With every dollar an organization want to spend, there exists a choice: a choice between investing that dollar to grow the business or investing it to grow in the future. The choice, many a times, is seen as investing for near term returns versus long term gains. The answer has been and will always be unclear and difficult. The need is to take a call depending on the situation you are in and where you want to be.
Here are some pointers to help you think through the same:
- It can be seen as a choice between a dollar of investment in incrementally improving the core and gaining in the near term versus a dollar invested in a growth business that might take years to incubate but would ensure long term gains and growth of the company
- Remember, the long terms investments can become the base or the very foundation of competitive advantage in a fast paced and crowded market. They will help you invest in innovation, new products, services and capabilities. This competitive advantage may not be easily replicable simply because not everyone invest for it at the first place and a unique cocktail of time, culture, strategy, vision etc. goes into its making.
- The market reality is stark. Technological environments are changing at a never before pace, consumers are much more empowered, demanding and fickle in their loyalties, product lifecycle is becoming shorter and competition is becoming fierce with lowering of entry barriers in many industries. Long term gains and growth can no longer be simply shoved under the carpet for quick returns. That may turn out to be a risk to your very own existence.
- In fact, decreasing investments in diversifying your corporate portfolio may increase the risk that the pace of disruptive change in your industry has a cataclysmic effect on your business.
These are some of the reasons you will find Amazon, Google, Apple and other respected enterprises making huge bets on long term growth and that has made them last for so many years, in so many countries and amongst so many players.