Setting Objectives

The practice of setting clear actionable objectives is an essential component to effective leadership.

Setting objectives involves creating a consistent and systematic process approach to the day-to-day operations of a business. When done correctly, setting objectives serves to align the short-term tasks with the strategic vision of a company. 

With a strong, inextricable link between the short and long-term objectives of a business, entrepreneurs can ensure the prolonged viability of their company. 

Here, we examine one of the many goal-oriented systems entrepreneurs can adopt when building a strategic approach to their company's operations. 


Integrated Management By Objective System


Among the many objective oriented methodologies, The Integrated Management by Objective System is an effective approach that offers entrepreneurs a useful guide to developing actionable goals.  

The benefit of adopting an Integrated Management by Objective System is that it integrates all of a company's processes into one consolidated framework, which enables a business to function as a cohesive whole with unified objectives. 

The system is comprised of 6 essentials stages:


1. Define Corporate Objectives at the Board Level

First, define the long-term vision and purpose of the business. 


2. Analyze Management Tasks & Allocate Responsibility

The second step is to study the core functions of the business and devise formal job specifications that allocate responsibilities to individuals. Then determine the desirable candidate who is best suited to oversee and lead specific company objectives within the broader framework. 


3. Set Performance Standards

Third, entrepreneurs must determine the standards or metrics by which the performance of  individuals and groups within the business will be judged.


4. Agree & Set Specific Objectives

Fourth, entrepreneurs are responsible for clearly communicating the company objectives, followed by achieving a consensus on the adoption of an appropriate strategy to ensure the timely completion of the objectives. 


5. Align Stakeholders With Corporate Objectives

Company leaders must then motivate individual stakeholders to fulfill the corporate objectives by offering competitive compensation packages, professional development opportunities, or other motivating incentives. 


6. Establish a Management Information System

Lastly, entrepreneurs must develop a comprehensive management information system to monitor the progress of specific objectives, and track how they align to the company's strategic vision.  


The Management by Objective System is a top-to-bottom approach that seeks to control, coordinate and motivate a company's stakeholders towards a common vision.

Central to implementing the system successfully is aligning different incentives that motivate individuals towards a commonly understood and easily identifiable corporate objective.

The easier the corporate objective is to express in simple terms, the easier it will be to align incentives. Complex objectives tend to confuse people and muddle efforts to align incentives.

Part of the challenge of maintaining an efficient objective oriented system is sustaining a high level of efficiency as a company grows and matures. When new processes are incorporated into the business and new verticals or functions established, inefficiencies can arise without warning. 

To ensure efficiencies are sustained throughout a business, entrepreneurs must cyclically assess the corporate functions of their business and the processes that sustain them, typically achieved through a annual review. With clear objectives and sound processes, business can accomplish great things in little time and with limited resources.

The underlying benefit of maintaining an efficient objective-oriented business is that it will foster a harmonious work environment. Stakeholders will understand their responsibilities, recognize how they are accountable, and execute their work with a high level of engagement and enthusiasm. 


The 5 Whys Process


To foster a more efficient workplace, entrepreneurs should consider implementing the 5 Whys process, a Six Sigma Theory. The 5 Whys is a very simple and effective method to improve objective oversight because it encourages stakeholders to identify the cause and effect relationships that frame all organizational challenges.  

The methodology is also a great way to resolve conflicts when objectives are not met and processes break down.

Practically speaking, the 5 Whys method persistently questions (5 times) the processes individuals and groups employ throughout a business. The practice aims to enhance the individual and collective understanding of where inefficiencies exist and how they can be improved with the goal of improving the overall processes of the company. 

To illustrate how the 5 Whys can be implemented, consider the following circumstance:


Problem Statement: The vehicle will not start.


1. Why - will the vehicle not start ?

Response - because the battery is dead.


2. Why - is the battery dead ?

Response - because the alternator is not functioning.


3. Why - is the alternator not functioning ?

Response - because the alternator belt is broken. 


