Short-termism undermines long-term success. Overserving shareholders while ignoring stakeholders risks missing the future. Learn how balancing now and next builds resilience.
CEOs just had a horrible week.
Brian Thompson of UnitedHealthcare was shot dead in front of a Manhattan hotel in what looked like a targeted assassination. And what should have been a moment of compassion turned into bitter schadenfreude as online commenters implied that Thompson had it coming, or was at least undeserving of our sympathy. Companies that provide security services for corporate execs say their phones have been ringing off the hook.
And while one good man lost his life, other CEOs merely lost their jobs. Carlos Tavares, the CEO of carmaker Stellantis was thrown out, and Intel chief Pat Gelsinger was forced into retirement.
These defenestrations followed weeks of public acrimony. In September, dealers at Stellantis sent an angry open letter to Tavares. They accused the self-proclaimed “performance psychopath” of short-termism—undermining the company’s iconic brands and eroding its market share in an all-out drive for quick profits.
The letter was an unusual move that reflected franchisees’ growing alarm. After Tavares engineered record profits in 2023, his relentless focus on cost-cutting to please Wall Street was triggering supply disruptions and causing tension with employees, suppliers, and dealers alike. Sales at the parent company of Chrysler and Jeep have fallen, electric vehicle development has stalled, and the company has been forced to slash its earnings forecast.
These are cautionary tales for leaders across industries.
Balance the Now and the Next
From Tavares at Stellantis, to Laxman Narasimhan at Starbucks, to Dave Calhoun at Boeing, CEOs are getting removed at a record pace. Not surprisingly, they’re under extreme pressure to achieve near-term results. And yet, their downfall often comes because they fail to keep an eye on the future. That skill, the ability to balance the now and the next, is a core talent of future-focused leaders. If you don’t perform right now, you’ll be out of a job. But if you don’t build for what’s coming next, you’ll be out of a job when the next becomes now.
Of course, it’s no small feat to perform that balancing act. One thing that can help is a mindset of stakeholder centricity. Too many business leaders focus on shareholders at the expense of their other stakeholders: customers, employees, suppliers, and the communities they operate in. And yet, many of those other stakeholders have needs that extend far beyond this quarter or this year. Paying attention to those needs can help leaders to balance the now and the next.
Two years ago, Southwest Airlines experienced a massive technology meltdown that left thousands of passengers stranded during the holiday travel season. After the incident, it became clear that Southwest had been delaying important technology upgrades for years. And while those delays produced better returns for shareholders, it also created a massive “tech debt.” Other stakeholders noticed. Employee unions, in particular, had been pushing for upgrades to Southwest’s antiquated systems. As Mike Santoro, a captain and vice president of the Southwest Airlines Pilots Association, told CNN, “We’ve been harping on them since 2015…”
And while a broader set of stakeholders can help you identify future problems, ignoring those stakeholders can lead those problems to start stacking up. Amazon is famously proud of being the most customer-centric company in the world. But it has become equally renowned for underserving its employees through miserable working conditions. The resulting churn in workers at its warehouses may soon have them run out of people who are willing to work there at all.
Overserving Shareholders Leads To Short-Termism
CEOs who “overserve” one stakeholder group while ignoring others may enjoy a short-term performance pump, but they risk missing signals about the future. The most commonly overserved group at the party is shareholders. Wall Street wants results—stronger sales, better earnings, near-term price gains—and it wants them pretty much now. Like thirsty patrons at a bar, investors demand another round that they’ll regret in the morning.
Catering to a limited set of stakeholders can blind leaders to more important, and even existential, long-term trends. The future rarely arrives unannounced. The need for automakers to get their act together on EVs has been apparent since the Tesla Model S rolled out of production 12 years ago. Stellantis rivals like General Motors and Ford have invested heavily in battery technology, even poaching top EV talent from Tesla.
In his drive to juice profits, Stellantis’ Tavares was slow to cut prices as demand fell last summer, thereby ignoring the needs of customers, dealers, and suppliers. In a bid to preserve profits, he was slow to invest in the transition to electric vehicles. That was a disservice to customers. And it upset dealers, too.
To be sure, car dealers have had significant reservations about EVs—they make most of their money on servicing, and electric vehicles require far less maintenance than gas-powered cars. Nevertheless, dealers care deeply about their brand’s long-term success: many of them are family-owned multi-generational businesses. Ironically, that failure to meet the needs of all stakeholders ultimately hurt Stellantis shareholders, too. The company’s shares have fallen 40% this year.
Balance Stakeholder Needs and Don’t Miss the Future
Stellantis’s dealers and Southwest’s flight attendants sounded alarms about the future well before crises hit. The problem was that no one, or at least no one at the top, was really listening to them. They were too focused on the now and not paying attention to the next.
It’s true that the task of balancing a myriad of sometimes contradictory stakeholder needs can seem overwhelming or feel like political compromise. But leaders don’t have to act on every suggestion. Listening to these voices and asking the right questions provides critical insights. CEOs should be asking: Who are our stakeholders? What do they need, both now and in the future? How can we align their interests to create win-win solutions?
When done well, this becomes an act of creativity rather than compromise. By searching for solutions that meet the needs of all their stakeholders, leaders can find paths forward that balance today’s needs with tomorrow’s vision.
Companies with truly future-focused leadership, such as Patagonia, have expanded their definition of stakeholders to include the planet as a whole, recognizing that environmental stability is crucial for long-term prosperity. Ecuador, which I recently visited, has written the rights of nature into its constitution, allowing plaintiffs to file lawsuits on behalf of the environment.
In order to escape the trap of short-termism, companies need to embrace a broader definition of success. CEOs and Boards need to start viewing stakeholders as interconnected and vital to charting a sustainable future rather than as just a set of competing interests.
The best leaders are able to resist that pressure and stick to pursuing a long-term strategy in a short-term world. They know their success ultimately depends on heeding the needs of all their stakeholders, from customers and employees to suppliers and partners, and even the planet.
Which brings us back to the horrific murder of Brian Thompson. While we don’t yet know the identity of his assassin, it’s a fair bet that the gunman suffers from significant mental health issues. It’s also becoming clear that the gunman was motivated in some way by UnitedHealthcare’s treatment of patients. Bullet casings found at the scene had the words “deny” and “delay” scratched into them, words that health insurance companies use to avoid paying claims. A Senate panel recently released a damning report of how insurance companies have posted record returns in part by driving up denials of patients’ claims.
We live in a country where it’s too easy to buy a gun and too hard to get healthcare. Bitterness around that situation is what’s fueling the ugly comments we’re reading online. Those comments are inexcusable. They lack a basic sense of compassion. Of grace. And yet, as so many companies have posted record profits for their investors, other stakeholders could be forgiven for feeling left behind.
