Wednesday, April 25, 2007

Goal Setting...

During the span of last 3 months, I happened to read about Dr. Ram Charan - first from a blog buddy's post and later read a wondeful book by the same author - Know-How : The 8 Skills That Separate People Who Perform from Those Who Don't .

And just last week happened to find a entire collection of his published articles -> Ram Charan - What Every Company Should Know

It been truely a pleasure to go through the articles and see how masterfully he has broken down the biggest strategic challenges faced by organisations across the world into simple modules and tackled each of them by suggesting real and actionable steps in which they can be dealt.

My favourite one has been, Goal Setting. Here is what he recommends -

Goals should always reflect the opportunities in the outside world,
tempered by what's realistically doable. Here are some guidelines:

Think about the "how"
Saying "We're going to grow revenues" is not enough.
Saying "We'll grow revenues faster than our competitors" is better, but is still
vague.You need more specificity: "We'll grow twice as fast as the GDP over the
next five years. One-third of that growth will be fueled by new products, which
will be the result of a 25 percent increase in R and D money. We'll fund the R
and D with money saved by cutting marginal product lines."
State your goals clearly, but also understand how they'll be accomplished. What actions will they trigger, and what are the implications for your business?

Involve others
You want the people who have to work toward the goals to have a chance to challenge them and the assumptions behind them. Then you'll know you haven't overlooked anything and you'll have a feel for whether the goals are realistic.
Some people resist goals because they don't like being held accountable, but others resist because they know that meeting them will do real harm to the business. Besides, people are more likely to buy into the goals if they have a chance to help shape them.

Consider how goals interact
A single goal -- whether it's profit or revenue growth, or market share, or even a hybrid like shareholder value -- distorts the business as people try to maximize that one measure. Instead, choose multiple goals, and as you do, consider how they interact with one another. No company can maximize everything at the same time. Be sure the set of goals you choose can be accomplished simultaneously. Reducing working capital by 10 percent, for instance, might be impossible if another of your goals is to grow revenue 15 percent.
Several years ago, leaders of one of the world's largest automakers stated their intention to increase overall market share, but pursuing that goal proved to have a negative effect on earnings as the company struggled to support a very wide range of products.

Consider the context
Set your goals in light of the opportunities that exist internal and external to your business, unit, or department. Maybe there's an opportunity to redesign your supply chain and tap huge cost savings in the process, or a whole new customer segment that could cause a big jump in revenues.Think broadly, and look forward, not backward. And be prepared to adjust the goals in light of what the rest of the
business is doing -- for instance, in response to the CFO's need to increase
cash in the coming year.

The beauty of these guidelines is there simplicity. In the sphere of management consulting where throwing jargons and sounding complicated is considered to be highly desirable, here is someone who can speak plain english and yet make an impact.

The underlying philosphy in all that he speks about is building synergies; hence he talks about goals been based on the opportunities in the external world but the way to achieve is through introspecting, identifying ones strenghts & shortcoming and arriving an optimal. Just as what Sigmund Freud said - "A man should not strive to eliminate his complexes but to get into accord with them: they are legitimately what directs his conduct in the world".

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  • Ravi Kapoor said...

    Hi Ashutosh,

    This is Ravi from Bollywood Buzz blog..thanx a ton for taking time out and visiting my blog buddy!

    I also spent sum time on your blog and found that you write gr8 articles..have added your blog to my favs..take care n have a good life!



  • D said...

    Ashutosh, I so want to believe all that people who decide management policies in companies are reading Dr. Ram Charan! I haven't experienced any of this wisdom in the last few years at work :(

  • Ashutosh said...

    @ Ravi

    Thanks for dropping and u'r words of encouragement :)

    Keep Visiting


    @ Devanshi

    Thanks for feedback.

    I know that, and its really sad to see companies living in there own world, oblivious to the changes around. I have seen this appathy while I was working. But I am also sure that sensitisation to such softer issues of general management will surely help you become a different (read better) manager, as and when you reach there.


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