SMART Goals For Achievable Objectives; DARE for High Growth and Turnarounds
It’s 2022! New year, new start.
What planning have you done for that new start? How did you go about it? Studies show that nearly all New Year’s resolutions fail before the end of March because, as the daily routines of life take over, the resolutions are forgotten.
The same thing happens in business. Few companies take the time to escape for a quiet strategic planning session before year end. Those that do often fail to achieve the goals or implement the systems that were planned.
SMART goals are a well-established managerial tool originally created by Peter Drucker (I believe) to help teams meet their objectives. SMART goals are:
Specific: A goal must be clear and specific. For example, rather than a goal of, say, increasing margins, a SMART goal might be to decrease direct materials as a percentage of revenue by 5% by June 30.
Measurable: A goal must be measurable. If you aren’t measuring, you’re not managing.
Achievable: A goal must be realistic and attainable. We have all seen unachievable targets ignored by employees who see no reason to even try.
Relevant: A goal must be relevant to the business and to the individual(s) responsible for achieving the goal. The best way to do this is to align the goal with HR reviews and compensation systems.
Time-bound: A goal must have an achievable deadline.
For businesses seeking incremental improvement this fiscal year, such as a reasonable increase in revenue, SMART goals may be the best way to define and manage that improvement.
However, if your business is seeking or requires rapid change, such as in turnarounds and high growth situations, SMART goals may actually be counter-productive because they limit the creativity of management teams and fail to incorporate required strategic changes. Instead, of SMART, try my DARE approach to planning and effecting change.
The DARE approach is to:
Dream about what your business could look like in 3 to 5 years and make a list of the strategic changes required to get there.
Adjust current systems, habits and routines to work towards the strategic changes.
Reward employees for participating in the new systems; do not punish them for missing goals.
Evolve by monitoring and adjusting systems and rewards regularly to drive to the desired outcome.
Consider an example from a planning session I conducted last year with one of my businesses. For revenue, management presented to me a plan for 20% growth – an achievable SMART goal reliant on an increased marketing budget, targeting a handful of new customers that had already expressed some interest in our products and the general inertia of the business.
My problem was that this company was small and 20% growth, while achievable, was not a satisfactory target. I needed high growth and so I challenged the management team to imagine what the business would look like if revenue in, say, 3 years, was multiples of last year’s revenue – specifically, an outrageous 20x.
The answer, of course, was that the business would look very different. Specifics included: increased US distribution, a new product launch and on-shoring of certain manufacturing. So, we started planning to move the business in that direction. Not to achieve a specific goal of 20 x revenue, but rather to create managerial systems and rewards to enter new markets, create new products and rationalize supply chain.
It is too early to say if DARE worked for this particular business. I can confirm however that I have used this approach in many, many turnarounds and high growth situations and have yet to be disappointed. If you are looking for big change, give it a try.
We wish you a happy, healthy and successful 2022.