Escaping the Messy Middle: 5 ways to balance today's pressures with tomorrow's strategy

Balancing short-term priorities with long-term goals is one of the greater challenges a businesses can face, particularly when we're standing on the precipice of a new era. The immediate pressures such as managing cost and operational issues often dominate attention. They're tangible, ugly, urgent, and hard to ignore. 

At the same time however, there is the need to prepare for the future and invest in new technology and capabilities. This inevitability leads to the messy middle - having to drive both short term and long term objectives, all whilst competing for the same limited resources. 

Below I break down why this is particularly hard today, some learnings from the past, and my top 5 ways to ease the pain.

Looking back - We've been here before

There’s always a need to continually improve performance in any business, but the bigger shifts often come from periods of technological innovation.

Looking back over the last 30 years or so, there have been around four of these major shifts:

 [Late 1990s]: E-Commerce: Powering retail businesses with global market reach and 24/7 sales opportunities.

[2000’s]: ERP (Enterprise Resource Planning): Integrating and automating core business processes to enhance efficiency and decision-making, often combined with significant outsourcing to lower cost.

[2010’s]: Digital Transformation: A suite of technologies that combined to fundamentally change how businesses operate and engage with customers, including cloud computing, social, mobile and analytics.

[2023+]: Artificial Intelligence: Whilst we’ve had various forms of AI for a while now, it’s generative AI that is beginning the next wave of performance, leveraging the connected platforms that were built in the 2010s.

At the beginning of each of these waves, there's invariably a need to invest substantially in new capability that will unlock much of the promised potential.

And this is precisely the time we begin to experience the messy middle - managing the trade-off between the needs of the business today, against the needs of the business tomorrow.

Right Now - Why it's harder than before

"Short-term thinking drives out long-term strategy, every time."   –Herbert Simon

Whilst balancing objectives across different time horizons is nothing new, there are a few factors that make this more challenging in business today:

Current economic pressures

Current economic pressures characterised by high inflation and modest growth often mean capital is more constrained.  In boom times, large investments were often supported by growing revenues, but today’s environment requires a sharper prioritisation of resources, making achieving this balance increasingly complex.

It can be hard to prove Return on Investment

Unlike a traditional project with clear goals and a business case, investments in core capability such as new technology platforms or new operating models come with a high degree of intangible benefits. Take the current narrative around AI - a big part of the benefit is 'freeing people up to do more higher value work'. It's hard to size the benefits without a lot of assumptions, especially at the beginning of the journey. Often it's more about opening up a range of possibilities than achieving a direct financial outcome in of itself.

New capability can challenge existing business structures

Disruptive waves often challenge traditional business models and structures. Take the eCommerce of the 1990's - many Retailers were organised by channel - Stores and Contact Centre.  But the arrival of a new Online channel disrupted this, especially when customers wanted to buy online, but make a return to a store, which channel was going to wear the cost? These sorts of changes can make it challenging to land the right sponsorship and ensure alignment across the organisation in the short term.

Looking Forward - 5 Ways to Ease the Pain

The very nature of this problem is complex, and as it is all about trade-offs, there's more than one answer. But there are some ways to make the journey a little less painful - here's my top 5:

1. Have a common definition of value everyone can anchor to

Disruptive waves such as AI are rarely centrally managed and coordinated. To move at pace, it makes sense to harness the collective power of the organisation. But it's important to create alignment around the future you're  aiming for. What does good look like for the business in 3-5 years' time? What are the key customer, financial, risk and people metrics? And if you had to choose, which comes first? This will help align distributed initiatives and experiments under a common framework making it easier to compare short and long term focus when competing for the same resources.

2. Make the big bets

As mentioned above, it can be hard to prove the ROI on new capability, which is often foundational and about opening up new potential scenarios for the future. Sometimes it might be necessary to shortcut traditional business cases and funding requests to avoid getting into analysis paralysis. If strategically it makes sense, it might be time to commit to a decision, ringfence the funding and see it through. Take Microsoft and their pivot to cloud in the early 2010's with the launch of Azure. It was a significant shift away from its traditional software products, requiring billions of extra investment with uncertain returns.  Where possible, incremental delivery that allows you to test, learn and prove early value can ease the nervousness of those stumping up the investment.

3. Make the small bets

Fortunately, not all change requires a leap of faith. Look for areas or solutions that allow you to experiment, test, and learn in low-risk environments first. In the case of AI, these might be internal use cases or small teams where you can compare against non-AI enabled colleagues.  This can help minimise funding and resource requirements in the short term and gather valuable learnings on how and where to scale.

4. Central sequencing and orchestration

Short and long term initiatives will invariably be distributed across the organisation with one part affecting another. It therefore makes sense that some degree or central coordination and sequencing is required to help facilitate discussions around trade-offs and resource allocation. The common value definition in #1 helps with this. A further complication is that these disruptive waves often mean looking at the business an entirely different way, so a central function can help identify who needs to work together to avoid duplication and misalignment.

5. Aligned leadership

Finally, when embarking on a transformative journey, it goes without saying you need your leadership team aligned. Not just on the vision, but more specifically on how the business needs to change. This can help drive the right conversations and decisions more locally in the organisation, reducing the reliance on the central coordination function.

Ultimately, the messy middle isn’t a problem to solve but a dynamic to embrace. The ones that thrive will be those that actively manage it with the right mechanisms in place. These are exciting times ahead - hopefully this gives a few ideas to lay some solid foundations to launch from.