Donal’s research has focused on the ways in which corporate decisions about social outcomes tends to change over time.  In particular, he has challenged the prevailing idea that we tend to discount future outcomes in systematic ways when we think about social outcomes in the same way as we discount financial outcomes.  As executives, how are we thinking about future social outcomes differently than we’re thinking about future financial returns?

Donal explained that, when we think about financial returns on investment, we discount the future.  A dollar today is worth more than a dollar tomorrow.  In contrast, when we think about sustainability, we discount differently, and in general more weakly.    A tree tomorrow may be worth even more than a tree today.  This contrast creates a paradox between the sense of urgency required to take action and the patience evoked by the time between now and then.   How do we resolve this paradox?  By evoking both urgency and patience.   There’s a lot of work to do in this, though.    The more we emphasize urgency, the more people feel angry.  The more long-term, the more we are biased toward inaction.

Donal, what did you mean when you wrote that “Time is not money”?   

Often we do not discount the value of our time.  You may agree to show up at a meeting six months from now and then later regret that you did so.   We think about the distant future in quite abstract ways that don’t account for the value of our time.

What are the implications of not discounting the future for the ways in which managers allocate financial resources?  This definitely seems to run counter to what we were taught in our finance classes when we did our MBAs.  What do we gain by thinking differently about how time unfolds in punctuated ways, and in thinking about what we are trying to accomplish tomorrow as just as important as what we are doing now?

Some investors are patient, including especially institutional investors.  Some will short sell.   There are multiple discount rates that are relevant to any specific problem or opportunity.  Some stakeholders have different discount rates than others even within the same community.   Investors and employees may discount the future differently between and across their group affiliations.  Even across geographies, discounting is different. 

On top of that, an orientation toward the future is not unambiguously positive.  Take Tesla, for example, which often has expressed a deep commitment to a sustainable future.  But there are questions for today that Tesla must address on safety and on emissions.  There are tradeoffs here.  If you’re very long-term oriented, you may set aside important issues for the short run on how you will compete.   Uncertainty about the long run may make stakeholders fearful about whether we can get through the short run safely enough even to reach the long run.

How do you advise executives who want to accomplish important social goals – say around carbon neutrality or energy efficiency?

Awareness of tradeoffs is key. Being aware of heterogeneity is key.   Make it clear that, within any strategy, there are both short-term and long-term       issues that have to be addressed.   Think of the example of long-distance running.  Research has shown that the finish line, the end goal, can be quite motivating.  But the best runners are not thinking all the time about the finish line.   Most often, elite runners think in an operational mindset about their next step.   In some ways, this is a sequencing issue:  Motivate the big picture with the goal and then turn toward the operational next steps that we need to put at center stage.   Turn toward granular detail.  Once you have an initial shared understanding of what you want to accomplish, then you can focus on what to do right now.

You’ve got a new paper on how to frame shared futures even among stakeholders with very different ideologies, namely in the Northern Ireland Peace Process.   Did you apply this way of thinking to that example?

              This paper compares two instantiations of the peace process.

First, in the 1970s, the effort to stop terrorism through a negotiated process largely failed.   Why? The focus was on urgency.  And urgency can make people angry.   The peace agreement was about controlling short-term behavior.

Second, the 1998 Good Friday Agreement largely succeeded through a negotiated process.  The process began by bringing people to an understanding of a better shared future.  And then the process made explicit the danger – the risk – of procrastination on the operational steps that were necessary in the short run to step toward that shared future.   There were challenges in negotiating the short-term operational agreements necessary for peace, but they were much more successful than in the 1970s.  The discipline has to come by charging the operational path.   This is because people can more readily agree on the abstract, conceptual, long-term future.  The work is in demonstrating how a shared vision of a more peaceful future translates into the steps we take now.

Are you optimistic? 

Yes, two things make me optimistic.

First, I believe that, with commitment, we can make progress.  The Northern Ireland in which I grew up was a fractured society.   Today, the society is less fractured than when I was growing up.  This paper shows that, with commitment, we can make progress.

Second, we have each experienced great hardship both individually and collectively.   And we have made it through.   Resilience is who we are as humans.  Im hopeful that we can see our way to a better future.