From The Case Foundation
The Long Now Foundation’s Interval Café is a place for conversation about long-term thinking. Nestled in a concrete warehouse at San Francisco’s historic Fort Mason, the Interval was a fitting watering hole for the nearly 2,500 participants in the recent Social Capital Markets (SOCAP) gathering. SOCAP’s annual pilgrimage to Fort Mason brought together innovators, investors, foundations and social entrepreneurs to “build a world we want to leave to future generations.”
But drive an hour south from Fort Mason to Silicon Valley and you’ll be reminded that short-termism is deeply embedded in our business culture. This epicenter of tech start-ups is defined by a business development norm of launch, scale and exit. Investors are more likely to ask, “What’s your exit strategy?” than “What’s your long-term vision?”
Today’s young business leaders came of age in the era of “short-termism” where companies enter and exit in five to ten year cycles and compete in a world where workers average 11.3 jobs during their careers. Dramatic disruption in the 1980s due to globalization, recession and technological change gave way to financial markets’ relentless push for short-term gains. Jim Collin’s 1994 book Built to Last: Successful Habits of Visionary Companies may have been a last bow to long-term business thinking.
Entrepreneurs dedicated to creating social value, and even impact investors seeking social returns are caught in the collision of short-term norms and the reality that progress requires a long-term strategy.
We’ve witnessed this tension as we’ve gotten to know early stage businesses and investors involved in our Entrepreneurship @ Work program’s new initiative – SOURCE: Solutions from Our Country’s Entrepreneurs. SOURCE, a partnership between The Hitachi Foundation, Village Capital and Investors’ Circle, connects entrepreneurs with the investment capital, mentoring, and support needed to grow their businesses. In this inaugural year, SOURCE is focused on four specific problem areas that affect low-wealth individuals – health, energy, financial inclusion and agriculture.
Through SOURCE, I’ve had the privilege of spending time with dozens of entrepreneurs and investors. One common theme from the entrepreneurs – each dedicated to creating social and economic value – is that they seem to struggle to imagine their businesses 10 to 20 years out. As impact investors push the ventures to define their scale-up and exit strategies – with less focus on social returns – it demonstrates the real challenges ventures face at the intersection of measurable financial returns and monetized social returns.
Read the full post at The Case Foundation.
Barbara Dyer is president & CEO of The Hitachi Foundation, a senior advisor in the formulation and implementation of Hitachi’s North American CSR strategy and is a Senior Lecturer and Visiting Scientist at MIT’s Sloan School of Management.