Let's face it, there are never enough resources or hours to do what everything we want to do. Do you ever find yourself saying "if only we had extra money/skill/help here - we could achieve so much more!" There will always be trade-offs associated with goal achievement and prioritising immediate results or short-term wins and vice versa. Avoid becoming victim to "short-termism" with an intentional approach to mastering the art of balancing both.
Most of us claim to be time-poor and resource constrained. Ask anyone how their day was and you'll get your answer - "Good. Busy." So it is true in our organisations. Whether we are just starting out, with a small team that can fit around two Ikea desks or in that intermediate stage where hosting the daily team huddle requires a dial-in, not a meeting room. Even large organisations must make decisions about where and how to focus their people.
Productivity takes a dive
We are working longer hours and more of us are working. Yet growth in output is not keeping pace.
In 2024, productivity levels again took a nose-dive in Australia compared with 2023. Definitely compared to the Covid productivity bubble. In Australia, productivity is now reaching levels not seen since 2018 with plenty of reason (we won't go into here but the Australian Productivity Commission is all over it!).
We all know long-term growth doesn't just come from hiring more people or asking our current teams to simply work more hours. The recent over-hiring frenzy in the tech sector is a classic case in point.
In fact, the very definition of Scaling vs. Growth, includes the notion of economies of scale. Each additional hour of work or dollar invested returns an incremental unit of output, dollar of revenue and profit. Scaling (done right) means returns are increasingly positive and teams are less stressed and happier.
Scaling is both science and art. The challenge is in managing the tensions that come with it. Just when you think you've got one aspect of scaling sorted over here, another area needs your attention over there. It's a constant game balancing. Of making decisions and managing trade-offs resulting from scaling tensions. Overly focussing on one over another and the whole flywheel is out of whack! Imagine Delegating without clear Accountabilities or explicit core Values, or buckets of Cash invested without a clear Strategy (this happens far too frequently and generally results in death by pre-mature scaling!).
Short-term Goals
Short-term goals generally refer to financial and other goals your organisation has within the next year or less.
Financial goals include growth targets on P&L or Balance sheet items like revenue, gross margin, inventory days, cashflow or operating profit.
To achieve growth in short-term financials goals (outputs), we generally focus on leading indicators or "influencing activities" (inputs) that we know have a high impact on our goals. For example, influencing activities affecting sales revenue on a daily or weekly basis might be:
number of inbound referrals or new account registrations
number of sales meetings or proposals
number of products promoted in our weekly email
increase in marketing spend on existing customers versus new customer channels
The goals you choose to focus on, changes your activities. Sounds obvious, but think about it.
For example, if we were more focussed on growing Profitability, not just customers, we might refine our leading indicators or influencing activities:
number of "core customer" inbound referrals or new account registrations (e.g. Amazon Prime customers vs. just any type of customer)
number of meetings with "core customers" or proposals with pricing at > 35% margin
number of hero product bundles promoted in our emails/socials
improve marketing return on customers in a specific cohort from 3X to 5X based on measuring customer lifetime value (gross profit basis)
They may also include other goals less likely to impact the financial goals this year, but should impact long-terms goals, e.g.
launching a new product line or partner,
hiring a new specialist or leader or
buying new software to improve future efficiencies and make your process work faster, better or cheaper.
Generally we focus short terms goals into two horizons; 1-year goals and quarterly goals, with leading indicators or KPIs ideally measurable and reported on a daily and weekly basis.
Long-term goals
Long-terms goals refer to goals associated with the attainment of your longer term strategy.
Spoiler alert - by strategy we don't mean simply operational effectiveness according to Michael Porter (original article "What is Strategy") but sustainable differentiation.
There are several layers to developing a truly differential Strategy and it includes your organisation's;
Core purpose / mission
Strategic positioning and brand promises to customers
Differentiating activities
A good way to think about long-term goals versus long-term strategy is to focus on what must be true about your organisation over the longer term to deliver your strategy.
This includes, but goes beyond Financial metrics mentioned above. It also includes areas critical to longer-term growth such as innovation, data and documentation and strengths or capabilities.
Assuming your longer-term strategy is ambitious and your plan is to scale, this will usually involve a mix of driving the current product offer and business (what the organisations knows how to make and deliver today) and potentially investing in innovation (product or process) and new initiatives aimed at driving more profitable growth (or exponentially more output/impact) in future.
If we don't know where we are going, there is a high chance we won't end up there. It is imperative we have as clearly stated strategy and long-term goals as our short-term goals.
To be clearly stated, Long-term goals should consider:
a Big Hairy Audacious Goal - a clearly stated, measurable destination some years out from today. The next big mountain you are climbing, often referred to rather drolly as a BHAG (thanks for that Jim Collins).
