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Principle 1: Use Long Term Goals to Drive Short Term Decisions | Lean Principle

by @reagan No Comments
Business Strategy vs Operational Strategy

“Base your decisions on a long term goals, rather than short term gains.”

Always consider the long-term consequences of your short-term decisions

There is a fine balancing act between Strategy and day-to-day operational delivery.

Staying true to your long term goals is not very easy when today’s demands feel to often conflict with the vision and the long term direction.

Across almost every business, we continually find senior leaders under indirect (or direct) pressure to chase quarterly earnings targets and results. This behaviour comes down from the “top” and more often than not result in short term behaviours that damage long term growth. The company motto quickly becomes “that we will do whatever it takes to hit the earnings targets.”

We notice this most of all through the quarterly and yearly behaviour cycle within organisations. At the end of the reporting periods, we cut budgets, cut travel, we stop paying suppliers – we stop investing in tomorrow so that we give ourselves a proverbial tap on the back at the end of the year. There is a last-minute push to extract every revenue opportunity or saving opportunity out there.

“Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.”

The first principle (14 Management Principles / Toyota Way) is that we must all try to stay true to our vision and our long term goals and strategy.

Lean Thinking asks us to stay true to the long term even if it has an immediate short term negative impact on our business. As change accelerates, there is a FOMO (Fear of Missing Out) which is as real in senior managers in organisations today as it is in individuals checking out their social media feeds.

We follow competitors without thinking, we jump on every opportunity thinking that the first market-moving advantage is real with long term results, rather than carefully considering the organisation as a whole.

Organisations need to be adaptive (rather than reactive) and they need to have a lasting purpose that is bigger than one particular product line or service.

Balancing the Long Term vs Short Term

Today, with so much change taking place around us, understanding what really adds value is really important. What is equally or perhaps even more important in our distracted world is identifying the noise from the value.

If we are able to identify the noise and ignore it, we will have 80% less to consider.

Within our corporate decision making structures, we must have review processes to evaluate the cultures that the senior leaders create. This review must include an attempt to understand the impact of “flavour of the month initiatives”, our “firefighting activities” and the impact of the decisions senior leaders make.

We need to always stand guard and keep the long-term vision driving the short term actions and not the other way around.

The same goes for our personal lives as well as we are all guilty of preferring the immediate gratification rather than the long term benefits. We take the extra portion, or we might binge on the TV series because doing what we know we must do feels too painful.

“Most of us have two lives. The life we live, and the unlived life within us. Between the two stands Resistance” – Steven Pressfield, the War of Art.

 

We all know that we will make short term decisions that may impact the long term goals. But this principle is there to remind us to keep the long term in mind and try to use the long term goals to guide our actions.

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