Take the Long-View

The most iconic companies we admire started life with a vivid and long-term vision. And they strategized to fulfill it. So why don’t we do the same thing?

These days, our strategies are “long” if they look out 2 years. That’s a modern management failing. Without confroning and creating the future beyond what’s predictable, our organizations can’t ever become lasting and valuable brands.

In 1939, Charles Merrill, the retired co-founder of Merrill-Lynch, was invited back from his retirement. The company had languished since its sale, and they hoped that Mr. Merrill could restore the flailing merchant bank and investment firm to its earlier glory. He accepted the role and its full decision-making authority.

What he announced next shocked Wall Street. Instead of resuming its earlier success as a brokerage and underwriter for the elite, Merrill Lynch would become the ‘“financial supermarket” […] and open the financial world to the middle class.’  

At that time, the abiding belief among finance professionals was that the middle class lacked the sophistication and wealth to buy stock. And of course, because they were seen that way, no business had ever offered them any way to do so.

But Merrill believed that Merrill-Lynch itself could transform the middle class—the largest economic force in the country—into an educated, stock-buying mass. And with that endpoint in mind, he crafted a strategy that both created and sold to that market.

Charles Merrill’s strategy was not a data-driven response to conditions. He didn’t have the benefit of A/B testing or market research. And even if he had done focus groups or surveys, middle class people would likely have reinforced the conventional wisdom—that they didn’t understand enough to become investors.

But Merrill was intent on completely reinventing the category of financial services and opening it up to the masses. His vision was somewhat comparable to that of the Robinhood founders more recently—but with far greater impact and implausibility.

It was one of the most spectacular successes in the history of financial services and led directly to Merrill-Lynch becoming the number one securities brokerage firm in the US.

Today

Start-ups begin in a few different ways. Sometimes, there is a single technological breakthrough. The founder figures out how to do something and believes it may be marketable. That original individual or small team creates a prototype, sells it, and then raises money to continue growing the business.

Other start-ups begin because of a problem. The founder is personally touched by the problem and creates a solution. The solution begins to sell, and the founder grows the business.

And then of course there are those small and medium sized enterprises (SMEs) that make up most of the economy. They often begin as a vehicle for the owners’  skill, history or passion. A chef opens a restaurant, a builder founds a development company, a lawyer opens a firm.

Those first steps are usually enough to launch something. But at some point, if any of these organizations is to become extraordinary they must craft a strategy for the long-term.

What’s strange is that few do so.

No time For Strategy

In my work with start-ups, I hear lots of talk about go-to-market strategies and product-market fit. Go-to-market strategy answers the question of how we can best package, discuss and promote the product and how we can capture the greatest number of customers. That is, of course, a critical question.

The idea of product-market fit starts to get at strategy. But it starts from a strange perspective. The implicit assumption is that there is—out there—a perfect customer for the product; and we must discern that through some set of experiments, observations and tests.

Even as all these things are going on, the organizations have annual “strategy sessions” during which no strategy occurs. Instead, the team sets sales and profit goals and assigns projects and budgets.

But nowhere, in any of these activities does anyone address how the organization can differentiate itself in the minds of its customers—or redefine a category —or revolutionize an industry. Everyone tacitly assumes that someone already figured that out. Or, that it will emerge —in some mysterious way—through the quest for product-market fit.

Things Change SOOO Fast

If you hang out in strategy circles, you will hear lots of chatter about the need to be responsive and agile. There is little talk of long-term visions or planning, because everyone has succumbed to the “wisdom” that the pace of change is too fast to think that far ahead.

Yet, despite how fast the world is changing, organizations that have long-term strategies last.

Amazon has now been around for decades. So have Ikea, Toyota, Aldi, Nordstrom, Netflix and Southwest.

Each of those iconic brands had a clear, very long-term strategy almost from their inception.

Organizations that become permanent fixture –or verbs, a la “Just Google it” —focus on critical strategic questions.

·         What will the world of our company look like when our work is done?

·         How will we achieve that vision?

·         What will make us so special that our customers will demand our products over and above other options?

·         How can we sustain that distinctiveness?

Even as technology advances and new competitors enter the marketplace, those brands continue to win.

They iterate upon their existing strategy by addressing new challenges, adding novel solutions or transforming their delivery mechanisms. But they remain strategically clear.

Apparently, long-term strategy does work.

Why It Works

My commitment to the power of long-term strategy is not an article of faith. It’s borne of experience and research.

Imagine you are a gifted athlete—a runner.  As a small child, you watch the summer Olympics with your parents. They scan the various sports—swimming, gymnastics, track and field. But you are mesmerized by the Kenyan marathoners. You are entranced by their grace —scrutinizing their strides and footfalls. Even though you are only 8 years old, you say to yourself,  “I’m going to do that.”

