Companies can get led astray with weak goal setting. A misaligned goal can derail your firm’s entire planning process.
Picture this situation:
A management consultant leads an executive team through a strategic planning process. It was a busy morning. The team conducted a SWAT analysis and achieved clarity on the company’s competitive advantages.
During the afternoon session, the consultant poses a question to the group, “Where do you see your business in 5 years? What’s your goal?”
The team ponders the question and suggests, “We want to double our revenue to $24 million.” The consultant counters, “That’s not big enough. Think bigger! What’s your BHAG — Big Hairy Audacious Goal?”
The team gives it some more thought and replies, “How about $50 million?” The consultant pounces, “That’s it. Now you’re cooking with gas. That’s a BHAG! And I’ve got the perfect name for your goal, ’50 in 5.'”
The team rallies around the idea. “50 in 5” has a nice ring to it. It is clear, specific, and motivating. And it is big. To achieve the goal the company will have to grow by more than 400% in 5 years.
Big Goals rarely rhyme
Be wary of any goal that sounds like:
- 25 in 5 ($25 million in 5 years)
- 30 in 3 ($30 million in 3 years)
- 50 in 5 ($50 million in 5 years)
Paring nice even numbers may sound appealing, but they are rarely achievable.
The number is a starting point
“50 in 5” is a good starting point for your goal, but it’s not a goal. It’s a milestone. Where is the rest of the goal?
Make your goals SMART — specific, measurable, achievable, relevant, and time-bound. “50 in 5” covers the M and the T, but it doesn’t encapsulate the S, A, or R.
What areas of your business are you working on? Why is the goal important for not only your business, but for your customers? Is the milestone achievable?
When you consider the richness of a goal you can find much better names that describe the essence of the Big Goal and its importance.
Revenue plateaus are filled with unforeseen problems
Growing a company to $25-, $30- or $50-million is an admirable goal, but the number is fraught with risks.
Companies grow through predictable revenue plateaus: $1 million, $5 million, $10 million, $25 million, $100 million, $500 million, $1 billion. At each level, growth can slow down or stall.
To break free of these plateaus involves a major shift for the business. It requires investing in the infrastructure of the next level (business processes, talent, systems, operations, sales, marketing, etc.).
It often feels like you are throwing the baby out with the bathwater as you push through each plateau.
“30 in 3” or “50 in 5” do not prepare your team for what’s ahead. It’s just a number. To cross a revenue plateau requires a fundamental shift in your business and your behaviors.
The number loses impact
The number is only motivating when your company is on track. If you are growing quickly and on pace to achieve “50 in 5,” it’s a motivating goal.
As soon as you hit a bump in the road the phrase can haunt you.
- If you fall behind, the number becomes even more daunting.
- If changes to cross a revenue plateau are too painful or expensive, the team can rebel.
- If you fail to meet the milestone, you can lose credibility.
I’ll repeat it. “25 in 5,” “30 in 3”, “50 in 5” are effective milestones. They are numbers to shoot for, but they are not goals. Don’t let the number hold your company back.
Scold bad management consultants
I’d like to say it’s an anomaly for a company to have a goal like “50 in 5,” but they are surprisingly common. Management consultants seem to love them.
If you find yourself in a planning meeting and a consultant proposes a goal like “50 in 5,” scold him like a bad puppy. Look him in the eye and deliberately say “no” three times. Really emphasize the “no.” Let him know he’s made a mistake.
It’s your duty to prevent your company from making shallow commitments and unachievable goals.