"Long-term goals establish direction and define success. Short-term goals impact daily behavior.” – John Doerr
Last week, we laid out the example of the commercial landscape business that intends to be the Southeast’s leader in their industry by the end of the decade. We tweaked their vision to make it SMART (Specific, Measurable, Responsible and Time-Driven). Below is what we came up with:
Vision: “To be the Southeast’s leading provider of commercial landscape services by the end of the decade.”
Vivid Description: “To have the highest revenue of any commercial landscape company by the end of the decade in the tri-state region of Alabama, Georgia and Florida. Our revenue will grow because of our outstanding customer service.”
Now that we know where we want to go, it is time to determine how we will get there. This is where annual Objectives come in. Objectives are the O in OKRs. Objectives are the “WHAT” we want to achieve. Key Results (KRs) are how we will do it.
Our vision is our first Objective. It is our shining start that we will continue to orient our ships toward. Now we have to create annual Objectives that will lead us toward the vision.
How do we start? A great thing about OKRs is they are a bottom-up system. The ideas, objectives and key results are built by your team. They are what your team believes are the next best steps to accomplish this vision.
Why does bottom-up matter? Why can’t the leaders set the Objectives for their teams? Don’t they have a better chance of creating successful goals than their people? How do we know the team will come up with the right objectives? Will they low-ball their goals?
All great questions. Here is the problem. Most employees are not engaged in their work. Research by Gallup shows that 65% of employees are not engaged in their work. This means they are not engaged in accomplishing “your” goals and objectives.
Leadership might be able to create a better plan and they can probably do it faster than the group. But will the team implement “your” plan? I’ll take a less perfect plan implemented by an engaged team every day over a better plan that never gets done!
So, you work with your team to determine three to five organization-wide objectives for this year that will be the stepping stones to accomplish your 10-year vision.
Three great areas to start with are financial, people and customers.
Growing a business eats up a lot of cash. If you want to grow without outside investment, you’ll need to know your numbers better than ever. You’ll need to watch your margins, receivables and payables so you can create the cash you need to grow.
The Cash Conversion Cycle is a metric that tells you how many days it takes your company to convert its investment in resources into cash from sales.
Decreasing this number will create cash for growth. Improving your CCC might be a great objective for your financial team. Work with your finance team to brainstorm ideas and pick the objective that will have the greatest impact on achieving your vision.
Rinse and repeat that process with people and customer teams. Keep your list of yearly objectives to three if you can. The more goals we chase the less energy we have to accomplish any one of the goals.
The next step is to break down your annual Objectives into the Key Results to accomplish them. We’ll cover that next week.
Curt Fowler is president of Fowler & Company and director at Fowler, Holley, Rambo & Stalvey. He is dedicated to helping leaders build great organizations and better lives for themselves and the people they lead.
Curt is a syndicated business writer, keynote speaker and business advisor. He has an MBA in strategy and entrepreneurship from the Kellogg School, is a CPA and a pretty good guy as defined by his wife and four children.