Dominic Barton, global managing director of McKinsey & Company, argues that capitalism’s future depends on a shift towards long-term thinking. He identifies three interlinked problems contributing to the short-termism that currently pervades the business world: the rise of institutional investors, the focus on quarterly earnings, and the role of business schools in promoting this mindset.

Barton suggests that institutional investors, who manage more than half of U.S. corporate equity, prioritise short-term gains over long-term health and growth. The obsession with quarterly earnings further exacerbates this, with companies often sacrificing long-term strategies to meet these immediate targets. Additionally, business schools, with their emphasis on share price maximisation, are accused of fostering this short-termist approach.

To counter this, Barton proposes a three-pronged approach. Firstly, he advocates for financial reforms that encourage long-term investments. Secondly, he calls for companies to adopt long-term metrics, moving away from quarterly earnings as the primary measure of success. Lastly, he urges business schools to shift their focus towards creating more responsible and forward-thinking leaders.

Barton believes that adopting these changes will not only ensure capitalism’s survival but also help it thrive in the future. He emphasises that a long-term approach is essential for sustainable growth and the overall health of the economy.

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