The Challenges of Short-Term Thinking in Innovation

Short-Term Focus Over Long-Term Innovation

Leadership teams start their days by avoiding statements which would destroy future prospects. The combination of dashboards and incentive systems and approval procedures drives teams to maximize their 90-day performance while neglecting their 900-day goals. The outcome produces a portfolio that focuses on small improvements while strategic initiatives remain stagnant and the organization mistakes speed for actual advancement. The guide demonstrates how to identify short-term thinking while using Jobs-to-Be-Done (JTBD) and Christensen’s portfolio framework to make better decisions and establish a 90-day operational cycle which supports current financial needs and future business development.

Internal references include:

https://3msbusiness.store/where-to-begin-when-building-a-culture-of-innovation/

https://3msbusiness.store/how-to-create-an-innovation-strategy-that-works-for-sme-growth/

https://3msbusiness.store/what-startups-can-learn-from-apples-innovation-playbook/

Short-term thinking persists because of specific factors which make it difficult to detect.

Metric myopia. The practice of measurement leads to management activities while simple metrics receive excessive management attention. The current financial performance of revenue and margin stands out clearly but new product indicators remain difficult to interpret.

Incentive gravity. The payment structure of annual bonuses and quarterly targets motivates teams to maximize short-term optimization. The rational approach of teams leads them to select Efficiency and Sustaining work that aligns with near-term goals despite leadership emphasis on innovation.

Gate creep. The evaluation process through stage-gate reviews requires search-stage teams to present TAM and 3-year NPV data at their current stage. The evaluation process on spreadsheets leads to project termination instead of market-based failures.

Narrative bias. Leaders must deal with actual outside demands which include analyst requests and funding requirements and board performance expectations. The main drawback of delayed learning becomes more severe because it leads to increasing uncertainty that accumulates over time.

Christensen & JTBD lens.

A resilient portfolio requires all three elements of Sustaining to maintain current customers and Efficiency to save money and Disruptive to discover new customer needs and growth opportunities. The JTBD framework transforms abstract long-term objectives into specific testable assumptions that focus on customer task fulfillment.

Quick diagnostics: 10 minutes to baseline

The distribution of innovation spending across Disruptive and Sustaining and Efficiency initiatives during the previous 12 months should be evaluated. Your organization lacks sufficient investment in future growth because Disruptive initiatives receive less than 10% of innovation funding while you need to grow.

The average duration from idea generation to obtaining real-world signals through paid pilots or LOIs or pre-orders exceeds thirty days. Your learning process faces a delay because your current approach takes more than thirty days to produce meaningful results.

The frequency of gate meetings showing ROI precision without WTP evidence indicates evidence asymmetry. The costs receive more attention than the value which remains theoretical.

The number of projects that use budget funds without producing new customer signals exceeds sixty days.

A product leader should be able to approve tests under US$25k that last less than thirty days without needing to submit a complete annual-plan change request.

Internal references include [Internal link: Innovation Stage-Gate Checklist] and [Internal link: Risk Appetite Calibration Tool].

What “good” looks like

The portfolio structure includes three distinct lanes with specific performance targets.

The Disruptive segment (10–20%) includes numerous small experiments that test new customer needs which are not currently served. The success criteria include both learning speed and customer willingness to pay.

The Sustaining segment (50–60%) focuses on improving core offerings for existing customers while its success metrics include market share expansion and revenue per user growth.

The Efficiency segment (20–30%) supports the other two segments by providing funding which leads to cash savings and shorter project cycles.

The financial approach to options involves treating exploration funds as convertible options which receive funding increases based on evidence rather than committee decisions.

The first two stages of search governance require teams to demonstrate which assumptions they have validated instead of presenting three-year NPV projections.

Leaders establish psychological safety through null result acceptance and test reversibility and response time commitments.

A 90-day strategy exists to break free from short-term thinking constraints

The first thirty days of the plan require revealing portfolio facts while safeguarding search activities.

The current portfolio distribution should be disclosed by Finance and PMO teams (Owner). The distribution of innovation spending across D/S/E categories should be shown for the previous 12 months. The organization should establish a minimum Disruptive funding requirement which should represent at least 12% of total innovation operational expenses.

The CFO should oversee the Search Budget which operates as a protected fund. The system allows pre-approval of customer experiments under US$25k with less than 30 days duration without requiring additional approval when they meet established criteria.

