Building a Legacy, Not Just Profits: Escaping the Trap of Short Term-ism

With CMOs tenures at an all-time low (3 years) and the increasing rate of lay-offs across marketing and sales, its increasingly apparent that many brands are financially in a challenging place, leading to more of a “short-term” focus, which is understandable . This is driven by the pressure to meet immediate targets and boost quarterly earnings, which often means businesses prioritize short-term profits over long-term sustainability. While such an approach may deliver temporary financial gains, the negative implications on key factors such as talent, infrastructure and the subsequent business performance can be severe. In this, article we explore both sides of the coin when it comes to focusing on the immediate needs and the results businesses need to deliver today and consider the detrimental consequences of focusing solely on the short-term and a potential approach to drive advocacy for the adoption of a more strategic, long-term perspective in business management.

Talent

A short-term focus can not only impact business performance, but also negatively impact employee morale and engagement. People are the driving force on what makes a business successful, not its products (Twitter, sorry X are finding this out super quickly right now!) When businesses prioritize immediate gains, they may resort to cost-cutting measures, including workforce reduction or reduced employee benefits. The result is often a disheartened workforce, lower job satisfaction, and increased turnover rates. According to a study by the Society for Human Resource Management, organizations that prioritize short-term profits over employee well-being experience an average turnover rate of 20% higher than those with a long-term focus on employee satisfaction. High employee turnover disrupts workflow, hampers team cohesion, and increases recruitment and training costs.

In contrast, companies that prioritize long-term goals tend to invest in employee development, create a positive work environment, and offer attractive benefits and opportunities for career growth. Such organizations benefit from a more loyal and motivated workforce, leading to improved productivity and higher levels of innovation.

Infrastructure

When businesses focus exclusively on short-term objectives, they may be inclined to focus on developing solutions and infrastructure which can be seen as “band-aids” to deliver against short term goals, leading to compromised efficiency and long term effectiveness. An example of this within advertising is a brands approach to data and technology and how it constructs and leverages data across the entire POE (Paid, Owned and Earned) ecosystem. By operating in a short term mindset, the full picture, and usually lengthy timings to develop a robust solution, are bypassed in favor of solutions which provide solutions for a very specific and usually silo'ed need. Going back to data as an example, a robust POE data solution vs silo'ed licensed data for paid media can leverage data across all facets of advertising to better inform how a brand shows up and where they are most effective. But this open source approach, which usually involves many stakeholders and a thorough RFP analysis of key partners, is a lengthy process. By neglecting this type of long term vision analysis and what infrastructure is required to achieve longer term goals, businesses miss opportunities to enhance productivity and operations, resulting in wasted resources and time and likely longer term results. According to a survey conducted by McKinsey & Company, organizations that emphasize short-term results are less likely to invest in process improvements, leading to higher costs and reduced competitiveness in the long run

A long-term focus on infrastructure development encourages businesses to stop and consider the longer terms goals and what internal structure is required to deliver against these goals. This long term focus to develop a future proof approach to data and technology (as an example) will enable continuous improvement initiatives, driving operational efficiency, and foster innovation. Companies that invest in refining their infrastructure are better equipped to withstand market challenges, adapt to changing conditions, and deliver consistent quality to their customers.

Performance

Short-term-ism may deliver immediate business efficiency, but it is likely going to impact the ability to deliver long term sustained growth. A short term business performance focus is often evident in myopic financial decision-making. When companies focus excessively on immediate profits, they might disregard critical long-term investments, such as research and development, marketing, and infrastructure upgrades. The data and technology example mentioned above is a prime example of this. Consequently, the lack of investment in these areas can stifle innovation, limit market expansion, and hinder the company's ability to adapt to emerging trends. Research conducted by the National Bureau of Economic Research found that firms with short-term orientations invest significantly less in innovation compared to those with long-term perspectives . As a result, these short-term oriented companies struggle to maintain their competitive edge in the long run.

On the other hand, businesses that prioritize long-term growth are more willing to invest in research and development, explore new markets, and adopt sustainable practices. These strategic investments often lead to improved product offerings, expanded market share, and enhanced brand reputation, contributing to long-term success and stability.

Finding That Balance

So how can businesses balance both the requirement to deliver immediate short term growth as well as future proofing its business? This requires a significant shift in organizational culture and management practices. Businesses can implement many strategies, including a few below to embrace long-term thinking:

• Foster Employee Empowerment: Empower employees to contribute to long-term planning and decision-making. Encourage innovative thinking and reward employees for initiatives that support the company's long-term objectives.
• Clearly Define & Measure Long-Term Performance: Develop key performance indicators (KPIs) that assess both short-term and long-term progress. Monitor and evaluate long-term success to maintain accountability and drive continuous improvement.
• Strategic Resource Allocation: Allocate resources strategically to support long-term investments and initiatives. Avoid sacrificing vital long-term projects in favor of short-term financial gains.

Summary

A short term mentality to business may well deliver today's performance, but at what cost to tomorrow? By prioritizing immediate gains at the expense of long-term planning, businesses risk falling into a cycle of declining performance and eroded competitiveness and can lead to:

• TALENT: Disengaged employees due to short-term cost-cutting measures result in reduced productivity, hampering the company's ability to achieve long-term goals and strategic objectives.
• INFRASTRUCTURE: Process inefficiency leads to higher operational costs, which, in turn, put pressure on short-term profits, making companies even more inclined to prioritize immediate gains over process optimization.
• PERFORMANCE: Neglected investments in innovation and market expansion can lead to a loss of competitive advantage, decreased revenue, and further short-term focus as businesses desperately try to regain profitability.

Businesses must recognize the importance of striking a balance between short-term profitability and long-term growth. Embracing a strategic, long-term perspective can lead to process optimization, increased employee engagement, and innovative solutions, ultimately positioning the company for sustained success in an ever-evolving business landscape. By making informed decisions based on long-term objectives, businesses can create lasting value for their stakeholders and contribute to a more resilient and prosperous future.