Deadly Disease of Management: Emphasis on Short-term Profits

Deming Institute

One of Dr. Deming’s 7 deadly diseases is: Emphasis on short-term profits: short-term thinking. It is easy to focus on short term goals and use a somewhat simple short term figure to measure success.

Preview Thursday: Clarity First

Lead Change Blog

Ambiguity is a condition we sink into because it is automatic and it provides short-term benefits that manifest in a number of ways. The short-term benefits of ambiguous organizational behaviors come at enormous long-term cost.

How Do You Calculate ROI?

Mills Scofield

The calculation defines gain in financial terms. Customer Value : delighting customers with meaningful solutions that meet real needs within the customers’ contexts and constraints; perhaps even creating new markets and industries.

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Beware of Short-term Management, Not the Short-term Investor

Harvard Business Review

Much has been made in recent years about the pernicious influence of short-term investors on corporate performance. I believe these arguments often miss a nuance: It is not the short-term investor but short-term management that is the problem. The short-term investor does not reduce the firm's long-term competitiveness and value;short-term management does. Indirectly though, these short-term traders can destroy value.

Thinking Long-Term in a Short-Term Economy

Harvard Business Review

Fact is, these were the terms used to describe the results produced by Exxon Mobil and Royal Dutch Shell after their second quarter earnings release. In fact one of the surest ways to increase stock prices in the short term is to announce a significant layoff.

A Partial Defense of Our Obsession with Short-Term Earnings

Harvard Business Review

Here’s a conundrum: On the one hand, there’s a consensus among thoughtful business leaders that too many companies are sacrificing long-term growth on the altar of smooth, reliable short-term earnings. the capital markets are much stickier.

Amid Stock Market Turmoil, Investors Cling to Hope. Why?

Coaching Tip

Two market professionals were interviewed: Both said the big decline in recent weeks represented a buying opportunity. Other market observers have also shrugged off the volatility. Why I'm throwing money at the stock market (Marketwatch, August 26).

The Real Reasons Companies Are So Focused on the Short Term

Harvard Business Review

This has been a remarkable year for the markets. Some argue that profits are stagnant because of short-termism—that decades of focusing on current profits over long-run innovativeness has resulted, now, in companies that are hollowed out. Indeed, a study by Rachelle Sampson and Yuan Shi found that company short-termism is negatively correlated with innovativeness, measured as RQ ( “research quotient,” a measure of the return on R&D investments ).

What’s wrong with waiting for an opportunity?

Rajesh Setty

Fifth and probably the most under-rated reason is that you get used to seeing short-term results for your efforts. When you pursue a big and bold opportunity, short-term results are limited and that probably will scare the hell out of you.

How CFOs Can Take the Long-Term View in a Short-Term Economy

Harvard Business Review

Investors are increasingly seeking firms with long-term growth strategies, rather than ones focused on managing short-term earnings to boost the stock price. For CEOs, creating and communicating long-term growth strategy is easier said than done.

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Markets: Understand the Present to Forecast the Future (Part 2)

Coaching Tip

Alexandra Lienhard : So, as editor of the Financial Forecast and the Short-Term Update , what's the goal with the services you provide? He wanted to step back a bit from the day-to-day market commentary and incorporate the views of socionomics into what he was writing about. Let's give them not only the Elliott Wave Theorist and what I'm talking about socionoimcally and in the markets, but let's also give them your commentary in terms of stocks, bonds and everything else.'

Engage a Mentor with a Short-Term Project

Harvard Business Review

Under Rick’s guidance, his nephew prepared presentations, assisted in customer engagement projects, built a scheduling spreadsheet, suggested marketing recommendations, and formalized a development plan post-internship. That puts suitable mentors in short supply for young workers. Think really short, as in, less than a month — in essence, a micro-mentor.

Why Stock Market Investors Should Expect the Unexpected

Coaching Tip

Read our forecast for a market rally in the wake of Brexit. Investors who jump on "sure things" in the stock market usually lick their wounds with regret. The decision of British voters to leave the European Union appeared to represent low-hanging fruit to short sellers. Even professional investors thought the stock market pain would persist. The July Elliott Wave Financial Forecast says: The coming month could be a big one for the stock market.

STIR again!

