Observations on Consequences of Short-term Thinking in Technology Organizations

Issue no. 006 - Why do we continue to force engineering teams to make short-term bets when often long-term goals are more strategically important and better?

TL;DR

Short-term wins are always preferred over long-term because they are certain and make money now.

Many internal and external factors contribute to this short-term thinking.

Opportunity cost such as technical debt is always acceptable for short-term wins.

Long-term plans require massive investment, patience, and commitment which many organizations and leaders don’t have patience for.

Fight the short-term thinking by focusing on the right data, quantify the opportunity cost between short-term and long-term trade-offs, and tie each project to the broader organizational strategic goals.

Ensure technology is built right the first time - Slipping a project to build it the right way is a far better principal than to ship a broken feature to say it was done on time.

1.

Humans are wired to prioritize short-term gains over long-term investment. A common psychology experiment - if I said I would give you $20 right now or $25 in one week, you would opt for the $20 now. Why? This need for instant gratification is a very human trait. We crave certainty. It is hard for us to completely comprehend and weigh options that are in the future that may or may not happen. Even if the long-term goals are more promising or valuable, the instant myopic point of view makes us cave on the short-term dopamine hits.

Within Corporate America, short-termism is a real problem. Tell me if you have heard this line before.

“Acme Inc. during their quarterly earnings missed the Wall Street Analyst expectations and the stock is down 10%”.

“Acme Competitor Inc. during will focus on stock buyback stock increase shareholder values”.

“Acme Three Inc. new release was lackluster, mostly quality fixes instead of new features. Stock is down 10%”.

2.

I have spent a lot of time at the intersection of long-term plans and short-term needs. My observation has been that leaders have more frequently made short-term decisions at the cost of long-term goals.

After all, wouldn’t you want to take victory laps of making $2,000,000 now versus $3,000,000 in a near future that you can’t really be certain of.

Most common opportunity cost that engineering teams made to meet short-term gain in is technical debt.

Technical Debt has many different manifestations:

• Shortcut engineering solutions to meet short time limes.

• Extending existing systems beyond their intended design to meet business needs.

• Hardcoded/bespoke or throwaway code.

• Borrowing engineering capacity from future plans or other teams.

• Broken UX with rough edges and cut corners.

• Migrations, backwards compatibility issues, forced upgrades, the list goes on.

So, I keep asking myself, why do we continue to make these short-term plays when we know the long-term plans are immensely more important and far better for the organization?

3.

Some observations I have seen both in the industry research and my own experience working at Apple, Google, Blackberry on technology programs:

• Investor pressure to meet quarterly earnings target - Our present environment is geared towards making quarterly wins a priority for both shareholders and company future. Stock buybacks, product to product, feature to feature, sprint to sprint; the pressure makes it hard to stand up and say we will focus on improving or building our infrastructure or ecosystem the right way before we begin building the house on it.

• Constant drive for newer features and technologies - There is an implicit expectation that success means shipping new things constantly. Consumers don’t really get excited about 500 quality issues being resolved. Not unless these quality concerns are a big topic of concern due to external pressure from media or customer complaints have become too loud to ignore. That is reactive and always places the organization on the back footing.

• It gets cheaper and easier to test drive newer technologies and services (SaaS) without a long term strategy - build vs buy - This is an important one. When technology becomes cheaper in both cost and implementation, to meet business needs of the hour, companies just buy off the shelf solutions. Why? It’s much easier to do that then to devise a long term technology roadmap, build team(s) to develop, and maintain it for the future. Let’s just pay someone to do all that now. This may make sense at Small sized companies but medium to large organizations it does not.

• Senior leadership pressure to find even the slightest revenue gains to claim a Win - More often than not, this is external pressure being internalized. Bad for morale, bad for long-term thinking, but we get to do some victory laps now.

• Long-term investment can take months, years, decades - Rome wasn’t built in a day. Platforms take years to hit critical mass. Building the right thing takes time. Even startups take years and several funding rounds to get to a unicorn status. All good things take time, dedication, laser focus, and unquestionable commitment. Leadership teams love certainty. Long-term strategies are about making long-term bets. No one wants to be known as the person who said no to a feature or said “it will take longer than you are thinking to do it the right way”.

• In an ever product-driven technology environment, the patience for R&D is limited - R&D historically has focused on research; in an ever product-driven world, research has shifted to products to better respond to customer needs. This means that organizations are slow to adopt or explore new technologies that may prove beneficial to the organization. Money in R&D is in fact being invested to productization than skunkworks exploration.

4.

It’s not completely accurate that all short term goals must be bad when compared to long-term goals. Often the landscape can change that requires a recalibration of long term goals which opens short-term opportunities that are solid wins.

Long-term however does require an organizational focus on building the right thing the right way the first time. This ultimately requires patience at the leadership level, right level of workforce and skills investment, and above all a research driven approach rather than a feature or product driven one.

A 2017 study by McKinsey Global Index that surveyed 1,000 C-Suite and board members, short term focused organizations on all levels performed poorly than those that invested in the long term. Go figure.

5.

There are a few things that we can do to help leaders make the right decisions:

• Arm leadership with the right data set - both human (workforce capacity and skills) and capital resources (expected revenue gains, demand, and $$$)

• Highlight the opportunity cost for short-term versus long-term in both quantitive and qualitative categories.

• Help organizations develop protected research and exploratory time (20% projects at Google / Week of Code at Apple)

• Help arm leadership with a decision framework to decide on build or buy decisions not from the short-term point of view but long-term expansion and developing stronger moats against future competition or events. Whenever possible, always build, don’t buy.

• Tie each project across the organization to broader company vision or objectives. This can either take the shape of OKRs or Strategic Goals.

• Ensure technical debt is not ignored and tracked as a project. Many teams have tracked this as Top 100 Quality Bugs, Bug Bounty, Quality Hackathons.

• Help technical teams build things the right way the first time instead of cutting corners to meet deadlines. Slipping a project to build it the right way is a far better principal than to ship a broken feature to say it was done on time - that is not project success.

• Work with leadership to ensure long-term strategies and plans are well communicated across the organization with all teams bought in.

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