The art of goal-setting (the G in OGSM)
OGSM Series: The G
This article is the second in a series focusing on each component of the OGSM framework. The goal is to break down the framework, sharing the purpose and development process of each element. We hope providing a deep dive into the functionality of the framework will offer a refresh for current OGSM users and inspire others to consider OGSM as their strategic planning solution. If you missed our first article on Objectives, you can access it here.
Definition of a Goal
ArchPoint defines Goals a little bit differently than the rest of the world. For us, Goals in the context of OGSM are numbers that define what success for the organization looks like. Identified after the Objective statement has been solidified, Goals translate the Objective into high-level metrics. They are the means to measure whether an Objective has been achieved. If an organization’s Objective is to be the market leader, a Goal should measure market share. Goals are usually financial and operational in nature and provide targets for the next three to five years.
Objectives and Goals are the foundation on which the rest of a strategic plan is built.
They are yin and yang – words (Objectives) and numbers (Goals) – two variations of the same fundamental organizational aspiration.
Objectives and Goals should ground all strategic choices.
Even though Goals in an OGSM exercise are numerical in nature, it can be helpful to use SMART criteria when setting Goals. SMART is a well-known acronym with roots in Peter Drucker’s management by objectives concept, meaning that Goals are:
Specific – Goals must not be ambiguous or hard to understand.
Measurable – Goals must be able to be measured in quantifiable terms.
Attainable – Goals must be reachable but can stretch an organization (but not so far as to de-motivate employees or distort what’s possible).
Relevant – Goals must be based on the reality of the business and the marketplace.
Time-based – Goals should be set for a three-to-five-year time frame.
How to set organizational Goals
In OGSM, we set Goals over a 3-year time horizon, which makes it somewhat of an artform. A good Goal is equal parts reality and aspiration – Goals must be reachable enough to maintain realistic expectations but also stretch an organization into growth. As a leadership skill, it requires a mix of financial acumen, forecasting competence and the ability to synthesize historical company performance with the perceived financial impact of anticipated future performance. Here are the steps.
1. With the Objective in hand, answer this question: what are your most important financial and operational Goals?
Begin by choosing the quantifiable metrics by which you will measure the success of your OGSM for the next three to five years. These should be broad, numerical indicators of success for the entire organization. The “M” in OGSM stands for “Measures”, so you will be identifying more tactical metrics later in the OGSM exercise (for example staffing levels and on-time order fulfillment), so for Goals focus on the big picture.
When ArchPoint facilitates OGSM, we recommend setting the following Goals.
- EBIT or EBITDA
- Market share
- Optional (if they are not Measures of Strategy):
- Customer satisfaction
- Employee satisfaction
Once the categories of Goals are decided, the exercise of assigning annual numerical targets begins. Annual targets should be set for at least three years. This exercise requires knowledge of historical company performance and a reality-based forecast of the company’s growth trajectory.
2. Align on growth expectations.
It’s critically important to align on growth expectations among leadership – it’s quite common for different leaders to perceive Goals differently. Discuss the headwinds and tailwinds facing the company to test if the financial and operational Goals are achievable. If they are, plow onward. If they are not, pause, remove obstacles where feasible and address gaps between expectations and realities.
3. Monitor post-OGSM development.
Once the completed OGSM is deployed, Goals should be continually measured to check if the organization is on track. The strategic activities defined in the OGSM should also be tested for their connection to delivering on Goals. It’s often the case that a few months post-strategic planning, organizations fall back into familiar habits and activities. It’s important to confirm that the work being done is contributing to Goals, so leaders must monitor this consistently.
Having trouble setting Goals? We’re here to help. Just drop us a line.