Tuesday, July 06, 2010

Here's a great case for why we need new thinking and business leadership with vision, by Yves Smith (Naked Capitalism) and Rob Parenteau, the head of a global financial advisory firm and the editor of The Richebächer Letter.

IMHO, simply selling all the apples on the table while neglecting the tree is a recipe for disaster, not a better pie. Here is an excerpt of their case:


"Over the past decade and a half, corporations have been saving more and investing less in their own businesses..."

"...public companies have become obsessed with quarterly earnings. To show short-term profits, they avoid investing in future growth. To develop new products, buy new equipment or expand geographically, an enterprise has to spend money — on marketing research, product design, prototype development, legal expenses associated with patents, lining up contractors and so on.

Rather than incur such expenses, companies increasingly prefer to pay their executives exorbitant bonuses, or issue special dividends to shareholders, or engage in purely financial speculation. But this means they also short-circuit a major driver of [long-term] economic growth."

The Federal Government can't save the economy, businesses must do this. We need thinkers with a long-term design POV who will Invest in organizational development, withhold a portion of savings for reinvestment, explore new technologies and apply employees to R&D: activity that will pay future dividends beyond any item sold today.

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