15th October 2021
Summary
What Are Objectives?
“All our basic tools that underlie our planning and strategic activities are our objectives” What is a business objective? Definition and meaning - Market Business News
A business objective is what a company or business plans to achieve. Whereas a goal is a broad outcome that builds into an overall vision for the business. Objectives are measurable and are more focused than goals. Objectives specify the strategies, resources and time frame required to achieve them.
What are SMART Objectives?
When developing objectives for your business, the following acronym provides criteria for creating strong objectives:
S: Specific
For an objective to be specific, you need to assert a clear and concise statement describing precisely what is required to achieve your objective. Effectively defining all aspects of the objective will ensure understanding of its meaning. You need to specify what outcomes are expected, what strategies will be adopted to achieve these, what is going to be done, who by, and the deadlines for completion of the various steps and performance.
M: Measurable
Measuring the progress towards objectives is essential. Setting Key Performance Indicators (KPIs) and tracking these metrics provides insight into the progression of the work being completed. They also ensure that the strategy and its execution are on track and still appropriate for achieving the objectives. To measure the completion of an objective, or tasks moving towards this completion, requires a system that will log, as evidence, the outcomes being completed, and, therefore, the progress towards the achievement of the objectives. You’ll need to differentiate between the desired outcomes and identify which elements of these can be measured.
A: Achievable
Objectives must be agreed by managers and employees and seen as being achievable.
Ensure that those accountable have the necessary resources, funding, and skills to complete the desired outcomes. Also consider what circumstances would render these objectives or outcomes unachievable, try to plan or prevent such circumstances.
R: Relevant
Steps taken to achieve outcomes and objectives must be assigned appropriately to the relevant teams or operational employees. The objectives must be relevant to the skills of the department responsible for achieving them. Objectives must also be relevant to the overall vision and goals of the company.
T: Timely
Specify the deadlines and completion dates for each outcome and objective. Set dates and time, and ensure they are communicated clearly to those accountable for completion. Deadlines can also be motivating since restraints cause a sense of urgency.
Measurable Objectives: KPIs
“Key Performance Indicators (KPIs) are the critical (key) indicators of progress towards an intended result” - KPI.org/KPI-Basics
KPIs serve as evidence for the progress towards achieving specified objectives. They aid in decision making through producing key data. KPIis are also useful for tracking efficiency within your strategy and execution. Depending on the industry or sector of your business, the KPIs required to measure performance towards objectives can vary.
KPI.org establishes two categories of KPI types:
Strategic Impact Measurements:
Strategic metrics track & evaluate progress towards achieving your objectives. Some strategic measurements focus on immediate outcomes, such as sales and awareness, whilst the measurements that focus on end outcomes will track profitability and impact.
Operational Measurements:
Staying competitive in the market relies on data & metrics focused on operational functions and performance evaluation. Operational metrics enable management to improve efficiency through tracking processes and analysing outcomes. Here are some examples of operational metrics dependent on business type:
|
Marketing |
Cost-Per-Click (CPC) |
|
Retail |
Order Status |
|
Sales |
Lead:Opportunity (Ratio) |
|
I.T. |
Open Tickets:Total Tickets |
|
Manufacturing |
Downtime in Production |
Measuring Performance & Execution
“What gets measured, gets done” http://www.implementation-hub.com/articles/4_Measuring_Strategy_Implementation_9.5.13.pdf
Measuring execution is essential for knowing whether you are succeeding in your strategy implementation. Deciding which measures are suitable for you is determined by your strategy. Therefore, any changes in strategy will immediately impact which measurements are to be tracked. Once implementation is in action, and measurements are in place, they should be accessible to key decision makers in order for progress to be tracked, risk managed, and make necessary adjustments. Measurements are not only reports of data, but they should also be the means by which decisions are made regarding strategy, its execution, and the overall direction and performance of the business. Therefore, it is vital to ensure that you are tracking the correct measurements against your performance and outcomes.
How to Measure Strategy Execution
A Balanced Scorecard
The balanced scorecard (BSC) is a management system that communicates objectives based on the strategy and vision of the company. The BSC categorises these objectives into four areas:
- Financial Objectives
- Customer-based Objectives
- Process Objectives
- Learning & Growth Objectives
These four categories are adaptable depending on business type. Together, the four types of objectives make up a strategy map. A strategy map not only shows the categories of each objective, but also how one objective type may impact another. Each objective within the strategy map is then assigned a measure. These measures support and direct the management of strategy execution. However, measurements need to be continuously analysed and reviewed in regard to their ability to properly reflect performance success. The capability to accurately analyse performance results in being able to make even small changes that can significantly impact the progress towards completed outcomes and achieved objectives. Reviewing KPIs and their relevance to objectives is essential for eliminating irrelevant measures.
Completing a balanced scorecard enables your company to develop strong objectives, but it does not, however, provide a platform in which to monitor all strategic contribution and execution. Whilst a balanced scorecard creates measures that drive performance, it does not facilitate a bottom-up approach to strategy management.
Large organisations are extremely complex, often implementing numerous projects and initiatives simultaneously, all of which cannot be successfully managed by spreadsheets or traditional project management tools. The reason these methods are unsuccessful is their incapability to align outcomes with strategic objectives.
After seeing this challenge for many years, we created StrategyWorks which is an easy-to-use management system, provides a single live view of your strategy, but critically creates perfect alignment between objectives, KPIs and execution.
For further information on:
- How to create clear objectives and KPIs that create excitement about the future
- How to create the right strategic options to support your objectives
- How to create a perfectly aligned execution plan
- How to create perfect accountability and ownership for the plan
- The role of Strategy Management solutions like StrategyWorks to help drive your strategy faster and more effectively
Download our FREE Strategy Execution Blueprint!
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