Short-term vs Long-term

How to balance investments

There is a natural tension in people as well as businesses of whether to spend for short-term gain or invest for long-term. For people, this is the tradeoff for spending now to acquire something, an experience, an object, or even someone else’s gratitude through gifts, versus saving and investing that money for a hopeful payoff in the future, assuming the investment goes well or the value of your money doesn’t significantly decrease. In business, we have a similar choice, spend money today that has a near term payback or return on investment (ROI) or invest it in something that has a much longer payout or return. An example of the short-term might be a performance marketing campaign that will bring in new customers right away. An example of a longer-term investment is something like a new product offering that hasn’t found product marketing fit. The payback for that might be 5+ years.

So we all face this short-term vs. long-term dilemma all the time in both our business and personal lives. In this article, I want to focus on how this plays out in digital product companies and specifically with investment in product development. While this is a pretty narrow focus, there is a lot to consider even in this space and can be extrapolated back out into other areas such as marketing should one want to do so.

There are probably innumerable ways to slice and dice product development into different categories. For simplicity, I’m going to divide it into growth hacking and product-led growth (PLG). Growth hacking in product development is a data-driven, creative approach to rapidly increase user acquisition, retention, and revenue with minimal resources or changes. Product-led growth, on the other hand, focuses on creating a product so valuable that users naturally want to adopt it, share it with others, and become paying customers. One might argue that these aren’t the right labels or definitions but regardless what they should represent is an investment that is intended to produce returns in the short-term (growth hacking) and investments that have a longer payback (PLG).

In the book Capital Allocation by David Giroux, the author states, “Management teams should strive to deploy capital at the highest possible returns on a risk-adjusted basis to maximize returns for long-term shareholders.” I think this is a classic approach to managing assets that suggests the need in most cases for both some quicker paybacks and some longer ones that overall produces favorable returns in a balanced way. While the ultimate outcome should be for the long-term shareholders, not someone day trading your company’s stock, the key to this is the phrase “risk-adjusted basis.” Often your short-term investment has less risk because you should know sooner whether it is beginning to pay back, while long-term investments might not even start engaging with customers, much less paying back, until you have many quarters or even years of investment.

For these decisions, I think the best approach is a “portfolio approach” that means evaluating initiatives not just individually, but also in relation to each other and their overall impact on the company's financial and strategic objectives. This approach helps optimize resource allocation, balance risk and reward, and ensure a sustainable, long-term strategy. This approach isn’t just about spreading bets across different time horizons, it also enables smarter, more aligned, and ultimately more effective decision-making across the organization.

First, the portfolio approach reinforces strategic alignment. Not all initiatives carry equal weight in relation to a company’s long-term vision or competitive positioning. By viewing investments collectively, leaders can better ensure that each project or business unit is aligned with the broader goals of the company. Instead of funding every appealing idea or every squeaky wheel, this approach channels resources into the initiatives that are most likely to drive the company forward. It shifts the conversation from “What’s the ROI of this feature?” to “How does this investment support where we’re going?” and “Does it move a strategically important metric?”

Second, the portfolio lens improves risk and return evaluation. Traditional budgeting often looks at projects in isolation. But like a good investor, a product leader or executive team needs to ask: how does this initiative fit within the broader landscape of risk and opportunity? Some bets are low risk and low return; others might swing for the fences. By balancing these across a portfolio, a company can tolerate more ambitious, long-horizon investments while still preserving stability. This diversification cushions against the failure of any one initiative while preserving upside. It also surfaces underperforming investments, initiatives that are too risky or failing to generate sufficient return, and gives decision-makers clarity on whether to pivot, double down, or exit.

Third, it allows for more optimal resource allocation. Rather than funding based on headcount history or political capital, a portfolio view encourages reallocation based on evolving evidence. If one product line begins to show unexpected traction, or if a long-running effort continues to underdeliver, a portfolio framework supports shifting resources accordingly. This fluidity doesn’t just improve financial performance, it builds a culture of accountability and responsiveness.

Finally, this approach creates a more holistic view of the business. When everything is tracked individually and managed in silos, opportunities for collaboration and strategic coherence get lost. Portfolio thinking encourages leaders to step back and look for patterns: which teams or initiatives repeatedly create value? Where are the dependencies and synergies? Where is coordination breaking down? These insights go beyond budgeting, they can inform hiring, org design, even the core architecture of the company’s platform.

Taken together, these elements make the portfolio approach not just a budgeting tool, but a way of seeing and steering the company. It helps answer a deceptively difficult question: not just “Is this a good investment?” but “Is this the right mix of investments for who we are and where we want to go?”

There are several different flavors of the portfolio approach, each with its own strengths and uses depending on the level of abstraction and the type of decisions being made. While they share common principles, aligning resources with strategic priorities, balancing risk and return, and maximizing long-term value, they differ in scope, granularity, and application. Understanding these variations is essential for digital product leaders who want to use portfolio thinking not just as a metaphor, but as a concrete management tool.

Strategic Portfolio Planning operates at the highest level. It looks across the company’s full array of business units, offerings, or markets and evaluates how they relate to one another. This approach is less about individual projects and more about the overarching structure of the business. A classic example might be a conglomerate deciding whether to divest a lagging division or double down in a high-growth sector. In a digital product context, this might involve deciding whether to continue supporting multiple product lines or consolidate efforts around a single ecosystem. The key strength here is context: strategic portfolio planning helps you understand where each part of the business sits in the broader competitive and financial landscape.

