Reaffirming the Importance of a Long-Term Strategy

A few years ago, I wrote an opinion column for El Espectador titled The Importance of a Long-Term Strategy (July 27, 2020 https://www.elespectador.com/opinion/columnistas/felipe-janica/la-importancia-de-una-estrategia-de-largo-plazo-column/). After re-reading it and comparing it to today’s reality, almost four years later, I can emphasize that its principles remain as relevant as ever. Moreover, I’ve gathered additional empirical evidence that allows me to expand on some of the comments from that original piece.

In the last four years, I’ve had the privilege of leading a professional services firm—by now, you likely know I’m referring to EY, as my LinkedIn profile shows. My experience as Managing Partner, combined with my passion for staying close to teams—whether from clients, the firm, regulators, or my students in the business schools where I still teach—has led me to reaffirm a hypothesis: regardless of the size of a company or startup, a long-term strategy should never be overlooked.

I still believe that financial benefits are important, and I stand by the statement that “cash is king.” However, an overly short-term vision often blocks the path to long-term goals. I must also stress that achieving long-term goals requires accomplishing short-term objectives first. But here’s the caveat: when all energy is directed at addressing short-term demands driven by cash pressures, strategic objectives tend to fade into the background. Furthermore, the leaders of organizations—or even entrepreneurs themselves—often end up frustrated and begin making decisions based more on instinct than on structured analysis.

To avoid getting lost in managing the immediate without direction, education is essential, but above all, having a strong team is critical. It’s also important to recognize that achieving short-term goals often requires business sacrifices. Leaders need to set the example—this means showing the team the willingness to sacrifice in the short term to maintain a cash flow that meets immediate needs.

In that original column, I questioned how much organizations—regardless of their nature—were doing to provide reasonable assurance of return on investment. This question remains relevant today. The key lies in how effective leaders and their teams are in achieving short-term objectives, particularly in terms of cash flow. Let’s not forget that cash flow is always a direct consequence of management decisions. However, what often happens—almost always—is that leaders blame the treasurer (or the person handling that role) for cash problems, and the treasurer, in turn, defends themselves by pointing to various shortcomings. This is common, but it’s wrong. Something needs to change.

The solution, in my humble opinion, is to seek out the root causes of the problem, which are usually straightforward. Typically, it’s a combination of market loss and poor cash collection management, due to weak client negotiations. On this point, I recommend reading my recent opinion, where I mentioned that for a strong strategy, stakeholders should be the central focus, with God being the most important one. You can read the column here.

I also noted that the return on investment should be holistic. This approach will help avoid short-lived ventures and prevent many companies from accelerating their failure, dissolution, and forced liquidation. To support this hypothesis, you can access this research paper I authored. https://produccioncientificaluz.org/index.php/opcion/article/view/30483/31529