Planning for today and tomorrow takes work. As a leader of your organization, you’re expected to spend a sizable chunk of your time following up with your managers on their strategic plans, analyzing them and promoting the philosophy of your organization. Instead of looking for quick and easy fixes, jerry-rig your business quarter by quarter and change the way work is done. Instead of cutting down trees, plant new trees.
Be willing to take short-term hits.
If your business has long labored under the shadow of legacy issues, do something different. Get real about the challenges. While senior leaders should look to tackle big, corporate-level problems, managers elsewhere in the organization can address an array of longstanding problems at the team, facility or regional level.
Whatever your area of responsibility, resolve the outstanding liabilities that threaten to drag down future growth, even if it means taking a short-term hit. Show some courage and be the leader you want to be. Without legacy issues hanging over your head, you’ll be able to focus on building your business to compete better and win.
The only thing constant is change.
Revolutionary change sounds good on paper but in reality, it’s rarely the optimal route to strong, sustainable performance. A revolutionary change often includes a huge risk because you can never be sure what the future holds. A constantly evolving organization usually doesn’t need to take huge leaps to bring about revolutionary change, because it has been changing all along.
Think of it this way. If various dimensions of your market are changing, say 4 percent a year, that’s a small change. But if you don’t change with it, these changes will just compound year after year. A decade down the line, you’ll be looking at a tremendous gap between where you are and where your market is.
Culture is the bedrock of continued growth.
Peter Drucker said, “Culture eats strategy for breakfast.” except that culture is notoriously difficult. Still, a strong culture is integral to both short and long-term performance of an organization. Culture forms the bedrock for the continued growth of an organization by keeping everyone together on the shared mission and values.
In building a culture, you need to get past the idea that you’re already doing it. Whatever you think you might be doing, double down your efforts. Drive the culture at every opportunity. Revise your calendar to carve out time for culture building. Make every decision with culture in mind. In short, promote your culture as if your future depends on it. Because it does.
Smart isn’t enough.
Many companies look for talents when filing leadership roles. Yet, good leadership takes more than just intelligence. Smart leaders get beaten every day by those with better judgement, better humility and better common sense. The most successful leaders pay more attention to execution and detail, possess great interpersonal skills and recover from setbacks better than everyone else.
Learn how to utilize these skills as you lead people and hire people who have those attributes in addition to being smart. And be sure to pick people who have something to prove to the world. As the old adage goes, it’s easier to take a bit of wind out of someone’s sails than to put wind into their sails to begin with.
More is not (always) better.
As good as your leaders might be, it’s important not to have too many of them. All too often, companies suffer from a kind of leadership bloat. They establish new positions to lead new business initiatives but they don’t do enough diligence to ensure their leaders are working as efficiently as they can. The result – too many leaders – drags down performance even if the vast majority of them are high performing. That’s because more leaders usually create more bureaucracy.
Leaders don’t just lead. They create more layers and often more work for people down the line. These can be in the form of meetings, sign-offs, approvals, priorities, procedures and so on. In addition, each leader has their own staff – adding yet more costs to the organization. And when you have more leaders, you have more slots to fill as people retire or leave the organization.
Go big on growth.
Starting in 2002, Honeywell’s revenues rose from $22 billion to $40 billion over the fifteen-year period. While $6.5 billion of that revenue growth came from the net impact of acquisitions and divestitures, the remaining $11.5 billion came from organic growth. This growth was made possible by their customer focus, pipeline of new products and services and their globalization strategy. As the author and the former CEO of Honeywell said,
Results like this never would have happened had we not consistently taken a portion of our gains from keeping fixed costs constant while growing sales and invested that money back into longer-term growth projects. We would have given more back to shareholders over the short-term had we not invested in growth, but our longer-term performance would have suffered tremendously. If you want to grow, you have to plant seeds. So start planting!
Upgrade your portfolio.
Strategic mergers, acquisitions and divestitures should be part of every company’s efforts to generate impressive long and short-term results. In the short term, actively managing the company’s portfolio will slice into profits because buying companies requires amortization expenses and upfront restructuring costs that generally lead to first-year losses. However, done correctly, these deals start to pay off a couple of years later, boosting quarterly earnings and cash flow. As profits kick in, companies can use them to fund subsequent deals, setting in motion a virtuous cycle to fuel growth.
The key is to make sure during the start-up phases, when you’re first managing your portfolio actively, you deliver results that are good enough for investors. Avoid pursuing deals that will totally alienate inventors. In addition, try growing the business while keeping the fixed costs constant. If you do that, you can bolster short-term earnings even as you invest in mergers, acquisitions and divestitures that yield benefits later on.
Also check out: List of common cost-cutting responses to recessions
Succession is a vital part of strategy.
As tempting as it might be to procrastinate when it comes to planning your succession, it’s a vital part of your strategy and an outgrowth of the efforts you should be making all along. It’s always your job as a leader to decide who gets to replace you. If you don’t have anyone to fill in your shoes, then you’re not doing a great job.
Keep the whole process as low-key as possible. If you don’t have many candidates from the inside, look outside the organization. Review your leadership corps and existing succession-planning process. They might not be as strong as you think. Don’t string out the process for too long either, or you’ll risk losing your top prospects. You can boil down to just a few key criteria around which you evaluate candidates:
- Intense desire to wine
- Ability to think independently
- Ability to motivate and build a strong culture
As the transition comes, put your house in order. Make sure your successor doesn’t face unpleasant surprises upon taking over. Part of doing this entails dealing prompt with new problems that emerge so that your successor doesn’t have to.
Start planting the trees now.
“Toward the end of my Honeywell career, investors asked me why we were performing so well versus our peers. As I always told them, it wasn’t because of what we were doing then, but rather because of the seed planting we had done five years earlier.”
Create the virtuous cycle in which you generate short-term actions sufficient to satisfy investors while still supporting long-term investments. If you do, you’ll find that over time the short-term results will begin to take care of themselves. You’ll also find that you’ll do a lot of good for everyone, not just investors.