Too many companies rely on short-term fixes to address long-term, complex problems. The result is a series of failed attempts at resolving fundamental, underlying business challenges.
I was talking with some former colleagues the other day about a manager we all knew who had recently been fired. Her time in the role was short and now it was over. None of us were really surprised. She was brought in from outside the company to stir things up. And she did. Upper management wanted quick results so she focused on short-term fixes. She was a bull in a China shop. She brought in her own people, boosted the financials by deep cost-cutting, fired long-term employees, and instituted a top-down autocratic management style. She was laser-focused on short-term results and refused to listen to the concerns of employees and other managers. Anyone who challenged or questioned her authority was let go.
As you can imagine, the business results improved but morale dropped sharply. The good employees eventually all left the company and most of the institutional knowledge left as well. The only people who remained were those that were loyal to her and those that were quietly waiting for her to leave. Fear and anxiety became the norm. As a result, company performance ultimately fell off and all of the short-term gains she had made vanished. The company began to lose money and market share. Eventually, upper management had no choice but to fire her. The damage was done.
“You can’t build a long term future on short term thinking.” Billy Cox
Time and time again, I see companies bringing in short-term managers to fix long-term systemic problems. Often these companies have fundamental, structural flaws that need to be addressed. They have complex problems that need long-term, systemic thinking. Consider the examples of Radio Shack, Sears, K-Mart, and General Electric. Each of these companies has deep-rooted issues that have taken decades to develop. For years, leaders of these companies have focused on a series of attempts at short-term fixes. In the end, this short-term mindset has done little to address the underlying, long-term problems.
“For every complex problem, there is an answer that is clear, simple, and wrong.” H. L. Mencken
Consider a similar company, Levi Strauss & Co. The iconic denim brand reached its peak in 1996 with $7.1 billion in sales. After that, sales declined rapidly. Competition from other brands and a lack of creative and new ideas pushed it from the center of American culture. Young customers were fleeing to newer and trendier “designer jeans.” Levi Strauss was going the way of Blockbuster. It was just a matter of time.
In 2011, a 28-year Proctor & Gamble executive named Chip Bergh took over as CEO. He inherited a company steeped in debt, struggling to reinvent itself in the highly competitive U.S. denim market. Instead of a series of short-term actions, however, he developed a long-term plan to put the iconic brand “back in the center of culture.” Instead of cutting costs, he invested in innovation and a new research-and-development center called the Eureka Innovation Lab. He also went back to basics. He focused the company’s efforts on making the best jeans, especially for women. He purposely stopped chasing other clothing categories that were a distraction. He also became less reliant on retail chains like J.C. Penny’s and Macy’s. Instead, he expanded the network of Levi-branded stores.
What’s even more surprising, is that Levi’s board gave him the time to execute his plan. And, it worked. After six years of implementing his turnaround strategy, Bergh finally saw the results. Levi sales grew by 7.7% in 2017 and by 13.9% in 2018. Last week, Bergh announced plans to take Levi’s public after a 34-year absence from the stock market. Bergh now feels that Levi Strauss has the potential to be a $10 billion company. He stated that “Levi’s lost a generation of consumers in the early 2000s, but today our customers are younger than ever—and we’re gaining momentum as we bring them back.” Long-term thinking brought Levi’s from the brink of collapse back into the center of culture.
“Long-term consistency trumps short-term intensity.” Bruce Lee.
Stories like this give me optimism. Senior managers of other struggling companies should be able to see the extraordinary turnaround of Levi Strauss and realize the time and effort that was required to make this happen. This is clear evidence of the power of long-term thinking and the patience required to allow these turnaround plans to come to fruition. Maybe someday we will see an end to short-term managers and the illusion of quick fixes.
Long-term thinking saved your favorite jeans. It can save your organization as well.
As always, reach out to me on Twitter and let me know what you think.
If you are looking for a good book on long-term thinking, you should read Go Long: Why Long-Term Thinking Is Your Best Short-Term Strategy. This book reveals how some of the world’s most prominent business leaders resisted short-term pressures to successfully manage their organizations for the long term, and in turn, aim to create more jobs, more satisfied customers, and more shareholder wealth.