December 2006 online newsletter article

Get SMART for 2007!

In last month’s newsletter, we presented why it is important to use a “balanced scorecard” when evaluating your company. (See corecubed November 2006 Powering the Core newsletter)

Relying on the “bottom line” as a means of measuring a company’s performance is important in showing what has happened in the past, but it provides no guidance on the company’s current or future performance.

Get SMART for 2007!

Evaluate your business by creating SMART targets.

Don’t worry – marketing is not rocket science. Using SMART goals is one step in creating goals that a company can realistically achieve. These goals are not the same as the corporate mission which is the destination for which the company is headed. The SMART goals are the stepping-stones that help a company achieve its mission one step at a time.

SMART goals are:

• Specific
• Measurable
• Agreed upon
• Realistic and
• Timed

So, for 2007, set the company’s SMART goals. Now, how are you going to achieve them?  We all know there’s no one equation for success--or is there?

When building the scorecard to measure success, it helps to keep the following equation in mind:

Let’s look at these success variables one by one.

Measurement

A company that fails to measure the effectiveness of its decisions is blowing in the wind. Without proper measurement, it is impossible to know whether a policy or action is moving the company toward its SMART targets or not. Too many business owners “measure” the effectiveness of their decisions simply by waiting a short period of time and then sticking their head up to see if everything is “okay”. This is not effective measurement.

Techniques, or methods, used to reach the SMART goal targets are also a key factor. Techniques fall between two categories:

• The big picture items that have a significant impact on the overall performance of the business, like corporate restructuring, building expansion, product expansions, strategy changes or the addition of product or service lines.
• The small picture items that are not usually as consequential, but that are essential, like motivational speeches to get employees excited about the SMART targets or short video presentations that educate or inform and assist in reaching goals.

To achieve goals, the company must understand and use both methods.

Business owners should have the ability to effectively manage the actions or changes they place in effect. In order to apply and maintain the appropriate level of control over an action, the manager must first define the type of action it is. We classify actions into one of four categories:

• The Level One Action:  This is an action over which the manager has complete control. Its effects appear only within the organization itself.
• The Level Two Action: The manager retains control over this action as well, but its effects appear outside of the organization.
• The Level Three Action:  This action falls outside of the manager’s control. It does not affect the organization directly, but it does affect the “drivers” that cause a company to swing in one direction or the other.
• The Level Four Action:  As is the case with the previous action, the level four action is not under the manager’s control, nor does it affect the aforementioned drivers.

The key to maintaining overall control over the business’s performance is to focus attention on levels one and two over which the manager has some or complete control. Secondly, the manager has to find ways to compensate for the effects of level three actions, or at least be aware of their effects on the business drivers and make appropriate decisions. Level four actions, as they have no effect on the company itself or the drivers, are insignificant.

Managers should be able to achieve and maintain sufficient control over the actions to achieve their SMART goal targets. Nothing is gained by setting goals that are unachievable.

Focused persistence (often referred to as “project management”) is essential to obtaining your SMART goal targets. Any cohesive project management system should consist of the following criteria:

• A timetable for each action
• Regular and periodic reviews of each action
• Resources – both human and tangible – assigned to each action
• A sincere drive to achieve the SMART goal targets

Consensus

Last but not least, there should be consensus among all of the managers and team who are working toward the proposed goals. That means making certain that everyone, from the top down, thoroughly understands what the SMART goal targets are and what actions are being implemented to achieve them. This is done in four ways:

• Communication. The importance and status of the implemented action should be hammered home through regular communication with all involved. Everyone needs to understand not only the action being taken, but why that action leads the company closer to achieving the SMART goal targets.
  
  
• Involvement. Everyone working on specific projects to achieve goals should be closely associated with the planning and decision-making process.
  
  
• Implementation.  As the proposed action is being implemented, teams should be able to observe and note the effects of the actions as they take place.
  
  
• Improvement.  Once the action has been implemented, those working on the project will no doubt discover aspects of the process that can be improved. The climate should be such that any team member feels comfortable sharing these suggestions.

By taking into account each of the above factors, business owners will be well on their way to creating an effective balanced scorecard that measures the performance of their business: past, present and future. Marketing decisions to achieve business performance are easier to make if measurement is used to determine what is working.

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© 2006 corecubed