4. Why - is the alternator belt broken ?

Response - because the alternator belt was used beyond its useful service life and was not replaced. 


5. Why - was the alternator belt not replaced? 

Response - because the vehicle was not maintained according to the recommended service schedule. 


Through this example we learn the specific cause of the inefficiency (the alternator belt) and what policy lead to its breakdown (maintenance schedule was not respected).  From the exercise we are then able to conclude that by respecting the vehicle's maintenance schedule the vehicle can avoid the breakdown of future parts, which dramatically increases it's efficiency.

The 5 whys process represents an easy method that can dramatically help entrepreneurs quickly identify the root causes of a specific problem and how to resolve it in the future. The practice is particularly effective at illuminating where human errors occur and relationship breakdowns happen. 

Implementing the 5 Whys method can offer entrepreneurial leaders the following additional benefits:


1. Identify Training Gaps

This 5 Whys method effectively uncovers areas where company staff would benefit from further training.  


2. Don’t Do

Employees often do things that become obsolete. This inefficiency is typically rooted in the gaps that emerge when entrepreneurs react to market changes by adopting new practices and policies. The method can help leaders identify these gaps and eliminate them. 


3. Interaction Friction

Inefficiencies typically emerge at points of interaction between individuals and groups within a company. The 5 Whys method can help eliminate these friction points and illuminate how points of interaction can be smoothed out and improved for greater efficiency. 


4. IT Systems

Efficiency is often limited by IT. Stakeholders will often wait for a system update to resolve a pressing concern, or complete only part of a task because of technological limitations. Small and strategic process improvements by IT departments can meaningfully enhance the company's efficiency and save hours billable work. 


5. Tools

Constantly questioning organizational processes on a cyclical basis can help business leaders discover innovative tools to increase productivity and enhance the quality of the company's work environment. People want to work at the the most innovative companies that leverage new technologies. 


6. Areas of Research

When a process becomes cumbersome and no immediate solution is discovered, even by implementing the 5 Whys process, it is a good indication that the company should ask for outside support to help resolve the organizational problems. 


In summary, the 5 Whys practice is among the easiest methods entrepreneurs can employ to identify inefficiencies, as well as organizational and relationship problems. All it takes is the right mindset and a significant degree of humility to effectively point out problems where they exist. 

One of the central components of adopting the 5 Whys strategy to improve company efficiencies it to match reality with the strategic goals of the business.

Once the problems that prevent a business from functioning at 100% are understood, then processes and objectives that actually align reality to the company's strategic vision can be tweaked or reestablished.  




Another powerful question entrepreneurs should consistently ask of themselves and their colleagues pursuant to the effort of establishing a more objective focused workplace in addition to "why?" is "how?". 

How can X be improved?...

How is that improvement meaningful?...

How does the improvement enhance our bottom line?...

How can we implement that improvement?...

Asking "how?" a process can be improved, dramatically increase process efficiency because it forces people to rethink how they preform their daily tasks.

That reflective action can bring out creative ideas that dramatically change how a business operates to improve it's processes and performance in the marketplace. 

Setting aside time at the workplace to brainstorm with colleagues on clearly defining the processes that sustain a business may appear like a waste of time and resources, however the endeavor can yield extraordinary results. 

The practice will not only reveal interesting process improvements, but it will enhance the sense of ownership employees feel towards their job and the long-term performance of the company. 

When people feel as though they actively participate in the creation of new processes that align corporate objectives, they become more motivated and perform at a higher level. 

Ultimately, the goal of developing clear objectives and sustainable processes is to minimize uncertainty between all levels of an organization. Uncertainty breads doubt, and doubt leads to time wasting and resource misallocation. When this happens, people will spend an exorbitant amount of time trying to figure out what it is they should be doing, and how they should go about doing it. 

Business, and particularly start-ups, cannot afford to waste time and resources systematically figuring out what the corporate objective is and what processes should be implemented to achieve it.

Therefore, entrepreneurs should be encouraged to clearly define their objectives, and closely examine the processes which support their successful completion. 

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