When SMART Goals are Dumb.

How often do you see goals like these?

• Quality: Attend 85% of the weekly quality review meetings.
• Finance: Submit monthly financial reports within one week of each month’s close.
• Customer Service: Increase the number of Customers completing our customer satisfaction survey by 15%.
• Personal: Join a health club and work out three days a week. (http://goalsetting.righttolead.com/)
  

They look pretty good, don’t they? They are SMART* goals. Unfortunately, SMART goals aren’t always good goals. All of these goals can be achieved without impacting your business (or yourself in the case of the last goal). All four focus on activity rather than results. That’s a problem.

The use of SMART goals has become a well established practice in many organizations. SMART is good for making goals actionable and measurable. It doesn’t help you determine whether a goal is worthwhile. That is a key distinction.

It is important to track and monitor progress and activity. That’s how you know that people are doing their jobs. That’s managing. Leading is ensuring that the activity amounts to something meaningful for your organization. Focus and reward your people based on their contribution not on their activity.

Keep in mind four points to ensure that your people are focused on the right things:

· Results matter more than activity
· Outcome-based goals create greater accountability and focus
· Goals drive measures, measures support goals
· Rough measures of the right thing can be better than “tight” measures of the wrong thing

Results matter more than activity

Activity-focused goals are those that measure completion of tasks or processes. At first glance, they look good because the execution of tasks and activities is very tangible. They sound like action. We like to see people doing things.

Activities and processes contribute to outcomes. They are not substitutes for them. How do you know whether you have an outcome-focused goal? Ask yourself, “Can this goal be met without producing a change in the organization?” If the answer is yes, then it is probably not outcome-focused. This is the case for all four goals at the beginning of this article. Going to meetings, issuing reports, and surveying customers is not the same as changing your business. How many meetings, reports, or surveys have you seen that provide little to no value? Even the health club goal might not produce a result. You could decide to celebrate each workout with a pitcher of beer and a pizza!

If the goal doesn’t state a positive change to your business, it is not outcome focused.

Converting an activity-based goal into an outcome focused goal is pretty simple. Ask yourself why you are doing the activity. In the case of the quality goal listed above, the answer might be to reduce defects. Now you have an outcome. If you can’t come up with a good “why” for an activity (you’ll be surprised at how often you can’t), then it’s you probably should not be doing it at all!

Think about the difference between a goal to reduce defects and a goal to attend quality meetings. Imagine how people’s focus and actions, both in and out of the quality meetings, would change.

Outcome-based goals create greater accountability and focus

I once had a manager come to me with a long list of activity based goals. One of them had to do with regularly attending an integration meeting. The purpose of the meeting was to ensure that the each department’s needs were being built into the final solution. After we discussed the goal, she changed it. The new goal focused on ensuring that our requirements were being met. She looked at the goal and said, “Wow, that’s big. That’s hard. It’s sort of scary.” She understood.

She came in with 12 activity-based goals and left with 3 outcome-based goals. She knew that she would have to work harder than ever to accomplish those three goals, but if she did accomplish them, she’d make a significant contribution to the organization. She felt a lot more accountable—it was no longer possible to succeed simply by staying busy.

Goals should drive activity, but your goal should not be activity. It should be to change your business in a positive way. Focusing on a small number of outcomes rather than a large number of activities will help you drive real business results.

Goals drive measures, measures support goals

Often a company’s existing metrics become proxies for outcomes. Managers look at the metrics and make their goal to change them. This can work; especially if the metrics are already outcome-focused. However, if the metrics are activity-based, they simply drive more activity, not more results.

For example, a public affairs department measured the number of programs they provided, program participants, and volunteer hours. They tracked this data meticulously. Over time, their goals began to reflect the number of programs, participants, and volunteer hours they had. But, their real responsibility was to improve the company’s image in the community! They drove their goals from their existing metrics and lost sight of the original outcome.

Goals should drive metrics. Figure out what you want to accomplish and then determine how to measure it.

