Thinking Only Quarter to Quarter Stifles Innovation


IMG: via Shutterstock

For small businesses, thinking only from one quarter to the next is extraordinarily helpful: being able to see changes on the small scale can ensure survival or help correct problems before they become catastrophic.

But for some businesses, thinking in the short-term can be detrimental to innovation and creativity. Successful companies like Google and Amazon have the ability to think ahead—far ahead, in the case of projects like Google’s self-driving car project. Though experimentation won’t work for all companies, it does keep Google and Amazon on the front lines of innovation.

For many small businesses, looking only quarter-to-quarter seems like all that’s possible, but as companies become more successful, they have more room—and more budget—to experiment. However, because shareholders are not forgiving of the trial-and-error process, not every company should experiment with their capabilities, and certainly not before they go public, according to KKR’s Henry Kravis. Even established Wall Street firm KKR, which has begun to branch into venture capitalist investments, understands that experimentation is a delicate process that needs a lot of research and attention.

But larger companies that can afford to experiment with their innovations and company trajectory certainly make some interesting things happen. Google X, the somewhat-secret facility run by the Internet giant, encompasses a lot of projects, some of which are known, some of which are moving into becoming projects, and some of which we may not have even heard of. One of Google’s most innovative projects is its intent to create cars that drive themselves, which has recently moved from an idea stage to actual experimentation involving prototypes.

Like Google, Amazon is also working on some creative projects that could significantly change the way mail is delivered. Amazon Prime Air, so far still in its embryonic stages, is a service that will deliver mail and packages by drone. The project is innovative and would likely be efficient, but it faces the stern countenance of public opinion on the drones, which could be hazardous if not engineered correctly.

There is no guarantee that the program, or Google’s self-driving car initiative, will work: both projects carry the heavy risk of failure, but they are potential failures big companies like these are likely to withstand. Even if shareholders can hold a grudge, they are more willing to take chances on large companies than they are on small ones.

Shareholders of Google and Amazon will probably still see profit even if these ambitious projects tank. But they have a long and sturdy record of measurable progress, so their futures are relatively secure, or at least secure enough that their scopes are not limited to quarter-to-quarter activity.

It’s hard for small businesses who lack the kind of revenue garnered by Google or Amazon to think years into their futures or to tackle ambitious progress where success is not guaranteed. Thinking only from one quarter to the next has its own benefits, of course, but for the larger companies that have the resources, being able to think ahead for the long-term might yield some truly astounding innovations.


About DevonJ140
I am currently an Accounting Director living in New York City. I love reading and learning more about business, finance, tech, and current events.

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