Long-Term Investment and Digital Business

Becoming a digital business is a multi-year investment. The challenge for public companies is sacrificing quarterly profits to invest in the future.


Jul 11, 2015

Public companies with insufficient digital business capabilities will be vulnerable to new digital business startups. To close the digital gap will take continual investment. Dion Hinchcliffe discusses the need for companies and professional investors to change their mindset from quarterly profits to building and keeping a competitive advantage.


Now that we are in this fast pace digital world, you can’t engage in long term things because you have this quarterly – you have got to make your quarterly numbers. You have these short-term performance goals and a CEO is out. You know, if you miss four or four or five quarters you’re going to need to get a new CEO and the priorities change again.

So there is this real conflict and this real tension between these short-term business cycles, and these changes which might take two, three, four, five years that have to be continually invested in. Now, this is where the start-up world really understands that you have to lose money for five years or more before you get your big payout with being required in going public. You have to continuingly invest, regardless of what the results are, the short-term results which are hopefully improving, but so this is really the issue and when we talk to senior executives and say look, I can spend some resources on this but even if it’s for the very future of my company I have a hard time telling people, telling the investment community and you know telling the board of directors and our shareholders that we have to wait.

Now I think we’re seeing that change a bit, if you look at at Elon Musk is doing at Tesla and Bezos has done on Amazon is basically thumbing their noses a bit at the short-term view, and saying I can’t win in this industry if I only have that short-term view. So I think brave, real leaders are going to push back against that and to be able to invest more, and invest in the longer term, and those I bet will be the organizations that will be represented heavily in the winners in digital transformation.

Published Date: Jul 11, 2015

Author: Michael Krigsman

Episode ID: 202