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When it comes to oil and energy, short-term thinking is going to kill us. Come to think of it, short-term thinking negatively affects our economy, our businesses, and our personal lives.
I just read that after a drop in oil reserves two years ago, the U.S. reserves have gone back to their pre-energy crisis levels. The recent BP oil disaster, and the parody on the oil shortage slogan of "drill, baby, drill" ("spill, baby, spill"), illustrates the problem of short-term thinking. I'm certainly no expert on oil supplies, or on energy policy, but I do realize the leadership challenges of reacting to perceived, immediate crises, without taking into account the long-term implications. In other words, "drill, baby, drill" as a response to a short-term shortage, could lead to lax regulations and "spill, baby, spill" in the future.
Rising gasoline prices have led to a renewed call for offshore drilling, even though experts say that more U.S. offshore drilling won't have any impact on gas prices. (Here's an interesting and relevant article). More importantly, it is our reliance on oil, and our inability to adequately create cleaner energy sources, that is leading to the degradation of the environment. It's short-term thinking like this that typically gets people, nations, and organizations in trouble.
There is considerable evidence that short-term thinking in business, and in regard to the economy, is disastrous. It is our search for immediate gratification that fuels short-term thinking. Much of the economic meltdown was related to the pursuit of immediate rewards - whether it was the lenders trying to reap profits from questionable loans, or the homeowners who were buying property that was beyond their means.
Here are the danger signs that you are falling prey to short-term thinking.
1. No plan. Companies that don't engage in long-term planning are prone to failure. Individuals who don't plan ahead get stuck in dead-end careers and retire (or are laid off) without any financial resources or plan of action.
2. Trying for the quick score. Sometimes you can indeed "get rich quick," but usually this is because you have prepared beforehand, or because of lucky circumstances. Fads and trends come and go, and many businesses and investors that cashed in on the quick score (remember beanie babies, the craze around Krispy Kreme, etc.?) are often gone because they don't plan for what to do when the fad is gone. On a personal level: sure you COULD win the lottery, but don't bet on it.
3. Lack of analysis. All too often, what seemed like a good idea at the time, will only turn out to be a bad idea through careful analysis. A lot of terrific business ideas and inventions aren't successful because the originator didn't analyze how to get the product made, marketed, and/or delivered. Think about the many homeowners who didn't adequately analyze (and the lenders, too, of course) when purchasing a home that was a financial stretch. Analyzing the "what ifs" would have saved a lot of grief and pain.
In short, businesses and individuals need to keep cognitively engaged to plan and analyze to avoidthe dangers of short-term thinking.
http://trustedadvisor.com/trustmatters/the-cancer-of-short-term-thinking
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