The Ultimate Guide To Effective Goal Setting
With the start of a new year and a new quarter, individuals and organizations are writing goals to plan what they hope to accomplish.
Writing goals down is an extremely effective exercise. You’re 42% more likely to achieve a goal if you write it down.
However, writing down “I will lose 20 pounds” doesn’t burn that many calories. You’ll need to structure your goals in a way that sets you up for success.
Goal setting is essential regardless of industry – while marketing and sales teams may have goals that revolve around a specific quota, other industries may set goals that vary from quarter to quarter. In this post, we’ll break down how to develop, structure, and track your goals to maximize the likelihood that you not only accomplish your goal, but that the goal pushes you to achieve your full potential. Whether your team is using Scaling Up, OKRs, EOS, or some other system for strategic planning, using the proper structure and guidelines for your goals will help you accomplish more.
While we’ll focus primarily on goals for an organization, these tips equally apply to personal goals. Whether your goals are related to health, personal finance, or another part of life, the same principles behind a well-structured goal apply.
How should I come up with my goals?
A goal dissociated from a bigger vision may not provide enough motivation to keep you focused on achieving it. Planning for ultimate success provides the underlying motivation for achieving a specific priority. As Start With Why author Simon Sinek says, “Achievement happens when we pursue and attain what we want. Success comes when we are in clear pursuit of why we want it.”
We recommend capturing this ultimate vision with a Big Hairy Audacious Goal, which provides the guiding north star for your organization. After that, it becomes easier to break down the target metrics you need to achieve in the next year to put you on track to achieve your BHAG.
In fast-growing companies, planning typically needs to be done on a quarterly cadence to account for the speed of change. Quarterly goals should address the most important work for achieving your targets.
Download our free Quick Start Guide to Goal Planning today!
How should my goals be structured?
We recommend structuring goals in a way that focuses on flexibility and iteration. This reflects improvements to the conventional to SMART Goals advocated by Donald and Charles Sull of MIT Sloan called FAST (see With Goals, FAST Beats SMART). Let’s break down the components of each of these types of goals and how they can work together to ensure your goal structure supports your overall vision.
SMART Goals
SMART Goals are Specific, Measurable, Achievable, Realistic, and Time-Bound. Let’s break down what that means.
- Specific: Well-written goals should answer the main questions of “Who?”, “What?”, and “How?”. This means the goal explains who is responsible, what needs to be achieved, and how it will be accomplished.
- Measurable: A good goal should include some measure of success to enable you to track your progress and know when you’ve actually achieved it. Defining a quantifiable measure of success provides clarity to your goal and makes it easier to reach. We’ll discuss how to choose a target for your goal in the next section.
- Achievable: Setting a goal that other responsibilities prevent you from accomplishing sets you up for failure. Be realistic but aggressive when determining what can be accomplished with the time, energy, and focus you have available for this goal.
- Relevant: Any goal should help you achieve your targets and the bigger vision you have for the organization and yourself. A goal that isn’t important to overcoming the hurdles between today and your desired future won’t keep you motivated or move your company forward.
- Time-Bound: All well-written goals have a deadline for achieving them. Whether you’re planning on a monthly, quarterly, or annual basis, tracking goals against a due date provides a sense of urgency. Doing so allows you to understand whether they are sufficiently aggressive.
FAST Goals
Alongside the well-worn concept of SMART goals, we also recommend creating your goals with FAST, a newer paradigm, in mind. FAST goals are Frequently discussed, Ambitious, Specific, and Transparent. As such, FAST goals place more of an emphasis on shooting high and evaluating performance continuously. While some of this overlaps with SMART, we’ll break down the differences below and explain how they work in tandem to motivate your team.
- Frequently discussed: Setting a specific cadence for reviewing progress, prioritizing associated work, and allocating necessary resources is critical for staying on track to meet your goals. At Align, we give daily updates on quarterly goals and discuss them with functional teams on a bi-weekly basis. Specific discussion rhythm depends on your time frame, but you should allow for the greatest focus on what matters most and timely course corrections if goals go off track.