Long-term Financial Goals (P&L, Balance Sheet) with a clear focus on both profitable growth and positive cashflow.
Other Goals - balancing out our financial goals with other goals critical to stakeholders such as customers, employees, community and shareholders and structural improvements in operational effectiveness (e.g. productivity measures like $ or output per $ on headcount, customer ratings or leading indicators of experience and satisfaction or % top talent in organisation).
Key Capabilities - building on strengths, and building other capabilities that must become a source of competency or competitive advantages to deliver your strategy in the future over the long-term. (Including consideration of any changes taking place in your industry today) e.g. software or tech capabilities you will make or buy to help you deliver output or growth faster, better, cheaper such as reporting capabilities, productivity tools, functional capabilities like strong Finance and Operations oversight, outstanding ability to recruit top creative talent or data Product sourcing or Partnerships.
Key Initiatives - things you must go do to deliver future growth e.g. enter a new market, invest in a new production facility, launch new products or services, secure certain component suppliers, become a gold tier partner, larger scale process innovation.
Balancing the Tension between Short and Long Term Goals
How resources are allocated between short-term and. long-term goals forces trade-offs. Often times, founders and CEOs are faced with the decisions of what to "sacrifice" as they are still operating relatively lean and don't have the luxury of fully resourcing every plausible action. Sometimes short-term growth is sacrificed to secure a stronger long-term position in future. And vice versa.
For example, decisions regarding
how many developers to allocate to a new product function (which tends to result in more long-term growth outcomes) versus speeding up services or delivering better reporting to today's customers (more short-term outcomes)
hiring the next high-value specialist or functional manager - as we often do not have the cash/effort/bandwidth to hire everyone we'd like all at once.
to focus on sales excellence and key account customer expansion versus more product-led growth such as investing in brand building, product experience and securing new partnerships to drive more referrals and inbound enquiries from smaller customers.
“I would have sacrificed growth in the business for a year completely … in order to get it done in a year and get it fully done.” [Founder, Middleware ecommerce platform]
However, once both goal posts are clear, prioritising those activities that are likely to have the highest impact on both becomes much more apparent.
How to balance and manage the tension
Clearly state both short and long-term goals during Strategic Planning.
Being just as clear about what must be true about the business over the long-term to achieve your strategy as you are in the short-term. Review and align this with your team every quarter.
Be intentional about balancing short-term and long-term investments.
Investing in long-term capabilities and growth-driving projects >1 year while at the same time, drawing a clear line between long-term and short-term goals. Helps team prioritise working on activities that have the highest impact on both.
Invest progressively in building the long-term capabilities by making iterative investments in projects and people pegged to long-terms capability building goals. So that when we choose to invest, we are building capabilities that may fill today's gaps and deliver tomorrow's strengths and competitive advantages.
Organise "squads" to deliver on priorities linked to long-term goals. Proactively prioritise projects that help your organisation take steps each quarter towards longer-term goals. Consider peeling away small, often cross functional teams or "squads" to separate the project from the distractions of the short-term core business.
Timebox long-term initiatives spanning multiple periods into annual and quarterly "rocks". For those projects which take steps towards your BHAG and longer-term goals, plan your "rocks" or priorities within quarterly time periods to give it focus. This will also help with galvanising the squad or team, gaining commitment and elevating energy to get it done. Consider giving each quarterly sprint a theme and plan a celebration to avoid project fatigue.
Review, refine or stop. To make way for new activity we need to also make choices about how we free up our time to make room for something "new". What MUST happen verus is NICE to happen. Equally what are we NOT going to do. For example, what can we stop doing or automate that may have been necessary once, but are lower-impact on our longer-term goals, relative to other activities. This also goes for which customers and other stakeholders we will serve. Stop overly investing limited time, capital and resources with customers or partners that are loss-making or not a priority in terms of delivering the longer-term outcomes you are seeking. It's hard to shift to make - from saying yes to any and all customers and their requests, (and the revenue that comes with it). Yet a necessary one to make room for new activities that will help you to free up resources to invest in scale, and achieve your long-term goals and .
Final words...
Balancing tensions during scaling often involves trade-offs.
Making decisions about how to allocate precious (constrained) resources between short and long terms goals is easier with a clearly stated strategy, financial and other goals and quarterly planning process that draws a clear line through both.
Making good decisions within scale up leadership teams means frequently re-balancing. Revisit short versus long-term goals and resource allocations quarterly.
If you would like support to plan or facilitate a team strategic planning session with both short term and long-term thinking, output and accountabilities, please reach out to claire@madeforscale.net
Smooth scaling :)
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