Your Guide to Setting Business Goals That Work (And Common Problems to Avoid)

setting business goals - woman leading meeting Setting business goals can be a challenge.

Not only does leadership have to decide on the best goal or goals to pursue, there is also the issue of implementation.

All too often a new goal or pursuit is paraded in organizations, only to fizzle out over the next weeks and months until the next giant push.

Sometimes there is no buy-in from the employees – and sometimes not even buy-in from leadership.

It doesn’t have to be that way.

No matter the size of your business or organization, you can set business goals that are effective, push you forward, and receive buy-in from those involved.

In this article, we will cover:

  • Common problems with setting business goals
  • How to create the goals
  • Steps you can take to implement them into your company or organization
  • And extra tips to help you along the way.

We will also discuss two popular methods for setting goals in a business: the 4D’s and OKRs.

Let’s begin.

 

 

Common problems when setting business goals

There are some common problems that many companies face when creating business goals. See if you have ever faced any of these:

 

No buy-in from leadership

Sometimes there is no buy-in from leadership. It’s a goal that is pushed, maybe by the CEO or a few of the leaders, but the others aren’t on board.

Or maybe the top leadership pushes it, but the middle management/leaders aren’t on board.

What happens? If leadership doesn’t buy in, the other employees won’t either. Even if they do initially, when they see the leadership not pursuing it, they will likely stop.

Also, if leadership is not leading the charge, the chances of the goal being finished are slim.

No buy-in from employees

Another reason for failure is that there is no buy-in from employees. There can be several reasons for this.

  • If the culture is poor, such as a culture of gossip, negativity, cynicism, and so on, there is likely to be no buy-in. Your first goal as leadership should be to fix and repair the culture.
  • Everything is top-down. There is no input from the employees. Employees are less likely to buy in if they aren’t part of the process in any way.
  • There are too many goals and no one can focus on any of them. (We’ll dive into some of these below)
  • Goals are given lip-service at a meeting, but they are rarely or never repeated again. It never becomes part of the culture and everyday practice.
  • The leadership above them did not buy-in to it.
  • The goals are written in corporate speak (and in long-form)

 

There are too many goals

When there are too many goals and priorities, it keeps anything from being accomplished well. Employees who do work on the goals are not able to give needed focus on any goal because they are having to give some to each.

And, when there are too many goals, it can cause overload and burnout, and no goal ends up completed.

When there is only one or just a couple of goals, employees can focus and put all their energy into that goal.

 

Goals are written in corporate speak (and written in long-form)

Corporate speak is the bane to successful goals, missions, visions, etc.

Too many mission statements are written in corporate speak. “Our mission is to blah blah blah blah”. Generally, no one really looks at the mission statement or knows what it really says.

Side note: what is more effective as a mission statement? What inspires? A 200-word paragraph written in corporatese or a simple statement or bullet list? For examples, simple statements such as “to save lives”, “to provide the best medical care possible in our state”, “to provide quality, fashionable clothing to our customers”, and so on are much more powerful and inspiring.

When you write your goals in corporate speak or in long-form, you ruin the goals. They don’t inspire. They don’t motivate. They don’t push people forward.

Think about President’s Kennedy goal to put a man on the moon. To paraphrase, it was “To put a man on the moon andbring him back safely within a decade.”

Short, simple, inspiring. Let you’re your goals be as concise as that.

 

Businesses quit to soon on their goals

Just like the majority of people who start New Year’s goals break and drop them within the first few weeks, businesses sometimes do the same.

There is a new push, a new goal, fanfare and all, but after a while, it slowly fades away like nothing happened.

They quit. They stop putting effort into it. They let the everyday tasks overtake the goal.

They don’t preserver through difficulties. They don’t adjust along the way as needed.

And so it ends, another goal dead on the threshing floor.

 

Have you ever seen these common problems before in your company? Hopefully, this list will help you overcome and/or prevent them from happening in the future.

