Something from my travels

Rome (2025): Standing on business

Time Is the Filter

It’s easy to outperform in the short term. It’s easy to be precocious when young, hot when you’re new, excellent for a quarter or a year or even five. The hard part is standing the test of time.

In 1982, Tom Peters and Robert Waterman published “In Search of Excellence,” featuring 43 companies they identified as exceptional. Within five years, many had declined or failed outright. The book became famous partly because its thesis collapsed so quickly.

Jim Collins "Good to Great" (2001) which, while highly regarded on the whole, suffered similarly. Circuit City, featured as a model company, filed for bankruptcy in 2008. Fannie Mae, another exemplar, collapsed the same year during the financial crisis. The book’s criteria for greatness couldn’t predict survival even a single decade out.

This pattern repeats because short-term success is mostly noise.

Anyone can get lucky for a while. Markets may favour your approach for a few years. You can ride a wave you didn’t create. But time is the filter that separates genuine quality from temporary advantage.

Ergodicity wipes out many presumed successes. In probability theory, a system is ergodic if the time average equals the ensemble average. Russian roulette has a 5/6 win rate across many players, but a 100% death rate if you keep playing on your own. Many business strategies work exactly this way - they succeed until they catastrophically don’t.

A fund manager could beat the market for five consecutive years, but revert to the mean shortly afterwards. Extreme over-performance tends to regress toward average over time.

Past performance genuinely doesn’t guarantee future returns - not because regulators put that disclaimer on everything, but because it’s statistically true.

Tech provides the clearest examples. Netscape dominated web browsers in the 1990s. Dead by the 2000s. Yahoo was the king of the internet. Now irrelevant. Ask Jeeves about FourSquare. Or MySpace before Facebook. Or BlackBerry before iPhone. Each seemed invincible during their moment, and collapsed faster than anyone predicted.

“Time reveals a fragility that temporary success obscures. It’s easy to be great for a moment, but hard to maintain greatness over the long haul.”

A surprising number of companies used as case studies in strategy and marketing books were only doing well within the timespan of the book’s writing. Many supposed new status quos are just moments in time, mistaken for permanent shifts because we’re living through them.

Child prodigies who fade. One-hit wonders in music. Athletes who peak early then decline. Early brilliance doesn’t predict sustained excellence. Precocity isn’t durability.

Time filters relentlessly because it reveals what’s actually working sustainably versus what’s benefiting from temporary conditions.

Some business that thrive during economic booms may be poorly positioned for recession. A strategy that works in growing markets might fail in mature ones. A manager who looks genius during a bull market might be exposed come correction.

“You can’t fake durability. You can fake competence for a quarter. You can fake excellence for a year. With enough luck, you might maintain an illusion for five years. But decades expose everything.”

The hard part isn’t being excellent right now. The hard part is being excellent next year, and the year after, and ten years after that, through conditions you can’t predict and challenges you haven’t encountered yet.

Time is the filter.