BK, MN, BB, and I were talking about mergers and how companies are managed afterward. The doomed AOL/Time-Warner combo (and split earlier this year) came up.
This got very quickly into the question of how much forward thinking a CEO should do.
I won’t carry you through the discussion. I’ll leave you with our conclusion: A good CEO looks ahead, but he gives priority to shorter-term goals.
There are two reasons for that:
1. As the bottom-line guy, the CEO’s primary job is to make sure the current year is profitable. That means he must give priority to those projects that will bring in profitable dollars soon, not later.
2. Long-term vision is based on long-term prognosticating, which is never reliable. (Over 70 percent of John Naisbitt’s “Megatrends” predictions were wrong. The Wall Street Journal’s technology predictions between 1958 and 1989 were 80 percent wrong.)
In takeover or turnaround situations, you must have three perspectives:
What the business could be in seven years.
How it will perform two or three years ahead.
What profits it will bring by year’s end.
Look at all three, but make your first priority the shorter-term objectives. If you fail at that, you may not have a chance to work on longer-term solutions. Make the best plans you can and then, every three months or so, stand back for a longer view — but not too long.
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