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How to set business goals in six easy steps

Set the bar high, but be willing to reassess, our advice columnist says.

How to set business goals in six easy steps
[Photo: hxdbzxy/iStock]

Editor’s Note: Each week Maynard Webb, former CEO of LiveOps and the former COO of eBay, will offer candid, practical, and sometimes surprising advice to entrepreneurs and founders. To submit a question, write to Webb at dearfounder@fastcompany.com.

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How do you “do” goals?

-CEO of an early stage seed company

Dear Founder,

I’m happy that you are asking about goals. Goals are something that humans need, and they are extremely important at a company as they set the stage for what matters and what success looks like.

From the earliest days of managing your department, or launching any initiative, you set organizational goals to get what you want. Setting goals is natural and easy to do. However, setting goals that are achievable, realistic, and inspirational is where the magic comes in.

Goals are meant to evolve. As one of my CTO friends says, “I reserve the right to wake up smarter every day. Everything I said yesterday could be wrong and if so, I will change it.”

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But where do we begin?

I always start with this question: “What am I aiming for?” And, then the natural follow-up: “If we achieve it, will it matter?”

Too often I see people set goals that are achievable, but the bar is so low that the company doesn’t achieve the destiny it’s aiming for. (That scenario is uninspiring for everyone involved.) Conversely, if the bar is too high and the team thinks it is unachievable, it won’t really be committed to achieving the goals.

I am a perfectionist, so I want to achieve what I set out to do, but I also want to set goals that would be amazing—and challenging—to achieve. I’ve learned that it is better to aim very high and not quite achieve perfection than to nail every goal and deliver mediocrity.

This is a six-step process that I use to help set and achieve goals:

  1. Assess where the team is. Is it a high-performance team? How high performance? How does it operate? 
  2. Outline goals I’d be proud to achieve. What would I think is amazing?
  3. Take a step back. Understand that very bold goals might intimidate the team. Teams that are not yet high performance will think they can’t achieve aggressive goals. When goals are way out of range, you don’t get the buy-in or commitment you need to make anything happen.
  4. Reassess the goals. What would be acceptable to me and also make sense for the team? Look for the magic mix here—a goal that gives a little bit of angst (aggressive AND inspiring) but is also realistic (achievable). Rather than set commitments on next quarter, set them nine months out. I’ve learned that people freak out in 90 days, but they are willing to set more aggressive goals for nine months out. With enough time, people think they can do anything. I also try to implement mechanisms to reward people for stretching and coming near the goal. For example, at eBay, if we delivered 80% of the product roadmap on time with quality that was 100%, that was a win, and if we always hit 100%, it meant that we weren’t aiming high enough.
  5. Introduce these reassessed goals and a plan to the team. If you have done this right, the team will still find the goal aggressive but also achievable. At eBay around 2000-2001, we were at about half a billion in revenue, and CEO Meg Whitman said she wanted us to reach $3 billion by 2005. It felt like when JFK said he’d put a man on the moon. Initially we didn’t see a plan, but we figured out a way to do it, and everyone came on board.
  6. Check how you are doing against your goals. This is not “set and forget.” It’s about monitoring, measuring, and correcting. When you miss a goal, acknowledge it, seek to understand why, and commit to getting better. Remember, if you are behind in the first quarter, you still have three quarters to play. And it’s a lot easier to course correct earlier than later.

After a team goes through some cycles where they use this process and successfully achieve their goals, they start to hit aggressive goals consistently. And then I’ve seen something even more incredible happen: they set and beat aggressive goals that exceed my expectations. I love nothing more than when I have to dial them back. But it all starts with a process and a plan.

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