Written by Ed Cook
It’s the beginning of the year and you are setting goals - again. We set these annual goals in so many contexts: business goals, fitness goals, financial goals, education goals. Our list is long. You set these goals with such hope for success, only to watch the hope wither as the routine of the year kicks in, just as it has in previous years, keeping your goals unmet. You tend to be ambitious in your goals at this time of the year. Maybe you feel the renewal of the new year. Maybe the time off energizes you. Maybe you simply feel that goal setting is expected in January. Whatever the reason, disappointment often follows.
It doesn’t have to be that way. It is possible to set ambitious goals that are meaningful. Goals that, if achieved, would have a positive impact on your life. You can even incorporate the three-letter jargon that so often accompanies goal setting: ROI, KPI, and OKR. (More on those later.) What’s in the way typically doesn’t have anything to do with you. In fact, if left alone you would probably be more successful. The phenomenon that is wrecking your ability to be successful with your goal setting is Ephemeral Expectations.
We see this happen in the Change Leadership and Change Management work we do. We see it as we guide executive teams through group Decision-Making. We almost always see it when it comes to making an improvement on Team Effectiveness. Ephemeral Expectations are the destroyers of goal success. They are the transitory and shifting (ephemera comes from the Greek meaning “lasting one day”) expectations that come from sloppy (or at least ill-considered) thinking about what success looks like. Often, so ill-considered that the goal repeatedly changes. And this repeated change is the killer. This is certainly highlighted in the term Ephemeral Expectation which is an oxymoron. What’s the point in waiting for something that is gone in a day? Yet, managers will state and then restate and then restate goals over and again until you fail.
Fortunately, there is a way out. One that you can control. Like many things, it’s mostly about getting ahead of the problem, so that it doesn’t become a problem. It starts with the alphabet soup of 3-lettered goal-setting terms: ROI, KPI, and OKR.
The phrase Return on Investment is a strikingly wonky term for a simple idea:
Are you getting more out of the effort than you are putting into it?
That’s it! That’s what investment bankers mean when they look for an ROI. That’s what Investors mean. That’s what you mean when you look to buy something and say, “That’s not worth it.” You are saying that what you could get for your money is not good enough. The rest of the ideas around Return on Investment (ROI) are about making the calculation and, to be sure, it can be complicated. Nevertheless, making a straightforward calculation can be easy enough and incredibly valuable. It can be done in four steps.
ROI = (Value from Goal * Likelihood of success with a specific effort) / Cost of a specific effort
As the cost of the effort increases, hopefully, the likelihood of success increases. If not, that’s an indicator of where you need to stop investing. Here’s a link to a more robust description of how to Calculate a Change ROI.
The values in the equation just need to be in the ballpark. That provides enough integrity to be sure about the ROI of your goal.
As a personal goal, I want to get better at teaching analytics. The ROI for this is in two pieces. First, I teach analytics in the business school at the University of Richmond, so improving my teaching ability increases my value to the school and so my pay. That’s the more easily measurable impact. The second piece is that learning to do something gives me joy. Given that we describe our company, The Change Decision, as a change and culture consultancy focused on growing Joy at Work, the possibility of growing my own joy is very valuable to me. Additionally, we are doing Joy Research so this is self-reinforcing. All in, I judge the value to be high. Fortunately, the likelihood of success increases with my effort. So the more I do the more likely it is I’ll get the value. Overall, I judge the ROI as “medium.”
There is a fascinating battle (and I would suggest pointless) between those advocating for the use of Objectives and Key Results (OKRs) versus Key Performance Indicators (KPIs). Instead of jumping into that fray, let’s sidestep and instead talk about Input Measures and Output Measures. A Sales Team has some good examples of these. Output Measures could be the achievement of a sale, the monetary value of the sale, and the likelihood of future sales. Input Measures could be the number of sales calls, the monetary value of proposals submitted, and the effectiveness of negotiations.
The Output Measures are what you really care about, but it can be difficult to manage your goals based on just those because you don’t know why you have not achieved your Key Results. You just know that you haven’t. The Input Measures can tell you what you are doing, but they are not the Objective. If a sales team completes dozens of sales calls but closes few sales, it is not going to achieve the ROI.
"The great danger for most of us lies not in setting our aim too high and falling short, but in setting our aim too low, and achieving our mark." –Michelangelo
I would urge all of us to make the Objective at least meaningful if not inspiring. But remember, in declaring the Objectives and Key Results, simple is better than complex. Complexity is an enormous pit that can trap the would-be goal setter. Stay out of it. Instead simply ask, “What do I care about?” which can be stated as an Objective. Then ask, “What are the signs that I have achieved the Objective?” which are the Key Results. Keep it as simple as that, and you will be amazed at much impact you can have.
The Objective is to be better at teaching analytics. That’s clear but the Key Results are not quite so obvious. I can use grades but, for the Objective of better analytics teaching, that sets up a moral hazard where a better grade is about me and not the student. I could use student evaluations, but this also has a bias to it, in that I could go easier on the students to increase their evaluation but not improve my teaching. Most Key Results I could think of had a trade-off, so I decided to use a few of them in combination since they offset each other. Specifically,
The KPI metrics measure the things you are going to do to achieve your OKRs and ultimately realize the ROI of your goals. You can determine the KPI metrics by asking the question, “What should I do each week/month/quarter to achieve the goal?” The KPI is the amount of those things. If you are a Project Manager it might be how often you review and take action on a risk log. For a manager of a team, it might be how often are you having a development conversation with the people on your team. For a software developer, it might be the quality of the code you develop each week.
All of these are useful but they are not the final key result. A Project Manager’s Key Result is to deliver the project on time, on budget, and within the scope. Taking action on the risk log helps to achieve that. A manager’s Key Result is that the people on the team grow in their jobs and careers. Having regular development conversations helps achieve that. A software developer’s Key Result is software that meets the needs of the customer for a reasonable price. Keeping a high level of code quality helps to achieve that.
In my teaching example, the KPI metrics were fairly easy to come up with. I have been trying different techniques in teaching and already had others I wanted to implement.
I’ve thought about or have done all of these, but, until this year, I had not tracked them as KPI metrics.
The key to doing this well is doing it simply. In almost all cases, something is better than nothing. The goals can be dreams. Dreams that get you up in the morning. Dreams that inspire. Dreams that bring you joy.
"You are never too old to set another goal or to dream a new dream." –Les Brown
Here’s an example from my own company. One of our goals in 2022 is to increase the number of people that attend our Change Management related courses so that the revenue can sustain our business independently of the change and culture consulting work we do. It is likely difficult for others to see how powerful this dream is for us. It means we are sustaining ourselves by doing something that we love, and we are getting the time to do even more things that bring us joy.
Here’s what we did. We’ve calculated the value we would like to get, made an estimate of the cost, and an estimate of the probability that we will be successful. It took us about 15 minutes to calculate that the ROI was about 40%. Clearly worth doing!
Next, we set the Objectives and the Key Results (OKRs). The objective is above: to sustain our business independently of the change and culture consulting work. We have three change classes:
The Key Results were the number of classes taught and the number of people attending. It took about 15 minutes to determine these values.
Finally, we created the Key Performance Indicators (KPIs). Since this past year we increased the number of people following us on social media and attending classes because of our blog and webinars, we focused our KPIs on those. We chose the number of webinars and blogs then mapped out the topics for the year. We also set up a calendar of social media posts to guide people to these. This took much longer, several hours, but generated a plan we could follow.
The power in this is simply doing it. It may not be perfect but it will be valuable!!