Imagine your team and your business. How many business objectives are you tackling at the moment? I’m sure you’ve seen it countless times in yourself, your friends, in your professional life. We are trying to do too many things for too many people.
“Let’s successfully launch all of our new products in the first two quarters. Let’s make our marketing team write articles to cover every single one of the content themes.” You know the story.
Before you think that you’ve heard all about it, STOP! Yes stop, take a timeout, take a knee. Because stopping can be the most important thing you can do to achieve your goals…that matter.
You might not know what goals you should achieve. There is another stage before the classic goal-setting procedure.
The business goals worth going after need to have the highest impact on the entire company. Now the question becomes “Which objectives should you go after as a business, as a team, as an individual?”
The answer won’t be something mind-blowing or magical; it’s rather ordinary. It’s the golden 80/20 rule: roughly 80% of the effects come from 20% of the causes.
As Richard Koch, author of the 80/20 Principle, Richard Koch says: “You have to isolate where you are really making the profits and, just as important, where you are losing money.” Unfortunately every business person thinks they know this already, but as Koch says: “Nearly all are wrong”.
Let’s go over it again and make sure we nail it this time. Whether you work in a medium or large sized company, chances are that you make 80% of your profits in 20% of your activities. The trick is to find out which activities make up this percentage.
Products, customers, competitors
In order to do that, let’s start with the 80/20 analysis of profits based on the different categories of your business.
1. Product: Start with this one and see what information or data you have about your product or product group. Go over the sales from last quarter or year and work out the profitability after allocating all costs. Is there a product that is creating the most profit?
2. Customers: Make the same analysis, but look at total purchases by each customer. See if there are customers that pay a higher price, but are also expensive to serve. Maybe you have big customers, but they screw you over on price. The key here is to find some kind of pattern or abnormality.
3. Competitors: Your profitability will be as much determined by your competitors as by anything else. First of all, find out if you face a different main competitor in one part of the business compared to the rest of it. Do you and your competitor have the same market share in the two areas? Is there a segment you get the most profit from with less effort than your competitor?
I have to say that these are not absolutes and some businesses need even more specific questions, but the most important part is that you are asking these questions in the first place.
Goal-setting best practices
Beware of your own biases: judgment and decision making. Researchers have a few techniques to improve your chances of succeeding.
Use pre-mortems. This technique, also called prospective hindsight, helps you identify potential problems that ordinary foresight won’t bring to mind. It is useful to imagine a future failure and then explain the cause.
Now imagine that you have found a profitable area that needs more exploiting. If you go after it, what are the possible failures? What might have caused these failures to happen?
After all that, make sure goals are aligned throughout the company. According to WCW Partner’s research only 1/3 of managers create goals with employees in the workplace. It is vital that you involve employees early on.
Furthermore, achieving a goal as a team has extra benefits. In fact, team collaboration on a goal gives us accountability beyond ourselves, a crucial element for achieving a goal. It is also assuring to employees to know that they are not the only ones shouldering the responsibility.
Talking about accountability, research shows we are 42% more likely to achieve our goals when we keep a written record to track and measure success. So, find a suitable tool or process to track and measure your goals. We all know the phrase “What gets measured gets done”. Why not implement it?
What does success look like?
Taking into account all of these scientific findings and goal-setting recommendations, I would recommend the Objectives and Key Results methodology. OKR contains all the necessary elements. It uses accountability and is perfect for setting goals at any level in your business: company, department, team, or individual.
As Henry Mason – Managing Director of Trendwatching said: “The OKRs process helps the company to envision how success looks”.
To get started, determine the one major priority driving your company right now. Under each objective set 3-4 key measurable results to measure your success. With each key result you can also set a progress indicator or score of 0-100% or 0 to 1.
Scott Wolfe Jr. – CEO of zlien suggests using OKRs: “It’s very good to align and focus your team on the main things you are trying to work on as a company.”
It’s easy to forget that employees, doing their day to day jobs, dealing with all the small mundane tasks, don’t have access to this big picture.
Therefore, if you have selected your few most important business goals and want a good framework that includes everybody in the company I suggest you start with OKRs. You can get started with a simple spreadsheet or an automatic online tool like Weekdone.
Timeout is over. Now go out there and re-evaluate your business goals by deciding which ones to go after. Don’t forget the good old 80/20 principle and you will be on your way to success.