Delayed Return Environment

Almost any vice works like this. Overeating feels great now, and the obesity doesn’t onset until the behavior has repeated for years. Smoking a cigarette reduces stress now, and the threat of lung cancer isn’t significant until much later.

In general, politicians are focused on their next election. They tend to favor policies that will provide an immediate boost to their re-election chances, while the negative effects of the policy won’t be felt for many years.

When a manufacturer sells through retail partners, there’s a temptation to “stuff the channel” – ask retailers to purchase a lot of product (usually at a discount) at the end of a reporting period, in order to pump up revenue. This makes the CEO look good on his reporting call, however, it then means that these retailers need less product during the next reporting period, which drags those results down and results in a delayed crisis.