The definition of clear and specific business objectives, which can be securely quantified, classified and analyzed, is essential for the success and competitiveness of companies, both in the short, medium and long term.
One of the basic premises for the success of any company, even if it is a small family business or a large industry, is to have measurable business objectives. In other words, an indicator of strategic goals that can be described quantitatively.
Only on this way the goals can be tabulated and analyzed against actual achievements, helping companies to determine the effectiveness of its approaches, products or services, as appropriate.
This provides, in turn, the possibility of addressing different points of view such as quality, precision, scope, reaching the target audience, competitiveness and customer satisfaction, among many other variables.
Why is it so important to set specific business objectives?
Defining the organizational objectives is essential to draw up the most appropriate action plan and aim for its achievement. This is equally true for a school assignment, playing a football game or running a company. Only a correct definition and prioritization of tasks allows to design the most coherent and correct strategy to achieve the common goals in the short, medium and long term.
This premise is even more essential if we consider that one of the main causes of organizational collapse before three years of existence is precisely the lack of a clear definition of objectives. Clarity that is based, in turn, on criteria of reality and measurement.
Objectives can be of two types:
The strategic ones, which are set at a general level and in the long term.
Individuals (or for teams/areas) that emerge from the former, and must also always be aligned with the mission and vision of the business.
This division of goals provides the following benefits:
- It allows each area or department of the company to know exactly their functions, so that their managers, supervisors or bosses can determine the exact strategies to orient themselves towards the achievement of objectives.
- Facilitates the design, planning and application of tasks.
- Allows evaluation and verification of the effectiveness of the tasks or actions put into practice.
- Helps detect management errors and determine necessary corrections.
- Optimizes the establishment of priorities, which allows concentrating the focus of efforts and resources towards the truly necessary tasks, consequently increasing the efficiency and productivity of the organization.
- The achieve of previously established objectives reinforces the motivation of the whole team.
What is the best way to measure business objectives?
The best way to measure the objectives of a company is through the creation of indicators or data that allow quantifying the result, be it a process, service or product. In turn, having clear objectives makes it easier to create execution and performance indicators.
Indicators can be quantitative or qualitative, or a combination of both.
The quantitative indicator uses parameters or percentages.
The qualitative indicator is generally a rigorous form of evaluation.
The hybrid indicator quantifies qualitative data, just as is done in an index.
While the three types are often complementary, qualitative data will be most useful in cases where outcome measurement is difficult to capture quantitatively.
The most successful measurement methodologies
In recent years, two major strategies have become popular and effective to successfully measure business objectives:
1. The SMART working method
It is one of the most popular systems for measuring objectives in the business world and its name is an acronym for the expressions Specific, Measurable, Attainable, Realistic and Time Bound.
This acronym was invented in 1981 by researcher George T. Doran in 1981, and refers to the following characteristics:
S (Specific): The objective must be specific and clearly defined. Once raised, we must answer what, where, when, how and why.
M (Measurable): The objectives must be measurable, since it is the only way to know if they are being achieved or not.
A (Attainable): The goals must be achievable and consistent with the resources, means and capabilities of the company. Therefore, we must avoid the ambition of achieve complex objectives at once and replace them by small reasonable challenges, which, together, will represent a great advance for the company.
R (Realistic): We have to set goals that are important enough to dedicate our resources to them.
T (Time Bound): It is essential to define and achieve a deadline for our objectives, orienting them temporarily and establishing an expiration date in order to avoid postponements and delays.
This fixation and determination allow us to set objectives with the highest level of specificity, which not only allows us to focus on achievement, but also objectively measure the degree of success achieved.
For example, a “SMART Goal” would be “increase sales of one specific product or service by 20% over the next 6 months.” That level of detail in the information will provide a precise quantification to determine success or not, in quantitative and temporal terms.
2. OKR Methodology
It was invented by the former CEO of INTEL, Andrew Grove, and its name derives from the expressions Objectives and Key Results. In recent years, it has achieved great popularity among various multinational companies, thanks to its ability to define and manage goals based on the establishment of simple objectives, and the measurement of performance based on results.
To implement this method, we must first determine a qualitative objective, and then a set of quantitative key results.
In this way, the focus on the objective is always maintained and the results are analyzed more clearly, since it is possible to measure, evaluate and redefine them, if it is necessary.
This way of working allows the company to create:
Long-term OKR: Generally used as a whole and worked on annually.
Short-term OKR: Used more in specific team and with quarterly measurement.
In the same way, tasks and results can also be established with even more limited measurement (in weekly or fortnightly periods, for example, as is done in agile methodologies such as SCRUM and KANBAN). This helps to understand in a more practical way the level of performance of the team and the degree of fulfillment of the objectives.
As a result, the following benefits are obtained:
Agile and ambitious goals
The OKR methodology allow us to adapt the goals to shorter cycles, which helps to face successfully to possible changes in the environment. It also helps to set and achieve more ambitious goals, which encourages employees and ensures maximum team performance.
Focus and prioritization
OKRs make it easier to prioritize business outcomes, helping employees prioritize key tasks and more easily stay on target.
Culture of results
The OKR methodology encourages work focused on results, promoting the growth of the company.
This method allows defining the goals that the business needs through a practical process. In this way, companies that adopt it save valuable time and resources to achieve the expected results.
If the OKRs are well aligned and clearly visible to the entire team, they help to identify any contradiction or inconsistency, favoring their swift resolution and optimizing the level of participation of all collaborators.
How does technology help better measure business objectives?
Once the company and its management teams have selected the best way to establish and measure objectives, both short and long term, it is also essential to have the best available technological tools at hand to ensure adequate quantification of tasks.
This enables higher efficiency rates to be achieved which, in turn, are reflected in better results and direct benefits for both the company and its employees.
To achieve these improvements, we can use various apps and digital tools. For example, electronic checklists applied by managers and supervisors in order to implement SAMRT or OKR methodologies with their teams, through personal smart devices, which can operate both in the field and remotely.
In this way, area supervisors would be in a position to specifically quantify the level of task completion, without the need to use paper or spreadsheets that require more work, consume more valuable time and have a high chance of making mistakes.
A concrete example of how modern digital technology today helps us to accurately limit and measure the fulfillment of the objectives of any company. At DataScope we have the expertise and the necessary tools so that you can take that transcendental step, and move towards the successful consolidation of your company.