You’ve been CEO of SpiderNet for the past two years and have embraced a very trusting culture among your team. For the most part, you and your team discuss future vision and the team goes off and executes against that vision. You’ve never needed to really manage objectives or goals, simply because the team has generally delivered on the stated direction.
However, as the company has gotten larger, you’ve noticed that some organizations are not delivering on tasks that you believe need to get done. You’ve chatted with members of your executive team and they believe that they are making great progress. They point to all the things they’ve accomplished over the past three months. When you look at the accomplishments, you wonder how they decided to prioritize certain items. In your opinion, many of the items they have accomplished have little to do with the ultimate success of the company or vision.
You are now concerned that many in the organization seem to think they are doing great things, despite your frustration with the output. Everyone claims to be working hard, and you don’t disagree with that. Given how you have managed in the past, how do you change to ensure everyone is on the same page? Do you leave things as they are and try to be clearer? Do you create objectives for people to follow? If you do the latter, don’t you risk turning SpiderNet into a bureaucratic mess?
Peter Drucker, the famous management consultant, is noted for saying, “You can’t manage what you can’t measure.” While I very often despise all management consulting advice and quotes, this is one that I happen to agree with. I have lived through and seen the sloppy execution mistakes made, when a company does not have a framework of measureable objectives to guide their path. Furthermore, it is very possible to balance the flexibility and creativity of an entrepreneurial environment with a lightweight, highly effective process for managing with key objectives.
Here’s a way to go about doing this:
One of my first pieces of advice to any entrepreneur (including many that come in for funding) is to articulate what they’d like the company to accomplish in the next 12 to 18 months, based on their strategic vision. This may be what a company wants to accomplish with a given funding round or what they want to accomplish over a given period of time. Pick a timeframe that is far enough out (two years max) and write down five measureable objectives that you believe will define success. Make the objectives measureable as opposed to qualitative. It is not as easy as you think. In fact, try it right now and make sure that the goal can be measured.
The important aspect of being able to measure the goal (i.e., have 50 paying customers) is that you will absolutely know whether you have achieved the objective. I have very often seen companies create a set of non-measurable goals (i.e., maximize adoption with paying customers) that are pretty useless. At the end of the time period, you and your team will often forget what you were trying to accomplish and what exactly the goal meant. This results in everyone thinking that the goal was mostly met.
Once you develop a small set of 12- to 18-month company objectives, share those with your team. Ask your functional leads (sales, marketing, engineering, G&A) to come up with their five goals, based on the higher-level objectives that you’ve outlined for the company. You now have the start of a framework.
From there, you can start to manage on a quarterly basis, using the same framework. Start with the 12- to 18-month goals and back those down to what needs to be done in the next quarter. I often think about this process like climbing a mountain on an expedition: You have the grand objective to get to the summit, but have many daily objectives along the way (e.g., get to the next campsite, etc).
For quarterly objectives, I would use the same process as the longer-term thinking. As CEO, you should come up with the three to five items you need the company to accomplish in the next quarter. Ask your team to come up with their own three to five items. You now have a baseline from which to manage. Each week at your staff meeting, you can get a status update on where folks are relative to their quarterly goals. This becomes your status report and everyone knows where things stand. If something changes along the way, and a quarterly goal is no longer important, the team can change it. However, changes only get made by proactive discussion and not by arbitrary omission.
At the end of each quarter, set aside time to do a complete goal review with your team and clearly specify the goals met and the ones missed. You will get a clear view of why something was not done and what needs to be done about it. At that meeting, you can create the next set of objectives for the following quarter.
If you really want to be transparent, I would recommend sharing all goals and all results with the entire company. This gets everyone on the same page and creates a framework in everyone’s mind as to where the company is going and how each individual can help to achieve a given goal.
This process can be used all the way down into the organization and can be used upward for the board. Keeps things incredibly simple. One set of objectives and one set of status.
I would encourage SpiderNet to adopt a simple framework for managing to key objectives. As the company gets larger, there is the tendency for tasks to become less clear in employees’ minds. Keep the key objectives front and center and have everyone work towards these goals. Celebrate success when goals are met, and take action when they are not.
[Editor’s Note: This is the last installment of Peter’s series of guest posts on fictional startup SpiderNet, which have run over the past four Mondays. Be sure and check out his previous posts.]