When we talk to our expansion stage portfolio companies about goal setting, we use the term S.M.A.R.T. to help ensure that there is extreme clarity around what the goal actually is and how to attack it. S.M.A.R.T. is a bit long in the tooth and not perfect, but it is a really good way to help everyone get clarity around what the company is trying to achieve and helps to frame the initiatives that will help to get the results.
The basic point is that clarity around what the company really wants to achieve will help everyone in the organization to communicate the goal and then develop, prioritize, and execute the best ideas for achieving the goal.
Here is an example of possible different goals with respect to business growth strategies for the year. The point is that each of the goals is going to lead your team toward different initiatives to achieve the goal (and just to be clear, you might have multiple business growth strategy goals):
– Increase sales by 50% (Lots of possible initiatives to meet this less specific goal)
– Increase sales to new customers by 50% (more specific goal that will lead the team to initiatives that focus on new customers)
– Increase Average Selling Price (ASP) by 50% (even more specific goal that will lead the team to figure out ways of increasing ASP)
– Increase renewal rates from 50% to 80% (will lead the team to work on customer success and customer relationship)
– Increase opportunity to close rate by 50% (will lead the team to focus on the reasons behind lost deals and won deals which could affect messaging, the lead funnel process, the sales process, and/or product)
Each of the example goals above could lead to the same financial result (increasing sales by 50%), but hopefully it is clear that the different goals allow for more clarity around what specifically the company is trying to achieve which helps the team choose the best initiatives to meet the goal.
Periodically, we get some push back on either the term SMART or the use of specific goals in general. Sometimes people point out that having result-based goals is not as good as having process-based or project-based goals, as you don’t know what the results of the process-based or project-based goals are actually going to be. While it would be possible to have a long conversation weighing off the pros and cons for each, my answer to that is “Great, have process-based or project-based goals if you feel strongly about that”. Other people point out another finely tuned argument against one or more of the terms making up S.M.A.R.T. My answer to that is “Great, don’t use the term”.
Overall, I find the arguments a bit silly and in general coming from people that just want a good debate or really want to do the hard work of getting goal clarity. My objective is to simply get management teams to goal clarity, as it is really difficult to execute at a high velocity without it.
One question that I get periodically that I have a lot of time for is “how do I make this goal SMART?” I generally answer the question by asking the person how they will know at the end of the period that the goal was achieved. The more clarity around this answer the better and the more objective the measurement of success the better as the clarity will help the communication of the goal.
The fact of the matter is that your team and company will be better off if everyone is committed to the clear direction that you are trying to head and has a clear sense of what they might be able to achieve in a certain period of time so that people can stay coordinated and so that cross-team strategies can be executed (for example new product introductions cut across product and development, sales, marketing, and customer support functions and the coordination is really important if you want to be successful). The more clarity, the better.
The clearer that you can be on what you think you can accomplish and the easier it is to have an objective understanding of whether the goal was met or not, the easier it will be to have a retrospective at the end of the period to learn from the experience and determine what adjustments to make during the next iteration (including, perhaps, the form of the goals that achieve the best results). This retrospective process is key to continuous improvement and very difficult to do without having goal clarity.
As Lewis Caroll said, “If you don’t know where you are going, any road will take you there”. While that does not mean that if you do know where you are going then you will get there, at least the team will know where it is trying to go and will be able to measure progress and make ongoing adjustments, which should raise the probability of getting to the ultimate “there” (which may also change over time)!
The bottom line is that if you don’t like the term SMART, don’t use it. But you still need Goal Clarity!