Setting business objectives by applying “smart” principle is holistic as each component is critical to the entire endeavor.
The bigger issue of strategy execution is that a good strategy adds no value unless it is effectively executed. Strategic objectives are the achievable components to focus on organization’s strategy and provide the leadership a tool to clearly articulate these objectives to their workforce, their investors, other key stakeholders and guide positive improvement over time. The strategy stems from longer term goals and results in annual objectives aligned to the strategy. Annual objectives start with the executives choosing a few key initiatives, understanding their interdependency, and driving them down the line. More specifically, how to set strategic objectives right by following SMART principles?
The bigger issue of strategy execution is that a good strategy adds no value unless it is effectively executed. Strategic objectives are the achievable components to focus on organization’s strategy and provide the leadership a tool to clearly articulate these objectives to their workforce, their investors, other key stakeholders and guide positive improvement over time. The strategy stems from longer term goals and results in annual objectives aligned to the strategy. Annual objectives start with the executives choosing a few key initiatives, understanding their interdependency, and driving them down the line. More specifically, how to set strategic objectives right by following SMART principles?
Specific: An objective is specific if it is well-defined, unambiguous, and describes exactly what is expected. They should precisely identify the elements of an activity or capability that must be improved upon. Objectives are key to driving accountability, but what makes them effective is how they are implemented. The foundation is the management process; how to well align objectives within the functional design of the organization. Should one find that the organizational design does not match the objectives that are intended to meet the overall vision and mission, one may want to assess how they are organized.
Measurable: An objective is measurable when success is defined with specific targets or bounds, and a reliable and affordable system is in place to assess the degree to which the objective has been achieved. Where SMART goals are helpful to people is in the process of thinking through "How will I measure myself against this goal?" and "How will I know if I actually achieved my goal?" The financial objectives are quantified and measurable assuming the business process is aligned to do so. On the other hand, there are some objectives is slightly more problematic to measure, although possible but maybe more on a qualitative scale.
Achievable: Is the achievement of these objectives reasonable within a given timeframe? To set smart goals, all the people involved in implementing them need to be involved. How do you expect people to implement the strategic goals if they do not know or they have not participated in formulating/setting? Ensure that measurability does not come at the expense of achievability. Any objective should also not depend on unlikely or unpredictable market events and be based on what is most probable for the future. Without having achievable goals and a strong plan is like driving to a destination without a precise address.
Relevant – The objectives need to be relevant when taking a broader strategy and developing the initiatives for the execution teams to deliver. The relevant objective setting helps a senior leader keep a pulse on progress and helps the execution team understand what needs to be done with priority in mind. They are the proposed objectives aligned with the vision and mission, a way to do this is mapping out your strategic objectives over time and ensuring your organization is oriented correctly upon them. Those objectives that do not support the vision and mission, may not be relevant and may not guide positive improvement.
Time bound - Sometimes strategic objectives seem to be achievable and as you move toward accomplishment in time, the constant assessment indicates your progress is too slow. This is potentially right because you have not resourced, set the conditions or positioned yourself for success, this could also be because the market conditions of changed or you were unable to account for some variables that had a tremendous impact from the beginning. A very important question is to determine when these objective need to be completed. Key phrases to assist in this could include “no later than” or “by” or “no earlier than”. This assists an organization in assessing their progress and making improvements based on the changing environment.
Setting business objectives by applying “smart” principle is holistic as each component is critical to the entire endeavor; and it is the basis for not only formulate strategic objectives but also assist organizations to measure their performance via efficiency, effectiveness, and agility lenses.
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