The Total Portfolio Approach (TPA) builds on this by taking a more dynamic and integrated view of resource allocation. Where strategic portfolio planning might be annual and relatively fixed, TPA is continuous and fluid. It emphasizes agility, treating resources as fungible and responsive rather than locked into specific silos or long planning cycles. Think of it as a living investment philosophy: instead of “set it and forget it,” TPA calls for constant reevaluation based on current data, market conditions, and internal performance. For product companies, this could mean quickly shifting engineering resources from a declining feature set to an emergent growth area, or rebalancing acquisition spending as conversion trends change. TPA thrives in fast-moving environments where yesterday’s good idea may not be tomorrow’s.

Then there’s Portfolio Management (PPM) in a more formalized, enterprise sense. This is typically a structured methodology, complete with governance processes, scoring models, and executive oversight. PPM is used to identify, prioritize, coordinate, and monitor initiatives that are most aligned with the organization's strategic goals. It’s a disciplined way to manage competing demands and ensure that resources go toward the highest value work. While it can sometimes become bureaucratic if overly rigid, strong PPM creates transparency and accountability. It forces alignment across functions and avoids the trap of local optimization, where every team believes their project is the most important, regardless of enterprise impact.

Closely related but more operational is Project Portfolio Management. This variant focuses specifically on managing a collection of discrete projects, often within a product or technology group. The goal here is not just strategic alignment, but also tactical execution, ensuring that project timelines, budgets, resource availability, and dependencies are managed efficiently. It’s the day-to-day manifestation of portfolio thinking. For example, a product org might manage ten concurrent initiatives with a shared engineering pool. Project portfolio management helps balance the competing demands, resolve conflicts, and surface tradeoffs in real time.

Each of these approaches brings a different lens. Strategic portfolio planning offers altitude. TPA adds adaptability. PPM provides structure. Project portfolio management delivers operational control. Rather than choosing one, successful digital companies often blend them, applying each where it fits best. A C-suite might use strategic planning and TPA to make resource bets across product categories, while individual product leaders implement PPM frameworks to prioritize roadmap initiatives. Meanwhile, project portfolio tools keep execution aligned and humming.

Ultimately, the point is not just to manage money or projects, it’s to ensure the entire organization is pulling in the same direction, making coordinated investments in the future it wants to create.

Applying portfolio frameworks in practice requires more than just spreadsheets, scoring rubrics, or a steering committee, it requires a cultural mindset shift across the organization. Leaders must not only manage resources and risk, but also manage meaning. They have to help teams understand why certain investments are made, how they fit into the bigger picture, and what success looks like across the portfolio, not just in isolation.

Start with transparency. Whether you’re using Strategic Portfolio Planning, the Total Portfolio Approach, or formal PPM processes, success begins by clearly communicating the strategy and the rationale behind resource allocation. If a team is assigned to an initiative with a long time horizon or uncertain outcomes, they should hear explicitly: “This is a bold bet. We’re asking you to try something that may not work. That’s not failure, it’s part of our portfolio strategy.” This framing creates psychological safety and fosters innovation. It also protects teams from feeling like scapegoats if the investment doesn’t yield immediate or even eventual returns.

Operationalizing these frameworks also means maintaining flexibility in how you evaluate success. Traditional metrics like ROI, NPV, or time-to-market have their place, but in a portfolio context, they can’t be the only measures. Some projects are designed to explore new terrain, build capabilities, or uncover unknown opportunities. Their value may be indirect or delayed, but still essential. Leaders must recognize this and tailor their evaluation criteria accordingly, sometimes focusing on learning velocity or early signals of traction rather than final outcomes.

Moreover, leaders need to build in regular, honest portfolio reviews, not just quarterly updates or project check-ins, but real conversations about what’s working, what isn’t, and what to stop. These reviews should consider the overall health of the portfolio: is it balanced between short-term wins and long-term bets? Is it diversified across markets, customer segments, and product categories? Are there too many high-risk initiatives without offsetting low-risk stabilizers?

And when something doesn't pan out, which, by design, will happen, leaders have a particular duty: to frame the outcome properly. For the individual team, the sense of disappointment can be sharp. People pour their energy, identity, and creativity into a product or idea. If it fails, it’s easy to feel like they failed. But this is where leadership matters most. Good leaders remind their teams, “This wasn’t a random loss. We expected some of these projects to be high-risk. We invested in you not because we were sure it would work, but because we believed you were the right team to explore it.” That shift in narrative transforms a failed project from a professional blemish into a contribution to the company's collective learning.

Evaluation, then, is not just about outcomes but intention. It’s about asking: Did the team execute thoughtfully? Did we learn something valuable? Did the project fulfill the role it was meant to play in our strategic mix? When leaders consistently emphasize these dimensions, they reinforce the portfolio mindset and keep morale high, even when results are mixed. If leaders do this poorly, product managers and engineering managers will not want to work on risky projects, which will undermine the entire portfolio approach methodology.

A well-run portfolio doesn’t just allocate capital. It nurtures talent. It encourages experimentation. It respects risk. And most importantly, it creates a culture where progress is defined not only by what worked, but by the wisdom gained from what didn’t.

Balancing short-term gains with long-term vision requires more than instinct or hope, it demands a disciplined portfolio mindset that aligns initiatives to strategy, balances risk with return, and ensures resources are invested where they create the greatest overall value. By adopting and tailoring portfolio frameworks like Strategic Portfolio Planning, the Total Portfolio Approach, and Project Portfolio Management, leaders can foster transparency, agility, and accountability across their organizations. But perhaps most importantly, they can create a culture where teams understand the purpose behind their work, even when the outcome is uncertain, and see themselves as vital contributors to a broader, intentional journey of growth.