In middle school, the first thing you do after arriving is find out how to get on the track team. You are intent on running the Olympic marathon—but you are only 10 years old. You chase that vision throughout school to a university scholarship and multiple national marathon wins and near-wins. Finally, you are at the Olympic trials.

It wasn’t sudden. But it was steady. The long-term vision that you had has pulled you forward over the intervening 12 years. It drove you to try-outs, and to early morning practice —and it ensured that you never resisted even the most minor feedback you received.

Is it Real?

Long-term visions are compelling. They pull us forward like tracking beams.

When they are combined with talent, energy and strategy, they produce extraordinary results.

It’s more than mere emotions.

·         Long-Term Strategic organizations out-perform their peers.

·         Rigorous long-term strategic planning leads to better resource allocation and far more focused and aligned performance.

·         It produces a greater sense of direction and focus for employees, leading to better decision-making and higher productivity.

·         Most surprisingly, long-term strategic planning (when done rigorously) produces greater agility and ability to respond to changing conditions.

There are many more good reasons to undertake long-term, rigorous strategic planning. Yet, most organizations –and especially start-ups—don’t.

The Excuses

When I talk to founders about long-term strategic planning, they say “We don’t have time”. “We will, but after we nail down go-to-market (or some other initiative)”.

But every initiative that doesn’t emerge from a long-term, deeply interrogated strategy will fall short of delivering that strategic possibility. In fact, if the interim initiatives do end up being additive to the eventual strategy, it will have been purely by coincidence.

Choosing not to do the deep, reflective work of creating a long-term strategy has real costs. Even companies that appear to be moving fast, gaining market share and growing, may be doing undetectable damage to their futures by operating without a long-term strategy.

You needn’t look much further than Netscape’s failure to anticipate Microsoft’s Explorer, or Encyclopedia Britannica who didn’t confront the advent of the digital revolution. Millions more enterprises just disappeared without documentation of their dénoûment. Many of those failed to look beyond the present and near-term with strategic rigor.  

The Long, Long-Term

Business school graduates are familiar with legendary Asian planning time-frames. During the 1980s, when US car manufacturing was shrinking, Japanese cars were gaining ground. So, researchers scrutinized their business practices.

Westerners were flabbergasted to learn that Toyota and Honda were planning hundreds of years out in long, detailed strategic plans.

Beyond Japan, we can look to such extraordinary Asian companies as Alibaba. Jack Ma, founder of Alibaba, said that in the planning for his company, they considered the 100-year timeframe, and planned from that perspective.

So did Lenova, the ubiquitous computer company. 30 years ago they set out to become one of the biggest computer makers in the world.

This approach seems unimaginable to most CEOs.

Despite having such long-term strategies, none of these companies is hamstrung by obsolete strategic directives. They must maneuver moment-by-moment decision-making and interactions.

Counterintuitively, their actual operations often look chaotic when compared to hyper-managed and measured US counterparts. Some don’t even use quarterly deadlines for ongoing work.

But the long-term strategy provides something determinative– a standard by which to measure each opportunity and decision.

Strategy, Not Metrics

Start-ups often measure so many dimensions that it can be dizzying. But those metrics are not measuring a strategy—nor are they acting as a standard against which to measure action. They are simply measuring activity, tactics or project progress.

It would be easy to assume that the day-to-day decisions of long-term, planned companies and those made by current US start-ups are similar. From the outside it looks like that. After all, whether a car is on a joy ride at 120 mph on I-95 or on the Autobahn headed for Heidelberg, to a pedestrian on the side of the road they look the same.

Watching a start-up grow, scale, hire, and build can seem equally fast and undifferentiated. Usually, we see that as a harbinger of great things. But speed and velocity are different phenomena.

Speed measures the pace over time. 

Velocity is the speed toward a goal. 

The car racing toward Heidelberg knows where it’s going. That is velocity.

It sometimes seems like lots of organizations see themselves as racing a Daytona 500—a grind of the same lap over and over against the clock.

But companies that become industry juggernauts are not trying to win a race.

They are redefining the world–speeding toward a future destination.

Elon Musk is not trying to be the most prolific rocketeer—he is trying to build a second home for humanity on Mars. Regardless of whether you share that vision for the future, SpaceX uses that long-term vision and strategy to drive decision-making —even in the tumult of day-to-day activity.

There’s an old saying from the Navy Seals: Slow is Smooth. Smooth is fast.

By taking the time to slow down, reflect, and create a long-term strategy, the path that emerges is clearer. That clarity adds up to better decision-making whole facing the chaotic reality of business. During a rigorous planning process, people raise questions, argue their positions, stress-test ideas, and resolve tensions using multiple cognitive and methodological tools.  

That sets the stage for holding every new opportunity and challenge to the same standard of rigor. Ideas for “fantastic pivots” are subjected to pre-mortems, and argumentation—held up and measured. They’re not measured against KPIs, but against the long-term strategy.

It is time-consuming and hard. But so are most things worth doing.