I have the experience of working in two small product organizations (in India) that were once an ambitious startup. In both these product organizations, though they differed much in their lines of business, in the kinds of people who started it, in the philosophy they believed in, they did have quite a few similarities. One striking similarity which more or less drove much of the day to day activities, was the approach of “short term thinking”.
ok … by a Small company I mean a size of < 200 or a turnover of under, say, 5 million USD ( I may not be very accurate here ).
The attitude more or less is "Even though I know doing project Y helps in the long run, lets do it when we find a customer who can pay for it".
I am not against Short term thinking. I am not a die hard fan of Long term thinking either. All I am curious to know is what drives short term thinking in smaller companies ? Is it the market dynamics ? Is it fear of going bankrupt if the company waits long enough ? Is it the mindset of the people who manage the organization ? Is it the appraisal cycle that demands people to show progress every year that the executives tend to focus on short term results ?
Also, my question is How does an organization know when to switch its thinking pattern from "short term" to "Long term" ? When is that "Aha" moment ? How does it come ? How do we recognize it ? I would like to ponder a bit over all these questions.
Is it the market dynamics ?
This could be true for companies that go public. They are under constant watch and always expected to do better. Rarely would shareholders appreciate a huge expenditure for long term goals. But small companies hardly go public. So this market dynamic isn't a contributing factor. The other factor then could be competition. "If I am not fast enough and don't think about the present moment, I would be overrun by competitor". This is true as well. Small companies do have to squeeze every inch of their resource and make things happen. Apart from catering to short terms needs and gaols, how does a small company also thing and act long term ?
Is it fear of going bankrupt if the company waits long enough ?
This is related to the market dynamics mentioned above. In a product world, being earlier the better. Once a sizable market is captured then resources are focused on keeping the market share and growing it. Competition forces a company to get its product out as soon as possible. A product thats just good enough to create an initial "wow" ( usually the "wow" isn't sustained ).
Is it the mindset of the people who manage the organization ?
Gone are the days when one was proud to be an entrepreneur. ok … not really. What I mean is … it is more fashionable to be a serial entrepreneur than an entrepreneur who is focused on one activity. This mindset perhaps encourages an entrepreneur to set up things fast, roll out a product, spend on marketing and get a decent clientele and then, yes, sell it and move on. This attitude would of course not promote long term thinking. Majority of founders may not be of this nature. But if this mindset exists in those who run the company ( apart from the founder ), then such an approach creeps into the organizations thinking.
Is it the appraisal cycle that demands people to show progress every year that the executives tend to focus on short term results ?
If in students, the pressure of examination and scoring high marks prevent them from learning concepts and enjoying the learning experience, it is the constant pressure to perform that robs an executive off any long term thinking and enjoying one's work experience. Hardly I have heard of appraisals that look at the pattern of performance over a longer term rather than just the previous year. I know of executives who start with a big bang, show results and when it actually comes to sustaining it, they move on to other teams or other higher responsibilities and thus making some one else the scapegoat for the bad decisions that they made which (fortunately for them ) bear results only in the long run. Even small companies fall into this trap of result driven aggressive approach that long term plans are scoffed at as luxury that the company cannot afford.
But these smaller product companies do suffer the consequences of thinking short term. When an opportunity comes, there is little time to react and often I hear some one say "we thought of doing this x months back but then something else came up and this was put on hold. Had we done it then, we could have grabbed this mega deal now". There are justifications, there are excuses.
My point here is not to debate which approach is good and which is bad. But how to balance both ? How to earn enough to keep things going and at the same time how to plan long term for the big kills. I think all entrepreneurs are confronted with this same question and many would probably have found ways to solve this in their context. However, it would be quite interesting to listen to these experiences and learnings.