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Experiences of Embedding Long-Term Thinking in an Environment of Short-Termism and Sub-par Business Performance: Investing in Intangibles for Sustainable Growth

Abstract

This paper presents a case study of the South African operation of a logistics company, operating in a context of short-termism and under-performance. Frustration with managing in this context, and concern that this environment might erode the customer value proposition, prompted an exploration of the question: “How can the business prioritise its investment in intangibles to support sustainable growth in an environment of short-termism and sub-par business performance?” The study followed an inductive grounded theory approach and began with an exploration of the system of short-termism as it was being experienced by the management team. This evolved in an iterative process to include an exploration of the customer value proposition, the organisation’s capabilities and the system of investment in intangibles. Data were collected over a period of 6 months, across a series of four stages as the management team grappled with the short-term financial objectives imposed on them. The data categories were used to develop 214 propositions across all stages. Through the four stages, four artefacts were developed from the propositions (1) a causal loop diagram of the system of short-termism; (2) a documented value proposition; (3) an assessment of the health of the business’ capitals; and (4) a multi-year intangibles investment programme. The findings indicate that a focus on investment in intangible assets can play a vital role in stimulating sustainable value creation in an environment of historically poor returns on investment and pressure for short-term financial results. It is suggested that investment in intangibles can be introduced as a multi-year capabilities investment plan. The study succeeded in getting investment in intangibles approved and the implication is that long-term decision-making can co-exist in an environment of short-termism and low growth.

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Correspondence to Kosheek Sewchurran.

Appendices

Appendix 1: Propositions from Stage 1: Understanding Short-Termism as a System

Table 1 illustrates a sample of a log of propositions that was collected from a broader set of observations in the work environment, in the period from 15 April 2015 to 10 June 2015. The log indicates the observation, its relevance to the concern variable of “level of short-termism applied by executives”, whether the data operate as a restrainer or driver on the concern variable, and a proposition. Most of the propositions were based on observations in meetings, whilst some were based on reflections and memos written after specific events.

The selected observations and reflective data formed part of an initial coding process in which data were converted into propositions (Table 8 in this Appendix). We then undertook a phase of selective or focused coding to generate the most significant and most frequent variables driving or restraining the level of short-termism among executives. Table 9 in this Appendix illustrates the sample of propositions and how they were coded.

Table 8 Proposition log for concern variable: level of short-termism applied by executives
Table 9 Selective coding: propositions coded into variable

Appendix 2: Investment in Intangible Assets

See Table 10.

Table 10 Proposition log for concern variable: level of investment in intangible assets

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Sewchurran, K., Dekker, J. & McDonogh, J. Experiences of Embedding Long-Term Thinking in an Environment of Short-Termism and Sub-par Business Performance: Investing in Intangibles for Sustainable Growth. J Bus Ethics 157, 997–1041 (2019). https://doi.org/10.1007/s10551-018-3959-2

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Keywords

  • Capabilities
  • Customer value proposition
  • Intangible assets
  • Short-termism
  • Systems
  • Value creation
  • Strategic management