To Grow Long-Term, Eat the Short-Term
At a meeting of managers across the many units and divisions of General Electric (GE), Welch was hit with a barrage of questions that were customary for the open meetings that were encouraged during Welch's reign at GE.
One of the things they challenged Welch with was the continuing rhetoric used by him and leaders at GE about managing for the long term, but the continuing pressure to produce short-term. They challenged him saying this: "...despite the rhetoric about managing for the long term at GE, we are under too much pressure to produce short-term results."
The response by Welch was pretty typical of how he handled what seemed to be opposing forces. He said this:
"You can't grow long-term if you can't eat short-term. Anybody can manage short. Anybody can manage long. Balancing those two things is what management is."
He was an expert at attacking the very source of doubt that people as managers would throw at him. He understood why they would challenge him on what he wanted out of them and was prepared to help them see how to do it.
The problem of the short- versus long-term strategy is probably as old as business. It comes from the misunderstanding that looking at things over the long-term means relaxing short-term goals and objectives. This isn't what it really means at all, as Welch notes.
What it means is that there is a long-term goal that is a compass for the short-term strategies. It doesn't mean that goals aren't to be implemented and shot for forcefully, it means that they must be understood in the parameters of the long-term objectives they related to.
The word "balance" he uses is right. It's knowing the difference that makes up what management is. For example, we talk all the time here about too much focus on short-term objectives in business. And overall it's true, especially in public companies that demand certain types of quarterly results that in some cases have caused managers to fudge numbers, do stupid stuff to hurt the company long-term and other such things.
Welch says it perfectly when the says it all must be balanced. That's the real bottom line in it all. Short-term alone can't make a company successful by itself for the very reason that it isn't balanced by the long-term purpose of the company or division.
Long-term could keep a company standing still if short-term goals aren't laid out to be reached. Management is truly a balancing between the two.
Other Jack Welch Resources:
How Jack Welch Runs GE
Jack Welch Defends
Jack Welch's advice to MIT Sloan students
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