Goal Summit 2016: Goals – The Missing Link Between Strategy and Execution

© Copyright 2016 Donald N. Sull

Goals: The Missing Link Between Strategy and Execution

Don Sull MIT @simple_rules

© Copyright 2016 Donald N. Sull

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STRATEGY ?

RESULTS

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Goal Summit Mobile App 1 2 3 4

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Which is the biggest obstacle to executing your company’s strategy?

q  Lack of performance culture

q  Activities do not support our strategy

q  Lack of agility

q  Inability to work across silos

q  We have a strategy

Results

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Goals drive execution in four ways

Blinder Link Bold

Hypothesis Signal

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80% 90%

Goals as blinders

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Source: Survey of 8265 respondents in 305 organizations. Number of respondents varies by question.

Blinders drive performance

92%

87%

44%

35%

Specific

Handful

Regular feedback

Ambitious

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% of employees who answered “Make ambitious commitments even if you are not sure how to achieve them”

Imagine you were giving advice to a newly hired manager. What suggestion would you give about making performance commitments?

Source: Survey of 5385 respondents in 192 organizations.

© Copyright 2016 Donald N. Sull

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59%

11%

8%

5%

5%

1%

Past performance

Technical expertise

Acting with integrity

Political connections

Ability to adapt to change

Pursuing ambitious goals

Factor that most influences promotions

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Goals as links

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Links align activities to strategy

Source: Survey of 8265 respondents in 305 organizations. Number of respondents varies by question.

84%

66%

46%

42%

Developed goals with my boss

My goals link to my unit's goals

My boss explains how our goals support company

strategy

Know company's top 3 goals

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If a strategy falls into a company and no one understands it, does it make a difference?

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Goals as bold hypothesis

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R. M. Cyert and J. G. March, 1963, A Behavioral Theory of the Firm, (Englewood Cliffs, NJ: Prentice Hall)

Conservative goals narrow search

•  Incremental improvements •  Me-too innovations •  Cost reductions

-----------Goal----------- --------Status Quo-------

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-------Goal-------

R. M. Cyert and J. G. March, 1963, A Behavioral Theory of the Firm, (Englewood Cliffs, NJ: Prentice Hall)

Ambitious goals trigger broad search

--------Status Quo-------

•  Disruptive innovation

•  Creative solutions

•  Build new capabilities

•  Business model innovation

•  Rapid learning

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Goals guide iteration

Source: Survey of 8265 respondents in 305 organizations. Number of respondents varies by question.

27%

28%

34%

50%

Discuss difficult issues openly and honestly

Consstently analyze variance from goal

Met regularly with boss to discuss progress

Revise goals more than once per year Set goals

ExecuteCourse correct

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Goals as signal

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Goals for coordination

Source: Survey of 8265 respondents in 305 organizations. Number of respondents varies by question.

12%

21%

35%

Can learn colleagues' performance

Can learn colleagues' goals

Key partners understand our goals

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1

2

1 1 1 1

3 3 3

4

3

6

5

7 7

10

02

46

810

# of O

rgs

0 .2 .4 .6 .8 1% Public

N = 58 orgsOrganizations that created its first goal after start of quarter and organizations with fewer than10 goals are not included. Deleted goals are not included.

% of Goals in Org that are Public2015 Q4

Transparency

Goals want to be transparent

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Strategy • Develop strategy for execution

• Ambitious but not delusional • Maintain shared strategic context

Results Goals

Leadership capabilities • Master goal setting best practices • Provide useful feedback frequently • Lead discussions to course correct

Performance management • Linkage of goals to compensation? • Promote on ambition? Performance?

Resource allocation • Allocation of money and talent linked to goals

• Resources reallocated on same cadence as goals are revised

Data analytics • Tailor data to goal-specific metrics • Draw on multiple, external, real-time data sources

• Ensure data is timely, granular, and credible

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Risks of goals Steps to manage risk

Decrease cooperation •  Hire and promote team players •  Decouple compensation from individual goals •  Visualize interdependencies

Cut corners •  Strong checks and balances for key risks •  Fire leaders who cut ethical corners •  Make goals and performance transparent

Inhibit learning •  Mix mastery and performance goals •  Don’t link compensation directly to mastery goals •  Reduce target completion rate

Decrease intrinsic motivation •  Employees generate own goals •  Encourage tinkering •  Align goals to inspiring mission

Short-term focus •  Link quarterly goals to longer-term strategy •  Break long-term goals into shorter sprints

Tunnel vision •  Multiple metrics per goal •  Ongoing discussion of weak signals and anomalies •  Tolerate some positive deviance •  Encourage tinkering

List of known risk from Ordonez, L., Schweitzer, M. E., Galinsky, A., & Bazerman, M. (2009). Goals gone wild: How goals systematically harm individuals and organizations. Academy of Management Perspectives, 23 (1), X–X