Friday, October 30, 2009

"Irreconcilable" Differences

What is considered “strategic” can depend on ones time horizon. Short-term goals, like meeting a sales quota and longer-term goals, like earning a premium require different strategies. Frequently, short-term strategies (e.g. discounting) are at odds with long term-strategies (e.g. standardized pricing). So too, short-term strategists are often at odds with long-term strategists. But the animosity is usually unnecessary.

Most corporations are bound by quarterly reporting. Immediacy rules their thinking. The decreasing tenure of senior management tends to add to the urgency. The average tenure of a CEO was 8.3 years in 2006, down from 9.7 in 1999. A full 40 percent of CEOs hold their positions for two years or less. With such a short time at the helm, it’s not surprising that many managers have little reverence for the past (or great concern for the future). Their bonuses are paid in the here and now. As a result, short-term strategists are highly valued and tend to dominate the halls of corporate America.

Branders and marketers, both inside and outside of corporations, tend to be long-term strategists. Their charge is to manage the perceptions people have of companies and/or their products—something akin to managing a person’s reputation. Reputations aren’t as pliable as business decisions. As Benjamin Franklin said, “It takes many good deeds to build a reputation, and only one bad one to lose it.” As such, branders tend to value continuity over experimentation, which can make them appear cautious and slow to react.

The irony is that each perspective benefits from the other. Responding to changing market conditions keeps a company viable. And having strategic continuity ensures that a company’s actions don’t become disjointed, arbitrary and ultimately meaningless. Tension is a positive dynamic. Conflicting forces require creative solutions and propel companies forward. Being strategically homogeneous might feel good during meetings, but it’s a sure sign that trouble is brewing.