The Quarter Mile Stretch

Imagine if every three months you were expected to make more money, lose more weight, be a better community member, and more. Imagine if every three months you had to prove that you had accomplished more and were doing better than the three months previous to that one.

At first glance, you might think it’s workable, but after a couple of years, how much better can you possibly get? At what point are you accomplishing what high performance sports coaches call, "peak performance," and how can you keep topping that? Even the notion of peak performance is all about training and optimizing the body and mind for one specific moment in time. The whole idea is that there is a build up to that moment, and then some rest and recuperation after it.

So, why is it that we expect our publicly traded companies to return better results every quarter on quarter?

Last month, I spoke to one of the larger publishers of newspapers in the world. During the Q&A, one of the executive editors asked how their company could get better at discovering new business models and advertising opportunities, while at the same time increasing their current revenue base. The answer seemed obvious at the time: you can’t.

In order to truly innovate, companies are going to need a reprieve from trying to create record profits every quarter.

It’s the one conversation that the music industry never had with the general public, and you don’t see many newspaper publishers doing it either. Why doesn’t the CEO of one of these companies stand up in front of their stakeholders and say something like, "listen, if we don’t take two years to innovate – which will probably mean that we won’t make our quarterly earnings… in fact, we’ll probably loose money – we won’t be around in two years."

What would you rather have: record profits for two years and then nothing, or two years of innovation (with limited profits) and decades of prosperity?

Look at the layers of complexity that businesses face today: companies are forced to produce record profits quarter after quarter, the recession has affected almost every industry we know in the media landscape, and a lot of the traditional channels are grappling with the new realities of the digitization of their products, services and operations. That is the new reality.

Something has got to give.