Rough measures of the right thing can be better than robust measures of the wrong thing

Managers are under increasing pressure to be "data driven". Data is good. However, when used improperly, it is easy to fall prey to precise, well quantified measurements of the wrong things. Einstein is said to have kept a sign in his office that read, "Not everything that counts can be counted, and not everything that can be counted counts." In pursuit of a “good” measure, managers often lose their connection to the real outcome.

A recent scene from the TV show, "HOUSE" illustrates how precise measures of the wrong thing can lead you astray. In this scene, the doctors are stumped by a patient’s symptoms. Their sophisticated measures cannot find a problem. They ask House (Hugh Laurie's character) for advice. He asks a few questions, and then instructs them to take blood samples again. He says, "This time, look at them yourself--don't run them through the computer." Sure enough, simple observation with a microscope revealed parasites in the man's blood. The sophisticated computer tests didn't "see" them.

There is a similar business-related example in the 1996 movie, “Eddie.” The movie is about a fan (Whoopi Goldberg) who is given the chance to coach the New York Knicks. In the scene, the new owner of the Knicks is sitting in his skybox looking at a partially filled stadium. His assistant enters the room with a thick report saying, "Here are the recent attendance figures." The owner pushes away the report and says, "I know empty when I see it." Sometimes a rough measure provides the greatest insight.

This doesn't just happen on TV or in the movies. Many training departments use course completions, # of courses offered, or ratings on courses as key measures. Each of these is easy to define, have abundant data, and can be computed in very accurate and precise terms. Success against these measures is often the basis for claims that the training department is enabling the people in the company to perform better. This then is extrapolated to improving the business’s bottom line. However, none of those measures actually answer the question of whether people can do their jobs better. That is very hard to measure. One alternative is to just ask people how well they are doing (or ask their bosses). Some experts dismiss this as being too biased or subjective. However, while not perfect, these measures at least address the goal directly

The same is true for employee engagement, customer satisfaction, or many other "soft" goals. Sometimes a simple question or observation will tell you more than robust measures. Walk the hallways of your office. You'll know whether people are engaged or your customers satisfied.

I once knew a person who hated doing business with a particular company. He only used them when there was no other option. He discouraged others from doing business with this particular company. However, whenever he filled out the customer survey he gave the company decent scores. When I asked him why, he said that the company performed well on the questions on the survey. It was the things that they didn't ask about that caused him frustration. Anyone who interacted with him would have known this. Anyone who used the data would have thought everything was fine.

As a leader, you need to create goals and measures that provide the best approximation of your success and progress

SMART goals aren't enough. They also should be well thought out. Management and leadership are two different things. Management focuses on activity, leadership focuses on results. Your organization’s goals should reflect what you want to accomplish, not what you want them to do. Being able to quantify and measure a goal is good, but only if what you are measuring matters.
* Specific, Measureable, Attainable, Relevant, Time-based

Mind the gap but tend to the outcome

A consulting team was looking at a client’s supply chain process. They found that they could cut delivery times in half - from four days to two days. The client wasn’t satisfied. The end-end-end supply chain process was thirty days. Two days out of thirty wasn’t enough. They focused in the wrong place. They had focused on having a large impact on a small piece of the process.

Leaders often make the same mistake when prioritizing business decisions. The mistake is thinking that big results come from big changes to your business and that small results come from small changes to your business.

The gap in Gap Analysis
The Gap Analysis has become a staple of consultants and business managers. Most business diagnostics include some summary of gaps.

A gap analysis does provide useful information. However, it only provides part of the story. A gap analysis tells you the size of a problem. It doesn’t tell you the impact of solving the problem. Making decisions based on the size of a gap alone could be misleading.

For example in analyzing satisfaction (employee or customer) the use of satisfiers and dissatisfiers is critical. The size of the gap is less important than how that gap impacts satisfaction. Dissatisfiers are aspects of your business that turn people off if not done well. Customer parking is often a dissatisfier. If you provide a poor parking infrastructure, customers will tend to be dissatisfied. However, “great” parking will not necessarily make people happy or highly satisfied. On the other hand, customer service is often a satisfier. That is, continued increases in service will drive continued increases in satisfaction. Of course, even with a satisfier you will eventually hit a diminishing return.