- Ambitious: In addition to being “achievable”, your goals should provide enough difficulty to boost performance and minimize the risk of teams relaxing if the goal appears easily obtainable. Setting goals that require extra effort incentivizes innovation and creative thinking as priority owners figure out how to elevate performance.
- Specific: Though this attribute repeats the first component of a SMART goal, it creates greater emphasis on flexibility when combined with FAST. When the written goal is sufficiently specific, it is easier to identify where progress is falling short and quickly adjust course.
- Transparent: This is the final component of writing a goal that will push success, and it may indeed be the most important. Bringing transparency into goal creation and goal tracking creates motivation through accountability. Priority owners can understand how their work supports broader company goals and also understand how their efforts support other team members. It also allows for easier identification of duplicate efforts or efforts that don’t contribute to your broader strategy. Transparently tracking goals also allows for greater collaboration when identifying issues and correcting course.
How aggressive should my goals be?
A popular saying attributed to Bill Gates states, “People tend to overestimate what can be done in one year and to underestimate what can be done in five or ten years.” We recommend quarterly planning because this allows relatively confident predictive power. According to Verne Harnish, anything between one quarter and five years is a Wild Guess!
The most difficult part of writing a great goal is balancing achievability and ambitiousness. Companies at different stages may select different levels of ambition for their goals. Google, for instance, expects employees to achieve between 60-70% of their goals. This leads to greater creativity and experimentation when attempting to achieve goals (see Mindset: The New Psychology of Success by Carol Dweck).
Depending on the availability of past data, setting expectations that are orders of magnitude higher than current performance should depend on tolerance for failure. One solid solution to this issue is defining the success criteria while also including a stretch goal. We categorize these by a color system, but there are many ways to do so. Our priority color system includes:
- Red: This represents an unacceptable failure. This is the minimum level that you would accept before there would be consequences. If your goal is to 2X some metric, Red could be 1.25X. This would constitute quarterly performance that puts achieving annual targets out of reach.
- Yellow: This represents performance between your unacceptable range and meeting your goal.
- Green: This is the color of accomplishing your goal.
- Dark Green (Super Green): This represents your stretch goal, what it would mean to go above-and-beyond what was expected. This should come with added celebration if accomplished.
You should create your measurable result for a green target based on the level of success needed this quarter to hit your annual target. In turn, you should base your annual targets on the performance that companies in similar industries followed on your desired growth trajectory. More information can be found in the additional resources section at this post’s conclusion.
To see how quarterly targets are developed from annual goals, let’s look at a few examples.
See it in Practice
Company Example: MedTechX
Let’s say MedTechX is a medical device manufacturing company whose new cancer detection device was just approved by the FDA. They’re preparing to scale quickly in 2020 and setting goals to support their growth. Their BHAG is to enable 1 Million cancer screenings. They have a 5 year target of going public with a market cap of $250 Million.
To achieve this, they set a 1 year target of doubling their revenue and achieving three times industry average profitability (definition of a great vs good company). For their 2020 Q1 goals, their CEO asks their CMO, Director of Sales, and Head of Manufacturing to each come up with strategic priorities for the first quarter to support their annual targets.
Sales Goal: Increase sales reach on the eastern seaboard by recruiting, hiring, and onboarding Regional Sales Managers in 5 new regions by March 30. Associated KPI: New managers hired.
Marketing: Build brand awareness by surpassing 10,000 social media followers by March 30th. Associated KPI: Social media followers.
Manufacturing: Reduce material waste 50% by identifying and correcting 25 process inefficiencies. Associated KPI: Weekly material waste.
Each of these leaders then assigns tasks down to their teams that support these goals. The sales goal involves creating tasks for HR, legal, and the website team to assist in the hiring process. The marketing goal includes content creation and design work to elevate brand authority. Manufacturing’s goal requires identifying inefficiencies with their team and creating new processes to correct these issues.
