As a change management consultancy, we recognise that the sign of a great business leader is one who constantly challenges underlying performance and seeks to make the changes required to make a significant and long-term ‘difference’ that grows the business.
One such example is Microsoft’s CEO Satya Nadella, where in 2016 he outlined his vision of technology as transformational and challenged business leaders to “make a difference” :
"When I think of our challenge today...let's take what we are good at and rethink it. That’s not a side project. That is the very company itself".Satya Nadella, Microsoft CEO
But in reality ‘making a difference’ is a challenge to deliver. Why? When our change management consultants work with leaders they observe that the problem arises when underlying performance is stuck and the ambition to ‘make a difference’ is regarded as unlikely. One of the key reasons for this is leaders having limited time to focus on making a long-term difference. They get sucked into managing multiple and significant challenges such as short-term earnings, customer engagement strategies and improving capabilities whilst simultaneously trying to drive efficiencies. This leaves little capacity to address and deliver the envisioned ‘difference’.
Obviously, achieving short-term performance targets is important in managing the business fundamentals. But issues arise when achieving short-term goals is the trade-off for progressing the long-term objectives that are key to delivering transformational change and the step up in performance (‘making the difference’) that Nadella is referring to.
Our change management consultants cite 3 barriers for why this happens:
In a series of short articles our change management consultants explore each of these barriers in turn and how to navigate around them.
Ernst & Young describe the risk attached to the ‘phenomenon of short-termism’, as a management focus on short-term objectives often being inconsistent with the long-term interests of the company , they cite:
as being key drivers for seeking short-term goals at the expense of the longer-term ambition.
This leads to what has been described as the ‘macro’ impact of short-termism - growth loss because investments are misallocated across companies who are overly focused on short-run profit issues.
In summary, our change management consultants advise that when leaders overly focus on short-term wins, they are less likely to take an objective view of performance, and make lasting adjustments that will benefit the long-term. Additionally, focusing and achieving short-term goals, creates a risk of being tactical rather than transformational.
It is striking how narrow most organisations lenses are when they look at their performance. A lot of the time leaders and teams only compare the current month to last, and maybe the same point in time from last year.
Our change management consultants advise that to truly understand underlying performance and/or its volatility, look to understand the levers that underpin performance, and how they do in the long-term. For example: if sales are flat-lining does it reflect in other measures e.g. the number of leads generated, the amount of up-sell seen in key accounts or the final price from negotiations?
Leaders who understand and address the root causes of poor performance are the ones that are ‘making the difference’.
Our change management consultants share 5 ideas to help address this:
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