Thursday, February 22, 2024

The Shark Must Move: Investment for the Future


     A shark breathes by having the water flow past its gills so that it can extract oxygen. If it stops moving, fresh oxygenated water does not continue to flow past its gills and it dies. Unless outside factors are supporting them, companies, groups, and individuals must keep moving or they will not prosper. Perhaps they will linger but they will not thrive. 

     Once a company goes public, there are strong expectations. They come from analysts, from stockholders, from a board of directors. Very few of them have the benefit of a long-range view. Tell them that you'll have something amazing in three or four years and they may say "that's nice, what do you have for me now?" Thus, the pressure is steady to accomplish within the short term -- a quarterly viewpoint.

     Within a family, the range of returns stretches out a bit. As long as there is a known goal to be approached and some type of progress, towards that goal, which can be recognized then all is smooth on the front.

    We have three aspects of preparing for the future. First is to understand the goal we wish to approach. Note that a goal must include the definition of a journey but it does not always include a requirement to reach the destination. Perhaps it is an iterative goal and process. Second, we need to commit to doing what is needed to move towards that goal. Third, we need planned activity and movement to go towards that goal. Definition, commitment, movement.

     There is a dream. It may not be reached but it is a direction. My company died because we had no direction of growth beyond providing the best current product and support that we could. That is NOT a bad "mission statement" but it doesn't keep the shark moving. As our market shrank so did the company.

     Doing what you currently do is great for the day to day -- until it isn't. Sometimes a company, or individual, will succeed in being able to just continue to provide small improvements and, if the market remains strong and competition weak, that can keep the shark moving enough to stay alive. But, if the market changes or the competition becomes stronger and better funded, it is not enough and you can only look forward to dwindling results.

     Assume you have decided upon that goal. First living person on Mars perhaps? Are you willing to commit? Will you allocate enough resources to realistically move towards the goal? Resources may include time, money, labor, thought, negotiations, etc. A company may succeed in deciding upon a goal but be so restricted in outlook towards the next quarter's profit and production that there is no true commitment toward any long-term goal. 

     Sometimes people find themselves devoting all their time and energy to staying alive. Just like providing a great product and support, staying alive is devotion to the present and it is NOT a bad thing. But it won't move you towards your goal. "Success stories" are often about people who commit more than they thought they had in order to move towards a goal. Night classes? Writing that great novel in the hour before sunrise each day? Finding a job that allows study during the time one is watching over an incoming queue?

     Commitment is recognition that the future cannot be ignored.

     Having decided upon the direction (recognizing that you might not achieve the final goal) and committing to do what is needed to move towards that goal, you now have to move. Further education? Active networking? Setting aside income for savings? Reducing quarterly dividends to allow for more research and development? Possibly (but not as a first step) your commitment and belief is strong enough that you decide to hasten the accumulation of money by taking out a loan. Many businesses have begun with an extra mortgage on a house (or of the founder's parents' house).

     And if you achieve that goal? Start the process over again. Keep the shark moving.

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