Things change too quickly these days, and I realized years ago that if I don’t have a clear line-of-sight on what I’m building, I have a hard time prioritizing what I should be working on and what my teams are focused on doing. A lack of focus leads to a lack of efficiency and increased frustration.
Defining a single company goal is arguably one of the most important things you can do as a growing business. Point everyone in the same direction, and it’s a lot easier to get things done.
How to determine the right company goal
When I first started picking goals, I had a hard time getting past anything that didn’t resemble the following:
- Increasing revenue
- Reducing expenses
- Mitigating risk
- Improving quality of work-life
While these are all fine, they are simply goals that every business needs to achieve. Telling my teams we wanted to “increase revenue and reduce expenses” wasn’t helpful. They already assumed we should be increasing revenue. It is a business, after all.
Using the 5 Whys
Initially, I wrote this off as a childish methodology. But, it turns out that sometimes a simple approach is also the most effective.
If you’re having trouble picking a clear and specific goal for your business or team this year, use the following exercise:
- Pick one of the items in the list above that stands out to you the most.
- Then ask yourself “why?” and write down your answer.
- Continue to ask “why?” or “why this is a problem?” at least 4-5 times.
Let’s go through a quick example scenario to see how this works.
- I’ve chosen “Mitigating risk”. Why?
- Because we have no problem with expenses or revenue generation, but it does feel like our foundation is on a house of cards. Why?
- Because we will soon have a client concentration problem. Why?
- Because we secured a giant client that, at its current rate, will be producing 75% of our revenue. Why is it a problem?
- Because we will have a reduced value, a more challenging time raising capital, and an increased risk of failure if they leave. Why is this a problem?
- Because we are in an excellent position to scale if we were to raise capital and using the money to acquire more customers to eliminate the client concentration risk will put us in a perfect position.
And there we have it. We dug deep and went from the original goal of “mitigate risk” to “Use our current success to raise capital and acquire additional customers to avoid facing any issue with client concentration.”
A few notes on this scenario:
- The purpose is to look forward; be proactive.
- Making sure you’re able to continuously look forward is why you’d want to repeat this exercise often.
- If we had ignored the situation, it would have been too late, and instead of trying to solve a potential risk, we are stuck with solving the existing risk rather than avoiding the hazard.
- Being proactive is always superior to being reactive.
Communicating the Goal
Share the goal, don’t keep it to yourself.
Tell your teams and help them understand how you got to the goal. (Read our article on Task + Purpose to see why).
There’s a real art to communicating the goal, but we’ll save that for another article.