Managing for the short and long term

In the not too distant past, when time and weather permitted, I used to find myself on a stand-up paddle board on Perth’s beautiful Swan river. Over the hour-long paddle the often calm waters could turn into quite a swell depending on the wind and passing boats. Negotiating these unsteady times involved keeping one eye on the board and the shaky waters at hand and another on the horizon to ensure you stay above board, travel at a good pace and in the right direction.

So too in business, managers must have a dual focus of the microscope and the telescope in administering their organisations and making constant adjustments.

Too much focus on either could be disastrous.

These days, managers, political leaders and CEOs have decreasing tenures making focusing on the long term difficult. There may be forced to deliver short term returns such as increasing profitability, reducing costs, and providing dividends to shareholders. But whilst all of these are honourable pursuits they must be conducted within the context of the long term.

Investments in future personnel, long-term projects and new initiatives must not be sacrificed for more immediate goals.

What is the right balance? There is no magic formula as every organisation is different and faces unique and fast-changing circumstances.

However, the starting point must be a growth budget. Creating and managing a growth budget concurrently with a standard financial budget ensures there is constant and reoccurring focus in the future.

It requires asking and answering questions such as: what will the future look like for our organisation; for our customers and non-customers; for our industry; for our environment? Where will future revenues come from? Where will our people come from? Will we be operating out of the current framework, location, even country? How do we plan, resource and execute all of this? What is the timeline? Should investment in the future come from current revenues?

Managers need little motivation to focus on the near-term: the day, the week or the month ahead. However, glancing towards the future whilst still staying focused on the present is critical to ensure the organisation is sustainable.

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