How to set a company's goals

If my memory isn’t failing me, after the Robert Redford character gets elected in The Candidate, he whispers to one of his supporters, “Now what?” Raising money is like running for office: It’s very exciting and even fun if you get the money. But after you raise the money, now what?

The good news is that you got the money. The bad news is: You got the money. At the end of the process, everyone who has started a company has to answer the same question as the candidate: “Now what?” The answer to this question is, “Now you execute.” And the next question is, “How do we execute?” That is the topic of this column.

1. Create something worth executing. You’re going to get tired of my obsession with great products and services, but pitching, demonstrating, bootstrapping, and executing are a lot easier if you’ve created something meaningful. It’s hard to stay motivated and excited about executing garbage. So if you and your team are having a hard time executing, maybe you’re working on the wrong thing.

2. Set goals. The next step is to set goals. Not just any kind of goals, but the right goals, and the right goals embody these four qualities:

• Measurable. If a goal isn’t measurable, it’s unlikely you’ll achieve it. Quantifiable goals are things like shipping deadlines, sales volume, whatever. The old yarn “What gets measured gets done” is true. This also has ramifications on the number of goals you set because you can’t (and shouldn’t) measure everything. Three to five goals are plenty.

• Achievable. Take your “conservative” forecast for these goals and multiply by .5; then use that as your goal. For example, if you think you’ll easily sell 1,000 air conditioning units in the first year, then set your goal at 500 units. There is nothing more demoralizing than setting a “conservative” goal and falling short; instead take 50% of your forecast, make this your goal, and blow it away. You might think that such a practice will lead to under-achieving organizations because they aren’t being challenged – yeah, well, check back with me after you don’t sell 1,000 units like you conservatively thought you would.

• Relevant. A good goal is relevant. It should measure something that matters to your success.

• Rat hole-resistant. A goal can be measurable, achievable, and relevant and still send you down a rat hole. Let’s say you’ve created a new service. Your measurable, achievable, and relevant goal is to sign up 1,000 service customers in the first year. So far, so good. But what if you focus on this body count without regard to the value of the service? So now you’ve gotten 1,000 customers, but you don’t have enough service techs to do the work. That’s a rat hole. Ensure that your goal encompasses all the factors that will make your organization viable.

3. Postpone, or at least de-emphasize, touchy-feely goals. I’ll get lots of negative feedback about this, especially from Ron and Jackie, but touchy-feely goals like “create a great work environment” are bull shitake. They may make the founders feel good. They may even make the employees feel good. But companies that execute on measurable goals are happy. Those that don’t, aren’t. As soon as you start missing the measurable goals, all the touchy-feely stuff goes out the window. As my mother used to tell me, “Son, sales fix everything.”

4. Communicate the goals. Many executive teams set goals, but they don’t communicate these goals to the organization. For goals to be effective, they have to be communicated to every employee in the organization. Employees should wake up in the morning thinking about how they’re going to help achieve these goals.

5. Measure progress on a weekly basis. The goals that people achieve are the goals that are measured. If you don’t measure progress toward a goal, you might as well not set it. This is another reason for setting only three to five goals: People can’t focus on more than five, and measuring many more than five is too difficult. The optimal time period to review progress is weekly: monthly is too little pressure; daily is too anal.

6. Establish a single point of responsibility. If you ask your employees who is responsible for a goal, and no one can answer you in 10 seconds, then it means that there’s not enough accountability. If more than one person is responsible for the achievement of a goal, then no one is responsible. Good employees accept responsibility. Great employees seek responsibility. Lousy employees avoid responsibility.

7. Follow through on an issue until it is done or irrelevant. Many organizations set goals and even measure progress toward them. However, after a short period of time, some goals are no longer on the radar because people start focusing on the coolest and most interesting stuff.

8. Reward the achievers. Rewarding the people who achieve their goals has two positive effects. First, the achievers feel rewarded and become even more excited about doing their jobs. Second, the under- and non-achievers know that the company takes execution very seriously. The form of the reward can be money, time off, or whatever works to serve notice to everyone that “this person delivered.”

9. Establish a culture of execution. Execution is not an event — a onetime push toward achieving goals. Rather it is a way of life, and this way of life (execution versus non-execution) is set in the early days of the organization. The best way to establish this culture is for the founders, particularly the CEO, to set an example of meeting goals, responding to customers, and heeding and measuring employees. This obsession should go right down to the level of the CEO answering e-mails and responding to phone calls.

Guy Kawasaki is a managing director of Garage Technology Ventures, an early-stage venture capital firm and a columnist for Forbes.com. Previously, he was an Apple Fellow at Apple Computer Inc., where he was one of the individuals responsible for the success of the Macintosh computer. He is the author of eight books, including his most recent, The Art of the Start, which can be found atwww.guykawasaki.com.