One of the first things that I do with each new engagement is to work on goals - for the company and the entrepreneur/leader. It might seem basic, and many have done it before, but my experience is that few entrepreneurs and companies have current goals or have been able to do them well. We don't move forward without goals - it is difficult to grow a business in the absence of them.
Some say that growing companies should not have goals. It can keep them hyper-focused and let them miss opportunity. I couldn't disagree more. An entrepreneur who knows where they're headed is more likely to get there. Goals keep us grounded, give us direction, and allow us to measure progress. A good entrepreneur will always remain opportunistic, and if we measure and re-visit goals regularly, there is plenty of time to adjust to what we've learned or new external influences.
A goal seems like it should be an easy thing to create, yet most goals I have reviewed lack sufficient clarity to make them actionable or measurable. Growth of our businesses and ourselves is personal, and we can easily get lost in our own heads. Our goals need to be unambiguous else we may fool ourselves into thinking we've met them or miss the opportunity to celebrate when we succeed. Goals are difficult to do on your own. It takes an outside-in, unemotional perspective to create effective goals. Like so many other things in our businesses, goals become easier when there's someone to talk it through, ask the hard questions, and offer unbiased insight.
Here are three ways that I guide an entrepreneur to create and use goals most effectively.
1. Make them SMART.
Most entrepreneurs are familiar with SMART goals - Specific-Measurable-Attainable-Relevant-Time-based (Wikipedia has more insight it you're not familiar with the concept), yet 90% of all goals that I see are missing one or more SMART criteria. Each goal should reflect all five attributes, not just a critical mass of them! "Launch a new product this year" is not specific or measurable. "Hire two new engineers by March" is not particularly relevant since it's an action you are going to take - but the goal should be the end, not the means. "I'm going to lose weight" is not measurable or time-based. The only criteria entrepreneurs usually get right is the goal being attainable. (Attainable is important and I'm not a believer in stretch goals, but that's for another discussion.)
How do you make sure your goals are SMART? Here are a few ideas that might help:
- Make it tangible - something that you can envision and demonstrate.
- Make it numeric - something that is unambiguous.
- Ensure it is the end result of taking some actions.
- Give it a date. Not a time frame, but a specific date to be accomplished and measured.
"Grow revenues by $2M by December 1, 2015" is a SMART goal (assuming you can develop a plan which makes it attainable). "Improve my work-life balance by working no more than 50 hour weeks by June 30, 2015" is another. Validate your goals against every element of S-M-A-R-T.
2. Start with the Long Term.
Our business plans involve a lot of assumptions. As a result of the uncertainty, we tend to be more comfortable planning for the short term. We set up goals for the year, measure them at the end of that year, and compare
David Brussin, co-founder of Monetate, recently wrote an article for the First Round Review about annual planning. I was fearful he was against planning, but quite the opposite. David suggested that looking at your business annually creates disjointed, long cycles. He promotes the benefits of a longer term plan, three years, and to look at your annual planning as a rolling 12-months that is reviewed quarterly. This is very much what I have been encouraging many entrepreneurs to do.
We all have a vision for our business - a far-reaching place that we'd like to grow towards. Perhaps we want lots of profitability, or to sell the business, or take the company public, or change an industry or market, or solve some world problem. We know that it will take more than a year to get there. If we keep making short term plans, it's very difficult to know that we're on a path towards that long term vision.
Make sure that your goals extend at least three years out. It's January 2015 - what are your personal and business goals to be achieved by December 2017? We know that's a long time away, full of assumptions, and likely to be wrong. Without that three year goal, how to do you know what's attainable in year two, and, therefore, year one? Start with three years out, figure out what you need to accomplish in year two to make that possible, and then back one more year to the current year. You are building a practical and realistic path to long term achievements. Then take your one year goals and break them down into quarters so that we learn quickly and make timely adjustments.
3. Review them Regularly.
I write my goals down on paper. Yes, paper. It makes it easier to keep them in my briefcase and look at them daily. You should look at your goals each day - on your desk, at the breakfast table, by your bed. We need to remind ourselves what we are working towards and why we make the efforts we do. The day-to-day distractions of running a company can prevent us from spending our time on what is more important. Those distractions are what prevents many entrepreneurs and companies from meeting their goals.
Goals should be measured regularly. I recommend quarterly. Did we achieve them? Are we on the path to achieving them? In having started with three year goals and working backwards to annual quarterly goals, we created a path. Reviewing the goals and measuring those that should have been attained allows us to see if we're still on that path. Being "off" the path isn't necessarily a bad thing. In the course of trying to meet your goals, you've learned about capabilities, validated assumptions, and assessed external influences. Sometimes we meet our goals and we have built and taken a good path. However, when you're off the path, it could mean several things:
- the path wasn't a good one and you need to recalculate, again working backwards from your long term goals;
- the long term goals weren't realistic or you want to shift them - then build a new path;
- you had discovered unexpected opportunities that allow you to re-cast your goals and path;
- execution just wasn't good enough - we're fallible and it is important to measure our capability and be able to improve.
After you review your quarterly goals, roll the twelve months forward and establish goals for the next four quarters.
I know there's a lot written about goals in January as we are inundated with advice about resolutions. Be it January or June, I am always going to start with goals. Build a path towards your company's mission, make it measurable, review frequently, know when things have changed, and always be ready to adjust. I guarantee you'll more easily grow when you're grounded by goals.