Let’s continue our deep dive into Strategic Preparation: aligning organizations to solve complex problems together, repeatedly over time. We’ve started the journey with measurement breaking it into three components:
Measures: the description of what you want to know more about (what and why)
Metrics: the specific definition of what you plan to measure (how and when)
Targets: the actual “goal” state for the metric, that which you are driving toward.
Finally we have arrived at targets — the clarification of where you want to be. Where measures are a communication tool for alignment, with metrics doing the heavy lifting of measuring, targets assert your will onto the process. “Increasing revenue” is an interesting measure and almost a metric, but not until you specify it as “increase revenue by $4M by the end of Q3 2024” can you set your teams to action. Well, you can set them to action without such clarity, most of us do, but you can then only expect chaos, frustration and disappointment as a result.
All targets require an understanding of current performance, which is knowledge often missing in newer organizations. This creates a goal setting paradox: If you have not measured enough to know current performance, how can you then set a target to achieve? Most leaders attempt to resolve this paradox in one of two frustratingly incomplete ways. For the first approach, the bolder among us simply choose a target out of thin air that “feels far enough away” and designed to spur action and get your team moving in the right direction. A similar approach is to choose percentage improvement to indicate that we should “do much better than now.” The challenge here is that if we do not know where we are, we are using hope and luck as our tactical approach to achieving our goals. Good luck, I guess?
The second approach, for the more cautious leader, is often to set a goal of “measure where we are” as its own achievable end. This seemingly bureaucratic ask will underwhelm your people by setting the first step as the final goal, while simultaneously drawing the ire of anyone responsible for the success of the organization as being too tepid to matter. How am I familiar with the appeal and limitations of these methods? Experience. So what to do? Let’s look at the nature of targets to give us a hint on how to set them in the absence of a measure of current performance.
All targets have a specific value, ideally quantitative. They also generally represent a rate in that they are demarcated in time. Your company wants to make $4M in revenue by the end of next quarter, not $4M “and then go home, I guess?” The introduction of rates adds massive complexity to the problem, as the demarcated period “by the end of the quarter” could either imply the desired rate of performance $4M/quarter OR is interpreted as a due date for success. The best way to tell the difference is to ask what happens on day 91. Will you be greeted with a “mission accomplished” banner or, more likely, a new expectation for $5M in the following 90 days. Similarly, if you fail to achieve $4M, do you quit and work on something else (all too common), or do you keep grinding, revealing the due date as merely a rough suggestion.
As leaders, be explicit if the time element of your targets implies a run rate (ongoing $4M/quarter or $16M/yr) OR a due date. If you are going to choose a due date, it ought to be based on real/external events— filing deadlines, RFP due dates, end of year tax implications, etc. The choosing of arbitrary internal deadlines to “create urgency” is nonsense designed to cover your awful leadership, usually your failing to prioritize work, make tradeoffs and manage the quantity of work in progress (WIP). Team members, if you are handed a rate, you can easily predict that your next segment of work will be a higher rate.
Now, if targets have a value and a time component, the choices of each will communicate the purpose of the measure. This is the point in the conversation where concepts such as BHAGs, OKRS, KPIs, SLAs, Health Measures and similar terms enter the chat. If the chosen target is close to current performance, implying that performance is maintained or does not degrade over time, then you are communicating a standard of your operation (SLAs or Service Level Agreements, Health Measure). For example: Call answer times must remain less than 4 min on average over the quarter. The inherent message here is “don’t fuck it up” and the actual enemy is entropy. These crucial measures, often overlooked in the pre-profitable era of a company, are the lifeblood of your organization. So much so that the DevOps ideal of “improving daily work is more important than completing daily work.”
Similar to SLAs are KPIs, Key Performance Indicators. When the target is higher than current performance, but represents linear progress that is expected with the passage of time, it is a KPI. It is something between a “don’t fuck it up” and improve current performance without fundamentally changing operations. The implied improvements are of the crucial “removal of waste” variety rather than redesigning processes from scratch. One view of organizational maturity is the continual discovery and validation of meaningful KPIs and Health Measures, then codifying them into your management systems.
Next, if your target represents a significant increase in performance, doubling or beyond, you are in OKR territory. If it is a massive jump, welcome to BHAG (big hairy audacious goal) land. The concept communicated here is neither “don’t fuck it up” nor “keep improving the process,” but rather “we need to change the way we do things” all the way to “we have no clue how to do this, so figure it out.” As a leader, you must severely limit the number of BHAG/OKR goals called for simultaneously. More than one or two at once will absolutely shred your organization to bits with everyone running around breaking everything while trying to fix it. Usually the pressure to do so comes from being frustratedly stuck pre-product/market fit or when you’ve failed to build sufficient infrastructure in the growth & scale stage and so everything is breaking everywhere at all once. Forcing a pivot through massive, multidirectional action will lead to failure. Your best bet is to take a deep breath, pick the most important thing or two, swarm until the problem is solved, and then repeat serially and rapidly.
Now, when setting audacious goals, there is an inherent tendency to linearize expectations. For instance, if you have 0 patients in January and want 1200 in December, you MUST resist the temptation to set a monthly goal of 100 patients/month. Why is this so disastrous? Because it entirely neglects the challenge of figuring out something from scratch. Right now, with 0 patients, it is REALLY HARD to get to 1. Getting to 100 in your first month is damn near impossible. The failure will demoralize your team and leave them feeling like they are “running out of time.” They will attempt to take shortcuts to get to the impossible 100 without building the infrastructure necessary to get to 1200. Inversely, if you could somehow quickly get to 100 patients in your first month, then adding an incremental 100 patients in November is WAY TOO EASY.
Rather than setting linear goals, set a goal of doubling your current performance, and measure how long it takes to do so. For example, 1 patient in 1 week, then 2 the next, 4, 8 and onward. Your managerial approach should be to capture learning week over week to attempt to shrink doubling time. Even if you don’t, it only takes 10-11 doublings to hit your original goal of 1200 patients, faster than the 12 months of the linear goal #math. I blame spreadsheet logic over critical thinking for this linearization phenomenon. Since you are looking at doubling time, setting long and short goals (1 this week, 1200 by December) simultaneously will align your team to the desired outcome, while acknowledging that you do not currently know how to get there. Furthermore, planning for doubling will eliminate the frustrating waste of time in negotiating targets with your people. You should be setting a target that allows the business to succeed. They will want a target that will let them not fail. Rather than fight over the uncertainty, focus on doubling, build momentum through experience, and exceed your original “high goal” by orders of magnitude. Or pivot because you were way wrong.
So back to the original riddle — what to do when you don’t know your current performance? If you’ve set a far target, focused on doubling rather than specific interim targets, then measuring your current performance is simply the first important step in getting there. Your teams may still hate this because they hate failing, which really means they fear punishment for failure which is a reflection of either your management style, the culture, or their accumulated managerial trauma history. Make sure you have your teams’ collective backs, encourage them to measure systematically (next post, I promise!) and then challenge them to achieve the breakthrough that your organization needs to thrive.