How Goals and Objectives Damage Business Performance

Did you ever hear a customer service manager say “My department’s main goal this year is to implement SAP.” or a logistics executive tell you “Our primary objective is to get the new warehouse built before the holiday season starts.”?

Whether or not you have, you are more likely to hear such statements from business leaders than “My department’s main goal this year is to reduce the average customer response time down from five hours to two.” or “Our primary goal is to be able to handle the holiday season sales spike without needing to spend the $1.2Bn in third-party warehousing and logistics we paid last year.”

Actions and Outcomes

The first two quotes are action statements; the second two are outcome statements. The former typify responses received three months into the implementation of an initiative when leaders are asked: “What’s your department’s role in this new strategy/ merger/ joint venture/ outsourcing contract?” I.e., Not long after the strategizing and goal-setting, most leaders talk about what they are doing, describing success as the completion of actions rather than the attainment of outcomes.

Reflecting on these personal experiences, I analyzed the data in 125 management consulting projects. The projects include Fortune 50 business strategies, early-stage venture growth plans, corporate transformations, turnarounds, mergers, process redesign, policy development, strategic alliances, product and service innovations, and a plethora of different collaborative actions. 

Over 95% of the participants are board members, CEO’s, SVP’s, VP’s, GM’s, departmental, and functional managers. (Not the operator/staff/do’er communities.) 

Analysis of the over 2500 interviews shows the propensity with which these roles propose actions and outcomes:

STATEMENT TYPE AVG. EXAMPLE STAKEHOLDER STATEMENT
Outcomes-Financial 5 We should see market share increase by 10% over two years.
Outcomes-Non-financial 12 We should see higher caliber candidates applying for key positions.
Positive Side-Effects 1 Collaborating well on this could lead to future co-innovations.
Total: 18 Indicator-of-Success statements per project

What to Do 20 We need to bring product Y to market by the end of the year.
How to Do It 21 Type S referrals should be higher priority than type T.
Who Should Do It 15 We should appoint a Chief Customer Officer.
Total: 56 Enabling-Action statements per project

Leaders and managers articulated actions at three times the rate they expressed outcomes.

Hesitant Outcomes, Fluid Actions

According to the consultants who conducted the interviews, most outcomes statements started as generalities; “We need to see distributor channel revenues increase by 25% over the next three years.” would be derived from “We need a stronger distributor channel.” 

In sharp contrast, almost all interviewees readily described actions with specificity; “We need to appoint a head of the distributor channel who should immediately cut out the weak performing distributors and bring in a new set of performance targets for those who remain.”

Client Consultant Coordination

There is an old story about the man who walks up to three men each laying bricks. When he asks the first bricklayer what he is doing, the bricklayer replies “I’m laying bricks.” The second bricklayer replies “I’m building a wall.” The third responds “I’m helping build a new cathedral where my friends will be able to come worship and commune.”

And there is an old saw in consulting that “You can’t want it more than the client.” It is no good if consultants are trying to build a cathedral for their client’s customers to come worship at when their client sees themselves laying bricks.  (And vice versa.)

Ends Versus Means

Few business actions are as instantly impactful as taking aspirin and feeling the headache fade away, or in the war movies when the medic stabs the morphine vial into the wounded soldier’s thigh and the screaming stops. The types of actions business leaders and management consultants plan have a delay between Sufficient Action Taken and Sufficient Impact Produced. It is easy to lose sight of the impact behind all the action.

Advanced Management Consulting deals with this through the Ends versus Means framework. (Not to be confused with the concept of ‘Do the ends justify the means?’) Ends refers to target outcomes while means refers to the actions to produce them. One issue with the conventional business terms Goals and Objectives (used as synonyms) is that they do not have a natural how-to partner. Goals and Methods, Goals and Actions, Objectives and Actions? No, they don’t work, but Ends versus Means clearly frames the distinction.

Set Yourself up for Better Outcomes

For your strategies, programs, and initiatives to produce stronger outcomes sooner:

  1. Use the Ends versus Means framework.
    When the words Goal or Objective are used, clarify whether the speaker means an action or an outcome. “Building a new warehouse.” may be a goal but is not an outcome.
  2. Define outcomes as:
    – Financial outcomes (required)
    – Non-financial outcomes (required)
    – Positive side-effects (optional)
    Ideally, use the Outside-In Scorecard framework for organizing the outcomes correctly.
  3. Remember the numbers above (5, 12, 1). If you are only hearing two financial outcomes and five non-financial outcomes from stakeholders, question whether success has sufficient clarity.
  4. Only move to the means conversation after the stakeholders endorse a single set of outcome metrics. 
  5. Change the name of the Implementation stage to the Benefits Realization stage and ask the Program Management Office to report and predict Outcomes Attainment before Project Completion metrics.

Tangibly, results include the Fortune 250 company that attained its three-year enterprise-wide reengineering goals by the end of year one, the B2B firm’s service revision that produced an ROI within the year, and the failing company that survived.

Anecdotally, more leaders are talking outcomes, though habits take time to change. Some pick Ends and Means up quickly while others need to be reminded (though not minding when they are, as they appreciate the frame and wish to adopt the thinking.)

Image of 2018 Goals

(c) dizanna / 123RF

Please let me know how you get on. If you want your corporate, departmental, or any other strategy or scorecard privately mapping into the Ends vs Means format, send it to mtaylor@schellingpoint.com

SchellingPoint blog awarded Top 20 Consulting Blog by Feedpost

 

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