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© Copyright 2016 Donald N. Sull
Goals: The Missing Link Between Strategy and Execution
Don Sull MIT @simple_rules
© Copyright 2016 Donald N. Sull
2 #GoalSummit
STRATEGY ?
RESULTS
© Copyright 2016 Donald N. Sull
3 #GoalSummit
Goal Summit Mobile App 1 2 3 4
© Copyright 2016 Donald N. Sull
4 #GoalSummit
Which is the biggest obstacle to executing your company’s strategy?
q Lack of performance culture
q Activities do not support our strategy
q Lack of agility
q Inability to work across silos
q We have a strategy
Results
© Copyright 2016 Donald N. Sull
5 #GoalSummit
Goals drive execution in four ways
Blinder Link Bold
Hypothesis Signal
© Copyright 2016 Donald N. Sull
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80% 90%
Goals as blinders
© Copyright 2016 Donald N. Sull
7 #GoalSummit
Source: Survey of 8265 respondents in 305 organizations. Number of respondents varies by question.
Blinders drive performance
92%
87%
44%
35%
Specific
Handful
Regular feedback
Ambitious
© Copyright 2016 Donald N. Sull
8 #GoalSummit
% of employees who answered “Make ambitious commitments even if you are not sure how to achieve them”
Imagine you were giving advice to a newly hired manager. What suggestion would you give about making performance commitments?
Source: Survey of 5385 respondents in 192 organizations.
© Copyright 2016 Donald N. Sull
9 #GoalSummit
59%
11%
8%
5%
5%
1%
Past performance
Technical expertise
Acting with integrity
Political connections
Ability to adapt to change
Pursuing ambitious goals
Factor that most influences promotions
© Copyright 2016 Donald N. Sull
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Goals as links
© Copyright 2016 Donald N. Sull
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Links align activities to strategy
Source: Survey of 8265 respondents in 305 organizations. Number of respondents varies by question.
84%
66%
46%
42%
Developed goals with my boss
My goals link to my unit's goals
My boss explains how our goals support company
strategy
Know company's top 3 goals
© Copyright 2016 Donald N. Sull
12 #GoalSummit
If a strategy falls into a company and no one understands it, does it make a difference?
© Copyright 2016 Donald N. Sull
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Goals as bold hypothesis
© Copyright 2016 Donald N. Sull
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R. M. Cyert and J. G. March, 1963, A Behavioral Theory of the Firm, (Englewood Cliffs, NJ: Prentice Hall)
Conservative goals narrow search
• Incremental improvements • Me-too innovations • Cost reductions
-----------Goal----------- --------Status Quo-------
© Copyright 2016 Donald N. Sull
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-------Goal-------
R. M. Cyert and J. G. March, 1963, A Behavioral Theory of the Firm, (Englewood Cliffs, NJ: Prentice Hall)
Ambitious goals trigger broad search
--------Status Quo-------
• Disruptive innovation
• Creative solutions
• Build new capabilities
• Business model innovation
• Rapid learning
© Copyright 2016 Donald N. Sull
16 #GoalSummit
Goals guide iteration
Source: Survey of 8265 respondents in 305 organizations. Number of respondents varies by question.
27%
28%
34%
50%
Discuss difficult issues openly and honestly
Consstently analyze variance from goal
Met regularly with boss to discuss progress
Revise goals more than once per year Set goals
ExecuteCourse correct
© Copyright 2016 Donald N. Sull
17 #GoalSummit
Goals as signal
© Copyright 2016 Donald N. Sull
18 #GoalSummit
Goals for coordination
Source: Survey of 8265 respondents in 305 organizations. Number of respondents varies by question.
12%
21%
35%
Can learn colleagues' performance
Can learn colleagues' goals
Key partners understand our goals
© Copyright 2016 Donald N. Sull
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1
2
1 1 1 1
3 3 3
4
3
6
5
7 7
10
02
46
810
# of O
rgs
0 .2 .4 .6 .8 1% Public
N = 58 orgsOrganizations that created its first goal after start of quarter and organizations with fewer than10 goals are not included. Deleted goals are not included.
% of Goals in Org that are Public2015 Q4
Transparency
Goals want to be transparent
© Copyright 2016 Donald N. Sull
20 #GoalSummit
Strategy • Develop strategy for execution
• Ambitious but not delusional • Maintain shared strategic context
Results Goals
Leadership capabilities • Master goal setting best practices • Provide useful feedback frequently • Lead discussions to course correct
Performance management • Linkage of goals to compensation? • Promote on ambition? Performance?
Resource allocation • Allocation of money and talent linked to goals
• Resources reallocated on same cadence as goals are revised
Data analytics • Tailor data to goal-specific metrics • Draw on multiple, external, real-time data sources
• Ensure data is timely, granular, and credible
© Copyright 2016 Donald N. Sull
21 #GoalSummit
Risks of goals Steps to manage risk
Decrease cooperation • Hire and promote team players • Decouple compensation from individual goals • Visualize interdependencies
Cut corners • Strong checks and balances for key risks • Fire leaders who cut ethical corners • Make goals and performance transparent
Inhibit learning • Mix mastery and performance goals • Don’t link compensation directly to mastery goals • Reduce target completion rate
Decrease intrinsic motivation • Employees generate own goals • Encourage tinkering • Align goals to inspiring mission
Short-term focus • Link quarterly goals to longer-term strategy • Break long-term goals into shorter sprints
Tunnel vision • Multiple metrics per goal • Ongoing discussion of weak signals and anomalies • Tolerate some positive deviance • Encourage tinkering
List of known risk from Ordonez, L., Schweitzer, M. E., Galinsky, A., & Bazerman, M. (2009). Goals gone wild: How goals systematically harm individuals and organizations. Academy of Management Perspectives, 23 (1), X–X
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