So, why does this matter? When reviewing satisfaction results, leaders often jump to the biggest gaps or lowest scores. Good leaders look at more than just the size of the problem. Moving your parking score one point (on a five point scale) might have less impact than moving your service score a quarter of a point. The key is to understand the underlying dynamics of your business and drive your decisions from there.

Cause and effect relationships aren’t the only ones to consider. Sometimes the right answer is based on simple math. A small change in a very large number can have a greater impact than a large change on a small number.

The James River Corporation makes paper towel and tissue products. They saved $360,000 in one plant by changing the design of a box. The change - cutting two inches off the flap. (http://www.ciwmb.ca.gov/Packaging/Events/SDPWorkshop/Facts.htm)

Federal Express reduced the costs associated with its shipping envelopes saving $20 million annually. One example of the changes is reducing the thickness of the paper stock with which the envelopes are made. Fedex has reduced the thickness by eight one-thousandths of an inch. It might not seem like focusing on thousandths of an inch can make a difference. However, if your company processes 2.5 million envelopes a day, a small change can have a huge impact. (http://www.indstate.edu/recycle/9504.html)

Finally, there was one company whose most profitable segment made up only .5% of its entire customer base. By doubling that particular segment (i.e., acquiring just .5% more customers) the company could increase its net income by over $30 million annually.

Think back to the Pareto principle (80/20 rule). In many cases large amounts of value are being driven by small parts of your business. That’s where you need to focus.

Finding gaps is easy. As a leader, your job is to figure out which gaps matter most. Don’t get distracted by the size of the gap. You might find that small changes can yield large results.

AIM your people for performance and you'll hit your targets

I once received a call from a distraught director. One of his departments continually posted abysmal customer satisfaction results. He asked if I could provide a customer service workshop for his team.

I looked through the department’s customer satisfaction results. While there were some opportunities to improve on service, they didn’t need customer service training. What they needed was a better process for moving their customers through the department. That was the root cause of the service issues. I later learned that the training department had already conducted two customer service workshops in the past 18 months. The problem wasn’t going away.

AIM
Individuals and teams perform at their best when they have ability, information, and motivation. (AIM) If any one of those is missing performance will suffer. This may sound simple. However, in practice, many leaders fail to address all three.

I've conducted hundreds of needs assessments in my career. More often than not performance problems are driven by motivation. Your people know what to do; they are just choosing not to do it (either consciously or subconsciously). Motivation is driven by engagement, corporate culture, rewards and recognition, and a person’s individual level of engagement. In one non-profit service agency, leaders were concerned that their counselors weren’t spending enough time with clients. The counselors wanted to spend time more time with the clients. However, their performance was evaluated based on the number of clients they saw. The agency's performance management systems were contradicting both the agency's and the individual’s desires. Once the performance management system was modified, the problem went away. However, motivated employees don’t always succeed.

Sometimes the issue is that people don’t have the information they need. Information can be operational data about a department’s functioning, the company’s goals and priorities, latest news, policies and procedures, lessons learned, or details about your products and services. In the case of the department with poor service scores, the manager had never seen the full report of her customer service results. The director would give her the overall score and tell her to improve it. Once she saw the responses to individual questions, she knew exactly what the problem was and how to fix it. Here was a person who had the ability and motivation but was missing the information upon which to act.

Finally, sometimes people don’t have the ability to do the job. Ability comes in two parts: internal and external. Internal ability includes knowledge, skills, and experience. This is where training can be helpful. This is also where many leaders focus their efforts to improve performance. The biggest mistake you can make as a leader is to assume that if people aren’t doing what you want it’s because they don’t know how to do it. Often, that is not the case.