So now we know some of the common problems, how do we go about setting business goals?

Let’s start with Step 1: finding and choosing the right goal.

 

Finding and choosing the right goal(s) to pursue

Before we dive deep, let’s do a quick recap of one of the common problems companies have: setting too many goals.

Too many goals hurt the effectiveness of the goal. It stretches people thin and no goal gets the focus it needs. It’s also not very inspiring when you are pursuing 5 or 10 different goals instead of everyone coming behind one big goal.

So how many goals should you have?

You want one.

Maybe two. Three if you must, but the more goals you make, the less likely they will get done.

One goal allows you to focus. That’s why it’s important to choose well.

 

Brian Tracy’s 4 questions

In his book Goals, Brian Tracy gives the 4 questions he asks every time he consults:

  1. Where are we now?
  2. Where would we ideally like to be in the future?
  3. How did we get to where we are today?
  4. What do we do to get from where we are to where we want to go?

 

Know where you are

First, you have to know where you are.  There are many ways you can do this:

  • Reports, stats, and charts
  • SWOT Analysis
  • Employee input
  • External surveys

You may look at your financials, your website stats, growth charts, error rates, and so on.

You may want to hire someone to do a SWOT analysis, or do it in house.

Employee input is always valuable. They see and know things that upper management often does not see.

And the list could go on.

If you don’t know where you are, you won’t know the steps you need to take to get from where you are to where you want to go.

Be realistic

When you do that, be careful not to paint a rosy picture. Face reality.

If the baby is ugly, say the baby is ugly. You can’t fix it if you lie about it.

Jim Collins in Good to Great talks about facing the brutal facts. Make sure you do that. Face and live in reality; don’t play pretend.

 

Where would you like to be?

Now that you know where you are now, where would you like to be?

Where would you like to see the company in 5 years, for example? Where would you like to be at the same time next year?

If planning long-term (such as 5 or 10 years), you will likely want to set those goals and then set a sub-goal(s) for the year that you can pursue toward those major goals.

Think about the different areas of your company. Where would you like each area to be? Is there something new you want to pursue?

READ  Your Guide to Stretch Goals: How to Set Them for Exponential Growth

 

How did you get where you are?

You are where you are at in the company (and in life) because of choices and actions the company (and you) made.

What went well and what were your successes? What decisions and actions led to those?

What didn’t go well? What were some failures? What actions and choices led to those?

Knowing how you got to where you are can help you make better decisions for the goals you will set and for the future in general.

 

What do you need to do to get from where you are to where you want to go?

Remember, you got where you because of what you are doing. If you want to be somewhere else, you must do something different.

What steps and actions will you need to take to get to where you want?

 

Brainstorm

Once you’ve done your research, brainstorm. Get the leadership and anyone you think should be in the meeting (be careful though – too many people can cause issues. Try to keep the group relatively small.).

Start writing out ideas of goals and where you want to be.

Think what not how. This is not a time to critique ideas or shoot things down.

Every idea should be written, no matter how crazy or off the way. In fact, sometimes the craziest ideas are best because they spawn even better ideas.

There is no criticism or putting down ideas. There is no evaluation of ideas. That comes later. What comes now is an open welcome forum for any and every idea.

Write down every idea the way it is said, as much as possible.

Think impossible. Think, “If money/resources/manpower/etc. was not an issue, if it wasn’t impossible, what would we want to happen? Where would we want to be?”

Gather input from employees

Great ideas for goals can come from employees.

They are on the front-lines. They know the equipment and the processes. They can come up with ideas that can save money or new ideas that could earn the company a lot more money.

Taking time to get feedback and ideas from employees can be invaluable.

 

Fight the temptation to do a plethora of goals

You brainstormed and you probably have tons of great ideas for goals. You may be tempted to do multiple goals.

Don’t. I’m not saying you can’t do 2, maybe 3, but again, when you do multiple goals, you lose focus and your employees lose focus.

When you have one large, challenging, inspiring goal, people can focus and put their energy into it.

