Oversized Financial Sector vs. True Innovation

Micheline Maynard publishes a sharp observation by John Casesa of Casesa Shapiro Group in a New York Times article about the trouble at GM:

But G.M., despite its tradition of fostering innovation, has often been impatient for profits to emerge.

Mr. Casesa said that pattern stemmed from the fact that so many of the company’s top executives had a background in finance, not in engineering and designing cars and trucks.

This out-sized rule by financial professionals in a single company is directly related to the overall size of the financial sector in developed countries. The same short-sightedness rules today in the stock market, resulting in an oversized focus on quarterly results. A long term focus and a will to wait for profits is a requirement for successful innovation.