This page is a work in progress, part of a multi-year effort to capture and share learnings, frameworks, tools, and processes to run organizations. See Running Organizations for more.

Why Should We Have Goals?

Goals are promises to fulfill visions. While visions are boundless and difficult to measure, goals are the measurable steps toward achieving them. Goals should be concrete, clear, and realistic.

There are many words for "Goals". Objectives and goals are often used interchangeably. Other words are Rocks, OKRs, and the old-school "MBO". V2MOM is another goal-setting framework that is used by Salesforce.

Goals are Statements of Intent

Goals set an intention for what you're going to accomplish. Goals don't have to be perfect, but having them gives you and your organization direction.

"A goal is like a dartboard. You don’t have to hit the bull’s-eye every time to score; you can earn points simply by getting on the board. Your company goals must be so clear and so meaningful that they move every constituency toward the bull’s-eye." (Source: CEO Tools 2.0)

There is never a shortage of issues to address in organizations. We'll never fix all of our issues, but setting Goals focuses us on addressing the ones that prevent us from fulfilling our visions.

“I will have to remember ‘I am here today to cross the swamp, not to fight all the alligators." (Source: The Art of Possibility)

Goals Motivate

We're driven to strive and achieve. Goals engage and motivate us along the way. Our motivation increases when we see progress. Articulating what achievement and progress mean in our organizational context is done in the form of goal-setting. Goals help us understand the connection between Mission, Vision, Purpose, and short-term success.

Goals Reduce Complexity

Fulfilling a strategy and achieving a vision requires wading through complex choices, and breaking down the future into short-term, achievable steps. Good goals reduce the complexity of the big picture.

"An important duty of any leader is to absorb a large part of that complexity and ambiguity, passing on to the organization a simpler problem - one that is solvable. Many leaders fail badly at this responsibility, announcing ambitious goals without resolving a good chunk of ambiguity about the specific obstacles to be overcome." - Richard Rumelt (Source: Good Strategy, Bad Strategy)

Goals Give Focus

Goals focus the organization and its people on just a few things. Organizations and teams should have a handful of goals at any given time. Individuals should have their own goals that they’re focused on achieving.

Goals Are Short Term

Goals should be set at least every 90 days. Some Goals can last for a year, but short-term goals of one quarter tend to be best for keeping us engaged and committed.

Small, pre-product market fit organizations could change goals faster by designing goals for every work sprint. Goals can always shift and change as the context in the organization changes, even mid-quarter.

Goals Are Achievable

While strategy can come off as abstract, theoretical, and long-term, Goals remove ambiguity, making the strategy concrete and short-term. Goals are not “moon shots,” they have to be achievable and believable.

"Importantly, the moon Mission had been judged feasible. Kennedy did much more than simply point at the objectives; he laid out the steps along the way - unmanned exploration, larger booster rockets, parallel development of liquid and solid fuel rockets, and the construction of a landing vehicle." - Richard Rumelt (Source: Good Strategy, Bad Strategy)

Goal Frameworks

Rocks

Rocks are sets of goals that represent the 3-7 most important priorities in an organization over the next 90 days. Stephen Covey's "Rocks" metaphor is used in both Scaling Up and EOS.

How Rocks Work

Rocks, in Scaling Up and EOS are not technically Goals. "Goals" apply only to one-year and three-year timelines, while Rocks are specific to a given quarter.

Rocks apply to the company level, department level, and to individual people. Rocks should follow the SMART Goal framework.

Rocks are written in stone for the quarter - not to be changed, removed, or added to. As issues and opportunities present themselves throughout a quarter, they are added to a list (i.e. Issues List) to be revisited at the end of the quarter.

"With that, a wall goes up, and no one is allowed to throw anything else over it, whether it’s a genius-level new idea or a hand grenade. Once the priorities are set for this quarter, no new priorities can be added! If someone does try to throw something else over, you get to throw it back because you all agreed on the current Rocks as being the most important priorities for this quarter.” - Gino Wickman (Source: Traction)

Setting Rocks

OKRs

OKRs, Objectives + Key Results, is a simple, flexible goal-setting framework. OKRs work well for creating change, improvement, and innovation and work best when they're aspirational and inspirational.

How OKRs Work

OKRs apply to all levels of an organization - the organization level, the team level, and the individual level. Each level should have 3-5 OKRs with five or fewer KRs per Objective.

Objectives are "what is to be achieved," just like with MBOs. Key Results (KRs) cover every step or milestone necessary to achieve the Objective.

KRs are not nice-to-haves, they're the necessary actions needed to achieve the Objective. KRs are the "how" that is missing from MBOs.

"Where an objective can be long-lived, rolled over for a year or longer, key results evolve as the work progresses. Once they are all completed, the objective is necessarily achieved." - John Doerr (Source: Measure What Matters)

The aspirational part of OKRs that can be missing from Rocks is in the execution. In many companies, including Google, completing 70% of KRs within a quarter constitutes success. If you're consistently delivering 100%, you're not ambitious enough with your goals. To create accountability, many organizations differentiate between "Committed" OKRs, to which an individual or team is expected to deliver in full (100%), and "Aspirational" OKRs, to which a success rate of 60% is average.

