One of the key reasons why companies fail is that they do not take the long-term view.
Short-term is easy. Short-term is immediate. Short-term is something everyone can relate to. But it is the long term that actually gives results.
We would like to argue that companies that are able to look at the long-term and create solutions that help their customers even before these customers realize that these solutions are now critical for them are the ones that will stay the course.
One of the primary reasons why short-term is so alluring is because short-term is what the management looks at despite business strategy being long-term. Understand that we are talking about management not the owners (who are also to blame but this is not a piece on pop psychology and we will not go in that direction).
The management gets paid to ensure that there are no hiccups. That things go according to plan. That no one does anything to upset the apple cart.
Consequently, there builds in every organisation an inherent tendency to avoid risk at all cost. The tendency comes from the individual not willing to stick his neck out. One reason for this is that the hope that someone senior will appreciate the initiative is not something that has certainty. More likely the opposite if the team is not supportive or geared for change.
A more generic but important reason no one takes that risk is because of the overall management style that we all have been accustomed to over the last 4-5 decades. Except for solving the initial problem, it has been more about risk aversion. Not looking to fix things that are not broken.
Unfortunately, the market has changed like nothing before in the history of commerce. The advent of the internet and the hegemony of the mobile phone mean that anyone anywhere has access to nearly the same information that we all have, that even the experts have.
This means that anyone with a certain bit of research can predict what is going to become the norm. And take steps to use it to do the next best thing.
And this creates risks for existing businesses. Risks that outsiders looking in can clearly see.
Unfortunately, what is apparent outside is not something that percolates inside a company.
What comes in is always something that is suitable to hear. This is not because the outside information did not call a space a spade (mostly) but because the first layer that received the information adjusted it to suit what the seniors would like to hear. Any apparent risk was coated with a layer of probabilities that did not give it as much impact as it originally would have in its raw form.
This points to the fact that the company is so focused on the short-term view that any new information that could have helped them long-term does not receive the attention it deserves.
So, how do we avoid this problem of risk aversion?
One way to avoid this problem is to inculcate a practice of questioning and continuous learning in the organisation.
There are numerous ways to get this done.
(We will list some of these methods in another blog post.)
Is putting in this process easy?
Unfortunately, the risk aversion culture also reduces such measures to mere steps that have to be checked through. The intel they could have given if such practices were allowed to flow as they should have never materialised after the first few times.
This can be seen in the many goof-ups in corporate history. The story of 20th- and 21st-century management is filled with examples of big companies messing up when they should not have. Simply because they ignored the facts. Or did not follow the corrective measures as they should have.
Will this continue? Will information be always tweaked at the gates?
We would like to say that this is likely to reduce as the barrage of external information flow makes it very difficult for management to ignore the trends of how the future will shape up.
Hopefully, this will result in a more long-term strategic approach to everyday management.
And things will change.
For example, in marketing, digital marketing is going to take more centre stage.
All the rest of marketing will revolve around it. Even traditional forms of marketing like sales calls, television ads, hoardings, newspaper ads, etc. will have some sort of matrices built-in that will check their ROI, something that was hitherto the practice only with digital marketing.
This will result in better marketing campaigns and more awareness of what works and what does not. Digital marketing from its current state of different processes such as SEO, SMO, video marketing, etc. will move to a more result-oriented strategy that will look at all these different types in terms of what contribution they can make as a unit.
Marketing will become more cohesive and assimilated. Digital marketing and traditional marketing will become parts of overall marketing that work together symbiotically to give businesses the results they want.
But this is something only companies that think long term will be able to anticipate and use to their advantage. Rest will wonder how effective digital marketing is not realizing that it is simply a tool just like the telephone or the computer. Just that it is not a physical tool but is equally important.
Hopefully, the focus on the short term will reduce somewhat as companies choose to not rely on shareholder expectations only and look at short-term profit. Marketing and digital marketing will emerge stronger with this shift and will be able to push through better growth numbers.
But this focus on the emergence of long-term thinking is a hope. Whether it will come to pass is a different matter altogether.
This post originally appeared on our earlier website: ihusresearch.com