When you have 5 or 10 goals, there is no focus, there is no inspiration, it’s “I’ve got all these things I’ve got to do now”.

 

Deciding on which goal to pursue

You’ve researched, you brainstormed, you solicited feedback, and you are ready to decide.

So how do you choose which goal to pursue? That’s not always easy.

Each person is likely to feel this or that area is more important. Sales is more important. Culture is more important.

But that is the wrong questions to ask.

Chris McChesney, Sean Covey, and Jim Huling in The 4 Disciplines of Execution say don’t ask “What is most important?” because opinions will always be different.

Instead, ask, “If every other area of our operation remained at its current level of performance, what is the one area where change would have the greatest impact?”

In other words, with everything staying the same, what one thing would have the greatest impact on your company?

Choose that goal.

There still may be disagreement, but it rephrases the question in a better way and changes focus.

Ideally, you want as much consensus as possible, because the more consensus there is, the more buy-in and ownership.

However, in whatever way the goal or goals are decided, there has to be complete buy-in from all leadership. If not, you will have issues.

Buy-in doesn’t mean there has to be 100% consensus, though that would be good. It means that once it’s decided, everyone is behind it 100%.

 

Stretch goals (BHAGs)

If you really want to move forward with your company, you need to set goals that stretch you.

Charles Duhigg in Smarter Faster Better says stretch goals are the goals that may seem “impossible” and that you don’t know how you will get there.

Jim Collins in his books recommended similar goals called BHAGs (Big Hairy Audacious Goals).

GE airplane engine defects

An example Duhigg gave of a stretch goal was with Jack Wells and GE. Each division had to set a stretch goal. The division that made engine airplanes gave a goal of reducing defects in finished engines by 25%.  They thought they could do it easily by hiring some quality assurance employees.

However, Jack said to make it 70%. Despite their protest of it being impossible, he gave them three years to complete it.

And complete it they did. And to do it, they ended up changing hiring standards, training, and how the factory was run.

They reduced defects by 75% and reduced manufacturing costs by 10%.

The Japanese bullet train

Another example Duhigg is the Japanese bullet train. The train between Tokyo and Osaka could take up to 20 hours, and it carried much industrial supplies and thousands of people every day.

The head of the railway system gave a goal of a train 120mph. The engineers said impossible; he said do it.

So change by change, little by little, they increased the speed of the train. They made tunnels through the mountains. They rebuilt gears, reinforced rails, and so on.

In 1964, the first bullet train left Tokyo and arrived in Osaka three hours and fifty-eight minutes later. The bullet train was a significant part of the rebuilding of the Japanese economy.

Man on the moon

President Kennedy’s goal of putting a man on the moon and bringing him back safely was a stretch goal for many – it was something they didn’t know how to do yet.

Stretch goals push you toward the impossible

Stretch goals push you to the “impossible”. If all you ever do are goals you know you will get, you will not move forward.

They grow and change your company. NASA had to do things differently with the goal of getting a man on the moon.

The engineers made many changes to make a train that will get 120mph.

The airplane engine manufacturing division made changes in its hiring, training, and the way the factory was run.

And because of the changes and growth, they did what others thought impossible.

Stretch goals challenge your employees

Easy goals are not inspiring. Easy goals don’t get passion and momentum going. Challenging goals do.

Think about yourself – what would inspire you more and bring more passion from you: something easy that you know you can do, or something that will stretch you a little bit.

Sports example: if you play basketball, and you normally score 15 points per game. Setting a goal to make 12 points for the next game isn’t going to challenge you. You won’t try very hard.

However, if your aim was 18 or 20 points, then you will push hard. You will put all your effort into it to make those points.

It’s the challenge that pushes you forward.

And when you accomplish it, there’s that much more joy. The more struggle there is, the more accomplishment we often feel when we finish it.

If there is no struggle, there’s not really a sense of accomplishment.

Challenging goals inspire your employees.

