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I recently completed reading the book “Obliquity” by John Kay, which provides an important perspective on vision, goal setting, strategy and decision making. Obliquity is the idea the complex goals are often best achieved indirectly.

For example, one of the central ideas in the book is that individuals and companies succeed when they focus on striving towards a compelling purpose, as opposed to a focus primarily on financial success. In the book, John Kay points out that businesses are best run by enthusiasts, men and women who pursue excellence and that financial success follows form this pursuit. However, if financial goals are made the primary objective, then organisations begin to loose their way and significantly increase their chances of failure.

One example of this error, discussed provided in the book is that of Boeing, the aircraft company. Boeing went downhill after their primary strategic focus shifted from being passionate about building great planes, to a focus of delivering “shareholder value”. Bill Allen, the Boeing CEO from 1945 – 1968 described their purpose as to “eat, breathe, and sleep the world of aeronautics”. The downhill spiral began when the new Boeing CEO, Phil Condit explained the new focus “we are going into a value based environment where unit cost, return on investment, shareholder return as the measures by which you’ll be judged”.

Another example comes from the Collins and Porras book, Built to Last, which compared and contrasted the strategies and approaches of two companies in the same industry. In the book, Merck and Pfizer were two companies that formed part of their analysis.

• Merck followed an oblique approach to their strategy, as emphasised by George Merck – “We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear”
• John McKeen of Pfizer, in contrast to Merck, followed a more direct strategy, John stated “so far as humanly possible, we aim to get profit out of everything we do.”

However, it was Merck who achieved success and made the most money. So it seems that the most profitable companies in the world are not the most dedicated to profit. Instead they are dedicated to pursuing a compelling purpose. They are dedicated to pursuing excellence. It’s not all about the numbers and shareholder value, it’s about passionate employees, great products and satisfied customers. The most profitable companies are not necessarily the most profit orientated.

In the the article “Jack Welch Elaborates: Shareholder Value”, an interview with Jack Welch, the former CEO of General Electric, discussing his ideas on shareholder value, he points out that…

“On the face of it, shareholder value is the dumbest idea in the world… Shareholder value is an outcome—not a strategy… That’s not a strategy you can touch. That’s not a strategy that helps you know what to do when you come to work every day. It doesn’t energize or motivate anyone.” – Jack Welch, “Jack Welch Elaborates: Shareholder Value”

The reality is that ‘getting the numbers’ and ‘shareholder value’ as goals will never be enough to stir the souls of men. It’s the commitment to a cause we passionately care about that really matters, it’s this commitment that causes us to get out of bed in the morning and that inspire us go the extra mile.

Why all this Matters

So, why does all this matter? When is comes the practice of leadership it’s important that we adopt a vision strategy that is compelling enough to drive the outcomes of leadership, being direction, alignment and commitment (see post). Let’s examine the application of the concept of obliquity as outlined in this post to our practice of leadership. Consider the following leadership challenges that a direct approach creates.

Strategy: When we have generic goals and objectives, such as “improve shareholder value”, this does not provide clear direction for the organisation and assist to answer questions like:

• How do we best allocate resources in support of this vision and strategy?
• What trade-offs should we be making to support the vision and strategy?
• What tactics would allow us to achieve our vision?

Execution: Without a strategy that results in clear and compelling direction, execution that results in alignment becomes difficult to achieve. Consider that alignment cannot be achieve if you are unable to address the following questions:

• What should we all be doing differently or better when we come to work each day?
• Who is accountable to achieve what outcomes?
• How do we ensure that the plans, decisions and action across the enterprise all contribute towards the same goals?

Culture: Without a strategy that considers all stakeholders, it is almost impossible to gain the level emotional commitment from employees to support the execution of strategy and to drive meaningful change. Consider the following:

• Does the vision inspire people to go the extra mile?
• What behaviours are being encouraged by the vision and strategy?
• What type of leadership style and behaviours are require to lead this strategy?

Related posts:

1. Keeping Your Goals in Focus
2. Study Recommends Sleeping on Complex Decisions
3. Groups perform better than the best individual at solving complex problems

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Don Dodge, a Developer Advocate at Google whose jb it is to help developers build new applications on Google platforms and technologies, wrote an interesting post “How Google sets goals and measures success” discussing how Google goes about goal setting. Don describes the central philosophy to Google’s approach to goal setting is as follows:

The Google goal setting process happens in a 90 day cycles…

“Every quarter every group at Google sets goals, called OKRs, for the next 90 days. Most big companies set annual goals like improving or growing something by x%, and then measure performance once a year. At Google a year is like a decade. Annual goals aren’t good enough. Set quarterly goals, set them at impossible levels, and then figure out how to achieve them. Measure progress every quarter and reward outstanding achievement.”