In the OKR system, compensation is never directly tied to OKRs, though the performance of OKRs makes up a small percentage of overall performance management.

The flexibility with OKRs, combined with the fact that goal-setting is difficult, causes many to try more rigid, formulaic frameworks with better guard rails. Many companies and individuals need a year or more to feel comfortable designing good OKRs. That's a long time to feel uncomfortable.

An example of cascading OKRs from Bain:

Individual OKRs are difficult, time-consuming, and then often don't end up aligned with the Department/Team/Organization level. Whitney O'Banner from Medium suggests you skip individual OKRs.

Setting OKRs

Jack Altman's book People Strategy has an in-depth explanation on how to set OKRs, which I'll summarize here.

Also, see an explanation of the "typical OKR cycle" from Measure What Matters.

It's fairly easy for most people to come up with Objectives/priorities, it's another to come up with the right KRs for that Objective. The question "What will it take to accomplish this?" is one way to get there.

WIGs

Wildly Important Goals (WIGs) are "Discipline 1" of the 4DX framework (covered in Operating Rhythm). WIGs are the "one (or, at the most, two) extremely important goals" that communicate what matters most to an organization. Failure to achieve a WIG "will make every other accomplishment seem secondary, or possibly even inconsequential." (Source: The 4 Disciplines of Execution)

How WIGs Work

WIGs apply to every level of the organization, with the rule that no team has more than two WIGs at a time. WIGs are communicated with the formula "From x to y by when," making them measurable and timebound. Leaders can veto any WIG, but they should not dictate teams or people's WIGs.

WIGs reduce demands and increase focus. They stand opposed to the Balanced Scorecard concept, as attempting balance spreads teams too thin amidst the "whirlwind" of the day-to-day.

Setting WIGs

You can determine WIGs by asking:

"If every other area of our operation remained at its current level of performance, what is the one area where change would have the greatest impact?" (Source: The 4 Disciplines of Execution)

V2MOM

V2MOM is a goal-setting, organizational planning, and strategy framework created by Salesforce.

How V2MOM Works

V2MOM is used for annual plans, for teams, and for individuals to set and communicate goals publicly. They're created annually and updated each quarter, whereas Rocks and OKRs are recreated every quarter.

V2MOMs are one-page documents drafted by every department and every employee, on annual basis.

V2MOM is simple but offers more context, explanation, and clarity than the OKR framework does. Like OKRs, V2MOM is a living breathing process rather than a static goal-setting framework.

Salesforce's original V2MOM from the book Behind the Cloud:

Creating V2MOMs

MBOs

MBOs are goals (objectives) that measure outcomes. They are generally set annually and are tied to individual compensation.

How MBOs Work

MBOs are more performance-focused than OKRs, which are generally more progress-focused, team-based, and ambitious.

That "performance focus" and the measures used to measure performance caused MBOs to fall out of favor. Performance for entire divisions, and all the people within them, came down to a single number (or set of numbers), and those numbers became the goals rather than measures of goals.

MBOs don't address how things will get done, only what will be achieved. This sets the system up for failure, as we can't control outcomes, and how we go about reaching outcomes is often as important as what we achieve. When compensation is tied to outcomes, the system becomes ripe for gaming and corruption.

"MBO companies respond to each failed quarter by instituting still more MBO. Bottom-line failures are excused as due to uncontrollable market factors, while successive improvements in selected quantitatively expressed objectives are loudly touted as proof that management really is succeeding in spite of the dismal results." - Tom DeMarco (Source: Slack)

Thematic Goals

A Thematic Goal is a goal that is the theme for the year. Thematic goals represent the overall strategic intent behind the bulk of a plan. Thematic goals work well in Annual Plans, and can be set at an Organization or Department/Team level to compress a set of goals and unify and align a group.

How Thematic Goals Work

Thematic Goals are singular, qualitative, emotional, and resonant, but unlike BHAGs and Visions, thematic goals are short-term and realistic.

"The thematic goal is not a number, and it is not even specifically measurable. It is a general statement of a desired accomplishment. It requires a verb, because it rallies people to do something. Improve, reduce, increase, grow, change, establish, eliminate, accelerate." - Patrick Lencioni (Source: Silos, Politics and Turf Wars)

OKRs and Rocks can be crafted around or roll up to a Thematic Goal. You can also have other operating objectives surrounding your thematic goal and OKRs/Rocks, like NPS, quality, revenue, etc.

Deciding on a company-wide thematic goal should be a leadership team effort. If the team is going to commit, it needs to work through the organization's priorities and make the determinization as a group. Once it's decided, the goal applies to everyone on the leadership team.

Don't make up a thematic goal if you're not truly committed to a theme, as you'll have to carry it around and talk about it every quarter for an entire year. If you're not confident that a theme can survive for a year, don't create one.

Common Goals Mistakes

Beginner Goal-Setting Fails

Vague Aspiration In Place of Clear Goal

A common mistake in goal-setting is not breaking aspirations down into addressable, timebound goals. I've seen 90-day personal development aspirations like "Increase Interpersonal Confidence." Goals that are vague and impossible to measure end up looking like wishes, and wishes are hard to commit to.