Sub-goals for your stretch goals

Once you set your stretch goal, set sub-goals to accomplish it. You can set yearly goals and quarterly goals to help you get to your main goal.

Each department, as we’ll mention later, can set their own goals that will help you accomplish it.

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While stretch goals may seem “impossible”, setting smaller sub-goals that will move you toward it makes it more real and doable.

 

 

Implementing your goal into your company and organization

Once you know what goal(s) you want to pursue, it’s time to implement it.

 

Writing it out

Short and concise

First, you need to write it out. Remember, short, concise goals are best. They are more understandable and inspirational.

Think of it as each word you put in the goal costs $10,000. Do as few as possible.

Start with action verbs

It’s also a good idea to start with an action verb. There’s no need to put “We will accomplish” “Or we will do..” or “Our company will”.

Instead, “Increase customer satisfaction by 20% by June 2020.”

“Become the top-selling gaming system in the US by January 2020.”

Make it specific

Remember to make it specific. There’s a huge difference between “grow our customer base” and “grow our early adopting customers by 20%”.

It’s hard to measure vague goals, and they are not very inspiring.

Make it measurable

Your goals must be measurable. If they aren’t measurable, you will never know if you reached it and won’t know if you are on track or not.

McChesney and the others in The 4 Disciplines of Execution suggest always formatting it this way.

“From X to Y by when”.

If you can’t quantify your goal, find benchmarks or steps that you can use to know you are on track or have reached it.

Make it time-based

You want a deadline on it. Without a deadline, there’s no urgency. It’s easy to put off and procrastinate on things that don’t have any deadline or timetable.

There’s a difference between your goal and your strategy

Some people recommend writing your strategy in your goal, making it very descriptive and long. I disagree with that for several reasons. One, it makes it long and not concise – so it’s not inspiring or as easy to read.

Second, there’s a difference between your goal and strategy. Generally, your goal doesn’t change, but your strategy might.

Your goal is your aim, the outcome you are looking for. Your strategy is what you are going to do to get to it.

You may try something, and it doesn’t work, so you try something else. You still have the same goal, just a different strategy.

I think it’s good to write out your strategy and plan, but do it separately. If your strategy needs to change, great, change it and get that goal done.

 

Presenting the goal

Next, you need to present the goal to the organization or company.

Many companies have giant fanfare and parties to start a new “goal” which then often fizzles out.

There’s no need for that. Instead, you need the following:

Leadership must buy-in

Leadership must be passionate about it and passionate about implementing it. If they aren’t passionate about it, no one else will be.

It must become part of the culture and everyday work (and repeated frequently)

The goal, and its pursuit, has to become part of the culture. It’s part of who you are as an organization. It must be said and seen frequently.

There should be frequent updates and reminders about the goal. It should be brought up in meetings and talk times.

Often “goals” are presented and given lip service, but nothing really happens. No passion. No movement. No one talks about it much again.

It can’t be something superfluous. It must become a part of everyday talk.

The goal could be posted on internal documents, painted on the wall, or posted everywhere. Anytime you meet, talk about the goal.

Make it part of who you are.

Put your money where your mouth is

Too often organizations say they want something, but aren’t willing to put the money and resources into it.

If you want your employees to be passionate about it, give them the money and resources to do it. Open the doors they need to make the goals happen.

In fact, McChesney and the others in The 4 Disciplines of Execution say that in your weekly meetings about the goals (part of the 4D process), one of the steps a manager should take is to ask and see what doors they can open for their employees to help them accomplish the goal.

Let people know the big picture and the why

Employees like to understand why they do what they do and how it connects to the big picture. Employees that feel like their work has meaning are employees who are more engaged and productive.

When you present the goal, whether as a group or through leaders to different groups, depending on your organization and style, or however you do it, make sure to give the big picture.

Why is the goal important? Why are you pursuing it?

