How to Set Clear Business Goals and Objectives
Business goals are the overall accomplishments you want to achieve that support your organization’s larger vision. This article not only underscores the importance of setting business goals to spur growth but also provides guidance on how to effectively set these goals.
One of the things we’ve come to deeply believe over decades of experience as investors, board members, coaches, and company builders is that companies either grow or die. Why? Because stagnant companies have a harder and harder time attracting and retaining decent talent (and forget about raising capital). In our experience, the better you are at growing revenue, the easier it is, all else being equal, to attract and retain talented people.
While the idea that growth is important isn’t new, what may surprise you is how many organizations (businesses, companies, not-for-profits) don’t set the type of goals that will enable that growth. Proper goal-setting ensures everyone is on the same page in terms of defining their goals and understanding what it will take to achieve them.
What Is a Business Goal?
Business goals are the overall accomplishments you want to achieve that support your organization’s larger Vision. When setting business goals, keep in mind the principles of a SMART goal — Specific, Measurable, Achievable, Relevant, and Time-bound. Proper goal construction ensures that all parties understand who's involved, how success will be measured, what resources are needed, how it serves the organization as a whole, and when it needs to be completed.
At Ninety, we set goals for every level of our organization — goals for the entire company, the leadership team, every department, and each of our team members. Completing our goals provides us with stepping stones that help us get from where we are to where we want to be.
Business goals take on a variety of forms:
- Financial — such as revenue, margin, and profit
- KPIs — such as paying companies, paying users, and Net Promoter Score
- Awards — such as earning Great Place to Work
- Competitive — such as increasing your market share
- Offerings — such as new products or services
Adopting a Business Operating System (BOS) provides a systematic structure for setting and accomplishing goals. Whether you're running on the Entrepreneurial Operating System® (EOS®), Scaling Up, Pinnacle, E-Myth, Great Game of Business, our own 90os, or another system, you’re almost certainly learning how to master the art and science of setting, monitoring, and achieving goals.
While setting objectives is wise, creating clear and compelling goals increases your probability of moving from where you are to where you want to be — and that you and your colleagues will enjoy, and maybe even love, the associated journey.
Whether aspirational or motivational, clear and compelling goals aligned with your longer-term vision:
- Provide a clear picture of what success looks like
- Define priorities and explain why leadership makes certain decisions
- Align individuals, teams, and departments across the whole organization
- Provide a methodology to track and measure success
- Allow us opportunities to celebrate and reward performance
In other words, clear and compelling goals are peaks worth climbing. At each summit, you plant a flag of a goal completed — a marker of the hard work your teams put into the ascent. Each win should be celebrated. Well-constructed SMART goals are guaranteed to improve your organization, so take the time to acknowledge every victory.
While you may still see a long way to go, the measured and marked progress from achieving your goals proves you’re on the right track.
Why Are Business Goals Important for Success?
Success doesn’t happen on its own. Setting goals that are clear, compelling, and actionable puts you on the path to repeatable success. Whatever "getting from here to there" means for you or your business, goals are necessary pins on the map toward your ideal destination.
Academic research shows us the widespread benefits of setting goals. In their 1990 study on goal setting, researchers Edwin Locke and Gary Latham found that setting goals:
- Increases effort
- Boosts creativity
- Improves brainstorming
- Heightens persistence
- Motivates tenacity
- Directs attention
George Wu, Chip Heath, and Richard Larrick later built on this research to find that our performance increases when we’re given specific and challenging goals. A goal’s usefulness, they found, is equal to the benefit of accomplishing the goal, minus the cost associated with completing it.
Said plainly, leading your team also means challenging them. Clear and compelling business goals raise the bar for your teams and motivate them through all the various stages of your company’s journey. Conquering these challenges brings people closer together and increases your chances of sustained growth on the road to building a thriving organization.
How to Set Business Goals That Enable Growth
We recommend the following process for setting company goals that enable and inspire growth:
- Step away from your day-to-day operational duties.
- Review and consider your company’s long-term vision.
- Seek feedback and make the goals SMART.
- Share your goals with your team members.
In business, growth and success are often synonymous. Companies need to achieve a certain level of growth to attract and retain great team members. Finding the correct level of tension to put on your team from the rigor of your goals is critical. The Yerkes-Dodson Law holds that performance increases with the optimal amount of pressure.
For setting clear and compelling goals that lead to growth, always consider your organization’s larger vision for the future first. Then, craft thoughtful goals that provide ways to track and measure your progress. Determining the number of goals needed for your company is essential. Mark Abbott, Ninety's founder, strongly suggests the ideal amount of company-wide business goals is three to seven. He also values having every team member responsible for individual goals that they own.
Sharing your goals is the next step. When sharing your goals, show your team how each goal builds toward completing departmental goals and how those objectives lead directly to accomplishing your company’s top goals. When your team members understand where you’re guiding them, they can see how their work helps the company get there, so they know their work matters.
The increased transparency that comes with sharing your goals increases trust. If you’re reluctant to share goals with your team members, consider the benefits of the whole organization having a clear idea of how the company operates and how current decisions can impact future outcomes.
Types of Business Goals and Examples
Scratching an item off our to-do list. Ticking a checkbox. Completing a goal. Nothing quite beats the rush of accomplishment.
Setting a date for achieving your goals is essential to any successful goal-setting process. At Ninety, we have four types of business goals:
- Compelling and Audacious Goals (CAGs) that we establish as 10-year goals
- A collection of 3-Year Goals covering various aspects of our business
- Several 1-Year Goals that build toward the above objectives
- Quarterly goals that we call Rocks based on finances, KPIs, and projects
We’ll go further into these types of goals by dividing them into two categories: long-term and short-term goals.
