If this year the target is to increase operating profit by 5 percent, the way to get your bonus—often a quarter of annual pay—is to focus doggedly on increasing operational profit. But what if, in order to be competitive five years down the line, a division needs to change course? Changing course involves investment and risk that may reduce this year’s profit margin. The stock price might go down with it. What executive would do that? That’s why a company like WarnerMedia or NBC may not be able to change dramatically with the times, the way we’ve often done at Netflix.
