Goals, objectives, KPIs, targets and initiatives
StratNavApp.com uses goals, objectives, KPIs, targets and initiatives to define strategies.
Let's look at each in turn.
Goals are high-level statements of direction. They should be aspirational. They should remain constant until your strategy changes.
Examples might be:
- Improve customer retention
- Reduce process waste
- Maintain the dividend
- Improve member engagement
- Serve customers more quickly
You can see that goals typically consist of a verb and a noun. The verb is the thing you want to do (e.g. improve, increase, reduce, maintain). The verb is usually one that indicates movement and direction. The noun is the thing you want to impact (e.g. customer retention, waste, dividends, member engagement).
Your goals should be unique to your organisation. They are very much dependent on your vision and mission statement and on your analysis.
For example, if your analysis showed that:
- The cost of raw materials is increasing at twice the pace of inflation
- Customers are becoming more concerned about the impact their consumption has on the environment, and
- Robotic technology for mixing material is becoming more affordable,
then you might decide to set a goal to reduce process waste.
Your goals should be mutually reinforcing, rather than exist in isolation.
For example, you might have a goal to serve customers more quickly because you believe that will lead to improved customer retention.
The balanced scorecard framework helps you to achieve mutual reinforcement by dividing your goals into four categories.
- Learning and Innovation goals are about building the capabilities you will need to improve your business.
- Internal Business Processes goals are about getting better at what you do.
- Customer goals help are about what your customers want and value.
- Financial goals are about how you create value to satisfy shareholders and invest in future opportunities.
Once you've defined your goals, the next step is to break them down into objectives.
In contrast to your Goals, your Objectives should be SMART, that is:
That is, at some defined point in the future you should know that you either did or did not achieve the objective. While goals allow for some ambiguity, objectives do not.
Examples might be:
- Reduce the percentage of total customers who cancel their subscription in any given month from 5% to 2% by December 2020.
- Improve the average time it takes to answer an incoming call from 1 minute to 30 seconds by December 2020.
Sometimes you will only need one objective to define a goal. But other goals are harder to pin down. For these, you might need more than one objective.
For example, if your objective is to improve member engagement, you might set goals to:
- Increase the percentage of members who visit the website each month from 40% to 50% by December 2020, and
- Increase the percentage of members who volunteer to attend a networking event each year from 10% to 30% by December 2025.
Neither of these alone exactly defines engagement. But in combination, they give an adequate approximation.
KPIs and Targets
If you've defined your objective properly, your KPIs should fall naturally out of them.
A KPI is a measurable variable that you can track on a regular basis.
In the example above, the percentage of members who visit the website each month is a measurable variable. You can track and record it every month.
You can set targets for each KPI. In the example above, a target would be 50% by December 2020.
You can set different targets for the same KPI for different time periods.
StratNavApp.com will draw a graph showing your progress towards your goals so that you can see if your strategy is succeeding.
Initiatives describe the things that you will do to achieve your goals and objectives.
Initiatives typically have a beginning and an end. There are typically costs associated.
- Launch a web site.
- Open a new branch.
Like goals, initiatives are best expressed as a verb or action done to a noun or thing.
It may take many initiatives to achieve a goal. One initiative may help to achieve many goals. StratNavApp.com will help you to map out all of these relationships.
The Goal/Inititiative Matrix will help you to ensure that
- every initiative helps you to achieve one or more goals, and
- every goal has one or more initiatives to achieve it.
That way you know that you have aligned your efforts to deliver your strategy.