In part I of this series on goal setting we talked about the history and research which supports most of today's goal setting theory. We focused on five areas which can affect an organization's ability to achieve the goals they set.
- Task complexity
In this post, I want to talk about the specific steps behind determining what your business goals should be. If you and your team are already 100% clear on what your company goals should be this year, head back over to part I to increase your chances of achieving those goals.
Why is selecting the correct goal so important? Seems obvious, but every minute you are not focusing your employees on the most important things (goals), you are wasting money. Getting to your destination is critical. No company ever just meanders its way to success.
So HOW do you determine what to focus on?
Understand that goals setting should be part of a larger strategic planning process
Setting goals without looking at the long-term vision of the business can lead to setting the wrong goals or having goals which are too short term focused.
Look at the image above. This represents a broader strategic planning process where the top 3-5 goals for year 1 are part of a larger picture.
As the leader, you are trying to lead your business from point "A" (your current situation) to point "B" 5 years from now. Point "B" is your BHAG or your "big hairy audacious goal". You are trying to create a plan which will get you to point "B" as fast as possible. The last thing you want to do is waste time and money.
Your goals are milestones which should chart the path to getting you closer to fulfilling your vision (your point "B").
Lastly, notice that your business should operate within the "box". Your core values (how you will behave) and the core purpose (why you what you do) are things which provide constraints for your vision. Operating outside of these constraints will prevent you from getting to your point "B".
Schedule an off-site with your team & get as many perspectives as possible
When you begin a strategic planning process, attempt to have as much feedback as possible from your entire organization. I've seen leaders (mostly due to insecurity) avoid doing this. Having multiple viewpoints will help you to avoid blind spots.
Schedule enough time to get together as a team. We've found it extremely valuable to facilitate a strategic planning session. This allows leadership to contribute and not get bogged down in running the session or agenda.
Define your Point "A"
Next, spend some time determining the current position of the company. There are a number of strategic planning "tools" that can help to flush out all the issues.
The first of those tools is the SWOT analysis. I've written about this before, but SWOT stands for Strengths, Weaknesses, Opportunities and Threats.
List your fires
Fires are those problems that exist in your business, but never seem to get solved. They suck up time and resources. There are several reasons for this, but you should take the time to ask your employees what those problems are and don't assume you know them all.
Define your Point "B"
There are a number of ways to do this, but ultimately, you want to paint a clear picture of the future (Jim Collins calls this your "vivid description"). I like to arrive at a point "B" in two ways:
Ask questions like, in 5 years we would like to do $XM in revenue, with a 20% net income. We would like to have "Y" employees. We would like to own Z% of the market. Anywhere you can attach some sort of number, do it.
This part is a bit more "fuzzy", but just as meaningful. Ask questions like the following in an attempt to develop as clear of a future picture as possible.
Our customers will say _________________________ about our company
Our employees act like this (list some behaviors or core values) ___________________and will say _________________about our company
We will own ______________% of the ___________________market
We will sell the following products and/or services ____________________________________________
Our products and services would do __________________ for the market (what positive impact will your products & services have on the market / world?)
We will be a leader at ____________________
Review all this feedback, then ask the question - "Based on all we know - on what should we be focused over the next 12 months?"
It's best to get as much feedback on this question as possible. Ask your team to articulate what they think is most important. Once you've developed your list, ask the team to rank order the goals or priorities. This is especially helpful if you end with more than 5 items. The objective here is alignment around what everyone thinks are the most important things that need to happen.
Assign a "who", due date and "KPI"
Once you've determined your top 3-5 goals, it's time to assign some accountability (remember the commitment piece from Part I of this series?), a due date and a way to measure success (a KPI or key performance indicator).
For example, say your goal is "To increase revenue in 2017". A more appropriate goal would be, "To increase revenue 5% from $5.0M to $5.5M by 12/31/2017".
Now for the hard part. You need to pick someone on your team who will ultimately be responsible for the goal and reporting results.
Define a check-in interval and a "Red", "Yellow" or "Green" criteria for the goal
Now that you've done the hard work of creating the goal and assigning the accountability, you need to define the check in interval. I suggest monthly, but some goals require a more frequent or less frequent check-in.
In Envsionable, you can create goals and KPIs (with specific thresholds) all in one platform, making this process super simple.
You can see below that the monthly result was $467,234 vs a goal target of $458,333 and the indicator was "green".
We set the red, yellow and green values as follows:
Hopefully this blog post has helped to demystify the process of setting your company's goals.
At Envisionable, we can help facilitate the goal setting process and provide you with a platform to stay on track so you can reach point "B" as fast as possible.