What is the difference between invest and spend? In the end, the resources are consumed whether we are investing or spending them. Distinguishing between investing and spending can help you make better decisions.
Spending a resource is applying that resource with the expectation of a near term return. Time spent on sales calls and money spent in advertising is expended in anticipation of a tangible and short-term return on that investment. Even if each sales call does not result in a sale there is the expectation that a certain percentage of those calls will yield results.
Investing a resource is expending the resource with anticipation of a future return. Investing resource in strategic planning and leadership development can result in longer-term capabilities and benefits.
The reason for differentiating between the two types of resource allocation is that if the decision allocating resource is bound by how quickly the return is realized the organization may be harvesting nickels and dimes when they could be investing in capabilities resulting in five and ten dollars.
There are two places for delineating between invest and spend. Those places are time and discrete monetary amounts. Time is a perishable resource and discrete monetary amounts can be held and expended at key points in time.
We are always looking for a return on our expenditures. The challenge is one of balance. We cannot spend all our time and money on looking for long-term capabilities or we will not generate the income needed for normal operation. Similarly if we expend all our resource in pursuing short-term gains we may find ourselves being rendered irrelevant by competitors who took time to identify new opportunities and invest in them.
So what is a practical application here? If your team does not distinguish between investing and spending time you may want to consider how the team uses time when they are together. In rough numbers what percentage of meeting is spending time versus investing time? The same question applies to your budget.
Another observation is how much resource goes working around instead of addressing issues? The failure to invest often results in larger spends to get near term results. If expenses are outpacing revenue it may be because you are not making the right long term investments.
Consider whether your team is investing enough time in longer-term capabilities. It is hard to go from a discussion of day-to-day matters and switch your thinking to long-term issues. You may want to set up separate meetings to look only at long term and put the short-term things on a parking lot of issues to be dealt with later.
Don’t be discouraged if some of your investment time gets spent do to urgent matters. Just keep working on making that time available. The irony is that the really hard problems are those that take more time to solve, often because they are not routine.
This is not something that needs overthinking. It is just a simple question of balancing the resources spent on near term issues with the time invested in longer-term capabilities. You may want to invest some time to think about that.
© 2016 Differentiating Strategies, LLC