Strategic Impact of Long Term Decision Making
One of the most challenges aspects for owners of businesses, and also for Boards charged with running businesses, is how to allow for the impact of a decision to unfold over time. Many listed company Boards will be delaying with a CEO on a limited tenure. The Board will have set expectations for performance and almost ALWAYS those expectations will require short-term focus.
And in that context, in that framework, the value and impact of longer term thinking is lost. Short term thinking and short term results are for the most part, easy. Any CEO can arrive as a one trick pony, do their ‘usual’ thing and see a change. The change WILL be noticed, can appear useful and for a CEO on a short term contract, tick most of the Board’s requirements. Bonuses are paid for all involved. For the Business Owner however, the opportunity to think longer term tends to stay, even amid the myriad of short term day-to-day operational decisions.
So what then is the problem?
The problem is when the Strategic Impact of Long-Term decisions is foregone or neglected as the time that is lost forces an organisation from a space in which change can be well managed and proactively pursued, to one in which it’s all hands to the pumps. As a species we are too comfortable with relying on ‘crisis’ as the trigger for movement.
I’ve been working with the CEOs of a series of manufacturers exploring emerging issues. Some of them are involved (to one extent or another) in supplying military parts. In the past couple of months they’ve seen a significant shift away from a longer term purchasing mandate (cycles of two to three years) to one in which the expectation for supply is now required in months. Many have found the increased tempo a surprise and a challenge. However the annual future scenarios I’d conducted for the Department of Defence and CFSS (now the Australian War College) over 15 years, all pointed to the need for this shift. These businesses were not aware that a longer term view was being developed and are now paying catch-up.
Inside your own business you likely have units developing a better forward view. The short-term CEO will not know or likely consider that information as being useful. The Board through its framework of expectations of immediate change, will not encourage or reward the CEO to find it. And the only trigger will be crisis.
In another organisation I’m currently working with, the CEO has offered new data regarding the challenge of work from home, the shifting needs of the workplace and expectations for retaining and attracting talent. It’s the basis for an organisational restructure that has caught a number of employees by surprise (that’s a story in itself). NONE of the data is new. Along with many others, I’ve been discussing work from home for almost 15 years. I’m constantly asked ‘what does the future of work look like?’ For Assure Programs in 2012, Recruitment Industry conferences in 2014, Selection Partners in 2016 and 2019, and more, the data was clear. And organisations ignored it because the Strategic Value of long term thinking was not recognised. And now, the trigger in the guise of covid sees businesses scrambling to retain talent.
CEOs and Boards give up the single most important asset they have, ‘time’ in preference for short term impact. And in crisis, choices are few and options rarely assessed. It’s costly. Arguably its a lazy way to run a business. For the business owner, that’s a choice. For those run by Boards, it’s more a case of neglect.
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