How executives can help sustain value creation for the long term

For many leaders it is obvious to focus on long-term benefits; for our shareholders, customers, for our employees and many other stakeholders. We will be able to survive, grow and we are focusing on sustainability and lasting success.

Still, this McKinsey study shows that the majority of executives feel under pressure to redirect resources from strategic initiatives in order to meet short-term financial goals. This is impacting the sustainability of the business. The company will reduce its readiness for the future and the motivation of the people are jeopardised. The article formulates five behaviours that brings back the leadership focus to long-term objectives.

1) Invest in risky, large-scale initiatives which help the company to navigate into a position of growth. These initiatives can be about digitalisation, product innovation, talent development, exploring new markets.

2) Design a portfolio of strategic initiatives that in its sum are delivering positive value. These initiatives focus on how to maximise the value creation with existing assets; this can be in the areas of operational excellence.

3) Continuously allocate resources and people to strategic revenue generators. This also means to regularly exit old businesses; this allows you to focus on growing forward.

4) Take a broad range of stakeholders into consideration (beyond shareholders). Generate meaningful value for customers, employees, business partners, the society and the environment. This will also secure stakeholder value.

5) Ensure that short-term gains are not jeopardising your long-term success. Navigate through a crisis that will make the company stronger.

How are you navigating around the temptation to focus on short-term financial goals?