GOALLLLL SETTING – WORTH IT?

It’s only 7 weeks till the World Cup kicks off in Russia. I’m pretty excited but are we ready? for Peru, Denmark, and France, I really hope that Bert and the team are.

After this weekends football matches both the kids and my own there was no lack of GOALS (credit to Jon Tidd on the opposing team) “the actual results are not important!” However, it did get me thinking about goal setting. Whether in business or your personal life, having a goal gives you something to work towards. It pushes you forward and provides a constant reminder of what you want to achieve. It gives you something to focus on.

Goals provide the motivational energy to carry on even when motivation is low. Academia has written much on the subject. By far, though, the most well known goal-setting technique is SMART. The acronym encourages us to make goals specific, measurable, agreed-upon (some people use achievable or attainable), realistic and time-bound. As far back as the late 19th century, renowned American philosopher Elbert Hubbard realized that many people failed in their endeavors. They failed not because they lacked intelligence or courage, but because they did not organize their energies around a goal. What they needed was a way to organize their efforts to improve their chances of success. It wasn’t until the late 20th century that help arrived in the form of SMART goals.

Not everyone sees SMART goals as a positive force in goal setting. Critics argue that the SMART technique doesn’t work well. Why? Because two broad trends have fundamentally changed the business environment. First, “the boss knows best” paternalism no longer works. Global companies are changing from top-down structures to free businesses. Respect for expertise, not centralized authority, coordinates the communities that create great technologies. Innovative companies give employees off-the-clock time and free resources and benefit from their tinkering. Such environments thrive with decentralized action. SMART goals cannot add to and inevitably subtract from, those environments.

Second, companies no longer compete individually but as members of networks. Apple couldn’t have created the iPhone, or Airbus the A350 aircraft, without collaborating with outsiders. Complexity, uncertainty, and ambiguity are unavoidably widespread since network members are geographically dispersed and have varying strategies, processes, and cultures. These enable problems and opportunities to regularly propagate with blinding speed. By implicitly assuming a staid environment in which immutable goals are appropriate, every constituent element of SMART hinders appropriate action. Here’s how:

“Specific” goals are easy to articulate, and they enable quick assessments of individuals’ efforts. That said, recall the last performance review you did. How many specific goals did you retrospectively consider irrelevant? This problem also manifests itself more broadly. Experiments show that in turbulent environments, people assigned specific goals actually tend to miss key events that occur simultaneously. So, consider two otherwise identical companies that evaluate their managers very differently. One company gives each manager five specific quarterly goals and authorizes him or her to decline any unrelated work. The other authorizes its managers to improvise to respond to changing business conditions. Given today’s dynamic business environment, which two company’s shares would you buy?

“Measurable” goals make it easy to decide how well someone has performed. Justified by physicist Lord Kelvin’s dictum, “If you cannot measure it, you can not improve it,” they have become an unshakeable element of managerial faith. Yet senior executives asked to identify a single factor whose absence would destroy most modern businesses usually pick, relatively quickly, an immeasurable value, trust. They’re right, for people wouldn’t get much done if they had to personally check every input they got. This suggests that blind faith in Kelvin should at least be tempered by an idea attributed (perhaps apocryphally) to Einstein:  “Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.”

Since “Achievable” may produce inadequate outcomes, many companies set “Ambitious but Achievable” goals. As Volkswagen’s scandal illustrated, such goals can engender ethical lapses, especially if they are specific and time-bound. Even if ethics aren’t an issue, they can limit, rather than enhance, organizational performance. That’s because externally imposed “Ambitious but Achievable” goals inevitably involve carrot-and-stick incentives. Not surprisingly, managers, engineers, and scientists who set their own (ambitious) goals have produced many of the world’s great innovations.

Goals are supposed to be “Relevant” to the specific individuals for whom they are set. This criterion seems reasonable: Why set a goal that isn’t deliverable by the person being evaluated? But relevance engenders a widespread problem, silos that hinder collaboration. For example, sales functions accountable for customer satisfaction often clash with supply network functions accountable for inventory. Each has goals relevant to its tasks. Suppose we added an inventory level goal for sales managers and a customer demand fulfillment goal for supply network managers? These would be irrelevant to each silo’s “real” work but would force them to collaborate to produce better organizational outcomes.

How could “Timely” not be legitimate? Very simply because it has become code for “as soon as possible.” Speed has become a virtue that trumps every other meaningful organizational goal. Textbooks teach the blind pursuit of “first mover advantage,” despite irrefutable examples of its limits. When did Apple last launch a truly first-in-the-world product? Didn’t Yahoo enter the search business before Google? Didn’t MySpace and Friendster launch before Facebook? How are Chinese and Indian multinationals, Johnny-come-latelies to world markets, giving established Western firms a run for their money? Equating “Timely” with speed irreparably harms creativity, effectiveness, and even efficiency.

Then what should an executive do? First, ask yourself whether your business faces dynamic or staid conditions. If the former, consider, at the least, becoming less SMART. Second, assess which jobs truly warrant the limiting of discretion and which will benefit from flexibility, collective judgment, risk-taking, and experimentation. Retain SMART goals for the former. For all others, truly involve the affected people in setting non-specific, qualitative goals that can inspire them to consider “can’t be done,” challenges. Ensure that time is only one of several criteria at stake. Add only truly unavoidable SMART goals, making sure they aren’t overly constraining.

You might say that managers ensure that people get their work done, while leaders inspire people to enthusiastically contribute discretionary effort. Being SMART may make you a good manager, but it won’t make you a leader.

If you have a personal goal you really want to achieve, think smart. Make sure your goal becomes reality and doesn’t end up in a graveyard of unfulfilled ideas. Note: I removed my goal of playing on the left wing for the Socceroos some years ago!