In 1975, the average holding period for a stock on the New York Stock Exchange was just over 5 years. In 2020, according to Reuters and Refinitiv data, it had fallen to 5.5 months. The average company is now owned by people who will not be its owners next year.
This is not an abstract finance fact. It is the gravitational field every executive operates inside. And it shapes which decisions get made, which get postponed, and which never make it to the table.
The metrics trap
There is a principle in economics called Goodhart's Law: when a measure becomes a target, it ceases to be a good measure. Quarterly earnings, weekly sessions, monthly active users, campaign click-through rates. Each began life as an indicator of something deeper, and each has, in most organisations, become the thing being optimised. The deeper indicator gets lost.
A 2017 survey of 1,000 board members and C-suite executives by McKinsey and the Focusing Capital on the Long Term initiative found:
- 87% felt the most pressure to demonstrate strong financial performance within two years or less.
- 65% said short-term pressure had increased over the past five years.
- 55% would delay a value-creating investment to avoid missing a quarterly target.
That last one is the killer. More than half of senior leaders, people who know better, will quietly destroy value to protect a 90-day number.
The counter-evidence
McKinsey Global Institute's landmark 2017 study, “Measuring the Economic Impact of Short-Termism,” identified a group of public companies whose decision-making, investment behaviour, and capital allocation matched a long-term orientation. Across 615 large- and mid-cap US public companies tracked from 2001 to 2014, the long-term cohort produced:
- 47% greater revenue growth.
- 36% greater earnings growth.
- 81% greater economic profit growth.
- 132% greater market capitalisation growth.
The same period. The same conditions. The difference was time horizon and capital allocation discipline.
The privately held examples are even cleaner, because they aren't fighting quarterly pressure.
Hermès. Family-controlled. Refuses to mass-produce. Operating margin 38–45% sustained for over a decade. Brand value has compounded for six generations.
Patagonia. Began funding grassroots environmental groups in 1986, ran the “Don't Buy This Jacket” campaign in 2011, transferred ownership to Earth Trust in 2022. Revenue ~$1.5B. Each move ahead of consensus, none reactive.
Aman. Introduced low-density luxury in 1988. The category they created (sub-50-room resorts above $2,000 per night) didn't exist as a category for another decade.
The frameworks that make long-termism operational
Long-term thinking is not a personality trait. It is a system. Here are the frameworks I work with most often:
- Type 1 vs. Type 2 decisions (Bezos). Type 1 decisions are one-way doors: irreversible, high-stakes, deserving slow deliberation. Type 2 are two-way doors: reversible, lower-stakes, and should be made quickly. Most organisations confuse the two and apply the wrong cadence to each.
- The 10-year question. When evaluating an investment, ask: if we were optimising for cash flow per share in 10 years, what would we do differently? This single question moves most boardrooms by 30 degrees.
- Regret minimisation. Project yourself to age 80. Which decision would you regret not making? Often clarifies in 30 seconds what spreadsheets obscure in 30 days.
- The “five-year letter.” Write the press release announcing the result of the decision, five years out. If the press release isn't worth writing, the decision isn't worth making.
- The 70/20/10 allocation. Used at Google, Pixar, and several long-term operators: 70% of resources on the core business, 20% on emerging adjacencies, 10% on long-horizon bets. Short-term pressure tends to collapse this into 95/5/0. The discipline is protecting the 10.
How to defend long-term thinking inside a short-term system
The hardest part is not believing in long-termism. It is operationalising it inside an organisation calibrated for quarters.
Quantify the cost of short-termism. Customer churn from rushed launches. Brand dilution from off-strategy campaigns. Talent attrition from values mismatch. These cost money. Naming the cost reframes the conversation.
Keep a decade decision log. Every decision whose result plays out in 10+ years gets logged: the decision, the reasoning, the assumptions, the disconfirming evidence to watch for. Reviewed every 18 months, not every 90 days.
Separate the cadence. Different decisions deserve different review periods. Tactical campaigns: weekly. Brand and positioning: 18-month cycles. Category strategy: 3-year arcs.
Hold values as durable infrastructure. Patagonia's decision to fund environmental groups in 1986 paid off in talent retention, customer loyalty, and ultimately in valuation, 30 years later. Values are not soft. They are slow capital.
Closing position
The world will continue to reward urgency. Markets will continue to compress horizons. Boards will continue to ask for next quarter.
The work of long-term thinking is not arguing against this. It is building inside it, quietly, methodically, with the discipline to protect what will still matter in ten years.
Not faster. Clearer.
Not more. Better.
Legacy is built by those who quietly refuse the gravity of the quarter.