|When setting business goals, whether they be numerical targets, or the achievement of key milestones in the execution of your chosen strategic projects, it is important to guard against the following common pitfalls:
Beware of “Group Think.”
People in the same team (sometimes even in an entire industry) can tend to all think alike. This is a trap to beware of when setting strategy and forecasting goals. Groups can tend to be over-confident, to take on greater risks, and make ill-advised decisions vs. an individual thinking alone.
To counter this tendency, solicit a diverse range of opinions (even contrary opinions to your own) to help you think through the consequences of each option before making a decision. Be willing to change your mind when new information comes to light that suggests a different course of action. For more information on decision making read, “Don’t be a dinosaur. Here’s how to make better strategic decisions“.
Past performance does not equal future performance.
Just because something happened in the past, does not mean that it will continue to be so in the future. In a rapidly changing environment, mindless financial goal setting done on an annual basis, based on past trends quickly becomes divorced from reality. Your people can quickly become disengaged when they can see they have no chance of reaching their goals in light of current circumstances.
To counter this, leaders must follow a disciplined strategic planning and execution framework, and review their strategy every quarter to ensure their Key Performance Indicators (KPI) and Strategic Projects remain relevant in the context of your changing competitive environment. Thus, goals and projects are continually set (and reset) within the context of the current strategic reality and your team can more readily “buy in” to them.
Guard against “Confirmation Bias.”
We tend to look for, and place more weight on information and data that confirms our personal point of view and discount information that doesn’t.
To counter this tendency, make the effort to obtain information from a broad range of sources – and make a decision based on a meta-analysis of all the data. Don’t just cherry pick the data that confirms your own point of view.
Build time for learning into new activities.
If you are asking your people to undertake something completely new, remember to factor in sufficient time to acquire the knowledge they will need to be able to successfully execute the project.
Team members should know that hitting their KPI targets and executing their Strategic Projects by the due dates will form part of their performance appraisal. However, you must guard against creating a climate where people fear that they will be punished if they come up short. If they feel this way, they tend to become ultra-conservative and set deliberately low goals, or allow far more time than they need to complete their projects.
Neither should leaders bully their people into accepting overly aggressive goals – or due dates that are unrealistic, by making them feel inadequate if they don’t accept the challenge.
Thus, it is a delicate balancing act. You want your people to perform to their full potential, AND you want them to remain fully engaged and motivated.
To counter these pitfalls, take time to discuss each goal or project with the person accountable and negotiate a mutual agreement. As noted in our article “What successful teams do differently” it is important to balance optimism with realism. Agree realistic goals and due dates that take into account that your people still need deal with “business as usual” and fight any fires that come up along the way – yet still achieve their goals and milestones.
Your aim is to create a culture of “keeping promises”, where people make promises to each other that they know they will be able to keep.
“Bank the learnings.”
Effective companies follow a cadence of business execution, where they stop and evaluate their progress every 90 days. They ask everyone questions like: Did we achieve our KPI goals this quarter? Did we execute our Strategic Projects effectively and achieve the milestones we set by the due date? What did we learn this quarter? What will we start doing? What will we stop doing? What will we do better next quarter?
By following a disciplined debriefing process, you “bank the learnings” and make your strategic planning and business execution more effective next quarter, and each and every quarter that you repeat this disciplined process.