External ability includes processes, tools and equipment, software, and other organizational resources. I recently applied for a life insurance policy. It took five months to get a decision. I then applied to a different company. I had a decision in three weeks. Both companies are large, well known insurance providers. I would guess that their underwriters are equally competent. One company clearly had better processes and systems. The difference in performance was staggering.

AIMing for better performance

Leaders are under increasing pressure to deliver more with less. In many cases the people you have could rise to the challenge. You just have to ensure that they have what they need, know what to do, and most importantly, want to do it.

Five tips for AIMing for better performance

1. Take time to understand the root cause of your people’s performance problems. It might seem faster to implement a “quick hit” but you won’t get the results you need.
   
2. Don’t take motivation for granted. It’s probably the single biggest driver of poor performance.
   
3. Make sure you have all three elements: ability, information, and motivation. Performance is like a three legged stool. It will fall unless all three pieces are in place.
   
4. Provide context – a key piece of “information” that is often missing is context. Your people want to understand the big picture and the end to which they are contributing. It will help focus them and it will also help motivate them.
   
5. Use training and workshops sparingly. Training is good for building skills. You can’t train someone to be motivated. You also can’t “train” them about information. They’ll forget it. Find alternative ways to motivate and provide information.

Leading with data

Most of the leaders with whom I talk understand the importance of data. They will tell you that to be a good leader you have to be comfortable with and knowledgeable about the data that drives your organization. However, many leaders are not providing leadership when it comes to using data and information.

Take a look through your most recent presentation. What are you communicating? Do you tend to use tables full of data? Do you have charts and graphs quantifying key business trends or results? Do you use lists to show how various areas are performing, perhaps sorted high to low?

If you are like many leaders, that type of information is probably a staple in your presentations. If it is, then you are not leading. Anyone, inside or outside of your organization, with access to a calculator, spreadsheet, or statistics program could provide that type of information. You need to take it up a notch.

I once was listening to a presentation given by a high performing manager and senior leader in the organization. The presentation had a set of slides with results from a leadership survey. Each slide showed the results for a give region with the average score for each questions. The questions were sorted from lowest score to highest score. Each slide also had a box in the upper right corner titled Key Insights. The “key insights” were a list of the three lowest scoring questions proceeded by the phrase, “The three lowest scoring items are . . .”

Were those really insights? You don’t even have to understand the business to generate those slides. As a leader your role is to add context and perspective to generate insights. So, how do you create meaning from data?

There are four levels at which you can create value through information: Collection, Summarization, Analysis, and Synthesis. This general model isn’t new. In fact you might remember it as the research process that you learned in college. Instead of just looking at this as a process, I like to look at it relative to how you use and communicate information.

As a leader, you have a role at each level. However, most of your time and discussions should be near the top at the analysis and synthesis levels.

Collection

Collection is the most basic level of generating value from information. I’ve worked in many organizations that couldn’t answer basic questions about the business. These organizations had people with strong analytical skills and had tools for analyzing data. However, they didn’t have the data. In some cases it didn’t exist – no one had thought to collect it. More often, the data was housed in multiple places, used different methods of organization and indexing or didn’t capture the information in the right way. Your role at this level is to use your insight and experience to ensure that the right data is being collected.

The key to good data collection is working backward from your end point. What business decision do you need to make? What type of analysis is required to make that decision? What data do you need to perform that analysis? Where does that data/information reside? Finally, what is the best way to get it? This might sound obvious but it doesn’t always happen. Instead, a leader will provide a general question and then jump right to data collection. For example, a leader might say, “I wonder what our customers think of our product line. Let’s do a survey.” Inevitably, this survey will ask a lot of questions that are not necessary (probably driving down the response rate) and will miss a couple of key points or distinctions that will be needed later.

You understand the business. You know what decisions need to be made. Your job is to ensure that your organization is collecting the right kind of data to answer those questions.

Getting data into a single place (or making it so it could be accessed as if it were in a single place) enables the organization to move up the value curve to find meaning and value in their data.

