The End of 90-Day, Metric Driven Leadership?

by Oct 20, 20080 comments

Years ago, I ran a private company. Our major competitors were publicly traded organizations who ran their businesses to meet the expectations of Wall Street analysts and shareholders. We, on the other hand, enjoyed the freedom of privacy which enabled us to make decisions based purely on our own criteria rather than the demands of outsiders.

For 20 years we have seen leaders and corporate boards in public corporations keep one eye on the analysts and the other on the appropriate goals for their organizations. But serving these two masters was never going to be sustainable, and eventually the game came undone, ending in bailouts, takeovers, collapses and fear.

But this may turn out to be good news. In these current market conditions, many publicly traded companies have no hope of matching the quarterly earnings from their previous periods, as they had succeeded in doing so frequently before. Missing these targets will be the norm for a while and analysts and shareholders will reluctantly resign themselves to it.

So, an opportunity presents itself: If leaders are going to miss their ambitious earnings goals anyway, why not invest in the development of people to compensate for the drought that has prevailed in this area for so long? A larger investment in professional development will hit the earnings statement now, and will make little difference to the current quarter’s performance. But it could make a lot of difference to the long-term health of the organization and its most important asset – people.

And long-term thinking, based on inspiring people more than analysts, will be a welcome change in leadership style.