When aiming to use data for improved business outcomes, it is very tempting to jump to the latest fancy tool we saw on TechCrunch, methodology we’ve been told about or start tinkering on a dashboard right away.
But as Alice in Wonderland is looking for direction, so can data also only show us a path, if the goal we seek to achieve is clearly defined.
The more precise and measurable the goals are defined, the more effective are the data points in optimizing towards it. And (Spoiler Alert), more often than not, business goals are commonly high-level, not updated, or simply too unspecific to be measurable. In this article, we’ll be discussing how to set SMART goals as a foundation for your data & analytics program. While you’ve probably come across the terminology already, let’s recap what SMART goals are, and what the acronym stands for.
What are SMART goals?
The term was first coined by George T. Doran in 1981 and is widely used in various contexts for business, product creation, marketing, and startup growth. The letters stand for: Specific, Measurable, Actionable, Relevant and Time Bound
Specific
A good exercise to see if your goal is specific enough, is to run through some W questions: What? Where? Who?
A common pitfall is only using words like “improve”, “decrease” or “more”, without quantifying it.
E.g.: “Make our ad spend more efficient”
Better: “Decrease our cost-per-acquisition (CAC) by 10% on average across all paid channels”
Measurable
What is the metric you are planning to measure the successful attainment of the goal? Do you have that data already? If not, how can you get it? How trustworthy is it?
Actionable
Some definitions also use Achievable / Attainable, while the overall criteria is if there is a way to actively influence the goal, and if it is reachable. Stretch goals are fine, but best matched with an actual action plan on how to get there, so the goal is motivating for yourself and your team.
Relevant
The relevance gives defines how high or low the priority is, and how it is related to other goals.
A good exercise is to weight the Gain/Value and Efforts, and then give the goals a rating of importance.
The relation to each other can be done with OKRs, and a differentiation of the strategic and tactical level.
Time Bound
While seemingly intuitive at the beginning, I’m seeing the time component as one of the most common points of confusion and ambiguity.
It seems logical to just add a date to our example earlier:
“Decrease our cost-per-acquisition (CAC) by 10% on average across all paid channels until 30th October”
But this leaves unspecified, from when to when the 10% decrease should happen. Is it the last week before the final date? Or is the average measured from a different start date? If so, which one?
Start with the big picture
It’s best to start with the global goal, which is large enough to serve as an orientation for all other initiatives and things you are striving for. Ask yourself, “if we only achieve this single goal, would it be a successful period (e.g. quarter or year)?”
It’s a good starting point, because the other goals can then be on a more tactical level, while rolling up to the central goal.
On a practical level, it’s easier to start with, as we usually already have the global goal in mind, but often not explicitly articulated yet.
How to set your SMART goals (and achieve them)
To get to the goals that are right for you and your unique context, there are a few steps that can guide the definition process, execution and final review.
As a rule of thumb, the goals should meet the criteria of the framework, but also reduce complexity. They should be as complex as needed, but also as simple as possible.
Goal Hierarchy
To ensure you focus on the right goals (Relevance) and that they are actionable, it’s helpful to think in top-level goal(s) and secondary, supporting goals. Along with the supporting goals, there are concrete initiatives that are intended to impact those goals.
P0: Universal Goal
P1: Operational goal that supports P0
I1: Initiative that supports P1
I2: Initiative that supports P1
P2: Operational goal that supports P0
I1: Initiative that supports P2
I2: Initiative that supports P2
P3: Operational goal that supports P0
I1: Initiative that supports P3
I2: Initiative that supports P3
Finally, define 2-3 key initiatives
After you have defined the what and when, and you know how to measure it, you’ll also want to emphasize the A (Actionable) in SMART sufficiently. To do so, you can directly associate key initiatives which are intended to reach the second level goals. These can be milestones to reach (e.g. establish a new level in a certain sales channel), or also organizational habits & routines, through process definition and establishment.
It depends on your leadership style and line of business, if you want to involve your team to define the global goal and second. Yet, I highly recommend getting the inputs of your team in defining the initiatives, for the following reasons:
- Full picture of options: There are many ways to Rome (and to reach your goals). Which path is best for your business context and organization depends on many factors, and having the full perspectives of your team can help you identify all options and rank them.
- Subject expertise: Especially for the initiatives that require a deeper subject expertise, you’ll want the inputs of those who are working on a daily basis. On the flip side, you might be biased to the topics you have an expertise on, and only double down on those if the expertise in other fields is not present.
- Identification, Motivation & Accountability: If the initiatives are defined by the team, especially from the team who are responsible for executing them, it creates a stronger sense of ownership if the initiatives are identified and defined not top down, but collectively.
Measure & Revisit
After you nailed the goals and initiatives, you’ll want to make sure they’re not tossed in the virtual corner, just to be revisited at the end of the quarter and see if it was a hit or miss. Make sure you actually pull the data which you have set as your measures of success (M).
Routines:
- Create an overview for you to have all KPIs in one view and review them at least weekly, e.g. a dashboard. Mark it in your calendar, so it becomes a routine.
- Have clarity on how the data is collected and aggregated. How trustworthy is it? Does anything change over time?
- Revisit the goals on a monthly basis. While the goals should remain as strategic orientation, reasonable adjustments should be considered an option:
- While the global goal shouldn’t change completely to serve the purpose of providing orientation, it might need to be tweaked dependent on significant changes in your business environment.
- The secondary goals might need re-prioritization or slightly modified, based on observations in the business and the market.
- Your initiatives should be able to learn from the hypothesis you were able to test, or learnings you could gain from your AB Testing & Experimentation Program.
Closing
While we all know the importance of clearly defined goals and avoiding high-level orientations, it’s difficult to bring it into practice with the day-to-day business. With the steps described above, you can break it down into several smaller steps, which can be done in a few small sessions. Taking one step at a time, and letting it rest can help you reflect about it, and reduce the pressure of getting everything right in just one go. Dedicate the time to monitor and revisit the goals. But the most important part: Get started and stay on it.
FAQs:
How can organizations track and measure progress towards achieving SMART goals over time?
Organizations can use project management tools, dashboards, and regular review meetings to track progress toward SMART goals, ensuring adjustments and interventions are made as necessary.
Are there specific examples of SMART goals that have led to significant improvements for startups?
While the post doesn't specify examples, many startups have achieved significant growth by setting SMART goals around user acquisition, revenue targets, product development milestones, and market expansion.
How can startups integrate SMART goals into their broader strategic planning processes?
Startups can integrate SMART goals into strategic planning by aligning them with their vision and mission, ensuring each department's objectives contribute to overarching business goals, and regularly reviewing these goals for relevance and progress.
