Why It’s So Hard to Play the Long Game

Imagine yourself at lunch at your best friend’s home with good food on the table and a glass of your favourite wine in your hand. The fun conversations have made you lose sight of time and before you know it the desserts arrive. Your friend, mindful of people’s desire to eat healthy, brings a plate of fruits along with a Tres Leches cake, which she describes as, “Sponge cake soaked in condensed milk, and heavy cream, topped with whipped cream and a caramel sauce drizzle”. What are the chances you’d pick that fruit? If you were anything like me, that Tres Leches cake would be gone well before the host finishes explaining what Tres Leches is! Turns out most people can’t resist such temptations despite knowing it’s bad for their waistline! But the same people, when given the option of pre-ordering fruits or dessert at a lunch date that’s one week out, typically make the sensible choice of the fruit. Researchers call this temporal discounting: the payoff of a future event that’s more beneficial is discounted and appears less attractive compared to an immediate payoff that’s less beneficial. This is made more acute when the item (like money, or even cake) with the immediate payoff is right in front of us, or practically in hand.

This is just one of the many reasons why playing the long game is hard!

In part 1 of this series, we saw why it makes tremendous sense for companies and individuals to play the long game. Despite the many advantages, examples of playing the long game well remain far and few. Why is it so hard to do? In this article, we explore five factors that prevent us from playing the long game well so we can make better choices by avoiding these pitfalls.

What distracts us from playing the long game?

1. Human motivations: Sometimes it’s hard to explain why we do the things we do – especially those where the risk-reward trade-offs are unattractive to the long-term. I am reminded of my first few days of learning how to ride a motorbike, the stunt I tried to pull on it to impress the girl next door and the subsequent mini accident it led to. It could have been worse but the immediate payoff sounded too attractive to a teenager with a less-than a fully formed prefrontal cortex (it takes till the age of 25 for that part of the brain to be fully formed). Playing the long game should mean you don’t take undue risks, but human motivations are rarely completely rational.
2. Incentive structures: In the workplace, motivations are shaped by the kind of incentive structures that our companies adopt. Think of the situation where CEO compensation is linked to stock price performance, which is common in the US. Given the average tenure of CEOs is five years for large cap companies, you have to wonder how long-term their planning will really be? Or imagine the populist measures of governments that know there is another election coming in a few years. In our own business I have observed some investors who let the lure of their year-end bonus or promotion drive exit decisions in the process, sacrificing the potential of much higher, yet delayed, payoff. Poorly designed incentive structures can inhibit people’s desire to play the long game. In the societal context, the “desire to blend in” is an incentive for kids to consume alcohol or partake in substance abuse despite knowing it’s not a good thing. It all comes down to the right incentives!
3. Extreme goal orientation: What can’t be measured can’t be improved, and so now most companies have detailed frameworks to set and measure progress towards goals. But because plans are made quarterly and annually, employees end up being overly focused on those goals. Issues can arise when it’s not clear to people how their personal or even team goals fit the long-term game plan. And, because the OKR said so, steps may be taken toward a goal, which could derail the wider organization from the longer term plan especially if the OKRs are not well designed. For example, a publicly listed company could cut investments in R&D to deliver short-term earnings goals while jeopardizing the less visible long-term gain from that investment. People want to lose weight immediately and jump into the latest magic diet without thinking about sustainability over time or committing to a fitness routine.
4. Our discomfort with uncertainty and change: As humans we crave for control and certainty and, by definition, what happens in the longer term is harder to control compared to events in the short-term. So, we end up taking actions and decisions that focus on the controllable short-term outcomes that, many times, only propagates the status-quo and avoids committing to harder changes that create uncertainty, but may be required for the long-term. Sometimes, this shows up in the way we act with FOMO – that exploding term sheet or the prospective candidate who isn’t perfect – instead of doing the harder thing of waiting for the right partnership at the right price, or for the right candidate. When we want to lock the quick win or take the familiar path, we sometimes end up with a poor compromise.
5. Glorification of speed: The media tends to focus on the meteoric rise of a particular startup or how a twenty-something founder took her company to a unicorn status. It is indeed more exciting to watch a cricketer who scores at a strike rate of 200+ given the adrenalin rush that it brings. But when the startup ecosystem focusses on stories like these, the wrong message is sent to future founders on how success is measured. The consistent compounders get much less limelight compared to the fast growing wannabe disruptors. In my opinion, the company on a slow, steady but enduring path is more exciting than the startup on an exciting but vulnerable path because playing the long game is about being in the game for a long period – the faster you go, the harder you crash if things go wrong!

In a world of increasing glitz and fanfare, and diminishing attention spans, the environment we are expected to perform in is loaded with distractions that prevent us from playing the long game. We need to reframe the space we operate in, redefine what success means, dig deeper within to live and work with intentionality while being focused on what really matters for the long-term. In the third and final part of this series, we will see how we can equip ourselves to play the long game and give ourselves, and our firms, a serious competitive advantage.

Now before you go, I do want to come back to the Tres Leches cake and offer you a way to make the right decision the next time you find yourself in that situation. Research shows willpower is connected to a limited reserve of mental energy; it’s not as ‘limitless’ as we sometimes believe. So the easiest way to eat healthy is to have rules you live by that do not require a decision to be made each time. The “no dessert on weekdays” rule is one way to create an automatic desired behaviour without having to use willpower. Rules help us keep our lives simpler and more focused on what’s good for us for the long-term. So, the next sponge cake soaked in Tres Leches, topped with whipped cream, banana and a caramel sauce drizzle that you come across on a Sunday may still give you a pause. But hey, you just got lucky with how you made your own rule with respect to desserts! So go on enjoy!

Short reads

If you have ever wondered why all the bananas in the supermarket are exactly the same, this blog attempts to throw some light on the topic. All bananas consumed today belong to the same Cavendish variety, with identical DNA, which poses the risk of the fruit being wiped out by a fungus in the future!

Finally some research that seems to suggest why we should show some attention to such ratings. While sometimes data can be biased, this is directionally a reminder that focuses on good culture and keeping employees happy can translate into actual value creation as seen by stock performance.

10,000 Women Die In Car Crashes Each Year Because of Bad Design. A very interesting piece that reminds all of us how if the world that is man-made can be so unfair to the opposite sex. We are glad we are starting to see more women founders who are also building the world and our Sequoia Spark initiative is a small step in the right direction.

Long reads

The Five Dysfunctions of a Team: A Leadership Fable, by Patrick M. Lencioni

This is a breezy read, for a business book, and one that hits the bullseye when it comes to how to build effective teams and get them to work well together. The book provides a powerful model and actionable steps to build high performance teams, and also shows how to overcome some of the issues that come up in a team setting. Highly recommended for anyone in a leadership role.

The Telomere Effect: A Revolutionary Approach to Living Younger, Healthier, Longer, by Elizabeth Blackburn

Dr. Elizabeth won a Nobel prize for her discovery of Telomeres, the tiny tails at the end of the chromosomes (much like the aglet of a shoelace), which shorten every time a cell divides. This amazing book talks about how telomeres affect how fast our cells age and die, and how the longer the telomeres the longer we live. The book also provides pointers on what we can do to slow down aging.

Do write in at ravi.gv@siteadmin.peakxv.com if any of my interests intersect with yours! Click here to read more articles on Sequoia’s blog. I’m also on LinkedIn and Twitter.