Why the Only Way to Think is Long-term

Lean principles are hard to live by. It is far easier to use Lean methods to drive for and achieve results, cash in on performance incentives and leverage that success for a promotion or even a new job, quickly before the lack of sustainability and cultural undertow become is noticeable. That may sound cynical but is too often the reality when the senior leadership is not enlightened to the fact that in the long-run the most important Lean principle is the one that is variously phrased as "long-term thinking" or "long-term philosophy" or "long-term purpose".

The aforementioned results-seeking short-term behavior is prevented when senior leaders demand both process and results, standards as an output of kaizen and not only double-digit improvements, and when development of people is seen not as a happy byproduct but even the main aim of the enterprise. Toyota is famously credited for living by their "we don't build cars, we build people" motto but in fact this same sentiment can be traced back nearly a century ago to the Reverend Samuel Marquis, head of the Ford Motor Company's employee relations department, when he said:

"Mr. Ford shoots about fifteen hundred cars out of the back door of his factory every day just to get rid of them. They are the by-products of his real business, which is the making of men."

It's no secret that Lean is people-powered and must be human-centered to be sustainable. Lean is not about the best way to launch a startup, develop new services, manufacture efficiently or market test products. These are relatively short-term objectives that are normally nested within longer-term ones. Within the long-term, enterprises must invest in development, and there is only one good outcome in the 2x2 diagram above. The four quadrants are
#1 We invest in developing people, they stay
#2 We invest in developing people, they leave
#3 We don't invest in developing people, they stay
#4 We don't invest in developing people, they leave

Scenario #4 should be no surprise, people see that the organization does not invest in development, and those who have ability or ambition choose to move on to better opportunities. Scenario #3 is a bit more insidious. It is a self-fulfilling prophecy of sorts in which leaders expect the least from people, provide the minimum of support and development, allow them to disengage, slow down and confirm our expectations that such people are not worth investing in at all. In scenario #2 we have the dreaded situation in which we have invested in people, but they leave the company! "Why are people leaving?" we may ask. What we should be asking is, "Are they leaving at normal or unacceptable rates?" and "Aren't we still better off than not having helped them to grow as individuals, and contribute to the company during their stay?" In scenario #1 where we have invested in developing people we have a highly engaged workforce delivering improvement and innovation, outperforming the competition in growth and profit.

Like Pascal's wager, whether we believe or not, it is only rational to hedge our bets and do the right thing and invest in development. As Pascal could only control one of the two variables (existence vs. nonexistence of God, belief vs. non-belief) we can only control one of two variables on this 2x2. We can influence, but not control, whether people will leave the organization. In fact, we can predict that people will leave, just not exactly how many, who or when. What we can control is what questions we ask and what knowledge, tools and support we give to help those people succeed.

Perhaps we don't act rationally because it is easier to see the false short-term cost savings of not investing in development, while the costs of lower productivity and quality due to disengaged people are more difficult to tie directly to this false cost savings. The payback for developing people and processes is often faster and higher than expected, but not enough leaders know how to design these profitable on-the-job learning experiences. In a Lean enterprise, leaders must evolve from being order-giving authority figures to coaches and teachers who make the training and development a talent attractor and talent-retaining system.

By making the investment in people faster and more effective, management has no time to worry about whether six months' worth of on-the-job training is lost if the person leaves in month number seven. Of course this this is not possible for all cases in all industries, but that is no excuse for doing nothing. Similar to the "Save More Tomorrow" approach pioneered in behavioral economics to help people commit to saving a portion of future earnings based on pay raises rather than immediately beginning to put away retirement savings experiencing a loss in spending money. Leaders can focus some portion of the development activity on time savings, cost savings, and learning through practical problem solving makes the investment in people both psychologically and financially painless.

A common misconception is that long-term thinking is exclusive of or at the expense of short-term needs. Why is this? Perhaps because we are too often so short-term focused, and the short-term being so immediate, we feel that by taking our eyes off of what is in front of us to look a bit further ahead, we are missing an immediate opportunity or risk. Long-term by definition includes the short-term. The short-term is subordinate to the long-term, not the other way around. Having a clear long term purpose will tell us what to do in short term also. We need a True North / North Star to guide us, even as we make local adjustments to get past obstacles or navigate the quirks of day-to-day business geography.

Philosophically, long-term thinking versus short-term thinking is the difference between viewing an enterprise as a non-renewable mine to be maximally extracted and eventually abandoned, or a renewable and sustainable source of wealth through a prudent combination of investment in its value-creating capabilities and extraction of surplus profits. It takes a certain amount of courage and faith for a leader to shift from extraction-based wealth creation to development-based wealth creation.

This post was started and saved nearly 38 months ago, put it aside after sketching out a few themes. While it would be poetic to call this an example of long-term thinking, it is just an artifact of long-term blogging, in fact, 10 years to the week.