3 Steps to Setting Business Goals For Success

By January 9, 2015Strategy

Allow 2016 to be the year you achieve your goals with these simple goal setting rules.

3 Steps to Setting Business Goals For Success

“In absence of clearly defined goals, we become strangely loyal to performing daily acts of trivia.”- Author Unknown

What do I want to change? What do I want to stop doing? What do I want to do better? The idea of setting goals is far from new – the study of best goal setting practices certainly goes back a few generations.

Many of us have heard of the acronym SMART for goal setting – perhaps so often that you have become numb to it. In fact, SMART has been used so much that the term has metastasized into multiple meanings. See one interpretation here versus a different interpretation here.

I suggest that we shorten, combine, and simplify the SMART to the following:

Clear and Measurable Goals

One of the most common mistakes in goal setting is creating goals that are poorly defined. Poorly defined goals are a problem for multiple reasons. First, it is difficult to determine if the goal has been achieved, and second, there is often confusion among participants regarding how to move towards the target result.

For example, Double the Company is a useless goal on a number of levels.

Double what?

Headcount? Units sold? Revenue? Profit?

By When?

Next Year? Next Week?

What Counts?

Revenue from joint ventures? How about acquisitions?

…and in the case of using the term ‘double,’ we should also define the baseline.

A much-improved example of this growth goal would be;

Increase sales revenue from core products from $10 Million in 2015 to $15 Million in 2016.

This creates a clear target and basis upon for creating more specific subgoals (via departments and individuals) in which employee performance can be measured. For example, once we have set the $5 Million growth in core products goal, we can now assign goals to groups – maybe by product line, geography, or business unit that directly attribute to $5 Million in growth. Remember – these sub-goals should roll up to the larger goal during this period of time.

Depending upon the size and complexity of your organization, goal splitting process can be repeated until the goals reach the level of individuals.

Realistic and Achievable

There is always a balance between making goals too easy to reach and making them unreachable. This is the psychological part of goal setting.

Most leaders (especially entrepreneurs) tend to error on the side of being too aggressive. That tendency that helps them deal with adversity and see the glass as half full is counterproductive when it comes to setting goals for the team.

I have a long list of stories that go like this: The CEO tells me that the company is going to double its revenue this year. However, when I talk to the leaders of the 3 business units, they each see a max of 25% growth if all goes well. Many leaders feel that this top-down approach will encourage their team to work harder. In reality, the process becomes demotivating when it becomes clear to the team in Q1 that the big goal is unreachable and their bonuses are unattainable.

Here’s a better plan: Build your goals from the bottom up rather than from the top down. The buy in created by building your goals based on the commitment individuals and/or subgroups creates a huge advantage. Psychologically, team members will fight much more aggressively for a goal that they have set than for a goal that has been dictated to them.

You should challenge anyone that is not stretching enough on their targets, but at least, when you are done, the targets will be theirs. To be clear, I’m not suggesting that we shouldn’t be aggressive with our goals – I am, however, saying that unrealistic goals create an unhealthy business climate.

Aligned and Relevant

This last piece is what ties the goal setting process from a specific time or within a specific business unit to the long term goals of the entire organization.

When setting your goals ask these questions:

  • Do these departmental goals align with the business goals?
  • Are my 2016 goals relevant to my 3 year or 5 year goals?
  • How do my business goals fit in with what is important to the rest of my life(check for conflict with things that are important to you in the areas of family, health, religion, etc.)?

These alignment questions point to the fact that no goal setting is done within a vacuum. There are always outside influences and we neglect them at our own peril.

Setting 2016 business goals.

To gain the most value from goal setting, the process should combine short term and long term goals and also include goals for the organization as a whole aligned with departmental and personal goals.

As you can see, this process is not simple – getting it off the ground the first time can be hard work, but the benefits are worth it.

The good news is that there are many great tools out there to help you with this process. One of my favorites is Align, which provides a coordinated method for building and aligning organizational goals as well as an easy to read dashboard that makes it easy to check progress in real time.

A good tool should both walk you through the process and provide you with an easy method for tracking progress and resetting the goals periodically.

  1. If you have any stories about how this type of thinking (or completely different thinking) helped you in goal setting, I’d love to hear about it
  2. If you are struggling with an issue around goal setting, please reach out. I’d be glad to work with you to see if some of my experience could help you navigate your situation.

Bob

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