The Curse of Expectations

I remember driving home one night listening the radio (in the days before podcasting, maybe 20 months ago). The host was interviewing recently retired Fortune 500 CEO. He asked about the biggest obstacle the CEO faced in his tenure. The CEO didn't hesitate. His answer: "Investment analysts." Because of the huge influence investment analysts wield when they set earnings expectations for each quarter, business leaders need to focus their energies on hitting those quarterly targets. If they don't, stock prices plunge and companies have less resources to invest in the future. I'm paraphrasing, but what the CEO told the radio host was pretty close to this: "I was prevented from looking after the company's long-term growth because our survival depended on meeting this quarter's expectations." He could make no decision that might mean unprecedented growth in a year or five years if it threatened the earnings-per-share analysts projected for the quarter. As he spoke, you could hear the frustration mounting in the CEO's voice. It must be a lot like the frustration they're feeling over at Google this morning. Reports are flooding business media and the blogosphere about the end of the honeymoon at Google, which failed to meet analyst projection when it released earnings yesterday, resulting in a 12% slide in Google's stock price, translatable into the ereadication of $16 billion of shareholder wealth. Never mind that the quarterly earnings were double those for the same quarter a year ago. Forget that it delivered net earnings of $372.2 million. Read how the Holtz Communication + Technology which focuses on helping organizations apply online communication capabilities to their strategic organizational communications. As a professional communicator, Shel also writes the blog