Can boards swing the pendulum to long-term thinking? A prolonged, strategic approach is good for the bottom line and society.

• Author: Milford, Maureen
• Position: SHORT-TERMISM

Would a product like Kevlar --DuPont's light-weight, super-strong fiber used in body armor that has saved thousands of lives--get to the marketplace today?

Research and development began in the mid-1960s on what became Kevlar; it wasn't introduced until 1971.

"No CEO in their right mind today would ever give approval for (research and development of) Kevlar," explains Edgar S. Woolard Jr., who was CEO of DuPont from 1989 to 1995. A short-term orientation can make CEOs "afraid to make big decisions."

For Woolard, a former director of Apple Computer who was instrumental in bringing Steve Jobs back to what is ranked as one of the world's most innovative companies, there's no question the short-term mindset can negatively impact the kinds of innovation that might change the world.

But now, it appears, many other business leaders are seeking to swing the pendulum away from the obsessive focus on short-term results to approaches designed to spark innovation and create value over the long term.

Boards in general seem to be paying more attention to long-term goals, says Ronald P. O'Hanley, chief executive of State Street Global Advisors, the investment management arm of State Street Corp., of which he is vice chairman.

He points to his own company as an example. At every board meeting questions are asked about the long term. For the capital plan, he adds, the long term is considered when discussing reinvestment, dividend policy and buybacks.

Resist short-term fixes

As leader of the world's largest asset management company, Larry Fink has a giant megaphone to crusade for a longer-term mindset in boardrooms and C-suites.

For the past several years, the CEO of BlackRock, which has $5.1 trillion in assets under management, has challenged top business leaders to resist the pressures of so-called quarterly capitalism that he believes threatens innovation, sustainable growth and the welfare of society. He has criticized (in letters to CEOs of leading companies in which BlackRock's clients are shareholders) the tendency for corporate leaders to reward investors through buybacks and dividend increases while underinvesting resources for the long term. He has reminded leaders that their duties of loyalty and care are to their companies and long-term owners, not every activist investor who owns stock at a moment in time.

Late last year, some prominent CEOs and directors publicly called for comprehensive solutions and policy changes to...