Summarization

Summarization is the next level in creating value from information. It is the level which with most of us is familiar. It is the level at which most leaders stop when working with information.

Summarizing data enables you to get a simple picture of what is happening. Averages, tables and charts enable you to compare entities against each other or identify where problems might exist. For example, a summary of sales data might tell you that region B,C, and G have the lowest sales in the country. That’s helpful information. It can help drive decisions about how to allocate resources and take actions in your business.

However, summarizing data just provides facts. Facts might show you what is happening, but they generally don’t tell you why it is happening. Anyone with access to data can generate facts. Your job is to use those facts to generate meaning and insight.

Analysis

Analysis increases the value of information by shifting your understanding from “what” is happening to “why” it is happening. I often tell people that there are no insights in lists. That is because lists, by themselves, don’t show relationships. Analysis allows you to find relationships. Relationships provide insights.

When you are working at an analytical level, you are dealing correlations, patterns, relationships, and causal and effect. All of these require that you combine multiple sets of facts. This is where you can begin to add value.Think back to the simple list of sales by region. You know that B,C, and G had the lowest sales but are you prepared to take action? Facts may prompt action, but they don’t direct it.

Do you understand they key drivers of revenue and expense for your business? Do you know the key actions and processes that your organization uses to conduct business? What are your competitors up to? How their actions might be impacting you.

By using your understanding of the business you provide direction for the analysis and keep it focused. That is where you add value in this part of the process.

In the sales example, what do region B,C and G have in common? Perhaps they have the same regional manager. Maybe they are the three regions where your competitor just launched an aggressive marketing campaign. It could be that B,C, and G all represent a demographic which is not (or no longer) interested in your product. Perhaps you use a different sales incentive program in those regions.

This type of work can’t be done by just anyone with a spreadsheet. It requires knowledge of your business, industry, and market. It is at this level where you start to draw significant value from data and information. It is at this level, that you as leader can make a unique contribution.

While you might want to be a bit more involved at this level (than at the previous two), you still shouldn't spend a lot of time here. Use analysts or other front line staff to crunch the data for you. Your role at this level is to use your understanding of your business to develop hypotheses that should be tested in order to explain the data.

Synthesis

Once you find the insights, the most important contribution you can make is to help people understand what they mean. When you synthesize data, you create a story about your business. Synthesized information is less about the numbers and more about the meaning of those numbers.

This is where you can create the most value as a leader. This is where you should be spending most of your time and effort.

Synthesis involves combining data from multiple sources and analysis with your broader understanding of the current business context and direction. How can you apply your understanding of the company's strategic direction to the information you are hearing? Can you incorporate the latest market research or competitive analysis to provide context for the findings? This is what synthesis is about.

Back to the sales example; we know that sales are poor in three regions. We also know a little bit about why those sales are poor. By combing that information with your broader understanding, you are ready to create a story and provide meaning to the current situation.

Does it matter that sales are falling in regions B,C, and G? Do we care about the demographic that is not buying our product? How does the drop in sales in B,C, and G reflect our business at large? Is it a foreshadowing of our future or is it a reflection of our past? As a leader, your job is to help people make sense of information. For a more in-depth perspective on the importance of story and meaning, I would recommend Daniel Pink's book, A Whole New Mind.

Conclusion

Your people, your management, your shareholders, and your customers are drawn to the story that you can tell about your business. Data and numbers play and important role in those stories. However the greatest value you provide is not from the numbers themselves but rather in helping others understand what those numbers are saying.

Imagine if the President gave a State of the Union Address that was purely facts and figures about the nation. Look at where the graphs and tables are positioned in a company’s annual report. Think of the leaders who inspire the greatest action – where do they focus?

Look back at your presentations. Are you just summarizing facts? How many of your points represent your knowledge or the business? Take a bold step. Move all the charts, tables, and graphs to the appendix. Then, tell the story of your business and what you are recommending for its future. Better yet, start moving all of your thinking, conversation, and time to analysis and synthesis.