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Long-term thinking in a short-sighted world

May 20, 2013

The enduring success of Sir Alex Ferguson clearly shows the impact of taking a long-term view of leadership’s role in building and executing a business strategy. Whilst many of the games in which he’s been manager were prolonged by the infamous Fergie Time, maybe the concept can be extended in terms of having patience and giving a leader time to make an impact.

Whilst Ferguson’s leadership style maybe regarded as more determined, more ruthless, more confrontational and antagonistic, and even more tribal, the greatest difference in comparing his success to that of his peers lies in the length of his tenure.

Yesterday was his 1500th game in charge, unprecedented, and provides lessons with relevance way beyond the football pitch. It’s a reminder than we have all become too focused and frenzied on short-term success as a metric, and making rapid changes if it’s not forthcoming. The value of the long hard slog is overlooked in a world where knee-jerk reactions dominate.

Of course, Ferguson won nothing in the first three years in his tenure, and was under pressure. Fans wanted him out, but the board stuck with him. Are we building a team for this season, or the infrastructure for the long-term?

A CEO needs to plan for the long-term and get the big decisions right, look towards the horizon rather than just the next game. Ferguson focused on this in terms of youth and ‘grow your own talent’ as a long-term vision, whilst instilling and embedding a culture – a strong ethos of loyalty, hard work, a never-say-die attitude, and a winning mind-set.

In business, John Rose built Rolls Royce into a global success over almost a quarter of a century, Martin Sorrell, CEO since 1985, has developed WPP into the world’s biggest advertising agency, yet in recent years long-serving business leaders have become the exception.

The average tenure in Britain of a plc CEO is now four years, in America it is six months longer. Marks & Spencer have been changing CEOs with the same frequency as a new collection of womenswear is introduced, whilst HP have had more leaders in the last five years than most of us have changed printers.

It’s almost become accepted wisdom that a leader builds their reputation by adopting a bee-like habit of flitting from flower-to-flower, longevity and experience seem to have little value.

But what is wrong with short-termism, surely a win is a win after all? The answer is simple: anyone can ‘get lucky’ and craft short-term success. Also as a leader if you know you are only going to stay in post for a short period of time, you will less likely take the big strategic decisions and make investments for the long-term, as you won’t be around to see them come to fruition. Building and sustaining success, is much more valuable.

It is changes in the industry structure which driven this short-term view in football. Money and the emergence of individual ownership have changed the landscape of professional football in England. When Ferguson became United manager, there was no Premier League, no lucrative television funding nor global sponsorship deals – 90% of club’s income came from ticket sales.

Now the emergence of individual, foreign billionaire ownership has created new demands for immediate success and the financial return this delivers. Ownership and money have changed the metric of ‘what does success look like?’ – owners no longer see the club as apart of the community and invest with altruistic motivation. In today’s Premier League, there is no time to see if a manager can pull things together.

So what can we take from Ferguson’s epic reign to infuse some new thinking into the perspective of ‘long-term leadership’?

1. Vision When Sir Alex took charge at Manchester United he had a very distinct and clear vision, it wasn’t one that many people would have expected but it was bold and ambitious. On his arrival at Old Trafford, he told the media My greatest challenge is not what’s happening at the moment, my greatest challenge is knocking Liverpool right off their f*****g perch!

Liverpool was the most successful football club in England when he took over, and he envisioned taking Manchester United beyond that. He could see past the immediate present of the club being way behind Liverpool. In his tenure, United’s 13 titles compare to Liverpool’s two, edging United to a 20-18 cumulative lead. He achieved his vision.

The board shared Ferguson’s vision, and so even though he didn’t have much success for the first three years, the board learned the lessons of its predecessors.

This will endure too, look at the way he’s retired, he’s had a huge part in planning his own succession. That speaks to the team and culture at the club. Rather than retiring and going off into the sunset, there’s a view that ‘these are the values, and we want to continue it’.

2. A boardroom focused stability and the long-term. The model of ownership highlighted above means trigger-fingers in the boardroom. At United, the board backed their man and trusted him to get on with it. Wanting instant results, most boards now sack managers after a single bad season. United’s board has bucked this trend and reaped the rewards.

