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Questions for discussion
1. Where does the leader’s principal loyalty lie? To his or her own
boss? To the shareholders? To the company? To his or her team?
To the desired outcomes? To the shared vision?
2. How do you as leaders manage to demonstrate loyalty to all who
demand it of you when the chips are really down?
3. What do you communicate to your subordinates through your
behaviour about your attitudes to loyalty?
4. What effects do your personal attitudes have on your people’s
behaviour?

Situation three

You are the CEO. An opportunity has arisen that will give your firm a con-
siderable short-term advantage over competition. Exploiting it will, how-
ever, mean diverting resources from a strategic plan that is on track to
deliver your key strategic goals within the planning horizon of three to five
years. The effect of such a diversion will be to delay the achievement of the
strategy by at least a year. It will, however, produce a substantial extra one-
off profit this year and the shareholders, who at last year’s AGM vocifer-
ously demanded a quick return on their investment, will be happy.

Choice 1
Your responsibility as a chief executive is to the shareholders. Exploit the
short-term opportunity. Keep the shareholders off the board’s back in the
short term and try to conserve enough of the extra profit to bring in addi-
tional resources to accelerate progress toward the strategic goals next year
and thereafter.

Research indicates that excessive short-term thinking is one of the key rea-
sons why leaders fail. The leader needs to exercise considerable skill in bal-
ancing short-term and long-term needs. Just as it is essential to ensure
that short-term needs are satisfied for a business to survive into the golden
future of the vision, it is equally necessary to retain focus on the effect that
decisions made today will have in the longer term. Where stakeholders in
the business are concerned it is also necessary to think through the expec-
tations that are being created by decisions made today whether they are
aimed at the present or the future. Shareholders who are enjoying a mas-
sive return on their investment today do not suddenly become patient if
the going becomes tough tomorrow due to lack of investment or an unwise
distribution of profits. Arie de Geus (Harvard) in his research into long-
lived companies and corporations identifies “frugality with resources in
order to be able to invest in the long term” as a common factor in long-term
business prosperity.

At the decisive battle of Gettysberg a majority of the Confederate lead-
ers confidently anticipated an easy victory. One, General Longstreet, saw
no serious reason to fight. The South could gain little more than a morale

102 Key management questions