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Purpose and benefits

It is a widely-held view that managers could do a much better job if only they could be measured on a ‘long-run’ basis. Managers in just about every industry claim that a preoccupation with the short term is stifling sound management practices. But Bernstein challenges that belief in this Viewpoint.

What is the long-run? According to Bernstein, the term is sometimes used to imply a return to normality, a time when current difficulties—or even the current state of good business—will come back to the ‘average’ state. Another use of the term is to distinguish business decisions that lock a company into commitments over an extended period of time. Bernstein contends that long-run thinking is ‘a concept badly used and often abused’; he discusses the two common usages of the term and suggests that accurate information and managerial control can make long-run decisions less risky.