{"id":69461,"date":"2022-06-18T11:21:00","date_gmt":"2022-06-18T15:21:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=69461"},"modified":"2022-06-28T15:26:34","modified_gmt":"2022-06-28T19:26:34","slug":"setting-business-goals","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/setting-business-goals\/","title":{"rendered":"How to Set Business Goals: Make Them Realistic"},"content":{"rendered":"\n

Want to know how to set business goals<\/a> that are attainable, rather than pipe dreams? Why is it important to create a strategic plan that’s grounded in reality?<\/p>\n\n\n\n

In their book Execution, <\/em>business specialists Larry Bossidy and Ram Charan teach you how to put together a strategic business plan that establishes your business’s priorities and goals. They assert that business goals must be flexible, grounded, and accessible. It’s also important to intermittently follow up on the goals after you set them.<\/p>\n\n\n\n

Here’s how to set business goals<\/a> that will help your company succeed.<\/p>\n\n\n\n\n\n\n\n

Set Realistic Goals<\/strong><\/h2>\n\n\n\n

Once you have the right people<\/a> in the right jobs at your company, the authors of Execution<\/em> say it\u2019s critical that you set business goals that are grounded in reality and not just pie-in-the-sky aspirations. This involves creating a good strategic plan that will set your company in the most promising direction. Let\u2019s look at the elements of a good strategic plan and how to finalize your plan so people stay connected to their part in fulfilling it. <\/p>\n\n\n\n

Create a Strategic Plan That Makes Sense<\/h3>\n\n\n\n

A strategic plan outlines the future direction of a company and establishes its most important priorities and business goals.<\/strong> As Bossidy and Charan note, leaders often neglect to do sufficient research before creating their strategic plan. They put together proposals based on secondhand reports, surface observations, and their emotions, then get frustrated when the outcomes fall far short of their targets.<\/p>\n\n\n\n

(Shortform note: Why do some leaders put subpar effort into their strategic plan? It could be because some business leaders consider strategic planning obsolete and a waste of time. They might argue that even the best-laid plans are likely outdated before they have a chance at being completed. Instead of formal strategic planning, these leaders focus on two key choices: which customers to target and how to create unique value in their products and services to attract those customers<\/a>. Advocates of this approach say that these two factors alone have the biggest influence on revenue and company success.)   <\/p>\n\n\n\n

It\u2019s essential, say the authors, to base your strategic plan on grounded knowledge<\/strong> of your company\u2019s true capabilities and resources, its strengths and weaknesses, risks in the external environment, insights on competitors, and the state of the market as a whole. <\/p>\n\n\n\n

Further, create a strategic plan that functions as a loose framework for action, not a rigid formula. <\/strong>A good plan, Bossidy and Charan state, allows room for adjustments over time. You need to know what direction you\u2019re heading in, but resist the urge to fill in specifics. For example, maybe you plan to cut costs, and you initially consider doing so by moving plant operations overseas\u2014you don\u2019t yet commit to that specific course, though. When a competitor does the same a few months later, they get horrible press coverage and their clients flee. Instead of going down the same path, you have a chance to adjust. How else can you cut costs? And how can you capitalize on your competitor\u2019s stumble?<\/p>\n\n\n\n

As you craft your strategic plan, cut out the fluff. Bossidy and Charan emphasize that you should be able to capture your strategy on a single page. If you can\u2019t do that, go back and simplify. Identify the top two or three goals that your company is going to prioritize this year. <\/strong>Everything else should fall under those big goals. <\/p>\n\n\n\n

(Shortform note: A concise strategic plan has the benefit of keeping the plan simple, accessible, and easy to understand. Another benefit is that you can easily post the plan in your office, on your internal website, and in shared spaces throughout the company<\/a> to keep it top of mind.) <\/p>\n\n\n\n

Lastly, make sure the people who will be responsible for implementing the strategy are involved in creating it.<\/strong> Throughout the strategy sessions, invite and encourage people to speak freely about challenges they anticipate, resources they\u2019ll need, and opportunities they see. Bossidy and Charan explain that this decreases the chances of being blindsided by a problem down the road. The process also builds buy-in and ownership from the key players<\/strong>. When they\u2019re involved in creating a plan, they\u2019re more invested in seeing it through. And bringing together the key players strengthens relationships across the company and fosters collaboration<\/strong>. Even when people disagree\u2014which they will\u2014the process of finding a solution is instructive and useful. <\/p>\n\n\n\n

