Blind-sided by short-termism

By November 2, 2016Blog
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I find myself at a tipping point. Boards and companies are targeting short-term strategies to silence activist shareholders. Government is discarding policy at the expense of community-will or loudest voice. Not for profit organisations (NFPs) find themselves vying for funding at a more rapid rate changing their service models to meet funder requirements instead of their clients’ needs.

These are wicked problems that represent broader social issues and are not solvable in the short term. They require bold leadership, long-term decision-making and clear strategy to restore confidence.

Wicked problems are deeply complex. They include social challenges, such as affordable housing, education and domestic violence. They also include economic challenges such as climate change, innovation and investment in infrastructure. These are the problems pervading our political, personal and business landscapes and exacerbating this short-term versus long-term dichotomy.

Yet how can we stay oriented towards long-term value in the face of such short-term pressures? We must resist the pressure for short term results with a focus on long-term value creation. Otherwise we ignore these wicked problems at our peril.

In our modern life of traffic jams, crazy property prices and the digital age, we have an opportunity right now to be ingenious and collaborative – with the long term view holding us steady. Community can become partners in the long term by staying committed and active. Businesses can be more nimble, adaptive and experimental. Without this shift, we will be stuck with short-termism. Citizens and community will remain irritants to government and business while shareholder expectations for short term profit will remain a continuous agitator to board strategy.

As I work across government, business, and the NFP sectors to help organisations experiencing significant change or complexity, I see all sides of the conversation. However, bringing them together remains a key challenge. For example, if I look at the infrastructure development occurring in the Sydney CBD and surrounding metropolitan areas, we have a significant number of projects at cross-purposes with each other and the communities in which they operate. Where was the strategic review and alignment to a clear vision and value for the state?

One of the biggest hurdles I see is a crisis in strategy. Not only do I see a lack of focus on the long term. The bigger issue perhaps, is that nobody believes we can get there anyway. *

As a person who facilitates and delivers strategies for organisations and government, I believe in strategy. Setting strategy is often conducted on a three or five-year horizon, so it’s far from a ‘set-and-forget’ exercise. It requires constant nurturing and consideration of shared value creation.

So what does it take to have a winning strategy. There needs to be an understanding and appreciation of the fundamentals: What are our strengths? What purpose are we serving? Who are we serving? A strategy without these fundamentals creates risk in terms of execution and expectations.

An enterprise – and everyone in it – must know why it exists. Problems arise when people forget their value and purpose. Before I work with any enterprise, I am assessing how well their ‘why’ is known and how deeply it is embedded.

Yet I see many organisations, be they public service, private companies or NFPs, making important and costly decisions because they struggle to answer these questions, or worse still don’t event stop to consider them.

In the NFP sector, we are seeing an increased tension between moving towards long term purpose versus the short term lure of government funding. This is a constant. The fundamentals get challenged, the service changes its model of operation to meet the funding requirements and the service’s ability to deliver to clients is compromised.

Similarly, problems arise when government doesn’t consider the needs of the communities it serves. This continual lack of reflection on what the community wants sees them with barely enough time to bed down – let alone consult, legislate and implement important reforms.

For example, the Government’s rollout this year of the National Disability Insurance Scheme (NDIS) has seen an initiative that holds enormous promise for Australians with disability derailed by disruptions in the NDIS’ myplace portal. NDIS will only deliver on this great promise if it is implemented well. This requires discipline and focus to stabilise the situation, as well as testing any proposed system change with service providers before it is implemented. During this hiatus the clients get forgotten and are unable to navigate the new system to arrange services.

With the Australian election now settled, there is an outbreak of short-term agenda setting across political terrain. We have a parliament which will require powerful negotiation for better policy. Yet Australia desperately needs long-term public policy from government, the public needs to remove its blinkers and embrace a willingness to reform, and business needs to move past profit and individual solutions.

Our wicked problems need to become opportunities to create cohesion and build partnerships addressed to the long term. We need engaged minds to come up with solutions. We need more partnering and collaboration between government, the community and industry. We need to shift from being providers and users, to becoming creators and influencers of strategy, policy, and services.

Leadership starts with all of us – the approaches we take, the feedback we give, the actions we carry out. Creating long-term shared value is pivotal to our discussions. So too is a passion and a commitment. We need companies and boardrooms to unravel the demands of shareholder expectations and director agendas. We need communities to hold steady regarding what they want, and we need a better system that gives our governments and those who run them the ability to make long-term decisions in the best interests of our people and our nation.

*PwC’s Strategy& conducted a global survey which highlighted that more than half of senior executives don’t think they have a winning strategy