In turbulent times, there’s a danger that longer-term objectives go out the window. Many of the business leaders I work with find it relatively easy to identify and develop strategic visions for their company. For them, the difficulty comes in translating these ambitions into immediate results.
Last week, I was working with an executive team to create practical strategies to deliver a challenging three-year performance goal.
Despite setting the goal a year ago, economic and trading pressures meant they had failed to make any meaningful progress.
As with many other businesses, they had become caught in the trap between their long-term aspirations and their need for short-term success.
So how can you make the leap from short-term tactical actions to long-term growth? Here are 5 practical approaches which can help:
- Set some medium-term targets.During their turnaround, Asda’s executives established six areas of focus for ongoing investment:
- Truly different stores Offering five to 10 per cent better value
- Stunning fresh food from craftsmen
- 25 per cent unmatchable mix
- A serious clothing offer
- Sold and served with personality.
These areas of focus, called the ‘formula for growth’, remained in place through to Asda’s purchase by Wal-Mart in 1999 and helped managers align their short-term actions with their bigger, longer-term goals.
- Make non-financial measures matter. Financial metrics measure past performance, but non-financial goals can act as an indicator of future success. At Reckitt Benckiser, innovation is management’s main focus for growth, so executives pay attention to the percentage of sales from new products. Likewise, P&G set and managed a goal of having 50 per cent of their new product ideas being sourced from outside the company.
- Focus on what drives value. Amazon’s executive team has agreed three drivers which they believe will remain unchanged in today’s business environment — range choice, low prices and fast delivery. By focusing on these drivers Amazon has developed innovative new services, such as its online Marketplace concept for sellers.
- Take it step by step. Don’t try to do everything at once. Instead, identify one or two practical moves that will take you forward now, and then repeat with further initiatives down the line. Tesco has eschewed ‘silver bullet’ growth plans in favour of a series of smaller jumps in its products and services (clothing, mobile phones, Tesco Direct), channels and formats (Tesco Express) and geographies (Eastern Europe and the US).
- Keep something up your sleeve. Abbott Labs delivered short-term results and invested for longer-term growth by establishing internal targets far in excess of publicly stated performance goals. Depending on performance, managers then used some of the ‘extra’ profits to fund new growth initiatives.
(Illustration: hikingartist, CC2.0)
