Setting Organizational Master Goals
Creating flow within a business is critical to its success. Flow takes many forms, but is best thought of as the minimization of waste in motion, waiting, transportation, and processing. You can close your eyes and think of flow as rushing streams of internal handoffs, information, and processes that join together to form a river of finished goods and services that are consumed by clients and customers. These streams and rivers are guided by the strategy statements of purpose, vision, values, behaviors, and the company’s “It.” Their velocity is determined by clarity of roles/responsibilities, goals cascades, and an unyielding commitment to understanding and satisfying the consumer.
If we’ve learned anything from the global SARS-CoV-2 pandemic is that maintaining flow takes continual maintenance and intervention. Externalities that conspire to reduce flow are everywhere. Therefore, we should employ our continuous improvement tools to maximize flow for the things we can directly control. For things that are beyond our full control, we must work to maximize flow and develop contingency plans–many organizations did not have a “plan B” to lessen the impacts of current global supply chain disruptions. A painful lesson of the pandemic is that the hyper-efficiency of just-in-time methodologies to maximize flow are fragile and quickly break down in the face of jarring externalities.
In this muse, we’re going to focus on an area of business design that is within our control and is a natural extension of the strategy statements we’ve discussed thus far–the determination of a company’s master goals.
Unfortunately, goal setting within a business can be fraught with start-stops, discontinuity, extra-processing, and long wait times from ideation to implementation. Poorly designed goals that do not connect up, down, and across an organization can do more harm than good. That harm evidences itself in the form of team mistrust, employee dissatisfaction, failed projects, and poor performance. Moreover, if corporate goals change too frequently, the organizational change management curve and many individual contributor change management curves can’t keep up, leading to–you guessed it–team mistrust, employee dissatisfaction, failed projects, and poor performance.
Our aim is to provide a fresh perspective on organizational goal setting and will be splitting the process into two main parts: (a) goals that are aligned to the corporate vision, and (b) those that are specific to the company’s annual budget (which connect back full circle to support the corporate vision).
As we’ve discussed previously, there are many seasons of a business. While these seasons vary across businesses and industries, three “seasons” are common to nearly every business and institution: long-range planning season, budget season, and talent management season.
Specifically, we want to help minimize the amount of episodic planning that a team or company engages in, shorten the “seasons” of annual business planning/operational cycles, and place more of this work into the flow of normal business operations. Weaving more of this work into the flow of the business will help keep entropy at bay and make goal-setting more natural and useful for individuals and teams. Said differently, it will be easier for employees and teams to connect the dots between their day-to-day work and the direction of travel for the business as a whole.
Master Goals and Change Management
As I reflect back on my 30+ years in business, one of the biggest “ah ha” moments I’ve had is the realization that we altered and tinkered with goals too frequently. Frequently shifting corporate goals collided with the ability of the organization to absorb these changes. No amount of clarity or communication was going to overcome the disconnect between how fast we thought the organization could process change and the actual pace of change the average team or individual could handle.
Therefore, organizational leaders must think carefully about separating out goals that change slowly from those that need to change more rapidly to keep pace with the market or shifting consumer tastes and preferences. Altering corporate goals for the sake of going through the motions of a long-range planning or budgeting exercise should be avoided as those motions will likely create waste and confusion. Clarity will not be reinforced as intended.
In a subsequent muse, we’ll talk about episodic goals that need to change more frequently and how to design them. Here, we’re going to build a framework for creating what we’ll call the company’s master goals.
Master Goals – Where to Start?
The big question is, how can we construct master goals that will endure through time and be resistant to “management shiny ball syndrome” (a.k.a., the flavor-of-the-day)? Where do we start?
The answer is to start with purpose and vision, two of our five primary corporate strategy statements (purpose, vision, values, behaviors, and the “It”). The details regarding the construction of these statements will be part of my forthcoming book, so we won’t hash them out here. Instead, we’ll operate under the assumption that the senior management team has worked collaboratively to create pragmatic and impactful strategy statements.
All too often, these statements get constructed and end up buried on the company’s “about us” page, as start-up screens on company computers, or wallpaper in the company break room. They literally become part of the furniture–which is a metaphor for something that slips into the subconscious and only gets analyzed when it’s so out of place or out of touch that it’s become a problem.
The benefit of starting with purpose and vision is that they become functional, pragmatic statements that are routinely discussed within the normal flow of business and are not “furniture” that we ignore in our day-to-day–only to trot out on special occasions.
Constructing Master Goals
Our objective with master goals is to promote flow, improve clarity, demonstrate organizational commitment to the path forward, and ultimately to improve trust, accountability, and performance. Figure 1 below represents a highly stylized document that can be used to codify and communicate a company’s master goals to internal (and potentially external) stakeholders.
The components of a company’s master goals are as follows:
Purpose: If everything begins and ends with purpose, then the company’s purpose statement should be the headline to its master goals statement and be front and center at corporate events, team meetings, and stakeholder communications. Don’t hide it away and don’t gloss over it. Pun intended, but be purposeful in ensuring that purpose is communicated frequently. Ask team members what the company’s purpose means to them and tell those stories in myriad ways–internally and externally. Authenticity should take precedence over glitz and glamor.
Vision: Like the purpose statement, vision typically gets relegated to the company’s “about us” page and doesn’t get the sunlight or attention it deserves. If you get one thing from this muse, it is to use the company vision statement as its primary master goal. Doing so will inextricably link vision to goals and will prevent entropy from allowing annual goals to stray from the company’s vision or north star. It makes no sense to create a vision statement for the business and not utilize it in goal setting.