Remember what your organization does and why. Increasing revenue isn’t just about making money. You are helping your customers with a need or want by providing your product or service. The more you sell, the more people you are helping (if not, you may want to reexamine your company).

If you can help your employees see the why and the big picture, it can help inspire them and grow their passion for the goal as well.

It needs to be implemented top down and bottom up

One reason goals fail in an organization or business is that it’s implemented top-down only.

The leadership makes a plan and tells everyone what to do and how. When that happens, there is less likely to be buy-in from the employees.

Instead, you want to implement your goals top down and bottom up. The leadership does need to set the overarching goal. Then let those below set their goals to reach that overarching goal.

So, you will have your one big overarching goal for the company, and each area, division, and even person will have their own goals that will contribute and bring success to the one main goal.

How do you do that? There are a couple of methods you can use that we will cover next: the 4D’s and OKR’s.

 

 

The 4D’s

The 4D’s comes from the book The 4 Disciplines of Execution by Chris McChesney, Sean Covey, and Jim Huling. The basic gist of the book is this:

First, focus on the wildly important

Set those wildly important (including stretch, BHAG) goals.

Second, act on lead measures.

Lag measures are generally what you are trying to accomplish – raise revenue by 20%, grow customer base by 11%, etc. You don’t know if you’ve met the goal till afterward.

Lead measures are different. Lead measures are steps you take that lead you to accomplishing your goal. They are predictive and influenceable.

They are predictable because if you do them, you will (most likely) reach your goal. They are influenceable because it’s something you can directly influence.

For example, if you wanted to increase sales, your lead measures could include:

  • Increase the number of calls per day by X
  • Increase business visits per week by X
  • Increase the return on social media ads by X%
  • Increase the percentage of leads to sales by X
  • And so on.

If you increase those, then your final sales number should increase.

Third, keep a compelling scoreboard.

If you don’t keep score, no one will care.

Create a scoreboard that can simply show your employees what the goal is, their lead measures, where they are today (or this week), and where they should be.

If it’s created by the employees, even better. It must be consistently updated, or it’s useless.

Fourth, keep accountability.

The authors recommend weekly meetings – just for the goal. Your area/division/department/team will have a goal that drives you toward the main goal and a lead measure or two.

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Each week, each person makes a commitment that will move the lead measure forward. They also share what they did toward the last commitment from the last meeting and the results.

The leader/manager will lead with this with their own commitments. He/she will also go over the scoreboard and how well they are doing.

Doing these weekly meetings helps keep people focused and accountable and it also lets you know quickly ahead of time if something is not working and to change it if it isn’t.

Applying this to your organization.

With the 4D’s, the leadership makes the overarching goal. The different departments and areas will then create goals that will bring them to the main goal.

Then, depending on the size of the organization, the next areas create goals, lead measures, and so on.

Each department and area will have their scoreboards and meetings. The leaders of the department will meet with their leaders, and so on, so everyone is held accountable to their goals.

 

OKRs

OKRs stand for Objective and Key Results. John Doerr wrote about them in his book Measure What Matters. OKRs are used by Google, among other companies. They were created by one of the leaders in Intel.

OKRs are similar to the 4D’s in multiple ways:

  • It employs the top down, bottom up method. The main goal is made at the top and sub-goals are created below it by the departments and employees to move them toward it.
  • There’s accountability. Employees meet regularly with their leader/manager to discuss their OKRs.
  • There’s a scoreboard – sort of. Each person posts their objectives and key results so everyone can see them – it’s accountability, and they can look at it and see how far along they are coming.
  • There’s lead measures – sort of. Key Results are the steps you must take to accomplish your goal.

 

With OKRs, The “O” stands for objectives.

Objectives are the goals – they are what you want to accomplish.

They can be the stretch-type goals are general day-to-day work goals of things that have to be done. (in Google, they expect some stretch-type goals to fail – but they expect all day-to-day work goals to be completed 100%).

 

“KRs” stands for Key Results.

