LONG-TERM VS. SHORT-TERM

Every news outlet reported today on GM’s announcement to kill another of their brands, Saturn.  It seemed by everything I’ve read that Penske buying Saturn was a “sure thing”, but seems they’ve had second thoughts.  Now the brand that pulled-off one of the marketing coups of the century, by turning a car recall into a party with their first “Saturn Homecoming”, is closing after 23-years in business.  Guess GM had to make the move, but doesn’t it make you wonder why they were running so much advertising for the brand knowing they could be scuttling it any minute?  That’s what free government money gets you.  No accountability!  Maybe we are seeing a little of that in our business too.

One of the lessons they teach in the military is to “Prioritize Long-Term Over Short-Term Goals”.  They preach the same lessons in most MBA programs I’m sure, although it would seem that the folks on Wall Streethave a little trouble keeping those straight.  Anyway as an example in LT. CMDR. Jon Cannon’s book, “Leadership Lessons of the Navy Seals”, he talks about tracking a dozen terrorists in a particular region of the world.  If the terrorists knew the Seals were watching, they would pull up stakes and move.  If you take out only one or just a few of them by moving too quickly, the troops risk of missing the others and giving them a chance to re-group.  The solution of course is to wait for the opportunity to take out all 12 terrorists simultaneously.

In our business today, we are seeing a lot of short-term versus long-term thinking and this is no way to succeed!  To go back to the military for a second, sure there are times when short-term is all you can think about.  Trying to survive in a fox hole surrounded by enemy troops during the Tet Offensive would probably be one of those times.  But once that enemy has been pushed back past a safe perimeter, it is time for a long-term plan to win the battle…then the war.  That was probably our problem in Vietnam, and now.  The U.S. didn’t understand the loses Ho Chi Minh was willing to take.  They didn’t really calculate how many years the Vietnamese people had been at war, how extensive their tunnels, supply lines and fortifications were.  Instead we just had what we believed was a long-term strategy, “Stop Communism”.   The American people really didn’t understand what that meant. 

Back in the day, record labels let artists take time to develop.  An act wasn’t expected to break until their third or fourth album.  Promoters, managers, and agents used to look at a band and say “in 10-years they will be playing arenas.”  Now we expect that by an artist’s second tour.  Jazz Fest, Coachella, Warped Tour, all great businesses that we admire.  All lost money for their first few years.  Sure we all get lucky sometimes as Tom Petty once said, but mapping out your long-term goals with those you work with will give everyone a sense of purpose and direction.  Bump in the road, you can change course but the long-term plan is still the mission.  There is nothing worse for moral than your team hearing about your company’s plans, directions, new products, etc, from someone other than you.  How many times lately have you heard from employees at certain companies, “what do I know, I only work here?”

Quarterly earnings are for chumps.  Sure leaders have to pay attention to them, especially at a publically held company.  But for a second think about the beginning of Jack Welch’s tenure at General Electric.  Forget whether you think he did a good job, whether he cooked the books, whatever.  At first, Welch was far from the shoe-in for the job.  Once he got the job, he was going to take GE in places it had never been before and at the same time sell-off parts of the company that made them who they were (such as small appliances).  Selling Wall Street on Welch’s long-term plans for GE wasn’t easy.  You can imagine the look on investor’s faces the first time they heard the words “GE Capital”.  Making investors and Wall Street believe in his long-term plan is exactly what Welch did.  He showed how with investment (we won’t call in sacrifice) in the future… and education to his team, the street, investors, the press, and anyone who would listen, the long-term goals of transforming GE could be achieved thereby making it more profitable for years to come.   

No reason why you can’t try that today.  Instead of the accounting person in your office asking for your yearly or quarterly numbers…how about a 5-year plan?  And not just the numbers, but how you plan on achieving those numbers?  When Michael Rapino first took over what is now Live Nation he spoke a lot about “value proposition”.  Michael told us how he was going to re-invest in the customer experience.  Then Wall Street and quarterly numbers got in the way and the new message became…”well everyone has at least one or two artists they want to see in a year”.  I don’t know about you, but the Value Proposition stuff sounds better to me. 

Speak with you soon…

Jim

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