South-Western - Management  
How to Plan for the Short Term
Topic Planning
Key Words planning, strategy, short-term
News Story

Managing for the short-term has suffered from a stigma when compared to the notion of being a long-term, visionary thinker. Short-term is more than reacting to the crisis of the day. Managers today have to be more oriented toward the short-term to be better synchronized with their organization's needs and customer's wants. Managing for the short-term has several advantages to aid in implementing the company's overall strategy:

  • Because it focuses on quantifiable information, it is based on reality. Customer interactions can result in changes that benefit the company.

  • It offers opportunities to correct errors before they become disasters.

  • It offers opportunities to garner support needed to implement projects on an ongoing basis.

  • It provides companies with a fresh supply of ideas, constant updates, and the ability to stay abreast of change.

Corporate missions are usually developed at the top. Without attention to the short-term, day-to-day events have little relation to the long-term goals.

Redix International plans for the short-term with weekly meetings between key managers and the CEO. The shifts in direction for product development occur based on discussion during these meetings. The ability to integrate responses to market demands with the company's overall strategy is an example of event-driven planning.

Managers need to be aware of the importance of managing the short-term. Without it they can impede progress in the company. They also need to understand how their short-term decisions affect the company's long-term strategy. It is sometimes easier for senior executives to see short-term moves as pieces of a larger puzzle, while lower-level managers may follow their own plans which are based on their contact with customers or their personal desires. The challenge is to provide a strategic context to short-term managing.

Internet startups were known for rapidly changing as the market evolved and shifted. These companies demonstrated the value of having the flexibility to change with those market changes and integrate those rapid changes with the planning process.

If you plan based solely on what's happened historically, you assume that all trends are linear. Without short-term management, the company operates quarter-by-quarter without much breathing space, and the results won't be relevant to the long-term direction.

Managers often become frustrated because they feel that the short-term demands placed on them are a negative and not as important as the long-term stuff. In doing so, they fail to recognize that today's business environment requires being reactive to changes, and that these changes have a large impact on the long-term strategy of the company.

Questions
1.

Executives tend to focus on the long-term in their planning. Why do you think this is true? Why is short-term planning important?

2.

The article points to Internet startups as good examples of companies that manage the short-term well. If this is true, why have so many of these companies failed?

Source Chuck Martin, "How to Plan for the Short Term," CIO Magazine Sept. 15, 2002.
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