Don makes the following observations and insights concerning his experience with the goal-setting process at Google:

• OKRs are Objectives and Key Results. I submitted my Q1 OKRs with what I thought were aggressive yet achievable goals. Not good enough. My manager explained that we needed to set stretch goals that seemed impossible to fully achieve. Hmmm…I said “This is just a 90 day window and we can predict with reasonable accuracy what is achievable. Why set unrealistic goals?” Because you can’t achieve amazing results by setting modest targets. We want amazing results. We want to tackle the impossible.
• Failure is not an option – A while ago I wrote a post about the culture of “failure is not an option” and how, taken the wrong way, that actually conditions people to set modest achievable goals that they are certain they can achieve. Because if they fail…they are fired. Taking great risks, pushing innovation, and striving to achieve the impossible will never happen at companies like that. In that post I discuss how startups definition of “failure is not an option” is completely different. For startups it means they will try 5 or 10 or 20 approaches until they find one that works. They won’t stop until they succeed. Google’s culture seems to follow the Thomas Edison approach which paraphrased is “I haven’t failed, I’ve just found lots of approaches that don’t work, and I am closer to the solution”.
• Achieving 65% of the impossible is better than 100% of the ordinary – Setting impossible goals and achieving part of them sets you on a completely different path than the safe route. Sometimes you can achieve the impossible in a quarter, but even when you don’t, you are on a fast track to achieving it soon. Measuring success every quarter allows for mid course corrections and setting higher goals for the next quarter.
• Rewards For Success – The rewards for achieving the impossible are significant. As you might expect there is an algorithm for calculating engineering bonuses with various multipliers. Google attracts the best people in the industry for many reasons, maybe most importantly because they give people the resources and support they need to achieve the impossible. Financial rewards are significant, but they are not the primary motivator. Working with the best people in the world and achieving greatness is the ultimate reward.

It seems to me that this continually striving for breakthrough innovation, by setting BHAG’s and clear objectives is working well for them. Too many organisation don’t take the goal setting process seriously enough to commit the necessary time and resources to defining a limited set of clear outcomes and committing the necessary resources to ensure goals are achieved.

Related posts:

1. When goal-setting backfires
2. Happiness, Success and Goal Setting
3. Three Criteria for Defining a Worthwhile Goal

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The article “For This Guru, No Question Is Too Big” from the NY Times discusses the work of the best selling business author Jim Collins. Given the popularity of Jim Collins the article discussed how he allocates his time, which is as follows:

“… in a corner of the white board at the end of his long conference room, Mr. Collins keeps this short list:

Creative 53%

Teaching 28%

Other 19%

That, he explains, is a running tally of how he’s spending his time, and whether he’s sticking to a big goal he set for himself years ago: to spend 50 percent of his workdays on creative pursuits like research and writing books, 30 percent on teaching-related activities, and 20 percent on all the other things he has to do.”

This seems to be an odd approach to allocating how to spend one’s time! However, this time allocation suddenly makes sense when you consider Jim Collins “overarching goal,” which is “to produce a lasting and distinctive body of work.”

Besides making wise use of his time in a way that supports his overarching goal, Mr. Collins keeps focused, making sure he is not distracted.

“Mr. Collins also is quite practiced at saying ‘no.’ Requests pour in every week for him to give speeches to corporations and trade associations…”

To achieve meaningful and challenging goals requires “… a willingness to say no and focus on what not to do as much as what to do…”! All leader’s who are passionate about perusing a challenging vision, have to ensure they spend their time wisely and remain focused on their goals. How are you doing?

• Have you allocated your time in a way that support your overarching goal?
• Do you say “no” to distractions?

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3. Persistence: The key to the Achievement of Meaningful Goals

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“A goal properly set is halfway reached.” – Abraham Lincoln

“Ready, aim … fail” by Drake Bennett discusses research that found goals which are incorrectly set can have negative consequences. Goal-setting drives success and without clear goals we are for the most part unfocused and undisciplined.

“It is a given in American life that goals are inseparable from accomplishment. President Kennedy’s 1961 promise to put an American on the moon by the end of the decade is held up as an example of a world-changing goal, the kind of inspirational beacon needed to surmount immense societal challenges. Among psychologists, the link between setting goals and achievement is one of the clearest there is, with studies on everyone from woodworkers to CEOs showing that we concentrate better, work longer, and do more if we set specific, measurable goals for ourselves’ ‘When people are asked do their best, they don’t,’ says Locke, now an emeritus professor at the University of Maryland’s R.H. Smith School of Business. ‘It’s too vague. Giving people ambitious and specific goals directs their attention, energizes them, and keeps them engaged longer.’”

