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There’s a myth about entrepreneurship — the belief that the hardest part is the beginning, the early-stage all-out hustle mode, which, so the thinking goes, will ultimately lead to big rewards. But in my experience as CEO of JotForm for over 15 years, I’ve found the opposite is true: the hardest part of being an entrepreneur is playing the slow game, including putting off short-term rewards — like investors, cash injections, and innumerable flashy perks — in favor of far-reaching, slow-drip success. It requires waking up and recommitting to your long-term vision every single day, even when the pay-off is difficult to visualize.
As bestselling author James Clear has written, “[t]he hard way is rarely harder in terms of daily effort, but it’s harder psychologically.” Part of that, says Clear, is trusting that small things will lead to big things. Though it may seem like a blind leap of faith, experts have found that there are real and tangible benefits to this kind of thinking. Here are five.
The benefits of having a long-term outlook
1. More innovative
One of the first things to suffer when entrepreneurs think too short-term is an investment in innovation. In the past year, many companies scaled back their goals from growth to mere survival, and as a result, innovative efforts have been throttled. At the same time, as competition increases, innovating is more important than ever — a long-term outlook is crucial.
As Alex Edmans, professor at London Business School, writes, “unlike buying a factory, the fruits of intangible investment may take several years to appear. The immediate consequence of training workers or researching a new drug is lowered earnings. It follows that managers who are trying to maximize short-term earnings may be under-investing in their company’s future.”
To invest in our future, my team has continued to roll out new products to achieve JotForm’s overarching mission: to make users’ lives easier with online forms and a growing fleet of related tools and apps. Our latest, JotForm Approvals, turns form submissions into tasks in an automated approval flow, so users can approve or deny requests on any device.
It’s relatively minor product innovation, but as James Clear says, these small things will hopefully add up to big results for our users.
2. Increased social responsibility
Another consequence of thinking short-term, aka “short-termism,” is scaled back sustainability efforts. During uncertain times, things like CSR activities are one of the first things to hit the chopping block.
But as it turns out, research shows a positive correlation between social performance and financial performance. In fact, one study looking at over 6,000 companies found that pandemic-induced drops in stock prices were milder among companies with more CSR activities. What’s more, the silver lining of consumers spending so much more time at home is increased awareness — never has the need for increased social and environment action been more pressing.
By thinking long-term, companies can continue their CSR activities, even during turbulent times. In the long-haul, it will strengthen your company’s financial performance as well.
3. Stronger relationships
Understandably, sometimes decision makers prioritize short-term crisis management over their hard-earned relationships. But when decision makers are able to rise above the immediate consequences and focus on safeguarding those relationships, the long-term impact can be profound.
The World Economic Forum recently highlighted the cases of pandemic-shaken apparel brands that canceled huge orders to suppliers in Bangladesh with an eye toward cutting their losses from reduced demand. On the other hand, brands such as H&M and Inditex paid suppliers for their orders, even if selling them wasn’t guaranteed, for the sole purpose of sustaining their close relationships.
In the After times, I’m sure you can guess which brands those same suppliers will prioritize.
As Lori Beer, global CIO of JPMorgan Chase, explains to the World Economic Forum, “As the corporate world becomes more virtual and business models more digital, the key determinant of sustainable success is less about the power of a company’s algorithms than it is about the efficacy of the relationships we forge.”
When an entrepreneur shores up her relationships, the payoffs emerge with time.
4. Boosted resilience
The benefits of thinking long-term are likely to impact your resilience on both a personal and corporate level. Consider career setbacks: when you don’t get the interview or the job or mess up on that important presentation. One study found that setbacks early in your career can actually result in a stronger career in the long-term. As Dr. Dashun Wang, one of the study’s co-authors, told the New York Times, “This is not just survival of the fittest. These people became better versions of themselves.”
The same can be said for companies that face setbacks. Take Innocent Drinks. At one point, according to co-founder Richard Reed, both their bottle makers and bottle fillers said they would no longer be able to work with them — with just 24 hours notice. The founders came within a day of losing their business. Reed explained to the BBC:
“We maneuvered our way through it, but it definitely taught us: focus on your Plan A, but know what to do if there’s an emergency.”
Today, Innocent Drinks is one of the most popular beverage-makers in Europe. Sometimes, keeping your eye on the broader mission is the only way to navigate during times of crisis — and you’ll move forward with a teachable moment.
5. More profitable
If you’re not already convinced to think long-term, consider this: it will make your company more profitable. In 2017, research found that companies that operated with a long-term mindset consistently outperformed their industry peers since 2001 — across almost every financial measure. Average revenue and earnings growth, for example, were an astounding 47% and 36% higher, respectively.
And not only that: as Harvard Business Review observed, entrepreneurs with a short-term mindset can become long-term managers — that is, change is possible.
Hopefully, with the above benefits in mind, you’re already reasoning about thinking more long-term. If you believe it pays off, it will — eventually.