Microsoft isn’t the only company in the midst of financial dissection especially as many corporate conclude their financial year with the calendar year. Now is the peak season for annual business reporting and planning for the business goals ahead…
They would do well to consider Drake Bennett’s hard look at business planning and goal setting in his Boston Globe piece “Ready, Aim…Fail”
- “The argument is not that goal setting doesn’t work – it does, just not always in the way we intend. ‘It can focus attention too much, or on the wrong things; it can lead to crazy behaviors to get people to achieve them,’ says Adam Galinsky, a professor at Northwestern University’s Kellogg School of Management, and coauthor of ‘Goals Gone Wild,’ a paper in the current issue of a leading management journal. ‘Goal setting has been treated like an over-the-counter medication when it should really be treated with more care, as a prescription-strength medication,’ he says. Taking on goals in this way has proven controversial, and Galinsky and his coauthors have earned a withering response from the prominent psychologists responsible for much of the literature on goal setting. But at a time when we’re left to wonder how smart, seemingly responsible leaders in business and government could make decisions that helped destroy trillions of dollars in wealth, there’s a new appetite for reexamining the things that motivate us – and how they can go awry.”
- “Reducing complex activities to a bundle of numbers can end up rewarding the wrong behavior – with engineers concentrating on less promising but more straightforward research, for example, to rack up more patents. If you are GM, argues Schweitzer, ‘You clearly don’t want 29 percent market share, you want something much more complicated than that.’ To combat this, Latham, among others, argues that what’s often required is a ‘learning goal’ – one where someone pledges to come up with, for example, five approaches to a thorny problem – rather than a performance goal that assumes that the problem will automatically be solved.”
The problem with outcome goals in complex systems, like profit in huge multi-nationals, is that the decomposition between cause and effect is not clearly established. Just dividing up a 10% cost reduction across every constituent part doesn’t necessarily add 10% to the bottom line.
Business is not a coin-operated spreadsheet.