When short term thinking harms longer term results.

Recently there was a very interesting article in the Financial Times entitled “The unexpected effects of acting in the short-term”. It described a study into the success rates of infertility clinics. Many clinics apply “selection at the gate”, which means these clinics only accept and treat promising cases because success rates are an important competitive element between clinics. This policy has as result that difficult cases, i.e. women who had failed to conceive under previous IVF treatment and/or who produced relatively few eggs or are over 35, are rejected. There are also clinics that do accept these more difficult cases alongside the ‘more promising patients’. The research shows that those clinics that selected easier cases enjoyed an early advantage in terms of success rate. However, those that were non-selective soon caught up and subsequently overtook them.

This study shows that
- People often do not see or are aware of the long-term consequences of a decision that is driven by short-term criteria;
- May be even more importantly, there are longer term benefits of accepting challenges and recognising areas with room for improvement.

The enhanced learning and skills that the non-selecting clinics had to develop to handle the more difficult cases led to a long-lasting better performance. The implication is that organisations should not necessarily look for challenges (although that may not be a bad thing) but nevertheless embrace them when they are there. Focusing on the easy things can have adverse consequences in the long run.

The importance of partnerships in emerging business models and the negative effects of transactional thinking.

In a similar vain, cutting costs and boosting profits in the short term can have adverse effects. This is an important factor to consider for companies and industries where the business model is changing, for example in pharma. New models are emerging and they all have in common that companies need to work much more in partnerships with a variety of other organisations. The negative influence of transactional thinking - which may be beneficial in the short term -becomes more and more an important blocker to successful partnerships. This is when parties within a relation see each other as suppliers and customers, rather than partners, and manage that relation in strictly quantitative, financial and excessively legal terms. This habit, clearly a hangover from earlier business models, sooner or later poisons the partnership. Instead, a shared common purpose, a recognition and understanding and particularly a tolerance for each others culture and the complementary capabilities and insights support partnerships that provide longer term success.

What can we learn from how bamboo grows?

Pressure is often so much on short-term success that the benefits of longer term thinking and approach such as performance improvement, symbiotic partnerships and innovation are foregone. There are parallels with growing bamboo. The growth pattern of this tree is remarkable. Plant a bamboo sprout in the ground and for four or five years you don’t see progress or results. You water and fertilize; water and fertilize, over and over again but you see no visible evidence that anything is happening. However, in approximately the fifth year things change dramatically. In a six-week period the Chinese bamboo tree grows to a staggering ninety feet tall. Wikipedia tells us that the tree has been measured to grow 48 inches in a 24 hour period and can reach a maximum growth rate of 39 inches per hour for short periods of time. It seems incredible that a plant that lies dormant for years can suddenly explode with growth, but it happens without fail with Chinese bamboo trees.

Instead of going for the easy options, only protecting what you have and focusing on the transaction rather than the partnership with a sole focus on short-term gains, greater success often comes from continuous improvement, from embracing challenges and from a hungriness and a curiosity to grow.