Rajesh Setty

STIR = Short-term Invisible Results. Most people understand short-term and results. So, what you will see are “short-term invisible results” (STIR). A series of such short-term invisible results is what will lead to real long-term results. The formula is: Long-Term Results = STIR + STIR + STIR + ….+ The visible long-term result is a published book. planning for marketing.

Internet Marketing Failing? Let’s Take a Look at What You’re Doing Wrong

Strategy Driven

If we look at the most common elements that come into play when things aren’t going amazingly for any given business, it quite often has to do with poor Internet marketing. Many business owners are becoming cognizant of just how important Internet marketing is. Marketing & Sales

When Not To Wait For Your Job To Improve

The Idolbuster

This is about bringing shareholders a short term return, which is ok with me. From a business standpoint however, I think anything that prioritizes the short term over the long term is poor strategy. Late in Q1, the VP of marketing rather sheepishly told everyone to drop what we were doing, and find out what we could do to help make the quarter. The company was telling us what was most important to them, and it wasn’t long term value creation.

Sales And Marketing Out Of Alignment? You're Not Alone

Six Disciplines

According to a new report by Forrester Research , only 8% of B2B (business-to-business) companies surveyed by Forrester Research said they have tight alignment between sales and marketing. The greatest obstacles to achieving tighter alignment between sales and marketing? 58% said long-term thinking by marketing vs. short-term thinking by sales. 46% said different goals and measurements between marketing and sales.

Here’s Why Your SEO Strategy Isn’t Working

Strategy Driven

In modern business, there is one thing that can either make or break your business: marketing. More specifically, digital marketing. It’s a big issue and one you want to prevent from Day One of your digital marketing exploits – or at least very early in your campaigns.

Why Strategy Withstands the Test of Time

In the CEO Afterlife

Coke isn’t wasting time assessing non-beverage markets or searching for food acquisitions. The proof is in the numbers; Coke’s profit and market cap consistently outpaces their beverage and food rival, PepsiCo. . Great strategies create long-term stability.

What Not to Do When Business Sours

In the CEO Afterlife

In terms of rectification, you have to look at the issue in the context of whether the problem is a short-term blip or the beginning of a long-term shift to your business or industry.

Culture Doesn’t Trump Strategy

In the CEO Afterlife

If these opportunities lead to a better bottom line and a corresponding stock price hike (even in the short-term), they must be good. Human Resources Leadership Marketing Strategy BCG Business CEO Culture Entrepreneurship Google McKinsey & Company Nespresso Target Walmart Zappos

Is Business a Combination of Sport and War?

In the CEO Afterlife

As for sport, the game of market share was an easy way to track success. With only 100% available to the players of the market share game, you knew whether your play(s) made you a winner or a loser. The delusion is that market share is the “be all and end all” of business success.

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How to Invest In Stocks: Fundamentals for Beginners

Strategy Driven

Having some cash on the side and wanting them to produce more in the long term is usually a great idea. Statistics on share prices, market ups and downs, stock dips and meteoric rises, resilience on both bull and bear markets, and so on for the past 5 to 10 years.

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Why leaders need a long-term vision

Lead on Purpose

What drives your daily activities—your long-term vision or making the numbers this quarter? If you’re a board member, do you incentivize your executives to make a long-term contribution for the company or to keep the shareholders happy this quarter? George discusses important topics including insisting on the long term, managing expectations and creating lasting value. Leadership Product Management / Marketing Purpose customers expectatons future value vision

What Blockchain Could Mean for Marketing

Harvard Business Review

A higher “Volume” of data has led to more efficient decision-making in numerous instances, such as in programmatic marketing and in banking. In the field of data-driven marketing, an answer to addressing this limitation lies in blockchain technology. Once a transaction is entered in the database and the accounts are updated, the records cannot be altered, because they’re linked to every transaction record that came before them (hence the term “chain”).

Preview Thursday: Benefit Corporation Law and Governance: Pursuing Profit with Purpose

Lead Change Blog

Yet the introduction of the “benefit corporation” gives leaders an opportunity to remake our business culture, and perhaps save the planet from our very human short-term bias.

Reducing Your Small Business Costs in 3 Steps

Strategy Driven

To take your small business to the lofty heights of being a market leader in the foreseeable future, you’re going to have to start turning over a major profit sooner rather than later. Rent equipment for short-term projects… don’t buy it.

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How to Win in Africa

Leading Blog

They say business leaders tend to “underestimate Africa’s size and potential as a market, and overestimate the challenges of doing business there.”. Africa is the next growth market. I N THE WESTERN WORLD, we often do not have an accurate picture of Africa as a growing marketplace.

