Regardless of their personal ambitions, business leaders that take a long-term view on strategy have a huge opportunity to drive sustainable, profitable growth.
Short-term pressures for founders and business leaders can come from plenty of places - investors, the board, team members, their wider community, or from themselves. It‘s hard to avoid these taking over the whole agenda of the company, but getting out of this cycle and adopting a mindset of long-term thinking is what separates good from great businesses.
Of course there are so many different and valid ways to grow a business, and their leaders will have wildly different attitudes and ambitions. Even then, having the right long-term strategy adds so much value even to the business‘ short-term plans, that it‘s worth adopting for everyone.
For some people it‘s natural to commit to growing with the same company for many years or decades, and take a longer term approach. For others, they‘re excited about the moving goalposts of a fast-growth business and plan to move onto the next project or sell the company within a few years. Even in those cases, while it might be less intuitive, it really pays off to take a long-term view on the business. It‘ll drive company value in a number of ways, so there‘s a much bigger chance of selling the business.
The benefits of long-term thinking
It might seem like a luxury or a distraction to plan and work for the long-term, but it drives company value in three crucial ways:
- Long-term strategy massively reduces business risks and increases resilience. It helps your business find the time and resources to build the things that make a company strong, such as a valuable brand, retention, organic growth.
- It massively improves ROI for your marketing and growth activities.
- As a result, your company will also be valued higher, be easier to sell, and have a bigger impact on customers and its people.
- Long-term thinking makes it more likely to not just drive financial sustainability, but also social and environmental. Business has an important role to play beyond just generating customer and shareholder value.
Establishing a long-term view in a business
Even if the benefits of taking a long-term view are quite obvious, how does one get out of the trap of constantly renewing short-term pressures? It takes some commitment to analysing the core strengths of the business and questioning some of the assumptions, then applying the right framework.
Here are the most effective steps to go through:
- Mastery goals: Centre your long-term strategy around mastery goals, rather than performance goals. It’s hard to set meaningful performance goals for the long-term. These are the easily measurable metrics you‘ll communicate to the outside world (sales/customer growth, profits, head count, funding). It‘s too difficult to predict the future too far ahead, so they can easily seem arbitrary and lose their motivational power. Mastery goals are those that focus on the internal strengths of the business and build the foundations for success: your organic growth, customer insights, knowledge how to scale profitably, building customer loyalty and brand strength. Think long-term mastery, short-term performance.
- Appropriate metrics: Choose the right metrics to show short-term progress towards your long-term goals. This will be essential to keep your team motivated and prove to your board and investors that you‘re adding value to the business. These could be related to the value and satisfaction of customers, the number of partners or key external exposure, or the profitability of your growth marketing.
- Intrinsic motivations: Identify the genuine, intrinsic motivations of you and your team for growing this business. The most effective teams and companies are those that have a clearly defined vision for the product and brand, and see it as valuable enough to keep working towards it. This will help to avoid getting into the trap of short-term pressures by setting relevant, meaningful goals.
- Crafting targets and milestones: Set your short-term and medium-term goals in the right way. For the medium-term you should set 3 milestones, each of about 6-12 months, that are absolutely necessary for continuing to develop the business. Then, set short-term goals to reach the next milestone, one at a time. They need to be based on how quickly you can grow and retain your customer base, so taking a bottom-up approach based on capability. If there‘s a mismatch between milestones and what‘s possible to achieve in the short-term, you might have to give yourself more time or revise down the medium-term goals, rather than increasing pressure on the short-term.
Many entrepreneurs and business leaders are naturally talented at crafting long-term visions. Others can easily see the value for their business in adopting that view. But it‘s still incredibly difficult to avoid the trap of short-term targets and move the business beyond those pressures and expectations. That said, getting clear on the intrinsic motivations of the team, and choosing the right goals and metrics can be hugely effective at establishing more of a long-term vision in every organisation.