Binomial Innovates -
Binomial is an innovation consulting firm helping clients be disruption-ready
January 19, 2021
New year resolutions — some look forward to making them, while others see it as a mundane rite of passage. Nevertheless, the longstanding practice of setting resolutions is indicative of the human desire to build better habits and achieve desired outcomes. Beyond the personal practice of goal setting, companies and organisations also set targets to drive business growth and move operational productivity along. From improving how organisational goal setting is conducted to enhancing personal development practices, this article presents a 3-step approach to help you set and achieve the right goals.
Goal setting frameworks are an integral part of organisational strategy, but with different well-known frameworks being adopted by various well-known companies, it is important to use the right one that complements your activities. The following mnemonic acronym serves to drive your decision making:
· U — Understand the importance of setting goals and how goal setting frameworks help.
· S — Select the right goal setting framework for your organisation.
· E — Executing your plans and strategies to achieve your goals.
The benefits of having goals are abundant. Most notably, goals give a central focus to your efforts, can be a source of motivation, and when clearly defined, allow for the measurement of progress. However, when not done properly, the reverse may occur — you and your team may become easily fraught with distractions at work, demoralised from not having a clear direction, and unable to have a clear awareness on any progress that may have been made. Even in critical periods such as turnarounds, AP-Canada noted that without proper goals and plans, 75% of turnarounds fail to meet all of their performance goals. Arguably, not setting goals the right way may be more detrimental than not setting any at all, though either route will unsurprisingly lead to the downfall, or stagnation in less severe cases, of any organisation or team.
Yet, with the ongoing pandemic showing little signs of welcoming an aftermath, some might struggle to see the value in setting new goals for 2021 and might settle for working with the same objectives and performance indicators from the previous year. Binomial refutes the notion that there is no point in setting goals during times when things are uncertain and can change rapidly. Setting new, refreshed goals has undeniable benefits that are more applicable to the future of today that is remote working. When teams no longer share the same physical space in their daily endeavours, it becomes easy to feel disconnected from the organisational fabric and its objectives. Fortunately, research has cemented the hypothesis that setting goals improves employee performance. Thus, starting the year off on the right foot can help mid-to-upper management ensure that all staff have a refreshed sense of alignment to key targets with a rejuvenated sense of confidence in the organisation, even as teams continue to be geographically segregated.
Synonymous with measures of quantifiable performance, KPIs are employed in the goal setting of many corporations and organisations worldwide. The paramount characteristic of KPI practice is that employees are typically expected to meet and even exceed their KPIs, with a 100% completion or higher being good grounds for a noteworthy performance appraisal. With any goal, the following elements are crucial in the writing of a KPI:
A description of what metric is being measured. Descriptions should be written as specifically as possible (e.g. “the number of new customers this month compared to the same month last year” as opposed to “the number of new customers”).
The numeric value to be achieved (e.g. 1000 new customers, 15% increase in revenue, NPS rating etc.).
The clear location from which data will be retrieved (e.g. company’s CRM tool, finance department’s quarterly P&L statement). Clearly defining the data source for tracking performance helps to save time during review sessions.
Some efforts can and should be tracked monthly for clearer insights, while more drawn-out efforts may require a longer runway to bear fruits of labour (e.g. quarterly, or even annually).
In setting a KPI to be tracked, it is important to recognise that there are three different types of measures, and that each type of measure has different applications and implications:
· Raw numbers (e.g. # of new sign-ups)
· Progress (e.g. % of a campaign complete)
· Change (e.g. % increase in sales)
As a rule of thumb, KPIs that measure changes in percentage allow for comparison and deeper evaluation on the efficacy of initiatives and work efforts. However, raw numbers still provide significant indication of an individual’s or a team’s performance when cross-comparison is conducted, and more importantly, serves as a good starting point for new metrics and initiatives to be tracked over subsequent months and years.
KPIs are typically set for each individual in a corporation, although extensions to entire teams and departments are possible and encouraged for holistic progress. To achieve synergy among and between individual KPIs, employing a balanced scorecard can help organisations align business activities to the vision of the business, and monitor performance against strategic goals. Crucially, a balanced scorecard looks at both financial and non-financial performance measures to gauge businesses performance for the long-term success of any business, which is in opposition to businesses that focus on short term financial results as an indicator of good progress for the long haul. Using a balanced scorecard facilitates a top-down approach by starting at the highest level of the business, with the foci being the vision and overall strategy of the business. This allows mid-management to cascade organisation-wide goals down to their own respective departmental aspirations and individual KPIs that help drive overarching goals.
