smart-goals

What Are SMART Goals And Why They Matter In Business

A SMART goal is any goal with a carefully planned, concise, and trackable objective. To be such a goal needs to be specific, measurable, achievable, relevant, and time-based. Bringing structure and trackability to goal setting increases the chances goals will be achieved, and it helps align the organization around those goals.

Understanding SMART goals

“SMART” is an acronym which explains how a goal might be achieved. Here is a more detailed look at each letter in the SMART acronym.

S – Specific

When considering the goal, it helps to be as specific as possible. Many individuals and businesses set goals with arbitrary dollar amounts, such as becoming a millionaire or generation 10 million dollars in revenue. If the goal is to make a certain amount of money, a more specific objective may be to make $40,000 per month for the next 5 years by selling 2500 units of a new software product.

Here, it helps to ask questions. What is it, in exact terms, that an individual or business hopes to achieve? Where, how, and when will this occur? What are the reasons for setting the goal in the first instance?

M – Measurable

Measurable goals have metrics that are used to gauge progress. This is particularly important for large and complex goals that must be broken down into smaller steps. Measurable goals also let the individual or business know that they have reached the finished line.

A- Achievable

Goals must be realistically achievable, otherwise, the temptation may be to give up on achieving them entirely. Businesses should set goals that their employees could reasonably expect to see through – given the materials and resources at hand. It’s also important to identify any short or long term impediments that may divert these resources.

R – Relevant

Relevance means that individuals and businesses set goals that are aligned with their values and long-term objectives. There is no point setting goals for the sake of it – so ensure that the reasons for conceiving a goal are aligned with broader strategies and company culture.

T – Time-based

Goals by their very definition need a deadline, particularly in business settings. Time-based goals are also important in tracking progress and setting milestones. For example, a business wanting to double its revenue in 6 months would hope to increase revenue by 50% after the 3-month mark.

Some common mistakes when setting SMART goals

Vagueness

Clarity is key when setting SMART goals. A marketing department might not know where to start when presented with the goal of selling 5000 cars in the next 4 years. However, the more specific goal of selling 5000 small cars in Italy by the end of 2025 gives them something to work with.

No KPIs

If the goal is to improve customer service, then there must be a customer service KPI with which to gauge progress. Many businesses make the mistake of setting goals that simply can’t be measured. Here, quantitative or industry research is key.

Unattainability

If a business is particularly successful, it is easy to get carried away with goal setting. An ambitious goal of selling 1 million pairs of shoes in the next 5 years is daunting and maybe unattainable without the required due diligence. In this case, smaller goals of selling 20,000 pairs every 3 months may be more suitable.

Key takeaways:

  • SMART goals are those that are carefully planned against certain criteria to increase the chances of them being accomplished.
  • SMART goals are specific, measurable, achievable, relevant, and time-based.
  • Some common mistakes when setting SMART goals include those not backed by reliable KPIs or those that are simply unattainable in the recommended timeframe.

SMART Goals vs. OKR

what-is-okr
Andy Grove, helped Intel become among the most valuable companies by 1997. In his years at Intel, he conceived a management and goal-setting system, called OKR, standing for “objectives and key results.” Venture capitalist and early investor in Google, John Doerr, systematized in the book “Measure What Matters.”

SMART goals and OKR are very similar tools, however, SMART goals are used more for personal development. Where instead OKR is a goal-setting system primarily thought for teams. So how to enable large organizations to achieve their goals at scale.

Therefore, while in terms of mindset SMART and OKR are similar. SMART usually are used more by solopreneurs, where OKR are used by startups and larger organizations.

SMART Goals vs. OKR vs. MBOs

mbo-vs-okr

Management by Objectives or MBO is a strategic management tool whose core principle is to define organizational objectives to align management with employees clearly. OKR is an evolution, as it breaks the silos and makes the shared objectives transparent to the whole company.

And those same objectives are aggressive and aspirational. SMART Goals can be used in the direction of OKRs but more at a personal level or at a smaller scale.

OKR and 10x thinking

OKR has been a system widely used in companies like Google to help scale up, while still aligning the company around so-called moonshots. Or small and larger bets that can make the company breakthrough in various verticals.

As OKR is by nature aggressive and aspirational, it fits well with the 10x thinking mindset.

moonshot-thinking
Moonshot thinking is an approach to innovation, and it can be applied to business or any other discipline where you target at least 10X goals. That shifts the mindset, and it empowers a team of people to look for unconventional solutions, thus starting from first principles, by leveraging on fast-paced experimentation.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which target is to reach over two million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get in touch with Gennaro here