I have never thought I would need to write an article on "Setting Smart Goals"  until my recent round of consulting with businesses to evaluate their vision, missions and goals going into the "rougher times" towards the end of this decade.

Much as they are thoroughly familiar with the concepts and the buzz phrases about SMART... most business goals remain pretty dumb...resulting in their wallowing in nonproductive activities and futile reports on why things are not working.

To be SMART, goals have to be

S- SPECIFIC

M- Measurable

A- ACTIONABLE

R- REALISTIC

T- TIME CONSTRAINED

Common Misconception In Implementing Smart Goals

Specific 

Being specific is not just about putting a number against a goal.  It is about the processes and relationships that bring about these numbers. To be SMART these relationships must be pretty linear, ie we know with a pretty high degree of confidence that if we increase activity X by 3...it will double the output of Y.

Many businesses today wallow about wasting shareholders funds without such established formulas. Many justify themselves by asserting that real life consist of complex and circular relationships, and it is not possible to preserve a linear relationship between action, activities and results.

Whilst this line of thinking may be appropriate if we are conducting a research project or creating models and theories, it is deadly for most businesses. 

Profitable revenues are generated only when businesses are able to identify a set a set of assumptions, a simplification of the reality that works for them... a formula or business concept for success.

Without such proven business concept,  goal setting is a futile and irrelevant exercise.

Measurable 

One of the business we visited had reasonably good sales performance for which managers were given bonuses.  We were initially happy to encounter a success story only to learn on detail review that 60% of the sales came from incidental, unplanned situations for which managers had little involvement.   Yet senior management have attributed these results as efforts of the managers without questions or qualifications.

With increasing computerization, getting statistics about business performance is generally not difficult, like what we did during the review.

Yet many business continue to shy away from establishing well defined measures of performance and performance management appraisal processes for its people, processes and activities.

The reasons for these are varied. Some erroneously believe that its inhuman to be so scientific in their management approach. Others are actually afraid to manage the consequences. What do we do if an employee exceeds a specified standard or misses one? There are also senior managers that rather not introduce the idea of specific measures lest they themselves become similarly accountable.

Actionable  

Managers at one company were shocked when I told them they should redo their action plans almost in entirety. 

For the majority of businesses, other than those with long order-fulfillment cycles,  Actionable Goals are those that can be executed and will have a measurable profit impact during the budget year.  

For marketing oriented business Actionable Goals are a set of campaigns that can be launched during the year given the business current resources, capabilities and relationships.

Target audiences, products, offers, media approaches, costs, potential revenues and cash flow projections must be clearly identifiable within a 85% comfort level. 

There should be no major contingencies, and break issues like, "we will launch this in April because we need our new system to be ready first" or we need to get the approval of a JV partner.   

For the business whose budget plans we reviewed this year , only 40% of the action plans were acceptable under our crtieria for "actionable"

Realistic

This is not about setting  low level goal that may be easily attainable. 

Goals must always be challenging...but there must always be a recognition that things may not go the way we plan or the situation may be different from one that we assume.

It is also not an excuse or condonement for failure.  Over the last year, we have heard many business and political leaders provide excuses for bad investments... that it is possible to predict the scale of the economic downturn.  These excuses are shameful.

Being realistic implies the need to recognise that we cannot predict outcomes before we engage in a project or investment rather than give that as an excuses when we have failed. 

Being realistic calls for plans to be flexible to meet the dynamics of business cycles and the fickleness of consumers.

A business manager argued during a meeting, if we looked at so many angles and so many issues we may lose opportunities. He is correct in many ways.  Opportunities that look good are often quickly grabbed these day.

This is where risk management becomes important. 

Some of the risk managers we met lamented that they do not have achance to evaluate  project or investment risks properly before they are accepted by management. These disgruntled risk managers often sit aside to become "ass covering whistle blowers"...shouting out "there we told you" as soon as things sour.

This is a total misunderstanding of risk management.  The risk managers job is larger to mitigate, minimize, spread and transfer risk after they have been incurred by the company.  Unfortunately many risks managers are as much "ass lickers" as much as they are "ass coverers".  They would not aggressively advocate risk reduction measures as this requires them to highlight their superior's decisions were flawed.

Time-contrained

A smart goal by my definition that create positive cash flows during the budget period in question. 

This does not imply that investment decisions that require a long period of cash outflows prior to a return are undesirable, but they are not operational goals.  

The operating manager that is accountable for current year results must be allowed to devote most of his time on current issues and not be distracted by long term investment projects.   

Conclusion

In the late 90s, we conducted a similar consulting campaign to assist companies set smart goals to meet the negative conditions created by the Asian Crisis.  Many survived and even prospered and globalized as a result.

In 2002-3 we did another round for existing clients and some new ones.  By then the concept of SMART Goals were we thought well disseminated and understood.

It is wonder how a few years of prosperity can help weaken corporate discipline towards proper planning and goal setting.

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This article is contributed by Alex Har, Director of Media Consultancy Asia Pte Ltd, and the owner of this website ONE1-DM.  Alex Har is a corporate performance consultant and coach for marketing oriented businesses, with more than 25 year corporate experience, 10 of which was at a senior level. 

Click Here to view his full profile