In high-growth organizations, success is not defined as simply doing better than last year. Year over Year comparisons are only valid if there are no changes to the inputs. Success is defined as planning effectively and achieving results that justify the investments made. Performance vs. goal is the primary comparison in regards to success. Year over year comparisons should only be used as a highlight when we are achieving goals and want to show anecdotal information. Transparency is a dangerous thing if the wrong data is highlighted. If we miss, we discuss, learn, and set action items for better results in the future.
For illustration purposes…..
- When it comes to goal setting, the right starting point is to focus on investments/changes being made, and then tying the goals to results that justify such investments. Assume a company has a goal to increase its amount of sales/leads from its existing customers by 10% year over year. Is that a good goal? Maybe, but only if nothing in the organization is changing. What if you knew the company recently invested in/added many new solutions to its portfolio, and the account base and sales/marketing resources are being invested in at a much higher level…… how does it sound now? It is typical for goals to be set at a higher level than the results achieved in a previous period, however to do that as a starting point would be arbitrary. Goal setting should start with careful consideration of the change in inputs.
- A business leader announces “Revenue is up by 10%!”. Now assume that the goal was to increase revenue by 20%, and part of that plan was an increase in investments and expenses by 30%. The result of only growing by 10% may mean the company is now in the red. So should the fact that revenue grew by 10% be presented as a success? See how dangerous it would be to use that as a headline announcement? Not only is it the wrong comparison to focus on, but the announcement just changed “what good looks like” to all stakeholders. It is always good to focus on the positives from a motivational stand point, but we must be mindful in order to avoid confusing our listeners.
As leaders we carry the awesome responsibility of putting together the plan and the vision, and for transparently reporting outcomes. Those we lead depend on us to do it right and to accurately report on what success looks like.
Here’s to all of us improving as leaders in the new year!