When Goal-Setting Fails

Goal-setting fails when we focus on the wrong goals or when we focus on a few goals, goal that are too narrow at the expensive of the greater organisation. Issues and concerns outside of the scope, of the set goals are neglected or worse get ignored.

“The argument is not that goal setting doesn’t work – it does, just not always in the way we intend. ‘It can focus attention too much, or on the wrong things; it can lead to crazy behaviors to get people to achieve them,’ says Adam Galinsky, a professor at Northwestern University’s Kellogg School of Management, and co-author of ‘Goals Gone Wild,’ a paper in the current issue of a leading management journal” Narrow corporate goals can keep employees from asking important questions that they otherwise might. Take the notoriously combustible Ford Pinto. In the late 1960s, Ford CEO Lee Iacocca, determined to take back the market share the company was losing to smaller imports, announced a crash program to create a new car that would be under 2,000 pounds, under $2,000, and would go on sale in 1970. Desperate to meet the conditions and the deadline, company executives ignored and then played down questions about the safety of the car’s design. As a result, the Pinto, with a fuel tank just behind the rear axle, was uniquely prone to igniting upon impact, and 53 people died in such fires.”

The Solution

The article goes on to discuss a few solutions to effective goal-setting.

“To combat this, Latham, among others, argues that what’s often required is a ‘learning goal’ – one where someone pledges to come up with, for example, five approaches to a thorny problem – rather than a performance goal that assumes that the problem will automatically be solved’ And whatever they are, goals need to be flexible when circumstances change. Francis Flynn, an organizational psychologist at Stanford, says he always tells his students that ‘the best goal you can have is to re-evaluate your goals, semi-annually or annually, to make sure they remain rational.’”

There are other solutions, this goal-setting error as has been discussed before by Robert S. Kaplan and David P. Norton who developed The Balanced Scorecard Method as a way to make sure organisations focus on a balanced set of goals. The Wikipedia entry describes the Balanced Scorecard rationale as follows:

“By focusing not only on financial outcomes but also on the operational, marketing and developmental inputs to these, the Balanced Scorecard helps provide a more comprehensive view of a business, which in turn helps organizations act in their best long-term interests.

Organizations were encouraged to measure, in addition to financial outputs, those factors which influenced the financial outputs. For example, process performance, market share / penetration, long term learning and skills development, and so on.

The underlying rationale is that organizations cannot directly influence financial outcomes, as these are “lag” measures, and that the use of financial measures alone to inform the strategic control of the firm is unwise. Organizations should instead also measure those areas where direct management intervention is possible. In so doing, the early versions of the Balanced Scorecard helped organizations achieve a degree of “balance” in selection of performance measures. In practice, early Scorecards achieved this balance by encouraging managers to select measures from three additional categories or perspectives: ‘Customer,’ ‘Internal Business Processes’ and ‘Learning and Growth.’”

As a leader who is striving to realise a vision and purpose everyday, have you set goals for your organisation and team? If you have, check that they are comprehensive, balanced and focus on a number of perspectives and that they do not too narrowly focus your organisation on one or two metrics at the expense of long-term effectiveness.

Related posts:

1. Happiness, Success and Goal Setting
2. Three Criteria for Defining a Worthwhile Goal
3. Study Reveals Where Americans Fail at Setting, Achieving New Year’s Goals

Leaders set goals that inspire and challenge. Goals energise people when they are well defined, provide meaning and give direction. Sadly leaders often set goals that are ambiguous, unrealistic and uninspiring, for example “providing a superior return to shareholders”. So how do leaders go about defining a worthwhile goal? In the book “A Bias for Action” by Heike Bruch and Sumantra Ghoshal, which I’ve just finished reading, provides the following criteria for defining worthwhile goals:

• Concrete: Concrete goals make it clear what the various components other make up the goal, the challenges that need to be faced and overcome to achieve it. There is a good understanding of the tasks that need to be completed to achieve the goal.
• Meaningful: People have to believe that the goal is worth the effort, that the goal is necessary to make a difference.
• Challenging: The goal should stretch us whilst not so overwhelming that it paralysis action. If goals don’t seem to be achievable they are quickly abandoned. Worthwhile goals are personally challenging.

When these three criteria underpin a leader’s goals, they help increase the level of commitment people give to the attainment of the goals.

• Are your goals concrete and well defined?
• Do you personally identify with your goals? Is it a worthwhile pursuit?
• Is your goal personally challenging? Will it stretch you whilst not overwhelming you?

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3. Happiness, Success and Goal Setting