Short-term versus Long-Term Strategic Thinking

Strategic thinking is a major component of business planning that sets the course of action that leads to either business success or business failure. Short-term thinking can be problematic as resources are wasted fixing potholes and gaining immediate results without considering long-term solutions. Executives that focus exclusively on short-term results sometimes leave their organizations in worse shape.

A great portion of our day is engaged in crisis management where new problems arise and we must deal with them immediately before the they spread. This process can be effective in the short run but can damage the company in the long-term when the root of the problem is not addressed. The crisis situations will continue to spread and grow as the underlying issues spread.

A strategy should focus on limiting the damage caused by crisis problems while ensuring the root problem is still being addressed. Executives who think short-term will see immediate results but will often damage long-term organizational performance. Jumping from fire to fire is a reactive strategy.

Long-term thinking can save the company money in the future by increasing competitiveness. When the company doesn’t have the ability to implement a long-term strategy, plenty of resources are wasted on counter-productive activities.

For example, a business many continue facing shut-downs due to dilapidated infrastructure. The production line breaks down frequently and requires heavy maintenance to keep going. It has a poor design and raises per product cost leaving a company slowly but surely less competitive by the year.

A long-term thinking will assess the long-term goals of the company and the strategy to get there to determine how to handle this problem. Instead of hiring new maintenance workers and dumping more money into a poor system the long-term thinker invests in a cutting-edge system that affords more adaptability to the production system.

Short-term and long-term strategy can work together. Short-term strategies can fix or minimize immediate problems through proper crisis management but will not ignore the needs of deeper problems. Short-term goals can build into long-term goals that lead to a stronger competitive stance.

Executives should ensure that short-term solutions do not supplant the long-term needs of the company. Even though solving immediate problems is attractive, it is the resolution of long-term issues that separates the exceptional executives from the rest of the herd. Developing a stronger strategy helps to reduce the frequency of short-term distractions by fixing fundamental competitive problems.

Three Tips for Developing Innovative Companies

Innovation is what makes the world grow and develop. In companies innovation can be worth a mountain of gold as a single innovative idea could turn a company ready to go bankrupt into a star performer. Just look at Apple and the development of innovative products that helped transform the company into a cash cow. To improve innovation in your company consider three different human capital areas of focus. 

There are a few good reasons why a company should develop innovation that includes stagnation through lack of new products and processes. Most companies will eventually move into a period of stagnation unless innovation is given appropriate weight. Companies must change the way they operate if they want to continue to grow. 

Innovation has many different factors that range from culture to compensation. However, it is sometimes beneficial to think of broad areas of improvement thereby leaving the details to the uniqueness of each company. At a minimum innovative implementation should consider teamwork, management, and employees as foundational aspects.

Teamwork: Ideas develop in a body of knowledge through social learning. Science requires the free exchange of ideas that allow new ideas and concepts to come to the forefront. In companies, teamwork allows people to share multiple vantage points and perspectives to come up with new and unique solutions. 

Having well balanced teams with different skill sets and diversity of people all focused on the same goal is important. Develop your teams wisely and ensure all members are working on the same problem. Let people free flow ideas and discuss them in an egalitarian manner until a final solution is found. 

Management: Managers are one of the most important factors in the success of a company. Hiring managers who are more interested in domination than performance is going to have serious consequences for innovative development. Few employees will bring forward ideas if they have been chastised in the past. 

The manager determines the types of interactions between those who can innovate and those who have the power to implement. Encouraging employees to come forward with new and well thought out ideas is beneficial. The manager should help inspire employees to develop and become more innovative. 

Employee: Innovative employees are a slightly different breed than many other types of employees. They are creative, risk takers, entrepreneurs, internally driven, theorists and thinkers. They take pleasure in finding new ways to think about ideas and concepts. 

Hiring employees that are constantly learning and giving unique responses to interview questions is important for innovation. Make sure that such employees are placed in positions where these skills are enhanced and toned for practical use is helpful. Like accounting, recruitment is a garbage-in and garbage-out approach where poor employees create poor companies. 

Innovation is a messy process and can be difficult to implement in an organization that is stuck in rigid methodologies and approaches. Rejuvenation requires the ability to find new ways of doing things that have a financial and cultural benefits on the organization. Creating higher levels of development requires thinking about the human capital of an organization and how it is used.