Balancing short-term and long-term goals is crucial for organizations to excel. These goals are more interconnected than they may first appear. Improving current operations validates you are on the right strategic path. There are three main principles to achieve both short-term performance and long-term investment: define your purpose and vision, set specific measurable goals, and allocate resources to match objectives. Regularly monitor progress through key metrics and make adjustments when needed. Communicate goals across the organization and get stakeholder buy-in. With dedicated leadership and belief you can achieve two seemingly conflicting aims, through persistent small steps forward. As David Cote says, leadership matters - success lies in the day-to-day doing, not genius formulas. Pushing people beyond what they assume is possible leads to remarkable results.
To achieve strong short- and long-term results simultaneously, organizations must adopt a more rigorous, intellectual mindset. Though feasible, balancing both timeframes is challenging and requires asking difficult questions to uncover satisfying answers, even when that means acknowledging inconvenient truths. Decide now to become an engaged, honest student of your business rather than a passive overseer. You can accomplish short- and long-term goals concurrently, but only by continually analyzing and improving processes across quarters and years. Challenge your team to think harder about customers, markets, and operations than before. Cultivate rigorous analysis and attention to detail. For example, when David Cote was CFO of a major appliance company owned by GE, he was tasked with reducing their $1 billion inventory. Cote's team studied the overall process and learned it took 18 weeks for the manufacturing plants to receive orders to replace shipped products. After optimizing information flows and supplier coordination, the replacement cycle time dropped to two weeks. Over four years, inventory was halved while on-time delivery rose from the low 80s to above 90 percent. To achieve such win-wins, intellectual laziness and inertia must end. People must make smarter decisions by enhancing individual and group thinking. Ask the hard questions that lead to breakthroughs. Treat people respectfully but make unreasonable demands. Dig into details and insist on more than incremental progress. Fuzzy thinking will not suffice. Define specific changes needed and take an informed, rigorous approach to implementation. As a leader, know enough to actively coach performance. The idea leaders can focus solely on strategy while delegating execution is false. With urgent priorities, even talented people let longer-term projects slide. Leaders must verify critical projects are happening and ensure employees have the tools, processes, and focus to execute decisions and improve them. To overcome short-termism, draw a line ceasing quick fixes to temporarily boost metrics. Instead, have leaders at all levels shape strategies planting seeds for the future amidst today’s harvests. With quarterly patch jobs banned, make strategy and planning regular and meaningful. Schedule “growth days” for uninterrupted reflection, capturing ideas for follow-up. Require brief monthly written strategy updates on growth, productivity, cash, people and systems. Every six weeks, analyze the data and discuss execution for two hours. This moves strategy from a single forgotten yearly meeting to an ongoing focus enabling long-term goals and resources. When taking over an existing business, legacy issues hiding in the closets often lurk, results of past short-term thinking. You cannot genuinely grow with these millstones, so expose and resolve them. Today’s employees and consumers expect transparency and won’t tolerate shirking responsibility. Addressing harm now is cheaper than later when it has compounded. Consider your leadership legacy. Will you pass the buck or courageously do what others avoid, even if it temporarily hurts metrics? For example, when David Cote became Honeywell’s CEO, the company had asbestos liabilities, safety issues, lawsuits, underfunded pensions, environmental damage and more. His team proactively engaged stakeholders to collaboratively resolve these. Being proactive on legacy issues provides several benefits: - You build a more responsible culture centered on transparency and accountability. - You reassure investors of aligning with society’s direction. - You shift the organization’s mindset toward continual small improvements compounding over time rather than massive one-time pushes. - By candidly confronting challenges early when cheaper to address, you put the business on sounder footing to focus resources on future growth rather than legal battles over past issues. If your business too suffers under the shadow of legacy threats, get real about past mistakes and forge ahead into a brighter future. While senior executives tackle systemic challenges, managers elsewhere can address longstanding problems in their domains that drag down performance. Whatever your responsibility, confront the demons of the past that hinder tomorrow’s potential. Your successors may reap the financial gains, but you will leave an inspiring legacy as a courageous, transformational leader who achieved success the right way. For instance, a major reason Honeywell’s market value grew dramatically under Cote was implementing the Honeywell Operating System (HOS) to bring rigorous analysis and continuous improvement to operations, inspired by Toyota. HOS empowered employees to map processes and suggest enhancements, enabling incremental yet compounding efficiency gains over time. Cote applied HOS to business functions too, not just manufacturing. He set an ambitious goal for functions to cut costs 50 percent as a percentage of sales. And rather than reduce headcount, he kept budgets flat forever while expecting improved services as Honeywell expanded. The four-step HOS sequence for functions was: evaluate processes from the ground up, measure process performance, reengineer steps adding no value, and continuously improve. A comparable methodology was used in factories to optimize the “hidden factory” of workarounds masking process problems. Though often incremental and mundane, small ongoing process improvements compound significantly over years, enabling flexible evolution to stay relevant. HOS allowed Honeywell to incrementally improve operations and functions in a sustainable way, keeping pace with external change.
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