Long-Term Business Goals
Long-term business goals involve any duration beyond one year. Many organizations create long-term goals far into the future. At Ninety, we prefer establishing a small set of five to fifteen-year goals called Compelling and Audacious Goals (CAGs).
Here are a few examples of some well-known CAGs:
- Starbucks — Become the most recognized and respected consumer brand in the world
- Amazon — Every book ever printed in any language, all available in less than 60 seconds
- Microsoft — A computer on every desk in every home
- Stanford University — Become the Harvard of the West
From there, we recommend setting a series of 3-Year Goals and 1-Year Goals with common threads leading to the CAGs. These goals should primarily represent critical revenue targets, subscriber counts, and the KPIs needed to achieve those financial results.
Some common long-term business goals include:
- Hiring a department head
- Creating a new innovative product
- Accessing a new market
- Redesigning your website
- Increasing revenue
Long-term goals are a critical piece of your company’s Vision. Using Ninety's Vision tool to capture the picture you have for your business’s future brings renewed clarity and purpose to your entire organization.
Short-Term Business Goals
At Ninety, we call our short-term goals Rocks or 90-Day Goals. These short-term goals cover what you want to accomplish in less than one year. Many Business Operating Systems (BOSs) praise the value of setting quarterly Rocks.
In terms of the degree of difficulty associated with achieving your goals, the research suggests that a 15% failure rate is ideal. More specifically, if you consistently achieve 100% of your goals, you probably aren’t pushing yourself enough and creating the tension that is associated with the Yerkes-Dodson Law. On the other hand, if you're only hitting 60% of your goals, you’ll likely find yourself with a demoralized organization. In our experience, great companies complete at least 80% of their Rocks (at Ninety, we’re focused on hitting 90%).
Achieving at least 80% of your goals instills a healthy level of focus, commitment, and intention. Whenever a goal isn’t achieved, the team should take the time to reflect on the loss and learn from it.
As many BOS coaches like to say, you either win or learn. That mindset is increasingly important as your organization goes through stages of growth and development.
Creating Rocks aligns priorities around your long-term goals and ensures that your Vision is incorporated into your weekly efforts.
To learn more about how we establish Rocks, you can check out our Quarterly Planning Meetings Brief or go even deeper on all things related to Rocks and Meetings in the 90u Library.
Why Do We Like to Call 90-Day Business Goals Rocks?
The term “Rock” was inspired by an analogy used in the book First Things First by Stephen Covey. Later, Gino Wickman incorporated the concept into EOS — making it a pretty popular idea across the BOS industry. In short, Covey provided us with a conception of the workday composed of sand (interruptions), gravel (day-to-day responsibilities), Rocks (main priorities), and water (everything else).
At Ninety, we also like to call our 90-Day Goals Rocks, and we believe that you can change your business or life in as little as 90 days.
Just like we create short-term goals in alignment with our long-term Vision, we follow a meeting cadence that scales from top to bottom:
This cadence keeps our teams focused and aligned so our business can thrive. During Weekly Team Meetings (WTMs), we check in on the progress of our Rocks and assign ownership to Issues and To-Dos generated to keep us on track.
Quarterly Planning Meetings (QPMs) celebrate the Rocks we’ve completed and provide a forum for talking about the ones we fell short on. Then, we create and assign new Rocks for the next 90-day cycle.
Once per year, we extend a QPM into an Annual Planning Meeting (APM) to examine the greater landscape by reviewing our Vision, gauging progress on long-term goals, and establishing our priorities over the next 12 months.
Covey had it right — setting Rocks keeps our priorities straight. New Issues are bound to come up, but we hold fast to focus on our individual, team, and company Rocks.
Find out more about how we break our Rocks into Milestones and To-Dos in Ninety.
How to Write Business Goals and Make Them SMART
Several core disciplines are associated with creating a great goal-scoring machine, but one of the most important is making business goals SMART. Once you do, you are well on your way to turning your organization into a great goal-scoring machine.
Making goals SMART ensures there is no question of whether a goal is accomplished.
Quality goals are SMART — specific, measurable, achievable, relevant, and time-bound.
After brainstorming a list of potential goals, use the list above as a template to make them SMART.
How to Write SMART Goals
Creating SMART goals keeps teams aligned with the organization’s Vision. Using Ninety, create a title for your Rock or long-term goal. Then, within the description, outline the fine details of the goal using the SMART methodology (Specific, Measurable, Achievable, Relevant, and Time-bound).
As you begin constructing your SMART goals, consider the following:
- Specificity minimizes miscommunication
- Automate as much of the data retrieved as possible
- Completing goals boosts morale
- Rocks keep an organization’s goals cohesive
- Using Milestones ensures timeliness and builds trust
How to Track Company Goals
With organizational goals set for several increments, it’s time to establish processes for tracking their progress. Make data your superpower and tie your goals to quantifiable metrics whenever possible. Ninety makes this easy with a customizable Scorecard to collect company, team, and individual data points.
All goals should be monitored and discussed during weekly, quarterly, and annual meetings. Those responsible for the goals should flag any issues along the way and delegate tasks as needed to bring the goal to fruition.
Business Goals Template
When setting goals, you can use Ninety, fill out our template, or simply follow these steps:
- Establish the What, Who, Why, and How
- What are we trying to achieve?
- Who is responsible for completing this goal?
- Why is this important to us?
- How will we accomplish this?
- Revise into a SMART goal
- Share the goal with your team
- Transparency leads to accountability.
- Sharing promotes teamwork.
- Collaboration and trust develop culture.
Set Your Business Goals Today
Setting clear goals is crucial for achieving growth and success in any organization. Visit our 90u library to learn more about how we document goals, leverage data, and align organizations. Want to learn more about business goals? Subscribe to our blog below to receive our newest articles — delivered right to your inbox.