(Shortform note: The authors extol the virtues of including people in strategic planning who will implement the plan. However, they omit a major drawback to this approach that could outweigh the benefits: Discussions could become cumbersome if you have a large company and many<\/em> managers who need to implement the plan. To manage this situation, use effective meeting time-saving techniques<\/a> like having managers share written notes before<\/em> they meet so they devote meeting time solely to reaching decisions. You can also take the simple approach of curbing the number of participants. Some suggest that limiting meeting attendance to 12 to 14 people<\/a> will keep discussions productive and purposeful.)<\/p>\n\n\n\n

How to Get the Most Out of Strategic Planning<\/strong>

The authors discuss strategic planning in general terms but don\u2019t provide guidance on key features that it must include (and that you must therefore have \u201cgrounded knowledge\u201d of)\u2014or how to keep it current. Here are some steps you can take to extract the most value from your strategic planning efforts.

First, use a cheat sheet to confirm that your strategic plan includes all the necessary components<\/a>. These components include:

Your mission statement, vision statement, and core values<\/a><\/strong>\u2014Declare what your company wants to accomplish and why, and what principles guide the company\u2019s actions.
A SWOT analysis<\/strong>\u2014Define the strengths, weaknesses, opportunities, and threats related to your company\u2019s current position.
Your competitive edge<\/strong>\u2014Clarify what your company does better than anybody else.
Long-term and short-term business goals and priorities<\/a><\/strong>\u2014Specify what your company needs to focus on, as well as what measurable targets you must achieve and when.
Key initiatives and programs<\/strong>\u2014Identify what methods your company will use to reach your goals<\/a>.
A scorecard<\/strong>\u2014Use this to measure and track progress<\/a> toward short-term and long-term goals.
Financial reports and projections<\/strong>\u2014Use this data to formulate realistic plans.

If you\u2019re unable to define or explain any of these features, return to the authors\u2019 recommendation and collect more knowledge of your company\u2019s operations until you can<\/em> confidently address each component.

Furthermore, make the most of the flexibility that the authors recommend and continually keep your strategic plan current by staying alert to emerging opportunities<\/a> for your company, both internally and externally. External opportunities include acquiring a new company, expanding into a new customer base, and marketing new products to existing customers. Internal opportunities include investing in research or equipment and restructuring departments to improve efficiency. <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Wrap Up, Summarize, and Monitor Progress<\/h3>\n\n\n\n

When you meet with your team to finalize the creation of the strategic plan, make sure people leave with a clear picture of what they\u2019re accountable for. Then, Bossidy and Charan advise, follow up<\/strong> by sending a memo to each leader that lays out their individual goals, commitments, priorities, and next steps<\/strong>. Thereafter, assess progress at regular intervals and make adjustments as needed.<\/p>\n\n\n\n

(Shortform note: Following up with everyone multiple times is another task that may take one person far too long, which the authors don\u2019t acknowledge. You can fix this problem by delegating. Some consultants recommend forming a strategic planning core team or designating one person as your accountability partner<\/a> who will be responsible for tracking outcomes and progress.)<\/p>\n","protected":false},"excerpt":{"rendered":"

Want to know how to set business goals that are attainable, rather than pipe dreams? Why is it important to create a strategic plan that’s grounded in reality? In their book Execution, business specialists Larry Bossidy and Ram Charan teach you how to put together a strategic business plan that establishes your business’s priorities and goals. They assert that business goals must be flexible, grounded, and accessible. It’s also important to intermittently follow up on the goals after you set them. Here’s how to set business goals that will help your company succeed.<\/p>\n","protected":false},"author":8,"featured_media":69483,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,29,79],"tags":[649],"class_list":["post-69461","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-career","category-entrepreneurship","tag-execution","","tg-column-two"],"yoast_head":"\nHow to Set Business Goals: Make Them Realistic - Shortform Books<\/title>\n<meta name=\"description\" content=\"When you run a company, it's important to set business goals that are grounded and flexible. 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