Too Many Goals

It's easy to take on too many goals (i.e. more than five) and then fail at all of them. We don't get extra points for ambition when setting goals. We can't "have our cake and eat it, too."

The OKR framework helps accommodate and control for ambition by expecting that less than 100% of OKRs will be met in a given quarter. Most organizations aim for about 70% completion, giving a clear target range to define success.

Unrealistic Timeline

Scoping realistic timelines is a common challenge as we often misjudge how much we can get done in 90 days. A quarter looks like a long time until we're mid-way through and realize we have no chance of reaching the targets we've set.

Scoping effective timelines requires practice. Having managers or peers give feedback on our goals is one way of ensuring good scoping.

KPIs/Milestones/KRs Don't Add Up

It's easy to set objectives and much harder to create the measures and milestones used to determine whether that objective is reached. This is a goal-design problem that's difficult to remedy without practice and help, but it's damning for an individual goal because it's hard to catch until it's too late in a quarter.

Choosing Unmotivating Goals

Sometimes we choose goals for ourselves because they're important to other, important people. This can happen in organizations where every goal is cascaded, and people don't feel they have the autonomy to choose what’s motivating to them. It can also happen when the goal-setting process is emphasized so strongly that it's fetishized within an organization.

If we're not personally motivated by the goals we set, it's hard to remain committed to them.

"If you’re not excited about the goal that you're working for, stop working for it. Personally, I like visualizing exciting new and beautiful things that I want to make into realities. The excitement of visualizing these ideas and my desire to build them out is what pulls me through the thorny realities of life to make my dreams happen." - Ray Dalio

Intermediate-Advanced Goal-Setting Fails

Not Being Specific About Activities

If you keep your milestones/KRs/KPIs at such a high level that you don't decide what concrete activities will get you to the goal, you have a nice 90-day wish but no guidelines for action. Goals and Key Results must be broken down into activities.

"Product teams are often given a lofty goal like 'Improve retention by 5%' without any clear path for how to get there. Leaders who assume teams will figure it out are delegating strategy, not enabling execution. This leaves teams rudderless." (Source: Better Goals With NCTs, Not OKRs)

Choosing Measurable Over Important

Creating goals is hard, and we're so often forced into rigid models like SMART Goals, which force us to think, and sometimes overthink our goals. In trying to satisfy these models, it's easy to choose what's most easily measurable over what represents real progress for ourselves and our organizations.

The measurability issue is what caused MBOs to fail in a lot of organizations. The organization pushed people to choose metrics as goals, and those metrics became targets. Suddenly everyone mindlessly focused on numbers instead of what numbers the represented.

Not Considering Dependencies

We often fail to consider the ways in which other teams will impact whether or not we can hit our goals. Most ambitious goals require teams to coordinate, but when setting goals it's easy to assume that everyone will deliver with quality, without delays.

"I Forgot"

Not being accountable to our own goals is an embarrassingly common mistake in goal-setting. We can lose track of goals for all sorts of reasons, including many of the items above - they're not motivating, they're not specific enough to guide daily behavior, we have too many to keep track of, etc.

Without a process for revisiting goals throughout a quarter, it's easy to lose sight of the intention we set weeks ago. Even a "midway" check six weeks into a quarter is often too late for a sufficiently ambitious goal. This is where our operating rhythms can hold us accountable.

Goals Hygiene

Tracking Goals

Red-Yellow-Green

Staying accountable to goals requires a method for updating goal status along the way. Most organizations use Green, Yellow, and Red color coding to keep track of the status of each goal throughout a quarter. Green means the goal is on track, Yellow means it's behind or needs attention and Red means it's at risk.

When discussing goals throughout a quarter, the ability to filter goals by Yellows and Reds allows you to find and work through problems quickly.

Keeping Goal Status Updated

Statuses (whether Red-Yellow-Green or otherwise) need to be updated on goals regularly. The more automated, visual, and public, the better. This creates the opportunity for more collaboration, accountability, and if necessary, management intervention.

"OKRs are scrutinized several times per quarter by contributors and their managers. Progress is reported, obstacles identified, key results refined. On top of these one-on-ones, teams and departments hold regular meetings to evaluate progress toward shared objectives. Whenever a committed OKR is failing, a rescue plan is devised." - John Doerr (Source: Measure What Matters)

Example: Intercom

This Intercom process, outlined by Paige Costello in The Magic of Goal Setting, is an example of keeping goal statuses updated in a Product Management org, on a weekly basis. This is a higher frequency and higher control process than most teams use but a great example of strong tracking of and accountability to goals.

Foundation

PurposeMissionVisionCore ValuesStrategy

Designing The Organization

Understanding CultureCultivating CultureOrganizational DesignOrganizational StructureOperating PrinciplesLeadership TeamsDesigning ManagementEffective Teams

Operating Effectively

Operating RhythmGoalsPlanningInternal CommunicationMeetingsMetricsBusiness ProcessResolving IssuesDeciding & Delegating