Welcome to financial year 2014! Whew! July marks the new financial year and for some of us, the end of a strategy, planning and budgeting cycle. Once again, I had the opportunity to design and facilitate my organization’s business strategy, planning and budgeting process and it seems that each time I learn tons. As a quick blog post, I thought I’d share a simple tool that was useful in my experience to help business leaders articulate their Business Objectives. Maybe it’d be useful to you too. The tool is a set of highly generic Business Objectives I refer to as “The Big 8”. The Big 8 business objectives comprehensively cover any business to describe what they want to accomplish inclusive of customer/market-facing interests that a line of business would primarily be concerned with as well as internal-facing interests that support organizations are often primarily concerned with. Organizations that can think through their objectives as well as the objectives from the organization(s) they support drastically reduce risk of failure to streamline execution and deliver a holistic business change.

 

“Everyone must communicate their objectives, their priorities and their intended contribution to their fellow workers – up, down and sideways.”…”it is the responsibility of all members to make sure that their own objectives fit in with the objectives of the entire group.”
 –Peter Drucker “Post-Capitalist Society”, 1993.

 The Big 8

 

The Big 8

Business Objectives

Description with KPI examples

Business
  Effectiveness

1. Increase market share

 Increase <name of product/service market goes here> market share

  • Example underlying KPIs to monitor progress; “# of wins”, “$ Geographic penetration growth”, “# Competitive win”.

2. Increase revenue

 Increase in sales revenue generated

  • Example underlying KPIs to monitor progress;“$ Area Revenue”, “$ Project Revenue”, “$ Utilization Rate”

3. Increase customer/partner satisfaction

 Increase in customer or partner satisfaction, loyalty, or company brand

  • Example underlying KPIs to monitor progress “# Customer Satisfaction”, “# System Usage Satisfaction”, “# Product Cross/Up Sales”, “# Rank in Analyst Surveys”

Operational Efficiency

4. Reduce cost

 Reduction in cost such cost avoidance, licensing costs, lowered rates, etc

  • Example underlying KPIs to monitor progress; “$ Avg Sub-contractor Rate”, “$ Sales Costs”, “$ Cost of Goods Sold”

5. Increase productivity

 Increase productivity to improve “time-to-market” of products/services to customers;

  • Example underlying KPIs to monitor progress; “Process Cycle Time”, “# Processes Eliminated”, “Project Delivery Time”

6. Increase quality

 Increase the quality of our products, processes or data.

  • Example underlying KPIs to monitor progress; “% data-entry errors”, “% Service Availability”, “# Incidents”

7. Reduce risk

 Reduce the risk to achieve business objectives and/or compliance to policy

  • Example underlying KPIs to monitor progress; “% Risk Exposure”, “# Policy Exceptions”

8. Improve people

 Improve people skills and discipline

  •  Example underlying KPIs to monitor progress;
      “% Skills Gap”, “% Training Participation”

For context when to use The Big 8, below is a simple strategy formulation process. I normally use The Big 8 when defining business objectives after analyzing the market and before defining KPIs.

  

Why use The Big 8?

Often organization leaders are focused on their internal responsibilities or maybe the company’s trendy, top-of-mind priorities and putting at risk the articulation of a comprehensive set of business objectives useful to organizations upstream or downstream to them. To avoid unintentionally ignoring critical business objectives, I use The Big 8 as a simple checklist to make sure the resulting set of business objectives covers all business concerns. I’m not suggesting every organization include a business objective for each of The Big 8. I’m only suggesting to use The Big 8 as a discussion topic to make sure that an appropriate business objective for that group isn’t over looked.

How should you use The Big 8?

Here are a few tips how to use The Big 8:

  • Tip #1. Business Objectives are a leadership tool so don’t simply reuse The Big 8 business objectives word for word. Think of them as generic abstractions ensuring that you’ve covered the most important types of business objectives for any business. Write down business objectives that are meaningful and directly relevant to the organization. For example, “Increase Revenue” is very generic and doesn’t inspire people, however, “Grow Profits in Emerging Markets” may be more relevant and specific to a business.
  • Tip #2. Avoid including “projects” or “tools” as Business Objectives
    • Bad business objective: “Implement CRM System”
    • Good business objective: “Strengthen customer loyalty and retention”
  • Tip #3. Business Objectives should be inspirational
    • Business Objectives inspire people, so be bold!
  • Tip #4. Business Objectives should resonate with your stakeholders
    • Business Objectives are a mechanism to show you care about your stakeholders and that you recognize their success is your success. Write an objective that says volumes for your accountability to enable your stakeholder’s success.
  • Tip #5. Business Objectives should resonate with your team
    • Business Objectives empower your team by providing focus to their purpose and what success looks like given their capacity.