Digital Marketing

SMART goals reduce ambiguity and increase commitment

One of the core competencies of leaders is the ability to deal with ambiguity, that condition in which things are not what they seem. And the higher a leader reaches in an organization, the more ambiguous things become. Leaders know that ambiguity is the enemy of compromise. They know that it cannot be eliminated. They know that most people work best in an environment where expectations, contribution, and recognition are well defined.

Leaders know that ambiguity kills initiative – it creates a culture of compliance rather than a culture of aggressive engagement. It keeps people off balance. It allows weak managers to protect any territory they may have. Ambiguity is a friend of the undecided, of the maybe yes, maybe no, of the uncommitted.

Reducing ambiguity is a goal of successful leaders.

But reducing the ambiguity is a real challenge. As leaders become more skilled and successful at dealing with ambiguity, it can be more difficult for them to recognize how critical it is for their people to have a clear understanding of what needs to be accomplished. Why? It is the curse of knowledge in action. That condition, defined by the Heath brothers in their book “Made To Stick”, says that once you have knowledge it is almost impossible to think or act as if others do not have it as well. The curse includes abilities. Once a skill is acquired, it becomes difficult to act without assuming that the same skill exists in others.

So this tug of war is working. While leaders develop the skill and ability to operate successfully in highly ambiguous situations, at the same time they need to work to reduce ambiguity for their people.

That’s where SMART goals come into play. SMART stands for specific, measurable, achievable, realistic / relevant, and time-bound. Setting goals based on these criteria reduces ambiguity and creates a climate of commitment.

What follows is a story from my experience that illustrates how critical SMART goals are to reducing ambiguity and increasing the chances of success.

I worked in a large multinational company with a small corporate staff, a really flat organization. While there was a lot of financial oversight, there was also a lot of operational freedom at the business unit level. The relationship between the business units and the company was clear: do your numbers and we’ll leave you alone. If you don’t meet your numbers and tight control will ensue, there will be changes in business unit leadership.

A fundamental part of the relationship between the company and the business units was reaching annual budgets and objectives. Corporate people were convinced that people at the business unit level were falling behind in earning the maximum bonuses for their organizations and for themselves. People in the business unit were convinced that people in the company were trying to dry them out. They both had reason to believe the same as they did. In that ambiguous situation, the annual budget dance took place and resulted, sometimes smoothly, sometimes not, in a set of financial goals for each business unit.

The president of a division that I had to work with considered that the budget was the objective of his organization, it is the only objective. He and his controller developed the budget based on what they thought would fly in the company. It was the equivalent of throwing a bunch of balls into the air and then trying to run under all of them. In this business unit, once the budget was approved, no further goal setting was performed as a means of communicating the requirements of that budget. As a result, his business was a culture of total compliance. “Tell me what to do and I’ll do it” was a phrase often heard in his business. It lasted three years, never budgeted, and was fired.

In another business unit, I was fortunate to work with a division president who was committed to involving all of his functional heads and direct reports in budgeting. All the opportunities, problems and issues were put on the table. When the budget was ready to be presented to the corporation, all the functional heads of its business unit knew what it contained, had participated in the definition of the numbers and had accepted it.

In this business, the goal setting process began during budget development. The key question for goal setting was “What are the top 3-5 actions that need to be taken to ensure budget is exceeded?” Every functional chief asked his people that question. SMART goals were developed at all levels. The result was a goal-driven culture where people knew what the few important goals they needed to work on to ensure success were.

Regular performance-to-goal meetings were held, adjustments were made, no surprises were allowed. It was a very demanding place to work, but the turnover was almost non-existent. That Division exceeded its budget for five years in a row and the Division President was promoted to Group Executive. There were many ambiguous situations that required work, but the top 3 to 5 SMART goals kept everyone focused on the few important ones.

There were many factors that contributed to the success of that business unit. But it started with the leader. It took the potential ambiguity of budgeting and turned it into a clearly defined process that involved input from experts. He then turned the abstraction of a budget into a set of operational elements that could be defined, measured, and reported. He used SMART goals to do that. And the very human tendency to bite off more than you could chew was controlled by insisting that goals be limited to the top 3 or 5, at all levels of the organization.

The only addition the division president made to the SMART formula was adding “Simple.” Its acronym SMART was changed to Simple / Specific, Measurable, Achievable, Relevant / Realistic, and Time Frame. Simplicity is a critical element in goal setting. I had seen too many goal setting processes that morphed into administrative processes that lost the real meaning and intent of goal setting.

Ambiguity is a reality in all organizations. In many cases it can be an advantage. But in most cases, the clearer the requirements, the better. Use SMART goals, keep them simple, and watch people respond with a high level of commitment to the company. They can be, as in this case, the difference between success and failure.

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