In 2000, at a time when United’s dominance was being questioned by Arsenal’s “Invincibles” and Chelsea’s influx of Roubles, there was no urgency in replacing him. The emergence of Manchester City with Dubai backing achieved a notable success in 2012, but a year on, City are back to the drawing board, their blueprint lacking any conviction. Red faces in Manchester, literally.

At least some of Ferguson’s personal clout can be attributed to his longevity, managing United for longer than most of his players have been alive. There’s a whirl of instability around many of the larger clubs, Chelsea epitomising this stop-start leadership frenzy.

Ferguson’s tenure made United a very stable organisation where players could just focus, and the resulting continuity and stability has been a point of difference. Yet Ferguson combined this stability with an ability to change things up as his competition evolved. He wasn’t just able to build one successful, title-winning team, he was able to regenerate that team over and over again, against the backdrop of a sustained long-term focus.

3. Loyalty. Colin Powell, formerly a four-star US Army General said Success is the result of perfection hard work, learning from failure, persistence – and loyalty. It’s an old-fashioned human value, but loyalty – of club to manager and vice versa – is why rival fans are envious at this time.

Research at Warwick University has shown the average English manager’s tenure at a club has fallen from 3.12 years in 1992, when Ferguson was in his sixth year, to just 1.36 years in 2012. The research shows that a high managerial turnover doesn’t provide success.

This loyalty has turned United from a team languishing in 21st in the old First Division to 13-times winner of the Premier League under Ferguson. The frenzy of seeking short-term success and making changes in leadership if not achieved is evidenced by West Ham’s loyalty to its managers: 10 managers in the first 106 years; six different managers since 2001.

That faith in far-off goals has characterised Ferguson’s tenure, and that of his replacement David Moyes, a man who has patiently plied his trade at Everton for a decade on a tight budget but with ample and consistent relative success. Moyes had consistent personal support from his board. Giving Moyes a six-year contract showed United will be looking to the long term with the appointment, rather than a quick fix. Glory comes with loyalty and allegiance in the top-team, and patience.

This contrasts sharply to the infidelity shown by Mourinho, a populist rival manager who has achieved short-term success with a number of clubs. However, Mourinho personifies the celebritisation of headline grabbing ‘look at me’ leadership. He has yet to build a platform for sustained organisation development and growth, epitomising the ‘gun-for-hire’ leader for a board seeking a quick fix, and it always ends in a tantrum, tears and a tumultuous exit.

4. Management Mastery Short-term pressures that do not contribute to the long-term vision, are distractions, yet Ferguson managed to achieve continued success each season whilst constructing a long-term plan. One key theme permeates much of the discussion about Ferguson – a condemnation of short-termism and the promotion of long-term thinking.

Abandoning short-termism for the longer horizon, it seems, would cure all ills and transform companies into forces for good. The reality for most businesses is more complicated and requires a more nuanced approach. Leaders face two daunting challenges as they embrace the value of long-term thinking and strive to create sustainable businesses. Ferguson developed a mastery of defining the long term and embedding it into today’s operations, juggling short and long-term goals.

Much of the confusion can be cleared when companies distinguish between a long-term perspective and a long-term planning horizon. The perspective provides a guiding star that leads the company into the future while the planning horizon must be more practical. It must provide enough scope to think radically, but not so much that it is abstract. Ferguson’s mastery of the art of football management created a meeting point where long and short-term needs connected.

Ferguson won 65% of Premier League matches, 13 titles; in over two decades of the Premiership, Wenger with three titles is the closet rival. His first league title came nearly seven years after he started, a shaky start. However, United hadn’t won a title since 1967, 19 years before Ferguson stepped into the role.

In business, we don’t play the long game any more. Equally, if the three barren years Ferguson had at the start of his United career were to be repeated by Moyes, despite the long-term philosophy he has embedded at the club, would Moyes be supported with such benevolence?

Long-term thinking in a short-sighted world perhaps best sums up Ferguson’s management legacy. He had vision, supported by the board, loyalty as a key cultural tenet within the organisation and his own mastery of the art of management. Yet you can’t grow long-term if you can’t eat short-term. Anybody can manage short. Anybody can manage long. Balancing those two things is what management is all about.

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