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The Big Picture of Business – Ethics… Good for Business

Strategy Driven

Unethical dealings for short-term gain do not pay off in the long-run. Power Stars to Light the Business Flame , by Hank Moore, encompasses a full-scope business perspective, invaluable for the corporate and small business markets.

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How HR Can Help Managers To Become Better Leaders

Tanveer Naseer

You aren’t likely to be affected by any team bias or prejudice, and probably find it easy to remain objective about the organization’s short-term and long-term needs. The best leaders, on the other hand, use strategic skills to achieve both short-term and long-term goals.

How Innovation Is Completely Different in Established Organizations than in Startups

Leading Blog

Continuous optimization, both on the operational side and the customer side, is good and important -- in the short term. DIY chain Lowe’s, for example, is building 3D printers that print in zero gravity, thus opening up entirely new markets for themselves.

How Big Companies Can (and do) Innovate Like a Start-Up

Leading Blog

A good strategy helps a company clarify the tradeoffs that will be needed to make between short-term improvements and long-term opportunities.

The proposal and the sale are miles apart

Strategy Driven

Your job is to make yourself a winner BEFORE the proposal happens by creating conditions or terms that preclude others from either bidding or winning. You need to convince your buyer that there’s a long term cost, not simply a short term price.

The Digital Entrepreneur’s New Business Checklist

Strategy Driven

First and foremost, finding your place in the market will allow you to target your primary audience with far greater effect. Conversely, positive experiences should bring long-term loyalty. As well as maximizing short-term profits, this can also buy more time for the venture.

StrategyDriven Podcast Special Edition 59 – An Interview with David Aaker, author of Brand Relevance

Strategy Driven

One of the world’s leading experts on branding and the winner of three awards for lifetime contributions to the science of marketing, David has published over 100 articles and fourteen books; including Strategic Market Management that has been translated into eighteen languages.

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Lead with a Coherent Strategy

Coaching Tip

Too many business leaders are preoccupied with the next answer to growth and find themselves stretched thin – trying to play in too many disparate markets and pursuing multiple strategies and directions that undermine rather than reinforce each other.

A Refresher on Marketing ROI

Harvard Business Review

Companies spend a lot on marketing communications. And more fundamentally, does marketing actually work? Marketing ROI analysis can help answer those questions. I talked with Jill Avery, a senior lecturer at Harvard Business School and coauthor of HBR’s Go To Market Tools , about this concept and what it tells leaders about their spending on marketing. What is Marketing ROI, and How Do Companies Use It? Juan Díaz-Faes for HBR.

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Rethink the Value of Each Customer for Efficient Growth

Women on Business

Guest Post by Elizabeth Dillon of Digital Marketing NOW (Learn more about Elizabeth at the end of this post). If not, you could be throwing away significant money on ineffective marketing initiatives. Many businesses conduct their marketing without calculating CLV.

Rising to Leadership Challenges in Lean Times

Lead Change Blog

As a result, leaders set their sights on trimming costs and aim to increase market share through better offerings. The first option is to improve market offerings by providing new products.

MFG of South Dakota: Trying To Do Some Good in the World

N2Growth Blog

MFG of South Dakota is a subsidiary of the Molded Fiber Glass Companies (MFG), a leader in the field of reinforced plastics and composites, serving diverse markets with a variety of composite material systems and processes.

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The Toxic Leader

N2Growth Blog

Yet rather than being weeded out, they seem to survive and thrive in an institutional ethic that values by choosing short term greed over longer-term value and culture. One, let’s call him the ‘seagull’, has produced great performance short term by moving in changing everything, slashing costs and people, then leaving. However they will make you look good and keep the stakeholders happy by getting the numbers, in the short term. By Grant Wattie.

For the love of sales, not the love of money.

Strategy Driven

A formula for long-term disaster. Oh, you may have some short-term success, but when you go home at night, you’ll be drowning your misery in television, beer, and in general anything but preparation for the next day. Do you love sales? Do you love what you do?

Personal Needs vs. Customer Relationships

Strategy Driven

The challenge of sustaining long-term value pushes businesses toward considering short-term relationships as the easiest route to profits. The systemic nature of marketing strategy depersonalizes their audience by using language that groups customers into segments and tar¬gets.

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