Manage by Objectives
Sometimes it seems businesses are not quite as effective as we would wish. One reason may be that the whole organization is not focused in the same direction. We need to strive toward an objective to keep a business competitive and running.
What will an objective do for your business? It will help you, so you know:
- Where you are going
- If and when you have arrived
The first step is to set an objective, and that is where many of us come up short. The objective must be numerical and measurable in order to be effective. If you say “We want to make the best pizza in Newcastle”, how do you organize yourself to do this, and how do you know if you have accomplished the objective? What is the best pizza? You can’t expect business growth that way…
Better to say “I want my business to rank # 1 on the Newcastle Chronicle Annual Pizza Survey”. That is an objective! You can find out what are the criteria for judging. Then you can adjust your recipe, advertising, price, etc. to match the criteria, and you will know if you have won.
Don’t be timid! Set a “stretch” objective that initially may seem almost unattainable – you will be surprised when you reach it. For example, you may set an objective “Whatever Princess Catherine wears today, we want to ship 100 copies by noon tomorrow.” This is an easy goal to measure, and would be very profitable, but it could be difficult to execute.
However, this clear objective will get you thinking along the right lines. First, we cannot make these clothes in China as the shipping takes too long. Second, we need to find paparazzi who will email us photos as they follow the Princess. Third, we will need a lot of cloth in different colors as we will not have enough time to order the cloth. Maybe we will need some computer software to convert photos into patterns. We will limit production to the 2 most popular sizes. It all starts to come together, and soon all our customers will look as delightful as Princess Kate, and the bank will be happy.
Embracing the stretch objective works wonders. This blogger worked on a large healthcare call centre project. Patients were often waiting almost an hour on hold to speak to a nurse. The company set a stretch objective for the new Call Centre – maximum time on hold will be 20 seconds. From there, every project decision was oriented to that “20 seconds”. The goal was met the first opening day.
But failing to set a numerical, measureable often leads to mediocre results for a business. For example, the USA ISS Space Station has the fuzzy, ill-defined goal of “Facilitate the use of the ISS as a National Laboratory for cooperative research”[i]. If we do not know what research we will do, how do we decide how big to make the Space Station, or what equipment to put in it? Lacking a numerical and measurable objective, the Space Station has circled aimlessly for many years, costing billions of dollars, and accomplishing no scientific breakthroughs. Contrast that with President Kennedy’s speech on May 25, 1961: “The United States should set as a goal the landing of a man on the moon and returning him safely to the earth by the end of this decade”. The program had a stretch goal, huge unknown technical challenges, a measureable outcome, and was tremendously successful.
You don’t have to be President Kennedy to set a defined stretch goal, but if you do, you will probably find you accomplish the same success.
Good Luck with your new Businness endeavors!