That's Management!


By Jack and Suzy Welch Since there is such a bias in the markets for short-term results, how can you prepare for the long term? — Wayne Abernathy, Washington, D.C.

In a word, that's management. Balancing the demand for quarterly results with the pressure for a profitable future is what good managers do for a living. Sorry if we sound exasperated, but every time we hear this question, we wonder: What do you think you were hired for? You were hired to wrestle a paradox—and pin it to the mat. And not just once, but over and over again.

Look, anyone can manage for the short term. Just keep squeezing the lemon, wringing out costs until there's nothing left but the pulp. And anyone can manage for the long term. Just keep telling people: "Be patient. Our strategy will pay off in time." The mark of a leader is someone who has the rigor, vision, and courage to do both simultaneously.

Take the example of managing people, a true short-long balancing act. Of course you want to motivate your team to deliver immediate results. You can do that with incentives and rewards, clear goals, and a passionate attitude about winning—the more passionate the better. But you can never stop thinking about developing your people, too. That means sending them to internal training programs or outside courses, giving them different experiences and stretch assignments, and encouraging them to take risks. Those activities may not deliver instant results, but they're an investment in the future that you must make.

It's the same story with managing r&d. Obviously, you need to fund projects that will improve and expand your existing products. That's usually money well spent, with relatively quick and certain returns. But some portion of your budget also needs to be earmarked for the kind of research that will deliver results in several years. Now, how much should go to each investment bucket? Your call, boss.

Perhaps the most common managerial balancing act has to do with marketing. With one phone call, you can take the easy way out and cut your advertising budget 20% to 50%. That will drop the savings right to the bottom line, with no sales impact for a quarter or two and no blood spilled in terms of programs or people. But what about the long-term hit to market share and brand? That's the judgment call, and you're the judge.

Work requires dozens of decisions a day, but yours is the über-question of them all. As a manager, you'll spend your career answering it.

Companies let go of troublesome employees. Is it ever a good idea to apply the same practice to troublesome customers? — Matt Silver, Wichita

You mean, is the customer really always right?

The obvious answer is yes. You can't build a business without trying to satisfy every customer, even cranky, annoying, or unreasonable ones. Customers are like relatives. You can't pick them, so you better learn to love them.

But—and this is not an insubstantial but—there are some circumstances where that old adage about customer supremacy can actually be destructive, and it makes sense to say no or even good-bye.

The first is easy: It's when a customer's demand for price destroys your profitability, or worse, creates industry pricing chaos. That's when you have to hold the line and dump the customer even if it drives your salespeople crazy. The second circumstance is similarly unsustainable: It's when a customer demands a one-off product that sends your r&d group in the wrong direction, away from your own strategy and financial goals. Again, this is a case where your salespeople might be hollering for support but where the long-term diversion of resources is a killer. Unless it is an exceedingly profitable customer, you have to just say no.

The third circumstance is more nuanced. It's when a customer disrespects your people. Now, sometimes your big customers—the market-share monsters—can act a little obnoxious. They own you, and they know it. So with them, you may need to endure some rudeness or outrageous demands as part of the cost of doing business.

It's different when the customer doing the berating is not your meal ticket but just a jerk. Then, your first line of defense is to switch the salesperson on the account, putting in someone with tougher skin and the mettle to say: "Hey, this has to stop." If that fails after a good try, it's time to walk.

Bottom line, we're not recommending that anyone ditch their "The Customer Is Always Right" plaque.

We'd just add a little asterisk.

Jack and Suzy Welch look forward to answering your questions about business, company, or career challenges. Please e-mail them at thewelchway@BusinessWeek.com For their podcast discussion of this column, go to www.businessweek.com/search/podcasting.htm


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