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Businesses That Win Trait No. 3: Long-Term Thinking

By Motley Fool Staff - May 24, 2016 at 7:00AM

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David Gardner discusses how long-term goals drive long-term value.

As deadlines approach and pressure builds, businesses and investors can become increasingly tempted to go for short-term gains. However, businesses that win orient themselves to a long-term vision and base their practices on it.

In this clip from the Rule Breaker Investing podcast, Motley Fool co-founder David Gardner explains how two successful, long-lasting companies are thriving because of their commitment to long-term thinking.

Make sure to check out the other parts of this series:

Businesses That Win Trait #1: Create Value for All Stakeholders

Businesses That Win Trait #2: Solve Real Problems

Businesses That Win Trait #3: Long-Term Thinking

Businesses That Win Trait #4: Not Afraid to Adapt

Businesses That Win Trait #5: Be Fun!

A full transcript follows the video.

This podcast was recorded on Oct. 21, 2015.

David Gardner: By the way, as we're talking about these, you're thinking about these both as a stock picker, as an investor, which companies do you want to invest in; but, I hope you're also thinking about your own business, and making sure that you're as oriented along these five traits as possible.

Number three. Trait number three is a long-term orientation. It's one of the hardest things to do. We have a hard enough time doing it here at The Motley Fool, and we're a private company. Thinking long-term. So, I know it, certainly, from working within my own business.

But if you think about public companies, you think about the pressure that they're under to perform on a quarterly or annual basis, you can see how hard it is to orient yourself to the long-term. That's why the businesses that win are winning because they're winning over the long-term, the only time that counts. Long-term orientation.

So, when I think about businesses that really operate over the long-term and succeed, I think of Novo Nordisk, which is a relatively recent pick I made in Motley Fool Stock Advisor. There's no substitute for actually having been in business for 90 years, which is indeed how long Novo Nordisk has been in business. As a Danish company, the primary player, talk about solving real-world problems, treating diabetes globally today. A really important company, ironically in probably the most socialist of all of the European countries, Novo Nordisk has really created great success.

And if you go to its website, I looked at this a while back, linking to their most recent annual report, they referred to it as an account of "our financial, social, and environmental performance." So, not just financial. And if you flip it open, you'd see that right next to the financial information -- which you would, of course, expect in an annual report -- are reports on environmental performance, with real metrics like the energy and water consumed by the company, carbon dioxide produced from energy consumption, and also, comparisons against targets. Along with social performance, which they measure through things like professional training, donations, and the percentage of employees who are trained in business ethics. Again, including comparisons against their targets.

No surprise to me, then, that this company is still around 90 years after it was formed, and is having a big impact on so many people who have diabetes today. And no surprise, then, that this is a long-term success, because it's long-term oriented. It's kind of how that company has grown up over time.

Another quick example that comes to mind for me is Starbucks. Starbucks has been a beautiful long-term business. It's not been around nearly as long as Novo Nordisk, but it has indeed been operating off of a global vision pretty much from the get-go. And look at what Howard Schultz and his company are achieving today.

So, these are long-term oriented people that drive long-term oriented enterprises, that drive long-term value. So, if I haven't said the phrase "long-term" enough, I'll say it one more time: long-term. It's really hard for a lot of businesses. But the businesses that win have that orientation built into their fabric, usually starting with the CEO.

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Starbucks Corporation Stock Quote
Starbucks Corporation
SBUX
$79.26 (3.76%) $2.87
Novo Nordisk A/S Stock Quote
Novo Nordisk A/S
NVO
$111.64 (0.19%) $0.21

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