Long term Strategy Vs Long term Thinking

Recently , I was talking to a business leader who is also a very close friend of mine about scaling his business to a different market. He told me that he needs someone to take the leadership for the complete execution of this new project. When I asked about developing people internally , this is what he said

" We need people who can do the "Plug and Play", we are tired of training people to the leadership positions because they either leave or we have to let them go when they do not meet our standards. We do not have time to wait until they become capable of leading our team. This is why we are hiring an external person for this role "

At the heart of it , this may not seem to be a problematic thinking because we assume that the people who were trained internally were not capable of making to the right positions to lead the team. In fact , the kind of trainings that was done in that organisation were not only inadequate , but also too short term for any individual who has not been in a leadership position to take up such an ambitious role of leading a large group of people in a totally different market place.

Now do not confuse that the organisation did not have a vision or a long term strategy. It has a very clear strategy on how to scale and position itself as a brand in multiple countries. The problem here is when it comes to certain decisions, people somehow gets to think short term while wanting to achieve a long term vision ! Truly surprising !

Why does this happen ?

I don't believe that short term thinking is the traditional way of thinking of the business leaders. Most of the leaders that I have met in my career are visionaries with very long term goals. The issue is when they fail to transform these visions to actionable long term strategies and build a culture of long term thinking in to their organisation so as to achieve these goals.

Understanding Long Term thinking :

One of the major reasons why short term thinking prevails is because it is not so well understood. People who have a long term vision often fall for short term thinking without knowing they are actually making it difficult for themselves to achieve their long term goals. One such example is that in case of a startup which offers deep discounts to acquire more customers in the hopes of increasing their prices in the future once their products or services becomes so convenient to the customers so that they will be ready to pay for it . This can be seen as a very long term strategy where the company deliberately burns their VC money !

Now if these organisations fail to think long term when it comes to an operational plan, then it becomes a huge problem . The high cost of operations , the poor quality of services when it scales , the lack of clear purpose other than just making money or being valued , all of these can affect the sustainability of the business. This is where long term thinking has to be understood as something which has an operational importance rather than just being a strategic planning. After all , its how you execute things at an operational level that decides how you will really scale !

Training People:

People are not naturally long term thinkers , this is because they are held responsible for achieving todays targets rather than planning for long term. This is the key reason why they act more to solve problems which are "urgent" and ignore problems that are "important". One such example of this is when managers and teams work overtime to expedite a late shipment which is urgent , but fails to solve the root causes of these delays so that it does not re occur, which is more important in the long term !

Changing them to think long term is not at all an easy task. This can take months of training to make them understand that how dangerous these short term thinking are and how a careful planning and execution of long term planning can make them switch from taking "corrective actions" to "preventive actions". In the above example , while corrective actions are to do over time and send shipments by air to expedite the delivery ( which obviously comes with a huge cost ) , the preventive actions may be to start planning a preventive maintenance of all critical machines so that the downtimes can be drastically reduced in the future and shipments can be delivered on time , saving the company a lot of money.

Now , why can't they plan it right away you ask ? Well , there are many reasons. Let me tell you that many organisations just hope that machines do not breakdown because in most cases it doesnt ! They might think that allocating a budget and resource for preventive maintenance is far more time consuming and costly. So they resort to fixing when the machine actually break down, BUT they fail to capture the actual total cost of a late shipment including the implicit of cost of potential loss of customers due to poor satisfaction levels !

If you think in terms of a year, plant a seed; if in terms of ten years, plant trees; if in terms of 100 years, teach the people Confucius

What can be done ?

Start looking for the total cost :

While traditional accounting practices are useful to monitor business performances by tracking critical financial indicators , sometime we fail to see the implicit costs that are not associated with the direct expenses or costs. An example is the cost of rework, If a manufacturing plant producing 1000 parts per day has 1% of rework , this means that they have to re do 10 parts daily. The direct costs associated with this can only be seen as the extra labour and the machine running time while the long term affect of this rework is often not seen. In this case , the plant is actually losing its time to produce good 10 parts daily , the cost of it when projected to a year would be significantly larger that the whole plant would seriously put their effort to reduce it, but that seldom happens in many places !

Build a culture of long term thinking :

Practicing long term thinking as a philosophy needs clear display from the leadership and management in taking critical decisions. For example , Stopping the production lines to solve quality problems such as rejections or reworks does not evolve as a norm unless the management permits it as a practice so as to prevent a defective product to reach to the customer. Such actions , even though may have some short term losses on productivity can yield long term results of sustainable and consistent quality . All these requires strong long term commitment towards quality from the top management. With some trainings to people on seeing the bigger picture in addition to this , long term thinking can become the culture of the organisation.

Develop Future Leaders :

The best long term planning is to invest in people to train and develop them to future leaders. This is where many organisations gets too short term. They think they have trained " enough " because they have spent "too much" time and money on training and developing people. In fact , they are losing many potential future leaders within the organisations who can understand the people and culture in and out. Hiring an external leader can also bring many changes but it will take more time for them to understand what really works and what does not . Also, frequent changes from external hirings to the leadership positions disrupts the continuity of many efforts that was done under the old leadership. This can also reduce the morale of people who works under such condition. In short , developing people to think long term , train their subordinates , lead them with respect and challenging them to raise to their full potential can be extremely rewarding in the long term in terms of productivity , quality and safety !

That's it for today , Hope you have enjoyed it . Also, please feel free to comment or suggest anything that could be worth discussing or writing in the future, Thank You !