As the balanced scorecard looks at KPIs from the above 4 perspectives, it helps C-suite executives ensure that both financial and non-financial aspects are equally important in driving success of the company. The caveat to using a balanced scorecard to facilitate KPI writing is that on a broad level, it is difficult to balance all 4 perspectives (especially for MNCs and large enterprises), and that copious amounts of resources will be required to measure the vast amount of data for KPIs.
One lesser-known but credited framework is the Objectives, Goals, Strategies, and Measures (OGSM) framework. Used by conglomerates such as Coca-Cola, Procter & Gamble (P&G), KPN, Reckitt Benckiser, Honda, Mars, MetLife, and Triumph International, the OGSM is a one-page strategic planning and execution document that charts a company’s central focus for a fixed period. The main benefit of the OGSM is that it helps management refrain from setting convoluted targets. By restricting the plan to a single page, the OGSM sharpens employees’ focus and is an effective reference tool for direction in times of uncertainty and decision dilemmas.
From Lafley’s illustration, one crucial takeaway from the framework would be his treatment of the Strategy section where he includes a “Where to play” subsection, which is a critical component for leaders to consider in many situations ranging from go-to-market strategies as well as research and development (R&D). Key trends such as retailers needing to get on digital platforms rapidly are reflective of the importance for managers to consider where they should situate and launch upcoming initiatives.
Devised by Andrew Grove during his stint with Intel, OKRs is a goal-setting framework that aids in the definition and tracking of objectives and their outcomes. With the key benefits of improving organisational focus, alignment, and engagement, OKRs was built upon past frameworks like Management By Objectives (MBO), and continues to be used by influential tech giants including Google, LinkedIn, Microsoft, Twitter, Gett, and Uber. former CEO of Alphabet and Google co-founder Larry Page explicitly credited OKRs with helping “lead [them] to 10x growth, many times over”, and that OKRs has “kept [him] and the rest of the company on time and on track when it mattered the most”.
As the name suggests, OKRs comprise an objective (i.e. a clearly defined goal) and 3–5 key results. Key results are specific measures used to track the achievement of one goal and are commonly evaluated on a percentage scale from 0 to 100. OKRs should typically be written with an intended success rate of 70%, as it was devised to encourage workplace ambition while methodologically tracking tangible progress. Having consistent completion rates of 100% might be indicative of sandbagging, at which point it is advisable to recraft the OKRs. For individual OKRs, each employee should have a confidence level of 50% in fully attaining each key result. It is highly recommended that OKRs be set and revisited every quarter for continuous alignment with new trends and priorities of the company.
As most companies tend to operate on the unsaid principle of striving for excellence, it might seem counterintuitive to employ OKRs’ ideological approach of having a target success rate of 70%. However, OKRs was conceptualised to combat issues and pitfalls of other popular frameworks such as KPIs. Notably, people tend to set ‘safe’ and unambitious KPIs to achieve 100% completion for the purposes of attaining performance bonuses. As a result, companies become mediocre. OKRs, with its learning and ambitious nature, allows employees to ‘fail’ within acceptable margins while crucially learning from their experiences. Setting quarterly OKRs allows teams to make adjustments relatively quickly. In the words of Binomial’s founder Kae Fong, when OKRs are deployed right, teams are “unafraid to shoot for the stars”.
Just as the word utopia is a combination of the Greek words ou (meaning ‘not’) and topos (meaning ‘place’), the utopian framework does not exist. As each framework has its strengths and weaknesses, the selection of a framework depends on the industry, size, and operations of an organisation, knowledge and experience with each framework, and preference of HR and management teams.
Here at Binomial, we strongly advocate OKRs through our recommendations and own firm practices. OKRs help people and teams align to organisation and goals, and it sits between personal (KPI) and organisational (balanced scorecard) objectives.
In the words of Josh Bersin, “while goal setting is important, it is far less important than conversations, listening, and feedback”. After you have chosen your goal setting framework and the initial spur of motivation wears off, the last element of the USE mnemonic becomes the differentiating factor that crucially determines how successful your teams and organisation will be.
The best practice before embarking on a new quarter or project cycle would be to have a kick-off session to conduct an OKR workshop (or any other goal setting of your choice). It is important to include all staff members in this session, regardless of their level of contribution or management. Roping in all the internal stakeholders for the kick-off workshop ensures that staff across various levels of management and responsibilities carry out their tasks in accordance to meeting objectives through achieving key results. As OKRs is a framework that forecasts and tracks performance in 3-month blocks, a quarterly practice of constantly reviewing OKRs is the key to reaping its full benefits.
Binomial is a strategy and brand consulting firm that helps companies be disruption-ready by combining entrepreneurial agility with execution excellence to stay ahead of the curve. We conduct OKR workshops and performance reviews with teams to enable their success by maximising their efforts. Get in touch with us to find out more.
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