Why “Making the Numbers” is Stupid (Part 3 of 3: Stupidity Prevention Medicine)

In our last two sessions together, we explored how “expectations” can create a poisonous environment whereby the numbers dominate rational business decision making. We also covered some of my favorite self-defeating behaviors that can result from such a maniacal focus on the numbers. Unlike a typical critic though, I won’t simply point to a problem and walk away. Instead, I’m obligated to give you some thoughts and tools to help you solve these problems (after all, that’s what we at thoughtLEADERS are all about – real world, practical tools that can make your organization perform better).

Business is a marathon. A long painful one but there’s only one goal – making it through that gruelingly long journey. Unfortunately in business, there’s no finish line. I won’t deny it’s easy to lose sight of the goal when the numerical mileposts on the way there take on a life of their own. As an aside, the reason those numbers take on such a huge presence in our lives is because they’re typically directly linked to OUR numbers (read: our paychecks and our bonuses). That close connection to something so incredibly personal makes it difficult to see “the numbers” as simply mile-markers on the way to a strategic objective (which in turn leads to the dumb behaviors outlined in the last post). That said, there are a few ways to mitigate these kinds of problems.

Align Metrics with Strategy

Seems like a “duh” kind of comment, huh? But take a step back and ask a few questions:
– What is your strategy? What’s the objective?
– How will you know when you’ve arrived there?
– What metrics will set the right guideposts to measure your progress toward that goal?
– Are the waypoints achievable (i.e., can you hit the metric within the proscribed time period or is it a ridiculous stretch)?

Now you know where you’re going and how you’ll define success (for a refresher on these points, see Budget +10% Isn’t A Strategy). You’ve also hopefully ensured your metrics are appropriate and achievable. If you’ve done those things, you’re ready to start tackling the more difficult issues: goal setting and leadership.

The “Commit” and the “Stretch”

Setting the right goal is core to avoiding the tyranny of the numbers. A great way to set these goals is to set two: the “commit” and the “stretch.” The commit is the number you guarantee you’ll deliver to the organization. It’s a number you know your people can hit if they meet the performance expectations of their job. It’s a number the organization can count on to be delivered. And if you hit your commit, you and your team get your targeted bonus.

The stretch is the number that seems just out of reach. I had a great boss one time who described it as follows:

“When you set your stretch number, if it doesn’t make you uncomfortable and nervous, it’s not a stretch. If you think with a ton of hard work and a bit of luck you can achieve it, it’s a good stretch. You shouldn’t know exactly how you’ll get there but should have a sense that it can be achieved.” (to hear and see me tell the story, check out the video to the left called “Set Goals & Bulletproof Ideas”).

Great advice. This stretch mindset generates creativity and innovation. It fosters hard work. If you hit your stretch (or even come close) then the bonus is commensurately large. And to be clear – by telling the organization this is a stretch, they shouldn’t “count on it” in their numbers.

This commit and stretch goal setting approach can mitigate a lot of “hit the numbers” stupidity because it makes the numbers realistic and achievable. It creates a dynamic whereby people are rewarded for exceeding commit goals versus being beaten for not hitting unachievable stretch goals.

Leaders Make Tough Choices

Leaders put the success of the organization ahead of their own success. They come second (or third or last – there’s a reason officers in the Army are the last ones through the chow line and eat after all the enlisted soldiers have gotten their fill…). When push comes to shove and environmental issues threaten achievement of the numbers, you have three choices:

1. roll over and concede defeat with an emphatic “Wait ’til next year!”
2. implement any of the ten stupid things I highlighted in my last post (or some other creative idiocy) that help you hit the numbers (and your bonus) now but at the expense of next quarter’s or next year’s performance
3. do everything possible to hit the number without adversely affecting future period performance but bite the bullet when you miss the numbers. Say “no” to stupidity and avoid pulling performance forward. Don’t take shortcuts now that will hurt you later (deferring investments, cutting training, freezing hiring, etc.).

Leaders choose option 3. All the time. Every time. It’s difficult and painful but they swallow hard and charge harder. They refuse to make suboptimal short-term beneficial decisions that are detrimental to longer term success.

Business is a marathon. When you catch yourself sprinting this quarter’s leg of the race, avoid the temptation to do something stupid. Think, plan, and act long term. Be courageous as a leader. Do the right thing.

– Mike Figliuolo at thoughtLEADERS, LLC

Photo: Marathon de New York : Verrazano Bridge by Mertineric