Strategy: Updated and expanded

A good guideline for the appropriate time horizon is the full business cycle for the particular industry. Ultimately, the company exited most of its textile lines, but it did not do so suddenly. This underscores a wider problem faced by many companies: While managing margins is vital, it must be balanced with the pursuit of innovation and growth opportunities to prevent strategic myopia and secure a company’s competitive edge in the future. As a result, top managers can’t easily know whether the projections that underlie their capital-investment and portfolio-strategy decisions are in any way predictive of actual performance.