Goals have been a part of workplace DNA for decades, but only recently have organizations relied heavily on goal setting to align employees and remain agile. In this session from the BetterWorks Goal Summit 2016, you'll learn how goals can help make your company vision a reality from Don Sull, Senior Lecturer at MIT Sloan School of Management.

1. © Copyright 2016 Donald N. Sull
Goals: The Missing Link
Between Strategy and
Execution
Don Sull
MIT
@simple_rules

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STRATEGY
? RESULTS

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Goal Summit Mobile App
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Which is the biggest obstacle to executing
your company’s strategy?
q Lack of performance culture
q Activities do not support our strategy
q Lack of agility
q Inability to work across silos
q We have a strategy
Results

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Goals drive execution in four ways
Blinder Link
Bold
Hypothesis Signal

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80% 90%
Goals as blinders

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Source: Survey of 8265 respondents in 305 organizations. Number of respondents varies by question.
Blinders drive performance
92%
87%
44%
35%
Specific
Handful
Regular
feedback
Ambitious

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% of employees who answered “Make ambitious commitments even if you are not sure how
to achieve them”
Imagine you were giving advice to a newly hired manager. What suggestion
would you give about making performance commitments?
Source: Survey of 5385 respondents in 192 organizations.

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59%
11%
8%
5%
5%
1%
Past performance
Technical expertise
Acting with integrity
Political connections
Ability to adapt to change
Pursuing ambitious goals
Factor that most influences promotions

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Goals as links

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Links align activities to strategy
Source: Survey of 8265 respondents in 305 organizations. Number of respondents varies by question.
84%
66%
46%
42%
Developed goals with my
boss
My goals link to my unit's
goals
My boss explains how our
goals support company
strategy
Know company's top 3
goals

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If a strategy falls into
a company and no one
understands it, does it
make a difference?

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Goals as bold hypothesis

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R. M. Cyert and J. G. March, 1963, A Behavioral Theory of the Firm, (Englewood Cliffs, NJ: Prentice Hall)
Conservative goals narrow search
• Incremental improvements
• Me-too innovations
• Cost reductions
-----------Goal-----------
--------Status Quo-------

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-------Goal-------
R. M. Cyert and J. G. March, 1963, A Behavioral Theory of the Firm, (Englewood Cliffs, NJ: Prentice Hall)
Ambitious goals trigger broad search
--------Status Quo-------
• Disruptive innovation
• Creative solutions
• Build new capabilities
• Business model innovation
• Rapid learning

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Goals guide iteration
Source: Survey of 8265 respondents in 305 organizations. Number of respondents varies by question.
27%
28%
34%
50%
Discuss difficult issues
openly and honestly
Consstently analyze
variance from goal
Met regularly with boss to
discuss progress
Revise goals more than
once per yearSet goals
ExecuteCourse
correct

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Goals as signal

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Goals for coordination
Source: Survey of 8265 respondents in 305 organizations. Number of respondents varies by question.
12%
21%
35%
Can learn colleagues'
performance
Can learn colleagues'
goals
Key partners
understand our goals

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1
2
1 1 1 1
3 3 3
4
3
6
5
7 7
10
0246810
#ofOrgs
0 .2 .4 .6 .8 1
% Public
N = 58 orgs
Organizations that created its first goal after start of quarter and organizations with fewer than
10 goals are not included. Deleted goals are not included.
% of Goals in Org that are Public
2015 Q4
Transparency
Goals want to be transparent

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Strategy
• Develop strategy for
execution
• Ambitious but not delusional
• Maintain shared strategic
context
ResultsGoals
Leadership capabilities
• Master goal setting best practices
• Provide useful feedback frequently
• Lead discussions to course correct
Performance
management
• Linkage of goals to compensation?
• Promote on ambition? Performance?
Resource allocation
• Allocation of money and talent linked to
goals
• Resources reallocated on same cadence
as goals are revised
Data analytics
• Tailor data to goal-specific metrics
• Draw on multiple, external, real-time data
sources
• Ensure data is timely, granular, and credible

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Risks of goals Steps to manage risk
Decrease cooperation • Hire and promote team players
• Decouple compensation from individual goals
• Visualize interdependencies
Cut corners • Strong checks and balances for key risks
• Fire leaders who cut ethical corners
• Make goals and performance transparent
Inhibit learning • Mix mastery and performance goals
• Don’t link compensation directly to mastery goals
• Reduce target completion rate
Decrease intrinsic motivation • Employees generate own goals
• Encourage tinkering
• Align goals to inspiring mission
Short-term focus • Link quarterly goals to longer-term strategy
• Break long-term goals into shorter sprints
Tunnel vision • Multiple metrics per goal
• Ongoing discussion of weak signals and anomalies
• Tolerate some positive deviance
• Encourage tinkering
List of known risk from Ordonez, L., Schweitzer, M. E., Galinsky, A., & Bazerman, M. (2009). Goals gone wild: How
goals systematically harm individuals and organizations. Academy of Management Perspectives, 23 (1), X–X