Short-term thinking the enemy of inspiration and innovation

There is one element ­central to innovation Malcolm Turnbull can’t deliver on — time for reflection.

When Malcolm Turnbull made his pitch for an innovation-led Australia, he introduced a raft of policies and promised $1 ­billion in programs designed to encourage new ideas.

It was a wide-ranging pledge that included technology investment, tax breaks for start-ups and improving technology literacy in schools.

Yet there was one element ­central to the role of innovation the Prime Minister did not or, more accurately, could not deliver — time.

Reflection is one of the ­cornerstones of great thinking. After all, Isaac Newton spent considerable time pondering under his apple tree. Yet thinking time is also one of the rarest commodities available to business leaders.

A study by the London School of Economics found most business leaders had precious little time for reflection. Researchers mapped the working days of almost 100 chief executives and found less than 15 per cent of their time was spent working alone.

One of the reasons so few business leaders have time for reflection is the increasingly shortened business cycle.

An always-on generation of Australian chief executives is ­finding it harder and harder to think beyond the next business quarter. Driven by shareholder pressure, operational demands and a raft of other constraints, efficiency and effectiveness have long replaced inspiration and innovation in the executive suite.

This short-term thinking often is attributed, incorrectly, to risk aversion or complacency, but from our work we know this is rarely the case. Even the most bullish chief executives can fall into a pattern of short-termism.

Many of these executives fully understand the adverse effect this behaviour can have on their organisations. Every day there are numerous examples of the toxicity of short-term corporate thinking, including increased chief executive turnover and organisational instability.

Interestingly it seems even investors have little to gain by pushing such an agenda.

A survey by the Australian Investor Relations Association found the performance of companies that focused obsessively on immediate goals (as measured by issuing repeated updates on financial performance and other reporting) rarely enjoyed a share price advantage over those with a longer-term view.

Hay Group’s global Leadership 2030 study found focusing on short-term improvement could kill off a leader’s desire to develop 21st-century skills required for success, such as contextual awareness, intellectual curiosity, emotional openness, concern for diversity, meaning making and bounded autonomy.

Held up against Turnbull’s ­vision for more innovation, many Australian executives will need to change their approach if they are to help their business achieve sustainable success into the future.

Leaders must create space for themselves and their people to learn new ways of working.

This takes more time and does not deliver results in the short term, but it is the only way to ensure they do not sell the future short. It also means leaders need to become more comfortable taking risks and making mistakes.

Indeed the Prime Minister’s call that Australian businesses must be “ready to fail” to move ­forward is simply unobtainable when they remain fixated on short-term priorities.

These critical components of innovations — reflection and risk-taking — cannot be achieved when the business horizon is counted in days or months. Like Newtown’s apocryphal apple tree, Australia’s business leaders must make time to grow.

Nicholas Conigrave is the associate director at Hay Group.