Key Results are the steps that you will take to make the objective happen. If you finish all your key results, then that means the objective will be completed. If not, you didn’t add all the Key Results you needed or wrote the wrong ones.

Each person then posts their OKRs where everyone can see them. Each person meets regularly with their team leader/manager to discuss the status of their OKRs.

 

 

4D’s, OKRs, or what?

The 4D’s and OKRs are two methods you can use to implement goals in your business. Whether you use one specifically are pull from them, there are some aspects that you will likely want to use either way.

 

Scoreboards

You want to keep score. People play differently when a score is kept. People need to be able to see where they are and if they are on track or not.

Scoreboards should be simple. Anybody should be able to see very quickly where they are at and where they should be.

The 4D’s recommends having the lag measure on the scoreboard along with your lead measure(s). You should have something showing where you should be this week/day and where you actually are.

 

Accountability & Transparency

There must be accountability. Without accountability, it will fall apart.

The 4D’s is good because it’s a weekly meeting. OKRs doesn’t have a “set” time, but you can do it as you would like. OKR’s also doesn’t have the peer accountability, but you can add that as well if you want.

Having goals posted and a scoreboard up also gives accountability – and more transparency.

Having the leadership post theirs where everyone can see also shows buy-in and that they are committed and transparent as well.

 

Top Down, Bottom Up

As we talked about earlier, you need goals coming both from the top down AND the bottom up. Otherwise, you will have a lot less buy-in.

 

Lead Measures

Lead measures are helpful in multiple ways. Because they are influenceable and predictable, you know if you do them well, you are likely going to reach your goal.

They also help make a huge goal seem more doable. Make $50,000 more on sales may seem out of reach, but making 5 extra calls a day seems more possible.

 

Other tips for setting (and accomplishing) your business goals

Create systems for your goals (and open up doors for your employees)

With whatever goal you pursue, you want to make sure the way the business runs and the systems you have support, not hinder, your goals.

Bureaucracy is a killer of success. For example, if employees must fill out tons of paperwork to make the goal happen, motivation toward the goal will dwindle, along with the chances of success.

Open doors for your employees. Make it easy for them to make the goal happen. In weekly meetings, have the leaders discuss what they can do to open doors – and make it happen.

 

Milestones can be useful

With consistent accountability and scorecards, you will know where you are at on a regular basis.

It can also be a wise idea to have set milestones that you want to be reached by certain times. If you have a goal for that year, you may want to have a milestone for every quarter or even month.

This will help you and your employees know how well you are doing, if you are on track, if you need to adjust, and so on.

 

Show appreciation and celebrate

You, of course, want to celebrate when you reach your ultimate goal, but also celebrate the victories as you go along. If you hit a milestone, celebrate it.

It doesn’t have to be a “party”. Show appreciation. Give congratulations. Buy coffee for everyone. Find a way to support the success your employees do.

 

Be consistent

You must be consistent. You can’t give lip-service to the goal then go back to the way things were. You must consistently pursue the goal, talk about it, and implement it week to week.

You must keep the scoreboard updated – consistently. Otherwise, it won’t work or help.

 

Find the keystone habits

Are there certain habits or changes that you can make in the company that will support the progression of the goal?

Keystone habits are those habits that affect everything else. Is there a method or system or change that you can make, that if made, would affect everything else positively?

Are there certain ways to do things that you need to change or implement to make it easier on your employees to buy-in and to accomplish the goals?

Are there certain rules you need to replace?

 

Conclusion

Goals are important for your business, so it’s important for you to take the time to find the right ones to pursue and to implement them effectively.

In this article we discussed common problems business have when setting goals, how to choose the right goals, how to implement them, the 4D’s and OKRs methods, along with extra tips to help you along the way.

Don’t expect the process to be easy. It’s likely to be tough. It may take time to bring change and implement the systems you will need for accomplishing your goals.

But it’s worth it.

 

Next step

If you know other business leaders that could use this, share it with them. And let us know below any other tips you may have for implementing effective business goals.

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