There are lots of ways to set and measure goals and objectives. From Key Performance Indicators (KPIs), to Objectives and Key Results (OKRs), and all sorts of other measures and metrics. Some are forward looking statements of what we will do, and some are backward looking measures of what we did do. The common theme is to keep the organization aligned and on track, and to create heuristics and early warning signs when things are going off track.
The question is whether we are measuring the right things, how often should we measure, and how many different measures can we manage. It is easy to get carried away with goal setting and measurements. The more goals you set, the more effort you have to invest in monitoring them, and the easier it is to lose focus. If a team of people share a single goal, they are all focused on that one target. When you introduce a plethora of goals, some members of the team may focus on one set of goals while others focus on a different set. Overall, the team gets distracted and the efficacy of the process is impacted. Fewer goals are generally better than many goals. Focus matters.
When considering how often to check progress or performance, the frequency needs to match the pace of the goal. Some goals take time to achieve, and checking every day is a waste of effort at best, or a distraction at worst. We also need to distinguish measuring from reporting. Suppose the goal is to increase average daily visitors. We need to measure every day, but there is no need to report every day. In fact, trying to manage the goal by reacting to each day’s visits is a waste of effort. It may make sense to report weekly, or bi-weekly, so we know how we are progressing toward the goal, and so we can take corrective action if necessary. Over instrumenting a goal can cause an organization to become distracted by unnecessarily reacting to every minor change. Sometimes we just need to set the course and ignore the small wobbles along the path.
A second challenge is to set goals where we know how to interpret the results, and what to do about them. In other words, are the measures meaningful and actionable. A common approach to defining goals is to make SMART goals - Specific, Measurable, Achievable, Relevant, and Time-bound. The trickiest element is ‘Relevant.’ While the letter ‘R’ makes the acronym work, it also opens up the definition to considerable ambiguity. Something can be relevant, but not very impactful, so is it really a SMART goal, or is it a distraction from what will really change the business? We want goals to be meaningful, or impactful, or critical, or strategic, all of which are stronger definitions than ‘Relevant.’
Here is my formula for goal setting. Start big and work your way down to details. The best starting point is to determine what are the desired outcomes that we can achieve in a finite timeframe. I am an advocate of setting generalized longer-term outcomes. The Supreme Court once said that they did not have a definition of pornography, but anyone would know it when they saw it. Similarly, these generalized longer-term outcomes do not need fine-grained detailed measures, but they should be clear enough that everyone will know we achieved them when they see it. A generalized goal may be to become the leading product in a market. That is enough to anchor behavior, so we do not need to pile on by saying exactly what it means to become the leader, or what measure we will use to confirm our leadership. Being the leader is the goal, and we will know it when we see it.
Once we have our generalized outcomes defined, then we can focus on the shorter-term specific steps that will lead to those outcomes. Each step should be unambiguously defined so we can easily agree when it is achieved. In our example, perhaps to become the leader we need to enter specific new markets, or deliver a new product or capability. Each step toward our outcome should be a distinct and specific goal. The process of getting from one step to the next should be instrumented with meaningful metrics to avoid any ambiguity about whether or not we have achieved the step. I am an advocate of putting the steps in priority order, and/or putting them in chronological order as in a staircase - one step leads to the next.
One last element in my model is to clearly state where we are today. Apply the measures or metrics from each step to the current state of the business, and codify it as the start of the plan. If one of the steps says we are going to have a 30% market share, then publish what our current market share is today so we can see what the transformation will look like. Documenting the current state of affairs helps to answer many of the ‘so what’ questions. For each step, we need to know if it really matters, in other words ‘so what.’ Visualizing the change from today to the future state will illustrate what will be different. If we are planning to go from a 10% market share today to an 11% share in the future, is that meaningful, or impactful? I.e. So what.
By starting with broad business outcomes and working toward narrower goals, we can ensure we focus on what matters, and we will provide the organization with a step by step roadmap to achieve our desired outcomes. What we measure and how frequently we report will flow naturally from the definitions of the steps on our staircase.