Goals that your people understand

You're at work, it's the middle of the morning, and suddenly everyone is called into the largest room you have, for a presentation. The CEO and senior management have just finished their new strategic plan, and they are going to share it with the rest of the company.

Do you get anything out of the next hour? Or do you just spend the time trying to look awake?

I've been in too many presentations where the latter was true. The CEO starts off by saying, "We have two main goals over the next three years: to become the number two supplier of refrangulated widgets, and to reach a market capitalization of twelve gazillion dollars. Here is how we are going to do it ...." Then the rest of the speech might as well be in Babylonian, for all that I under­stand it. I'm sure the CEO is following advice he read somewhere, that he should make all employees "partners" in the company's "strategic thinking." But because the message is in terms I don't know, the only thing I get from the meeting is that I am now an hour behind on the day's work.

It doesn't have to be like this.

What does a better way look like?

There is another way to roll out corporate goals, one that makes them meaningful to every employee. It takes a little more work up front, but this is the kind of work that the management team is paid for in the first place—so it's fair to ask them to do it. Also, if they run into problems in the preliminary setup, that's a key indicator that there are problems with the strategy itself. So it is worth the effort.

The method is called Hoshin Kanri (Japanese: 方針管理, "policy management"), and it draws a straight line between the company's long-term goals and the work I have to do tomorrow. This helps me understand the company's goals, because I can see the effect they have on my job in particular. But it also helps me see how my job fits into the big picture.

Ironically, I saw the method used long before I learned it had a name. I just thought of it as "The way That Company does goals," and I wondered "Why doesn't everyone do this?" But of course I couldn't ask my next employer, "Why don't we do goals just like that other company I used to work for, that you've never heard of?" It was a relief to learn the name.

How do you do it?

The whole process unfolds in several steps. Some people use a special matrix to organize their work, but I won't do that here. The logic is the important part, and you can organize it however you choose.

Define your strategic goals

First, you have to define your long-term strategic goals. Where do you want your company to be in five years? Be careful not to define too many goals, but focus on the handful that matter.

You may also identify your most important operating imperatives at this point. But again, be careful not to cloud the picture with too much noise. (For the distinction between strategic goals and operating imperatives, see the discussion in this post, under "What is a strategy, anyway?".)

How are you going to get there?

"A goal without a plan
is just a wish."

Next, plan out very concretely what you have to do to reach those goals. A familiar aphorism attributed to Antoine de Saint-Exupéry says that "A goal without a plan is just a wish." So define the actions you will have to take, and the milestones that will prove you are on track.

In the first instance, this means defining annual goals as progress towards your long-term targets. But it also means spelling out what your goals will look like, concretely, when you have achieved them, and then identifying what it will take to cross the gap from Here to There. If you want to be—let's say—the number two supplier of refrangulated widgets, what does that tell you about your warehousing and logistics systems? What level of performance do they have to reach, in order to support the overall corporate goal? But also, what is their performance today, and how far does it have to improve? Can you spell out achievable interim milestones towards which your logistics and warehousing personnel can aspire, that will get them where you need them at the right time?

And of course reaching this goal isn't even primarily about warehousing and logistics, though doubtless those play an important role. Every single department in the company should contribute to these goals somehow. So the CEO has to delegate to the respective department heads the task of working out maps for each of their functions which will support the common strategy.

As an aside, you should check that each department map is consistent with all of the others. If Engineering plans to develop the Next Generation Widget in Year Two using a special technical tool that IT doesn't plan to install until Year Four, somebody has to change his map!

Cascade downwards 

It doesn't stop there, but the next steps are pretty straightforward. You as a department head (or functional VP, or whatever your title is) now have a strategic map for what your department has to achieve in five years, and also in this year. Take it to your section managers or group leads, and go through the exact same exercise. Ask each of them to spell out how their group will contribute to meeting your goals. Notice that they don't have to reach all the way back to the company's goals, because your goals have already been aligned with the higher level. So as long as they support achieving your goals, they are also supporting the company as a whole.

Cascade this exercise down through the company organization, all the way to the shop floor. (Yes, this is exactly the same procedure I recommended three years ago for business continuity planning.)

The result is that I, as an employee, have personal goals to achieve that are directly related to my job. But if I achieve them, that supports my supervisor in achieving his goals, which in turn supports the department manager in achieving her goals, which ultimately rolls all the way back up to supporting the company in achieving its strategic targets for the year.

End of the year

Then at the end of the year, you evaluate how you did. This means everyone, at all levels. But the point isn't just to assign a grade, like in so many performance review systems. The idea is rather to carry out a root cause analysis on each missed target, to learn why it was missed, and then to update your plans with this new information. This way you—individually and as an organization—keep in touch with reality, learn lessons from experience, and adapt your strategy pragmatically.

I will admit that it is hard to remember to do this last step. Even when I worked at a company that did all the rest of it, that step was sometimes missed. But of course it is important.