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.

4 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.

  • Benjamin White | May 3, 2018

    I think the problem with SMART goals in a changing environment is less about the corporate level strategy and more about individual performance. Setting individual SMART goals in October with the expectation that you know what needs to happen in July is silly. It constrains the individual’s ability to respond to market forces and constrains groups of individuals from pursuing necessary and innovative change.

    This will continue to be a struggle so long as managers believe they have unique and insightful expertise about the future rather than about the past.

  • Mihai Ionescu | May 6, 2018

    SMART GOALS? NOT FOR STRATEGY!
    On a more technical view, SMART goals/objectives don’t have anything to do with the Strategy. They may be good for BMO management, for operations management, or for something alike, but not for the management of Strategy.

    Why? Because Strategy is a complex and inter-dependent model or construct of hypothesis about the future, based on which we build another hypothesis construct, which is the Strategic Plan that we execute and adapt for achieving our Strategy and reaching its top goals.

    In such a complex construct, the typical components of a SMART goal/objective (the aspiration, the actions to achieve it, the results measures and the time-frame) have their own inter-dependencies with other components of this construct (driving-driven objectives, lead-lag KPIs, strategic initiatives linked in a many-to-many relationship with different objectives, and so on).

    On its own, a Strategic Objective is not at all SMART. But together with the KPIs used to measure its achievement’s progress and outcome, with the initiatives we’ve planned for achieving it — in other words, with a bunch of other model components — it is.

    So, if you are involved in Strategy Management, forget about SMART. Leave it to those who manage operations.
    .

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