The “It”: What the company does and what makes it different from its competitors must stand alongside the vision statement. Stakeholders must be able to draw a straight line from the company’s purpose, to its vision, and then to the description of what the company does.
To create clarity, it is necessary to avoid making assumptions about what team members, customers, vendors, and investors know about the business. This is an easy trap to fall into–especially when the company has been around a long time or its current leadership is long-tenured. “Why should I have to reiterate something as simple as our purpose, vision, and “It?” goes the common refrain. “I’ve said it a million times–everybody surely gets it.” I can assure you that memories are faulty and making assumptions about how stakeholders interpret meaning and nuance leaves the door wide open to misunderstanding and misinterpretation.
Sustaining Goals: These are the high level corporate goals that change slowly through time. Year in, year out, the company has a keen focus on these goals. Examples include:
Revenue growth: “We strive for revenue growth that exceeds growth in GDP by 2x,” or “We expect to our rolling five-year revenue CAGR (compound annual growth rate) to exceed x percent.”
Operating income margins: “We expect our operating income margins to grow to x by 20xx.”
Governance and compliance: “Our company is built on a foundation of ethical behavior–our words and deeds are one and the same.”
People engagement: “The Widget Factory is a great place to work–our people are our most valuable asset.”
Continuous improvement: “We are committed to growth through continuous improvement and learning.”
Customer insights: “We are maniacally focused on the customer and strive to maintain a minimum NPS (net promoter score) of x.”
The examples above are contrived statements but are directional indications of what a sustaining goal statement should look like. While sustaining goal statements will, by definition, be more generic in nature, it’s also a huge miss to not consider how they will be measured and monitored through time. Measurement is key and ensuring all goals are as S.M.A.R.T. (specific, measurable, attainable, relevant, and time-based) as possible is an essential ingredient to the creation of organizational clarity.
Vision-Specific Goals: Vision-specific goals are what it says on the tin. They are specifically aligned to the achievement of the company vision and do not overlap with existing sustaining goals. They are long-term in nature and are unlikely to change dramatically year-to-year but will change more frequently than sustaining goals as major milestones toward the company vision are driven to completion or woven securely into the corporate operational fabric.
In a future muse, we’ll be talking about the process of setting annual goals. Both sustaining and vision-specific goals are jumping off points for the creation of what’s most important within a particular year or operational cycle.
Figure 1: Sample Master Goals Template
The Initial Set-up
The process of creating a company’s master goal set is, at first, a difficult, painstaking process. Many hours of executive team effort, several rounds of catchball (tossing draft goals back and forth between the senior team and the extended leadership team to improve clarity and buy-in), and prudent investments in objective, independent third-party consultants (e.g., facilitators) are necessary to their completion.
However, subsequent rounds of strategic planning become much easier as each strategy statement and element of the master goal set is confirmed for continued relevance and cohesion with the overarching storyline. Subsequent rounds are also easier because the master goal set is placed into the flow of work and is directly connected to annual, team, and individual goals, as well as all major corporate communications events.
Additional Considerations
Before I leave you this week, here are a few additional considerations–both positive offshoots and words of caution to note:
An effective set of master goals will improve your team’s ability to tell the corporate story. Storytelling is a critical human skill of import to everyone from individual contributors to the chief executive. If you want your company’s story to be told consistently through time, make the time to develop master goals.
As leaders, we know (or should know) the benefits of improved organizational trust and accountability. When everyone is rowing in the same direction, internal conflict is reduced. When goals are cleanly crafted, there is less wiggle room to allow for finger pointing and accountability dodging. Alignment is key! To gauge progress and adoption through time, we can employ the brand marketing measurement tool of “internal unaided awareness” by periodically surveying employees and stakeholders for their unaided recall of master goals. If a hundred employees provide a hundred different answers, then clarity has not been achieved.
Avoid continual wordsmithing each year. Choose your words and messages carefully during the initial set-up exercise and vow to live with them for extended periods of time. Even small changes in wording will generate unnecessary waste and confusion. Constant tinkering and wordsmithing makes storytelling more difficult.
Be aware of the shiny ball syndrome! Adopting the master goal construct will force you to ask more “whys” when shiny balls come across your desk. Don’t unduly stress individual and organizational change management curves by flitting between new ideas and strategy angles. Yes, agility is important, but it’s a huge evolutionary leap when leaders consciously balance shiny balls with the human need for consistency.
Make communication of changes to the company’s master goals a big deal and utilize multiple channels and methods of communication over extended periods of time to ensure new messages are received and adopted. If you expect to say something once and everyone will “get it” (like I did fifteen years ago), you’ll be disappointed over and over again.
Conclusion
Oh, and one final note. Organizational size and longevity matter.
Generally speaking, long-tenured businesses will be able to “see” farther into the future and should be able to create more stable strategy statements and master goal sets. Start-ups and short-tenured businesses live in an environment of much greater uncertainty and will only be able to “see” shorter distances into the future. Hence, master goal sets and strategy statements will change more rapidly in comparison. However, while long-tenured businesses should be able to “see” farther into the future, they also run the risk of becoming complacent and miss opportunities for change and growth. Agility must be balanced with the need for consistency.
Goal setting is not easy and the work to develop and communicate them is, in some cases, as hard as the execution needed to bring them to fruition. Poorly crafted goals are a sure-fire way to the achievement of poor results. Put in the time and effort up front to reap the rewards downstream.
Andy
