A recent study conducted by Harvard Business School shows the potential risks businesses and stakeholders face when they’re easily attracted by short-term solutions or quick fixes.
According to said study, short-term management undermines good business leadership such that:
- Leaders, who prefer easy fixes instead of finding a permanent solution that might require more work, attract short-term customers who are also looking for short-term fixes to their problems, and are therefore not likely to remain paying customers for long.
- Publicly traded companies that have this type of management are more financially at risk, because of unstable stock returns and high cost per acquisition.
- They spend much more money to attract new customers because they’re not able to keep existing customers.
Businesses that aim for quick profit instead of building and growing steadily are often blamed for popularizing the idea of overnight CEOs or insta-CEOs, who have built their riches on a product that will sell only for a short time (a year or less), then after dying a slow death and causing the bankruptcy of the whole company. In some cases, they’re also blamed by WSJ and a dozen other market analysts for the current economic crisis.
But there’s still hope… more and more companies are learning their lesson.
Good, I’m not one of those short-term Leaders!
Are you quite sure about that?
Here’s how you can tell for sure if you and your team are into short-term management:
- When you discuss goals with the company, do you often discuss things in terms of weeks, days, months, or years? If you find that most talks are centered on weekly, daily or monthly goals with little to no mention of how such plans affect the rest of the year, then it’s evident that you’re into short-term management.
- Review past company general assemblies, letters and stockholder announcements sent out. Highlight words that indicate the time factor used. Watch out for terms that may indicate a preference for short-term results.
- Take a long and close look on your company’s marketing campaigns. Do you have long-term marketing plans in place? Or do you only run short-lived ads when there’s a high chance to make a profit (i.e. holiday season, peak season for your industry)?
Are you guilty of choosing short-term gains over good business leadership and long term growth?
When your company’s profitability has become suddenly stagnant, or when your stocks are precariously dipping to danger zones, it’s time to take an honest, thorough look at your current management style. If you want to join the ranks of long-standing successful companies, you will have to make a change.
Let me help you evaluate your business’s standing and create a long-term with specific actionable tasks.
© 2013 Incedo Group, LLC
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