My approach to business goals puts me in a small minority, since everyone seems to do it the old-school way. But I’m not giving up on my approach yet.

Let me see if I can convince you…

Stop Setting Your Business Goals the Same Boring Old-School Way

The old-school approach to business goals is to pick a big number and say you want it to happen in a certain time frame.

Some classic examples include:

– Grow sales X% by the end of the year

– Generate $X in revenue during Q3

– Gain X new customers in the next 12 months

People talk about SMART goals and BHAGs and all that blah blah blah. You’ve heard it all before, so I’m not going to bore you with all of that.

Everyone’s familiar with these goals. It’s how most businesses set their goals. You’ve probably done it several times yourself. What could possibly be wrong with this approach?

Outcome-Based Goals Fizzle Predictably

Every employee has watched goals like this come and go. They tend to roll their eyes, think “Yeah, sure,” and then revert back to whatever they were doing before.

There’s a cycle to them:

• Exciting presentations and speeches about the new goals (usually involving the phrase “We’re all in this together!”)
  
• Department and team strategy sessions to break the goal into more specific action items
  
• Everyone works their butts off for a long time.
  
• Despite hard work and good intentions, the numbers don’t happen. This is very often for reasons completely outside the employees control. It could be an economic downturn, market shift, organizational change, loss of a major client, etc.
  
• At the end of the period, management holds a depressing meeting about how everyone missed their goals. Don’t worry, though, because they’ll do it all again next period.
  
• The whole cycle begins again.

It’s hard for employees not to feel cynical about that process. They might smile and nod when you tell them how you want them to “Gain X new customers in the next 12 months,” but deep down they feel like achieving that goal really isn’t up to them.

Old-School Business Goals Aren’t the Answer

Here’s the problem: traditional business goal setting is focused on outcomes that aren’t in our control.

That sounds crazy, right?

You’re probably thinking “Of course they’re within our control. If we just do X, and Y, and Z, the outcome will happen!”

And you’re probably right.

Probably.

However, you could also do X, Y, and Z, and the outcome still doesn’t happen.

You can do everything you think is going to work, and it just…doesn’t.

The thing is, you can’t make customers buy. You can do things that might lead them to want to buy but you can’t actually control whether they actually buy or not

So, here’s the question that always haunted me as a business owner, and that I believe should haunt you as you’re thinking about business goals:

If you did everything within your control to win but the hoped-for outcomes don’t happen, should you consider that a success or failure?

An executive focused on old-school goal-setting would consider that a failure. I say that’s a really wrong-headed way to think about it.

And if you don’t believe me, believe Captain Picard:

It’s Time to Take Back Control (of Our Goals)

Let’s say you want to lose 20 pounds, so you make that your new years resolution.

You know you need to cut sugars and carbs, so you break your soda habit and start drinking water. You lay off the breads and pasta and processed foods.

And you know exercise matters, so you make it a ritual to hit the gym three times a week before you go to work.

You’re fully committed. You’re doing the work. And you’re sticking to the changes.

But later, you weigh yourself and discover that you’ve only lost a few pounds.

You’ve Come to a Fork in the Road

There are two ways to think about this kind of situation:

• You feel defeated. It doesn’t matter what you do because it’s not going to work anyway, so why bother trying? Might as well just sleep in, skip the gym, and grab a big Dr. Pepper on the way to the office.
  
• You feel successful in your goals to get to the gym and cut carbs from your diet, and now you can recalibrate your goals based on new insights and information (e.g., maybe eating less frequently or trying different workouts).

The theory behind old-school, outcome-based goal setting is that it’ll work like that second scenario, but the reality is that it tends to work more like the first one.

Sure, it’s okay to have an abstract eventual outcome goal to lose 20 pounds, but that shouldn’t be the day-to-day goal you write on your bathroom mirror to keep yourself focused, because you can’t control it. You can’t control what response your body has to those changes, even though they’re probably the right things to do.

Instead, your real goals—the ones you write on your bathroom mirror, share with your accountability partner, and use to measure your success—should be the action-based goal over which you have complete control.

Athletes Do Better When They Focus on Their Performance Instead of Winning

Sports psychology research supports this idea of focusing on our controllable actions instead of on external outcomes.

Research has repeatedly shown that action goals (such as perfecting techniques, using proper form, and delivering consistent performance) are far more effective than traditional outcome-based goals (such as winning a specific competition or event) in enhancing athletic performance.

Additionally, studies have shown that these action goals reduce performance-related anxiety in athletes. Since the focus is on individual improvement and not on beating others, athletes feel less pressure and are more motivated to concentrate on their personal development. This focus helps build self-efficacy, as athletes see direct correlations between their efforts and their performance improvements.

Outcome goals, on the other hand, depend heavily on external factors and often lead to increased stress and distraction about factors outside their control, especially in competitive environments where the outcome is uncertain. Although these goals can provide motivation through competition, they don’t support an athlete’s performance and skill development as effectively as action goals do.

Focus Your Business Goals On Actions Over Outcomes

Instead of picking an arbitrary metric over which we only have unpredictable influence, let’s instead focus our business goals on the performance of specific actions within our control.

Instead of “Grow sales X% by the end of the year,” “Generate $X in revenue during Q3,” and “Gain X new customers in the next 12 months,” we’d be much better off considering goals like:

• “Launch and optimize a highly-targeted digital advertising campaign over the next six months”
• “Significantly reduce friction in our e-commerce checkout process before the holiday shopping season”
• “In the next three months, launch a new product line aimed at business users instead of individuals”
• “Implement a strong content marketing program during Q4 aimed at increasing incoming traffic from search engines”
• “Refocus time and resources from low-performing sales and marketing efforts into reinforcing our best-performing ones by next month.”

A Refreshing Approach to Business Goals

In theory, you’d expect that these action goals might be the sub-goals that emerge from old-school outcome goals, but in practice employees tend to set these sub-goals, work like hell to accomplish them, and then are feel as though they’ve somehow failed because the outcome wasn’t what they were told to achieve.

Instead, by framing those action goals as the final goals themselves, employees are freed up to focus on accomplishing something within their control, celebrating wins along the way, and feeling a sense of accomplishment and high-performance regardless of what the economy or other external factors might throw their way.

They’ll continue to perform to the best of their ability, but they’ll be allowed to feel good about it instead of living in constant anxiety of their best efforts being seen as a disappointment due to external circumstances.

And these action goals can still be SMART goals (Specific, Measurable, Achievable, Relevant, and Time-Bound) and still be BHAGs (Big Hairy Audacious Goals), but they the format is still focused on controllable outcomes.

Adopting action-based goals instead of outcome-based goals is just a better way to work, a better way to lead, and a better way to run a business.