Business short term-ism and digital transformation. What’s driving what?

Recent industry studies confirm that the phenomenon of short term-ism is on the increase.  

Short term-ism describes the focus on short-term business goals at the expense of achieving long-term objectives. This has been shown to undermine organisation’s longer term value creation in certain cases.

Fact is, short term-ism is a double edged sword.

  • On the one hand, not being able to rapidly respond to shifting customer demands or new opportunities because of organisational ‘change control’ and governance processes are too slow, can result in wasted effort, increased cost, missed opportunities and customer dissatisfaction, to name but a few.
  • On the other hand, when organisation develop an organisation-wide, well orchestrated adaptive strategy and execution capability, proactively responding to short term demands will drive a range of direct and indirect benefits for the organisation, its staff and customers without jeopardising effective governance and eroding business value.

Question is: Is building adaptive enterprise strategy, architecture, project delivery and service operations capabilities a critical success factor for your ‘digital transformation’ … or it it the other way around?

Short term-ism is nothing new – its intensity is.

The effects of short term-ism  are being more acutely felt now than before in many organisations.

Our rapidly changing business, technological and cyber-security environments are increasing the need to focus on the short term.  This has the effect of further fuelling short term-ism.

Any certainty over the future tends to evaporate in the face of exponentially increasing complexity and rates of change fuelled by the diversion of resources into doing things ‘now’..

The result is an increasing demand for organisations to be more responsive and adaptable – now.

We’re hard-wired to think ‘short term’

Fact is, focusing on the short term a well studied and common human trait:

  • Renowned psychologist Walter Mischel, designer of the famous Marshmallow Test, showed that most children preferred to have one marshmallow immediately, rather than two later (Assuming they like marshmallows, that is).
  • Evolutionarily, our cave dwelling ancestors that did not notice and swiftly react to the sudden noise in the bushes were progressively removed from the gene pool by the hunting lion. We seem to be hard-wired to preferentially bias decisions that favour the short term, and focus on changes occurring now.
  • Behavioural economics – a relatively recent discipline – confirms that decision preferences  varies across time and that people think of value in relative rather than absolute terms. Essentially, value is perceived higher now than in the future.

Spending some time in better understanding the forces driving short term-ism in your organisation should be well spent in ensuring that your digital journey is successful

Changing business models for increasing uncertainty and change.

The challenge facing many established organisations lies in transitioning from traditional business models to more responsive and adaptable business models

Conventional business models whose strategies and execution capabilities revolve around elements such as a fixed period strategies, defined scopes, budgets, timelines and resource schedules are likely to perform poorly in business and technological environments that are subject to increasing uncertainty and change.

By the time traditional fixed term strategies have been defined, business cases justified, budgets approved, resources allocated and projects scheduled, then implemented, the original circumstances may well have changed.    

This is because the appropriate value proposition today may not be the same tomorrow in response to changes as they occur in the overall ecosystem. 

So, what’s the digital hold-up?

Digital technologies continue to accelerate the transformation of the entire markets and business landscapes, yet many (established) organisations still struggle to realise the full benefits of digital transformation within their own organisations at the same pace.

Despite the hype of ‘digital’ a small sample of recent industry surveys reveals a picture that ‘digital’ is not easy.

  • Only 15% of organisations have a clear and coherent digital strategy1,
  • Over half of all digital initiatives have been considered as failures, with only one in eight hitting the mark2,
  • Only 5% of organizations feel that they have mastered digital to a point of differentiation from their competitors3, and
  • Only 18% of CIOs surveyed report that their organisations have ‘very effective’ digital strategies 4

What can and should organisations do to ensure that their digital ‘transformation’ is not only initially successful, but remains successful when facing the combined effects of  increased short term-ism and accelerating rate of change?

Consider the following factors:

1. A successful digital transformation journey involves a customer-centric whole-of-business approach.

A customer-centric approach for digital transformation is much more than ‘customer experience’. It is not a new website or digital marketing initiative. It encompasses the entire suite of value drivers that exist within and across the whole organisation.

Adaptive, actionable smart strategies are key to maintaining the organisation’s constantly evolving value proposition.

2. Structure your incentive schemes carefully

Framing short term financial incentives primarily around functional responsibilities will reinforce behaviours that will drive results that may not be in the best long term interests of the whole organisation.

Localised, short term staff incentives can undermine attempts at cross-functional collaboration – and it is this cross-functional and multidisciplinary collaboration that underpins enterprise agility and adaptability – key to your digital transformation’s success.

Review individual incentives and KPIs to reflect individual’s expected contribution to building, maintaining and supporting an enterprise-wide adaptive capability.

3.  ‘Change Management’ is not a function or job description.

The capability for continuous adaptation should be ingrained into the fabric of the whole organisation.

An adaptive strategy and execution capability allows the organisation as a whole to detect and proactively adapt to ongoing change in a coordinated, responsive, efficient and effective manner.

Where the accountability for ‘change management’ is vested in one department or team, this will hamper the establishment of enterprise-wide continuous adaptation capability.

Turning short term-ism to your advantage

In building an adaptive strategy and execution capability, organisations will be able to meet short term goals while sustainable protecting, optimising and growing business value in the face of increasing change and uncertainty. 

adaptive strategyThis article contains a selection of concepts from the book “Adaptive Enterprise Strategy Journey Management – Your journey for building an adaptive business strategy and execution capability in a rapidly changing and increasingly digital world.”  By Asif Qumer Gill & Rob Livingstone. [2017]

Copies are available from Amazon of directly from the website


1 Kane, G. (2015), “Strategy, not Technology, Drives Digital Transformation”, MIT Sloan Management Review, Summer 2015
2 Rogers, B., (2016), “Why 84% Of Companies Fail At Digital Transformation”, Forbes
3 Digital Transformation in the age of the customer’, 2015, Forrester Research, Inc.
4 The Harvey Nash / KPMG CIO Survey 2017