Rules to Break & Laws to Follow
How Your Business Can Beat the Crisis of Short-Termism
This content is excerpted from Rules to Break and Laws to Follow: How Your Business Can Beat the Crisis of Short-Termism, 9780470227541, February 2008, by Don Peppers and Martha Rogers, Ph.D., with permission from the publisher, John Wiley & Sons. You may not make any other use, or authorize any others to make any other use of this excerpt in any print or non-print format including electronic or multimedia.
The Crisis of Short-Termism: The Mother of All Problems
In our travels, we often ask chief executives and other decision makers what their biggest challenges are. We know this isn't a scientific poll, and we get a whole boatload of answers, but there is absolutely no question that the single most frequently cited problem is some form of this dilemma:
How can we do what's right for the company when the pressure to make our current-period numbers is so great?
The Crisis of Short-Termism is so all-consuming for businesses that it embodies many other problems, as well. Deep in our guts we all feel the need to "do what's right for the company," and we can usually grasp what the "right" thing is by paying close enough attention to our instincts, but the requirement to make the current numbers—to show concrete financial results right now—is so overwhelming that these instincts get submerged beneath a whole tidal wave of other concerns.
The most straightforward advice we can give business executives is to suggest that they change their "mental models" of what it means to succeed during the quarter, or during any currently measured time period. And in this book we're going to do our best to give you a new mental model for business success, based on two very straightforward principles:
1. Customers will only do business with you tomorrow if they (and their friends) trust you today. Therefore, customer trust is a prerequisite for long-term business success.
2. Your employees will only work to earn customer trust if they trust you, their employer. So your job is (a) to motivate your employees to treat customers fairly, and (b) to enable them to do so by providing the right tools, training, and authority for taking action.
Obviously, this is going to be a lot easier for us to say than it will be for you to execute. But fortunately for all of us, the same breathtaking rush of technology that is driving businesses into ever shorter cycle times also makes it feasible to execute against this new mental model, today. To paint an accurate picture, we need to take account of how transformed the business environment already is—and how much transformation is soon to come—as a result of new technologies:
- Technology makes possible sophisticated analytics to help companies calculate the current economic value of increased customer trust, which will be an important tool for beating the Crisis of Short-Termism.
- Technology subverts the power of hierarchies, which means corporate culture is now your most important management tool. The corporate culture that will give you the best chance to succeed will be centered on earning and keeping customer trust.
- Technology connects customers electronically with other customers, so bad news (and good news) travels at light speed. But because of the randomness inherent in how customer networks form, you can't "manage" them. All you can do is prepare for them. And if you're truly prepared, encourage them.
- Technology undermines the advantages of new products, so business success requires constant innovation. To create a "climate of innovation" you need to foster a culture of trust while harnessing the electronically networked intelligence of your employees.
Read the rest of this excerpt and download Chapter 1: False Assumptions
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