Leading for the long-term: Why deep-time matters

Friday, April 29, 2016 - 15:16

The Earth is roughly 4.5 billion years old, that's eight zeros -  a figure that is pretty difficult for humans to grasp. For someone who is expected to live less than 100 years, it's next to impossible to imagine something as vast as this.

In response, Geologists and other scientists came up with the concept of 'deep-time' in an effort to imagine the profoundly different time scale involved in geological and evolutionary processes.

One of the first to study the concept of deep-time was 18th scientist James Hutton. He was able to show that the way rock formations cut across and intruded on each other was indicative of a sequence dating back to prehistory.

Hutton's famous words "no vestige of a beginning, no prospect of an end", is what today we call deep-time.

Deep-time is more than just thinking long-term, it is also about understanding where you fit into the trajectory of a company.

But what, you may ask, has this got to do with leadership development and organisational management

Bringing deep-time to the commercial sphere

As many already know, the digital age is upon us. With the magnitude of disruptions hitting industries around the world, companies are coming and going in much greater numbers and in half the time. 

Figures released by The Boston Consulting Group show that businesses are currently moving through their life cycles twice as swiftly as they did 30 years ago. By mapping and analysing patterns of entry, growth, and exit for 35,000 US companies since 1950, researchers found that the lifespan of a business has significantly decreased. Researchers found that enterprise life expectancy decreased from around 55 years in 1950, to less than 35 years in 2010.

While some will argue that the destruction of companies can benefit the economy, the bushfire paradigm does not always hold up. This is especially true if they are publicly traded, where the main objective is to survive and be successful.

Yet, in a digital age characterised by fast-paced startups and quick profits, is there space to introduce the 'deep-time' concept into a leader's tool kit ?

Strategies for long-term growth

While the digital age has changed the ways people do business, there are a number of stalwarts that have survived the test of time. One of the best examples is Heineken. The Dutch brewing company knows a thing or two about working in commercial deep-time, having been founded in 1873 by Gerard Heineken.

In a 2014 interview with McKinsey and Company, Heineken CEO Jean-François van Boxmeer spoke about managing for the long-term. Marking its 150th birthday, Jean-François van Boxmeer said that sustainability comes down to a simple question: If I continue to do what I am doing today, will I survive tomorrow?

"In balancing the short, medium, and long term, I think you have to spot the opportunities and map them. And say, 'Well, what do I have to do so that the next 3 years are going to be great years? What, from 5 to 10 years? And what could be in 20 or 30 years?'" he said. 

He used the example of Heineken's current acquisition strategy, which balanced both the small and large picture to ensure the portfolio could respond to changes quickly but also invest in the long-term. 

"When we invested recently in a country like Ethiopia, it's a long view. It's at the very early stage of its development, but we think that Ethiopia in 20 years' time is going to be a force to reckon with in Africa," he said. 

"So the next ten years, returns will be minute. In the first three years, we're going to lose money in Ethiopia. But 20 years from now, Ethiopia might be as big as Nigeria is today."

Leading for the long-term is about understanding past your own experiences and thinking in 'deep-time'. A CEO's tenure is not indefinite but a company can be. As Jean-François said: "Never forget when you climb up the stairs to tip your hat to those who climb down the stairs. One day you will do the same."