The first stage of the process (Owner: Product/R&D) needs a complete rewrite. The first stage of the business case should include the job to be done followed by riskiest assumptions and test plan and decisive signal (paid pilot rate).The PMO should implement “zombie audits” as an owner to force projects without new signals to either graduate or pivot or stop after sixty days.

Days 31–60 — Make learning fast, cheap, and visible

The Product team should operate the Fast-test factory to launch 5–7 real-customer tests which include concierge MVPs and pre-orders and price probes and demand-curve tests. The first WTP signal should appear within 21 days of starting the test.

The PMO should maintain an Evidence ledger that tracks tests along with their learning costs and results and future assumptions. The system should honor all high-integrity project terminations.

The CFO should work as a financial partner to monitor Cost-to-Learn metrics and establish specific graduation criteria that include three successive signals for automatic test budget increases.

The ELT should establish Decision SLAs for leadership approval processes which include 48-hour response times for reversible tests that stay within established boundaries.

The organization should establish permanent capacity during the period from Days 61 to 90.

The ELT should redistribute funds to support the Disruptive floor while eliminating at least two unproductive projects.

The HR department should update performance review systems to include metrics for learning speed and evidence quality and option value generation.

The Product team must include customer-in artifacts which demand WTP evidence through screenshots and LOIs and invoices at each gate.

The CEO and Comms team should create a monthly document called “Bets & Lessons” to present to the company which demonstrates how current achievements support future development opportunities and accepts occasional minor setbacks.

The following meeting systems create rewards for long-term success.

The meeting starts with two sections that show assumptions for learning and existing evidence. Every dollar allocation needs to minimize the most dangerous unknowns.

The Rule of 10 states that tests which are reversible and cost less than $10k and take less than 10 days and use less than 10% of team time will automatically receive approval.

The team should conduct a pre-mortem analysis followed by a commitment phase which includes five minutes of failure prediction then test locking and measurement before deciding.

Paid pilots together with pre-orders and usage thresholds produce better results than both intuition and HiPPOs.

The session concludes with the ledger entry of results followed by documentation of changes and identification of the following assumption to prevent continuous disputes.

Internal references include the Concierge MVP Playbook and the Portfolio Review Cadence and the Leadership Decision SLA Template.

The following performance indicators demonstrate your organization’s progress toward breaking free from short-term thinking.

The percentage of innovation spending dedicated to Disruptive initiatives should reach 12% or higher within the first 90 days.

The average time needed to obtain the first signal from new bets should not exceed 21 days.

The evidence-based kill rate for search stage projects should range between 30% and 50%.

The cost of learning about each assumption should decrease from one quarter to the next.

The number of zombie projects should decrease by 50% before Day 90.

The number of stage-gate rework cycles should decrease by 30% during the first 90 days.

FAQ (for the “we can’t miss the quarter” concern)

We must protect our current financial performance.

Don’t. The funds for Disruptive tests should come from Efficiency gains while conducting small reversible tests that are protected from interference. The information you acquire at a low cost helps you prevent major late-stage financial losses.

Investors will react negatively to our business decisions.

Investors react negatively to unexpected events. A consistent pattern of small option bets with transparent learning outcomes reduces the risk of guidance errors while creating a believable long-term business strategy.

Our business sector operates at such a fast pace that we cannot develop long-term plans.

The need for options becomes more important because of this situation. The organization should focus on developing flexible portfolios and systems which convert unpredictable situations into business advantages instead of creating rigid five-year plans.

Sources & further reading

The WIPO Global Innovation Index (annual) provides country profiles and input/output pillars to help organizations determine their best long-term innovation investment opportunities. https://www.wipo.int/global-innovation-index/en/

The GEM Kingdom of Saudi Arabia National Report 2022/23 provides essential information about KSA’s entrepreneurial landscape and ecosystem development and business challenges which helps organizations create long-term strategic plans for the region. https://www.mbsc.edu.sa/wp-content/uploads/2023/05/GEM-KSA-National-Report-2022_23_EN.pdf

The official Vision 2030 portal for KSA provides information about national development priorities including industrial transformation and digitalization and research and development programs which impact long-term investment strategies. https://www.vision2030.gov.sa/

The OECD provides resources from 2023 to 2025 which focus on long-term investment and productivity to support patient capital and innovation at both policy and firm levels. https://www.oecd.org/finance/long-term-investment/

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