Companies that rigidly adhere to traditional approaches to goal setting may be driving their business in the wrong direction. More than ever, goals must be set in relation to the competitive environment.

We rarely question the need for goals, and the familiar acronym SMART instructs us that good goals should be specific, measurable, achievable, realistic, and time-based. But none of these attributes say anything about the context in which we are setting goals.

Are SMART goals effective in every context? If not, what kinds of goals are most useful in what kinds of contexts? These are important questions at a time when competitive environments are constantly morphing and new ones are unexpectedly emerging.

Why We Need Goals

Every company needs goals. Goals fulfill several functions: coordination (to align intentions); abbreviation (to summarize a complex effort); prioritization (to ensure that activities and processes don’t become an end in and of themselves); calibration (to tell us how to allocate or invest resources); and evaluation (to tell us if we are making progress).

In stable, predictable environments, it makes sense to set goals that are specific and measurable. For instance, some markets, such as confectionary and cosmetics, grow with gross domestic product (GDP) and follow relatively predictable trends. Thus, a company like Mars Inc. can plan out a multiyear strategy in its core categories.

In more dynamic and uncertain environments, however, SMART goals can be problematic. It’s hard to manage to specific, time-based targets when demand, technology, business models, and competitor sets are incessantly shifting, as is common in emerging or recently disrupted industries, like genetic testing services or augmented reality technology. In such cases, companies need goals to do other jobs, like prompt new thinking or encourage experimentation and learning in situations they have not encountered before.

How We Think Matters

To see how different kinds of goals can be effective in different situations, it is helpful to consider how the human brain works in different contexts.

Varying predictability: In predictable environments, the brain breaks down goals into familiar actions that we know will add up to the overall outcome. SMART goals, by specifying details such as the destination and arrival time, help us identify the right actions in the right order. They leverage our stable knowledge of the environment to construct an efficient plan.

In novel situations, however, the brain uses analogies to find the underlying similarities between what is known and unknown. Google’s goal “to organize the world’s information” is not measurable.1 Instead, it is usefully fuzzy, permitting and prompting, productive analogy-making.

References

1. Google Inc. “Our company,” www.google.com/about/our-company.

2. L. Gannes, “Ten Years of Google Maps, From Slashdot to Ground Truth,” Recode, Feb. 8, 2015, www.recode.net.

3. M. Reeves, M. Zeng, and A. Venjara, “The Self-Tuning Enterprise,” Harvard Business Review 93, no. 6 (June 2015): 76-83, https://hbr.org.

4. M. McCoy, “6 Reasons Why You Should Be Shopping at Zara,” HerCampus.com, Nov. 27, 2017.

5. Reeves et al., “The Self-Tuning Enterprise.”

6. P. Bateson, “Playfulness and Creativity” Current Biology 25, no. 1 (January 2015): R12-R16, www.sciencedirect.com.

2 Comments On: When SMART Goals Are Not So Smart

  • Indu Kadian | March 27, 2018

    Another caveat is when goals actually undermine the objectives. Is it because we do not select the correct variable or the objective is hard to measure like quantifying learning. In such scenarios, goals drown the objectives. I had written an article on how goals drown objectives. The link:
    https://www.linkedin.com/pulse/do-your-goals-drown-objectives-indu-kadian/

  • Adrian Tan | April 13, 2018

    I always thought the “R” in SMART was for “Relevant”. “Realistic” is covered by “Achievable”… but the article does make a valid point that goals should always be questioned, and if companies have trouble justifying them, then they are no longer good to have.

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