To make these goals FAST, MedTechX’s CEO asks each team to meet bi-weekly to identify blockers, which they discuss at their weekly management meetings. Additionally, each team presents progress to the entire company at their monthly all-hands meeting. Goal progress and the related KPIs are tracked in a dashboard that’s visible to every team member.
Personal Example: Becoming a Runner
To see how this planning can apply to your personal life, let’s look at a fitness example. My friend Sarah has a personal fitness goal for the year to get back into running form. She’s set a personal target of running this year’s New York City Marathon in under 4 hours while raising money for Alzheimer’s research in her Grandmother’s honor.
Because she hasn’t participated in running events since high school, she creates a moderate training plan to progress toward her goal. Remembering her ultimate goal, the marathon, with a strong “why” behind her, Sarah establishes quarterly goals to track her progress.
For Q1 Sarah sets the goal, “I will run the St. Patrick’s Day 5K in under 30 minutes.” To support this, Sarah adopts a progressive training program that takes her from running 10 miles a week to running 30 miles per week. She tracks her runs in a google sheet. To keep her on target, she posts updates on her Facebook page.
For Q2 Sarah sets the goal “I will run the July 4th Half Marathon in under 2 hours”. This involves continuing her 30 miles per week running schedule while including longer weekend runs with a fundraising and training club. This adds accountability for Sarah as she increases her training ahead of the race.
In both of these cases, goals are written to adapt over time and with flexibility in mind. Each goal is tied to a broader strategic vision with a clear “why” behind them. Accountability provides an additional layer of motivation and encourages community support.
Additional Important Questions
Now that you know how to write awesome goals, it’s time to ask five final, important questions before you commit to achieving a goal. These questions will help set you up for success and prevent wasting your time on a goal not worth pursuing.
Is this the best way to spend my time?
Pursuing strategic goals means taking time away from routine job completion. These goals should require extra effort while offering outsized returns. If the returns do not justify the time devoted to the goal, it may not be the right time to pursue that goal. Furthermore, you may need to reevaluate whether your goal addresses the right constraint towards achieving your vision.
What resources do we need to achieve this goal?
Embarking on a goal without the proper support resources sets you up for failure. Budgets need to be tied to strategic efforts and not the other way around. Thinking through the associated costs, in terms of financial and human resources, is a necessary prerequisite for committing to completing a goal.
What will keep this goal from being successful?
Identifying potential blockers and leading success indicators will help you know what to watch for as you undertake the effort. While reviewing progress, you should also be assessing whether these blockers are affecting progress toward your goal. Make note of any additional issues that come up as you progress.
How will we keep this goal moving forward?
Goal progress requires diligence over a period of time. Setting regular meetings for review as well as requiring transparency can help keep goals moving forward. Similarly, setting a quarterly theme or making progress visible to the entire team can help you stay focused on your goals.
Why is this goal important?
Conquering challenging goals requires meaningful motivation. MedTechX will stay focused on increasing their value because it aligns with their BHAG of helping 1 million patients. Sarah is more likely to stay motivated with her running goals because she is running for a larger cause while surrounding herself with a community of supporters. Digging deep early on to identify the “why” behind a goal pays dividends later on when challenges arise.
Other Resources
With Goals, FAST Beats SMART by Donald and Charles Sull
SMART v. 2.0, Aggressive Goals by Dr. Rob Sheehan
A Way to Know If Your Corporate Goals Are Too Aggressive by Michael Raynor and Derek Pankratz
A Way to Gauge How Well Your Company Is Really Performing by Michael Raynor and Derek Pankratz
Dynamics of Self-Regulation: How (Un)accomplished Goal Actions Affect Motivation by Minjung Ko and Ayelet Fishbach
If you’re interested in learning more about perfecting goal planning and tracking, download a copy of our new ebook, “The Quick Start Guide to Goal Planning and Tracking.”
