Goals: The Link Between Strategy and Execution

I hardly ever recommend webinars since they are a rather inefficient way to consume information, but sometimes good information is only available in that form…

This is a webinar by Donald Sull whose work I covered before. This piece is focused on the use of goals to drive effective strategy execution.

Don argues that goals drive strategy execution through 4 main mechanisms, each requires different “goal attributes” and presents different organizational pitfalls:

1. Improving individual performance:

• Only a handful – focuses attention only on what matters the most; makes goals easy to remember; minimizes goal conflict
• Non-conflicting – focuses attention and forces hard trade-offs
• Concrete – allow measurement of progress
• Ambitious – drive motivation to achieve and stretches people beyond their comfort zone
• Feedback– enables mid-course correction as well as learning and improvement of capabilities

While most organizations do a pretty good job on the first three, there’s very high variation around setting ambitious goals (from organizations where almost 100% of the commitments are conservatives to organizations where almost 100% of the commitments are ambitious). A large majority of the organizations struggles with providing effective feedback, and the issues tend to concentrate more around the frequency of feedback being too low than the quality of feedback being too low.

2. Drive strategic alignment 

Defined as the extent to which individual activities and investments are aligned with the overall strategy.

• Strategy is understood – you can’t align to something you don’t understand, forces strategy proficiency and the ability to connect strategy and team goals for managers
• Co-created goals (created by the individual, ratified by the manager) – connects team and individual goals; surfaces and prompts discussion around challenges to achievement; verifies understanding; increases commitment to goals (autonomy).

The organizational challenges around this front seem to be concentrated primarily around ensuring the the strategy is understood.

3. Foster organizational agility

Defined as the organizations ability to react quickly to the changing industry dynamics and accelerating cycles of innovation.

• Quarterly cadence – more frequent opportunities to respond to change; tighter coordination on a regular basis.
• Key results – avoid conflating objective with measure; clear data helps identify what is not working; enables the org to confront problems rather than blame people
• High ambition – encourage experimentation and learning; widen search beyond incremental improvements

In essence, the focus here is on more dynamic updating of the goals and doubling-down on two aspects that drive better individual performance. Organizations seem to be doing a mediocre job on implementing all three aspects.

4. Enable members of a networked organization self-organize their activities 

Successful execution of strategy typically requires tighter cross-functional efforts and effective cross-functional collaboration.

• Transparent goals – increase clarity of strategy; drive employee engagement; surfaces and reduces duplication of effort; clarify key interdependencies across teams and units
• Social goals – employee’s support one another’s work; spurs on-going discussion about goals and performance

This is the bleeding edge of goals science and two aspects of the “goals infrastructure” that are not wildly adopted. Yet.

HR for Humans: How behavioral economics can reinvent HR

Nothing for money: A behavioral perspective on innovation and motivation

Behavior Science, according to Wikipedia, is a catch-all phrase for describing

The systematic analysis and investigation of human … behavior through controlled and naturalistic observation and disciplined scientific experimentation. It attempts to accomplish legitimate, objective conclusions through rigorous formulations and observation

For many decades businesses operated under the critical assumption of classical economic theory that people are fully rational. Behavior science adds constraints to this purist approach on three key dimensions:

• Bounded Rationality – our cognitive abilities are not infinite
• Bounded Willpower – we sometimes take actions that conflict with our long term best interest
• Bounded Self-Interest – we are not solely motivated by our economic self-interest. We also care about things like pride, fairness, and the greater good

The existence of these “three bounds” leads people to behave “irrationally”, from a pure rational economic perspective.

The first aspect of business that started incorporating these insights was marketing, using the work of Robert Cialdini and many others. The famous Campbell Soup experiment, using a false sense of scarcity to increase soup cans purchases dates to the early 80s.

But recently, focus started shifting inward, towards modifying organizational practices, policies and programs to reflect our best understanding of human psychology.

This is a topic that a whole website can be dedicated to (and many are). I’ve been watching it closely for the last couple of years and applying insights from it whenever I can.

I’m bringing this up now, because the links above suggest that we’ve reached an exciting milestone on the adoption curve. In the past I’ve seen powerful thought leadership on this front coming primary from behavioral science experts and early evangelist. The fact that a consulting juggernaut like Deloitte is starting to put some pretty compelling materials together on this topic, suggests that we’re one step closer towards broader adoption of these ideas and practices.

 

A couple of good pieces from Simon Wardley on the idea of:

Pioneers, Settlers and Town Planners (#1, #2).

Wardley makes the case that a different type of talent is needed as your product/service evolves from inception, through being a product, all the way to becoming a commodity. The differences between these types of challenges is best illustrated here:

Each group innovates, but innovates in a very different way:

“The innovation of an entirely new activity is different to the feature differentiation of a product which is different from converting a product to a utility service.”

Wardley also argues, that in addition to thinking about talent differently, this also has a profound implication to the organizational structure: organizations should form cells specializing in one of these types of activities rather than adhere to a classical functional org structure.

In my mind, this is a pretty powerful tool for thinking about improving an organization’s fit to its purpose. But it can also be a powerful tool for helping individuals find their purpose: combined with the Doctor, Hospital Administrator, Policy Maker axis,  it creates a 3×3 matrix that can help you better pin-point a role that’s a good fit to your strengths.

FLOX Teams

FLOX is a lightweight framework for running self-organizing teams from the folks at NOBL. It’s quite compelling in its simplicity, consisting only of 2 “habits” and 4 “rules”.

Habits

1. Flocking – A  kick-off session where the team co-create their own “FlightPath” – the strategies, structures and systems to do their work. Guidelines for running a “Flocking” session can be found here.
2. Steering – A monthly session in which the team reflects on past outcomes and sets new goals. This discussion results in a clear plan of action and refreshed “FlightPath” that continues to guide the team.Guidelines for running “Steering” session can be found here.

Rules

#1 Steer toward your customer – serve the needs of an external or internal customer:

• Identify your team’s customer
• Assess their unmet and emerging needs
• Plot a strategic direction
• Test and respond to change

#2 Steer toward alignment – foster effective cross-communication and collaboration:

• Diagnose internal misalignment
• Increase the flow of information
• Codify and consent-based decision-making model
• Establish healthy interpersonal rituals

#3 Steer toward autonomy – empower safe-to-fail risk-taking without interference:

• Grow cross-functionally
• Define your test-and-learn process
• Hone your rapid prototyping skills
• Budget responsively

#4 Steer toward simplicity – reduce and resist unnecessary complexity:

• Learn to recognize complexity
• Approach complex problems differently
• Resist increasing complexity as you scale
• Periodically test-and-learn to reduce internal complexity