Always New Mistakes

November 17, 2008

The curse of the short term vision

Filed under: entrepreneur — Tags: , , , , , , , , , , , — Alex Barrera @ 8:40 pm

One of the biggest problems I’m encountering over an over again is the lack of vision of most people. Then I realized it’s not really a lack of vision, it’s just that people make decisions only based on short term information.

I’m sorry guys, but I believe that’s one of the worst curse our society suffers. The typical conversation goes like this: “Yeah, it’s a great idea/project/company but, how are you going to make money in 1 year?” or “ohh, yeah that’s a great idea, but it won’t work now, you need the next generation to do that”. Few things work on the short term and, of those that work, most of them are bad for some other reason. Just take a look at the recent financial meltdown, greed and short term vision brought all markets to their knees.

I guess it’s easier to take decisions based on the current state of affairs, you have fresh data and choices “seem” clearer. Nevertheless this is just an illusion, because data is fresh, the moment you take it into account it’s already outdated and worthless. Doing plans or strategies based only on current data is pretty myopic and dangerous as you don’t know if the next curve is right ahead of you. Not only you don’t know if the curve is ahead you, but even worse, you don’t even know what will you do if you reach it.

visionFor example, some days ago I was looking at a bunch of graphs from one of the biggest financial company in the world and I realized something. Most graphs and charts always show an exponential or linear growth rate of something. Paradoxically that stroke me as a lack of mid and long term vision. Expecting something to behave in the same way forever is just the simplest thing to do. Granted that no one knows exactly when things are going to flip, but anticipating things is a must if you want to survive. Those analysts just do the easiest thing, because growth has been positive in the past years, this will be the case for the next 10 years and if things start to go downhill we’ll just reissue a new report adjusting it. Is that vision or laziness? Is that what you pay an analyst for? Again, you can make mistakes, it’s normal you don’t know the exact date and time of when something important is going to happen, but you should at least expect downturns down the way.

rk662_future_jpgThere are plenty of examples of this behavior and I really suffer from it. Why is it so hard for people to think about the future and not just the present. Why do people, even if they grasp the value of something, keep reverting to the short term solution? Another example: “Oh, I want a house, I know mortgages are madness right now, but I really want the house so I’ll buy it, I know I can rent something and that would be the wisest thing to do, but I really need to own that home!”. Couple of months later we all know how things have ended…

I wonder how can we make people start thinking about things in the mid or long term. Anyone knows a secret formula for this? We should teach this mental gym at school. I think this is how things work now:

  1. Q: What would you do to solve this problem?
    A: solution 1
  2. Q: Will solution 1 work in the future? (More than 6 months)
    A: hmmm, how do you expect me to know that? Solution 1 works now doesn’t it? Then let’s stick to it.

And this is how they should work:

  1. Q: What would you do to solve this problem?
    A: solution 1
  2. Q: Will solution 1 work in the future? (More than 6 months)
    A1: hmmm, well I have no clue, I’ll research future patterns and then I’ll try to give an estimate guess.
    A2: hmmm, yes, analyzing all the data we have from current trends we can do an estimate guess that this solution will hold in the future.

An important point is that decisions have to be always reevaluated, specially if they are long term minded, as new information might change the way things look like, but thinking about not only what will happen now, but in a near future will, most probably, alleviate a lot of pain.

I’m sure many readers have experienced this in one way or another? Care to share?

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