Every one of you has had to deal with the conflicting requirements of optimizing your business in the short term versus the long term. In the short term, you need customers to find you at any price, and in the longer term, you need revenue, profit, and return loyalty.
In a larger public company, it's all about making your quarterly numbers, versus investing in strategic growth alternatives that may not pay off until several quarters later. The challenge we all have as business leaders is balancing the focus between business today and tomorrow.
Based on my own experience in both large and small companies, I agree it can be done, with the essential principles outlined in a new book, Winning Now, Winning Later, by David M. Cote, former chairman and CEO of Honeywell.
Although his focus is naturally on bigger companies, I contend that his recommended strategies apply equally well to entrepreneurs and startups. Some tips:
1. Demand a mindset of deep thinking for the long term.
Don't allow you or your team to succumb to the mistake of narrowing the scope of thinking to solving today's problem only. That keeps people from pushing themselves to develop the kind of new solutions that will permanently change the business for the better, versus short-term Band-Aids.
2. Connect operations today with long-term goals.
In my experience, even in startups, longer-term strategy often gets pushed off the agenda due to current challenges. Overtly connect every operational problem to your strategy, rather than putting strategy on a different plane and making it only an annual event. Don't make growth a big-bang event.
3. Separate serious business threats from daily crises.
The natural human tendency is for people to treat all problems as short term, and apply patches rather than solutions. Strategic threats--including new competitors, market changes, and environmental issues--need deeper analysis and full resolution, before they jeopardize your business survival.
4. Make process improvement a constant focus.
Don't wait for a short-term crisis--or a long-term one--to force process improvements. By being proactive, and empowering and rewarding your frontline employees for improving processes, you will enhance your business productivity and growth in both the short term as well as the long term.
5. Build and model a high-performance culture.
Every business team becomes inwardly focused by default, comparing themselves only to others they know within the organization. It's your job as a leader to be the model high performer, quantify the team view with metrics, and expand awareness to the best outside competition and new tools.
6. Attract, train, and reward only the best leaders.
This requires allocating a significant portion of your time, even as daily crises grow, to the nurturing of the leadership pipeline, mentoring high potentials, paying them well, and rewarding results with positive short-term feedback, as well as strategic promotional opportunities.
7. Constantly scan the horizon for growth opportunities.
Distinguish growth opportunities from survival efforts, and make sure they are adequately funded, rewarded, and measured. Get outside the company regularly to get feedback on future customer needs, emerging technologies, and the views of influencers and experts in the field.
8. Explore partners and M&A to solidify your strategy.
These days, the market is moving so fast that it is rarely adequate to rely only on internal development to keep up with change. You need to be constantly assessing mergers and acquisitions, as well as divestitures. Hone your process for due diligence and integrating these new elements.
9. Proactively prepare for downturns and recoveries.
Make sure you are paying attention to macroeconomic and customer trends and planning early moves, rather than waiting for a crisis. This means identifying initiatives early, communicating openly with your team, and asking for their help on the dilemmas of production cuts and layoffs.
10. Initiate succession planning for all roles, including yours.
Don't let promotions and succession planning be driven only by your HR function. Everyone, including your board, should have a role. Make sure internal top performers are vetted, as well as outside candidates. Can you name the top three candidates for key roles in your organization?
If you look deeply into the success of the most recognized business leaders today, such as Jeff Bezos, you will find that they practice many or all of these principles. Even though your work and solutions for short-term objectives often seem to conflict with strategic goals, I am convinced that, with focus, you too can balance these priorities, and build a legacy for all of us to be proud of.