We all have goals. Sometimes we call them objectives. Whatever they’re called, setting the table for the coming year is something all business owners must do. If the goals are bold enough and complex enough, they are referred to as "strategic." The implementation is more complex than one person can tackle alone. Some call these kinds of goals "BHAGs"—Big, Hairy (complex) Audacious Goals.
Let's examine the process in a local family business. The owner did his homework and sat down to plan the strategic goals he wanted to get accomplished for the next year. He was pumped up.
That was the situation I encountered while advising a $4-million manufacturing/distributor of technical industrial products. On the year's agenda were the following:
1. Establish a physical presence
Break ground for, complete, and move into a modern, state-of-the-art facility. The landlord raised the rent at the old location to the point where it wasn't fiscally prudent to remain there. Architectural drawings and building plans had been drawn up in the previous year and appropriate land had been purchased. A general contractor had been hired and promised to start as soon as the weather permitted in the spring. He assured the owner the building would be complete and ready to move in before the first snow of the fall.
2. Establish new systems
The company administrative/accounting IT systems were antiquated. The owner no longer felt comfortable with the accuracy or the timeliness of information provided by these systems. An outside accounting firm had been brought in the prior year and recommended a newer, more reliable platform (Windows 97 was no longer supported). So another goal for the year was to switch to the newer platform and system.
3. It’s a family affair
Inquiries from potential overseas customers had been increasing in recent years. The company’s market territory was principally the United States and Canada. The potential seemed to be attractive, but no one in the company had international business experience. Luckily (?), the eldest son had decided the prior year his future did not lie in furthering his career in a Washington, D.C.-based political job with his degree in international relations. He came home and had been the company production manager. The owner promoted the young lad to manager for European activities and he was tasked with developing that market for the company’s products. As an aside, the company had never had a sales manager other than the owner, who, in addition to being the CEO, was also the chief scientist, directly responsible for new product creation and product development. He also was 67 and really wanted to retire soon.
4. Create performance standards
The office manager (wife of the CEO) was continuously critical of and dissatisfied with the performance of her entire administrative staff. Her major goal for the year was to oversee the implementation of a new IT/accounting system. The company’s advisors suggested (note: advisors suggest or advise, that's why they’re called advisors) she implement a formal performance appraisal system with detailed, written performance standards against which to measure performance. By doing so, they reasoned, her people would know what her concerns were about their performance and her staff might be in a better position to understand what they were doing to upset her. The CEO and the plant manager thought this was a good idea and took to heart the notion that employees should be provided regular performance feedback.
That's only 4 BHAGs. There were a couple more, including an ongoing ownership transition plan that the wife insisted that all four of the sons share equally in the eventual transfer of ownership (even though only one of the sons actually was working in the business). That, however, is a story for a future installments of this blog.
What happened? What do you think happened? Don't read further until you have thought about it for a minute or two.
Surprise! NONE of the BHAGs were fully accomplished during the goal year.
1. The new building wasn't completed until late June of the following year. Weather was not a contributing factor. Multiple design changes and change orders dragged out the construction process. Aside: I recommended the general contractor who was hired because, among other things, he had a great track record of on-time delivery and had a lot of experience in working with closely-held business owners. He told me later this project was the most difficult/stressful general contracting project he has ever undertaken. Luckily, he still talks to me.
2. The company trusted neither the old IT nor the new IT systems. So, they ran both in parallel for the better part of the next two years. The outside accounting firm's advice throughout this period fell on deaf ears, primarily because the CEO's wife didn't believe either system was accurate. In reality, the solution was way beyond her pay grade, but after all, she was the wife of the owner.
3. The son's performance in opening the new market was, frankly, a disaster. He was earnest, loyal, dedicated, but held a position far beyond his competence. While he was personable and gregarious, he lacked the technical skills and expertise necessary to create a profitable outcome. The company’s advisors finally got the CEO to admit that if his last name had not been "Smith" (disguised name), he would have been terminated 12 to 14 months into the project. He continued in the same position, with mediocre results, for at least the next four years.
4. How about the performance appraisal system? Surely that must have gone off without a hitch. Nope. The CEO and plant manager embraced the system wholeheartedly. They set up formal performance reviews and the back of the shop (operations, R&D) responded extremely well. Cost of goods sold dropped significantly. On-time delivery greatly improved. Waste/rework dropped. The back of the company exhibited much better teamwork and interpersonal communication. Unfortunately, these results were not replicated in the office. The CEO’s wife refused to implement the system, continued to rail against what she considered poor/substandard performance and didn't buy in. As result, the IT/Accounting systems continued to be dysfunctional, the office atmosphere was toxic, and at the end of the day, because "Mama isn't happy, no one was happy."
What can be learned from this story?
1. BHAGs are generally carved out of the time you have after you have done your day job. The day job doesn't go away just because you have an overarching project to accomplish.
2. Most people are not good at juggling. Even semi-pro jugglers have a hard time juggling more than three items at a time. Most people have a hard time juggling two items at a time. We live in a work culture in which people are praised for their multi-tasking skills. Juggling and multi-tasking are the same thing. In smaller enterprises, the stretch, or extra time that people have to work on things other than their day jobs is pretty limited. That's why more than two or three yearly important goals don't get accomplished on time.
3. Family business frequently does not work because the family often takes precedence over good business practices.
4. You are only as good as your weakest link. Goal accomplishment needs everyone to be competent and on the same page.
Jeffrey C. Susbauer, Ph.D. is Associate Professor Emeritus at the Monte Ahuja College of Business, Cleveland State University where he has taught strategic management and entrepreneurship courses since 1970. A long-time consultant to scores of businesses, a member of the boards of advisors to over 60 companies, he co-founded and serves as the principal instructor for the COSE Strategic Planning/CEO Development Course for the past 36 years. The course is concerned with providing entrepreneurs with education to guide their vision, strategic thinking and execution in their businesses.
Want to learn more about the Strategic Planning/CEO Development course? Click here for additional information or contact Jeff via email.