Companies start with purpose: a founder, a vision, a reason to exist. But founders leave and often, the soul leaves with them.
In come the agents; career managers. No vision, no north star to guide them, no passion.
Purpose gets replaced by process. Decisions are delegated to committees. Nobody leads; everyone manages to a script.
Soon, the company forgets why it exists. Bureaucracy creeps in. Meetings multiply. Progress slows.
Gone are the days of innovation, entrepreneurialism and of building something special. Now it’s about extraction, sucking the blood of the business. Personal interest now trumps collective corporate responsibility.
It’s no longer about the company, but the parasites within it. Who’s accountable for the future?
Not the managers; CEO tenures average just over 4 years, they’re already polishing their CVs.
Not the investors; the average holding period is a mere 156 days, they’ll soon move on to the next opportunity.
Everyone’s just passing through. A chapter of the story. No cares about how it ends.
Leadership becomes a revolving door. Tenure is brief and succession is outsourced.
Strategy talks about “the long-term”, yet management only thinks in quarters.
We’ve seen this movie before. We know how it ends. Stock price climbs. Executives cash out. The narrative collapses. Someone else is left picking up the pieces.
Smash and grab; that’s the playbook. Get in, juice the numbers, get out. “We’ll be gone before it all blows up”. That’s the real strategy
Poor incentives lead to poor outcomes. The smiles are fake, the decks are polished, but the mindset is clear.
For the senior management it’s less about value creation, and more about value extraction. Stewardship is symbolic, wisdom is absent.
Accounting games mask economic reality: “Adjusted earnings”, “non-GAAP”, “EBITDA”. Bullshit earnings as Munger called them. Financial reports gradually drift into fiction.
Inconvenient truths excluded, dilution masked with overpriced repurchases dressed up as a return of capital. Each tactic works, briefly, then the damage sets in. What looked good on paper was destructive in practice.
It looks healthy until it breaks. A bit like treating the symptoms, while the disease spreads unseen. It works, until it doesn’t.
Management cashes its chips and runs for the exit. The company limps on. Predators circle.
It’s all about today, not about tomorrow. No patience, no intergenerational vision, no trust, no future.
Collapse comes suddenly when the music stops playing.
Hope Is Not Lost - Some Do It Differently
Not every company plays this game. Some think long-term, acting with moral integrity.
They invest wisely, allocate capital carefully and treat culture as an asset. They have patience and humility. Respect for employees, suppliers and customers.
Rather than focusing on the next quarter, they extend their time horizons. They play the long-game. It’s all about resilience, adaptability and optionality.
And guess what?
When they win, shareholders win too!
A great company needs a great leader, but they are exceedingly rare.
Singleton, Buffett, Bezos, Leonard, Jobs - you know the names. If you want great outcomes, invest in great people.
In all other cases? Caveat Emptor! (Buyer Beware!)
Excellent point, James.
Incentives are what truly drive decisions. Munger already said as much.
Now the key question: How can we change this corporate mindset?
Awesome to read.