The pattern · Vision
Long-term vision: seeing before others do
Companies managed for the long term grew revenue 47% more, the McKinsey Global Institute found. What the research says and how to train your vision.
Long-term vision is the ability to decide today with years in mind, not weeks. Those with this trait accept slow results, see trends before they become fashionable and endure being misunderstood while the rest of the world catches up. Research shows this stance tends to pay off. But it also shows the price of arriving too early.
What the research shows
In 2017, the McKinsey Global Institute analyzed 615 publicly traded American companies between 2001 and 2015 and separated those managed with a long-term focus from the rest. From 2001 to 2014, the revenue of the long-term companies grew, on average, 47% more, with less volatility. Earnings grew 36% more (McKinsey Global Institute, 2017).
Seeing far, however, isn't enough: you have to be on time. Bill Gross, founder of the Idealab incubator, analyzed about 200 companies, those of his own incubator and other well-known ones, and compared five factors: idea, team, business model, funding and timing. In his analysis, presented in a TED talk in 2015, timing was the factor that weighed most, ahead of the idea and the team (Bill Gross, TED). It's an investor's analysis, not an academic study, but it helps to understand a common phenomenon: right ideas that arrive ahead of their time.
Who lived it
In 1997, Amazon was an online bookstore losing money. In his first letter to shareholders, Jeff Bezos wrote a section called "It's All About the Long Term". There he warned that the company would make investment decisions in light of long-term market leadership, rather than short-term profitability or Wall Street's immediate reaction (1997 letter).
Amazon went years without a profit. Bezos attached that same letter, every year, to the letters that followed.
In Bairo's journey
Bairo Leandro Gonzalez Martinez arrived early more than once.
He created a hair treatment course when the field was still in its infancy in Brazil; today trichology has graduate programs at health schools. He wanted to bring artificial intelligence and augmented reality to the business when that seemed like fiction. He heard it wouldn't work, believed in it and, even so, gave up. Years later, the same thing became a trend. He bet on natural-based cosmetics when few people were betting on them, and they became a trend too.
From these experiences he drew a double lesson. Being right ahead of time doesn't pay the bills, but it shows your eye is right. And arriving too early also means arriving alone. For Bairo, the image that sums up this trait is Walt Disney's: the story goes that, when Walt Disney World opened, in 1971, someone lamented that Walt hadn't lived to see the park, and heard in reply: "He did. That's why it's here."
How to develop this trait
- Write where you want to be in ten years. Not sales targets: what you want to have built. Reread it every year.
- Separate trend from fashion. A trend solves a problem that won't go away. Fashion satisfies a passing desire.
- Watch the weak signals. Read what researchers, young people and markets abroad are doing. The future usually arrives first at the edges.
- Plan the waiting time. If you arrive early, how long can you hold out until the market catches up? Having cash and patience is part of vision.
- Don't give up on the idea, adjust the timing. If the market isn't ready yet, keep the idea, follow the signals and come back when the time comes.