Since there is such a bias in the markets for short-term results, how can managers prepare for the long term?
In a word, that's management. Balancing the demand for quarterly results with the pressure for a profitable future is what good managers do for a living. What do you think you were hired for? You were hired to wrestle a paradox-and pin it to the mat. And not just once, but over and over again. You have to eat, and you have to dream.
Look, anyone can manage for the short term. Just keep squeezing the lemon, wringing out costs until there's nothing left but the pulp. And anyone can manage for the long term. Just keep telling people: "Be patient. Our strategy will pay off in time." The mark of a leader is someone who has the rigor, vision, and courage to do both simultaneously.
Take the example of managing people, a true short-long balancing act. Of course you want to motivate your team to deliver immediate results. You can do that with incentives and rewards, clear goals, and a passionate attitude about winning-the more passionate the better. But you can never stop thinking about developing your people, too. That means sending them to internal training programs or outside courses, giving them different experiences and stretch assignments, and encouraging them to take risks. Those activities may not deliver instant results, but they're an investment in the future that you must make.
It's the same story with managing R&D. Obviously, you need to fund projects that will improve and expand your existing products. That's usually money well spent, with relatively quick and certain returns. But some portion of your budget also needs to be earmarked for the kind of research that will deliver results in several years. Now, how much should go to each investment bucket? Your call, boss.
Perhaps the most common managerial balancing act has to do with marketing. With one phone call, you can take the easy way out and cut your advertising budget 20% to 50%. That will drop the savings right to the bottom line, with no sales impact for a quarter or two and no blood spilled in terms of programs or people. But what about the long-term hit to market share and brand? That's the judgment call, and you're the judge.
Jack Welch is Founder and Distinguished Professor at theJack Welch Management Institute at Strayer University. Through its executive education and Welch Way management training programs, the Jack Welch Management Institute provides students and organizations with the proven methodologies, immediately actionable practices, and respected credentials needed to win in the most demanding global business environments.
Suzy Welch is a best-selling author, popular television commentator, and noted business journalist. Her New York Times bestselling book, 10-10-10: A Life Transforming Idea, presents a powerful decision-making strategy for success at work and in parenting, love and friendship. Together with her husband Jack Welch, Suzy is also co-author of the #1 international bestseller Winning, and its companion volume, Winning: The Answers. Since 2005, they have written business columns for several publications, including Business Week magazine, Thomson Reuters digital platforms, Fortune magazine, and the New York Times syndicate.
A version of this column originally appeared in BusinessWeek Magazine.