Why set business goals?

The answer is simple: organizational alignment.

And as the famous author and business guru Jim Collins once said:

“Great performance is about 1% vision and 99% alignment.”

Ya, that about sums it up. Alignment is that important in any team of any size and at any stage.

Unfortunately, most CEOs, founders, and leaders lack the discipline and focus to align everyone on their team.

Most organizations have too many goals, which leads to everyone rowing in different directions. This is the least efficient way to grow a company, and I see this time and time again.

In these companies, I usually tell the founder & CEO to cut out everything that isn’t ABSOLUTELY ESSENTIAL – to have a “minimalist” approach to their leadership and goal setting. And then, follow the steps in this article.

It doesn’t mean you can’t spend some time outside of these top goals thinking about the future, new products, big picture stuff.

But your primary job as the leader is getting your entire team aligned on just a few really important things. Less is always more in business. 

So, if you want to drive business results, you need to take goal setting more seriously. Everything matters, from the framework to how you communicate progress to how you reward your team. 

This article takes 20 years of my experience with goal setting and provides you with a system that you can use within your own organization. 

Ready? Here we go… 

Common Goal Frameworks & Their Flaws

If you set goals for your team or organization, you’re likely using one of these three goal frameworks (or something similar):  

• Objectives & Key Results (OKRs): created by Andy Grove in the 70’s
• SMART Goals: by George Doran in the early 80’s
• V2MOM: by Marc Benioff in the late 90’s. 

If you’re already using one of these, you’re a step ahead of the pack. Using some kind of goal framework is much better than using nothing at all! 

But as you’ve likely noticed in practice, these frameworks have some major challenges, especially when applying them to the modern working environment (i.e., remote/hybrid). And this makes sense, considering the “newest” one on the list is almost 30 years old! 

I used all three of these extensively over the last 20 years leading teams. Each time we ran into a flaw with the framework, we made modifications to better suit our situation.

All of the guidance in this article is based on many years of trials and tribulations with these popular goal frameworks—especially OKRs, which is the most popular goal framework used by startups worldwide.

More on the 7 fatal flaws of OKRs and how to fix them here.

So, you can consider this article a “quick fix” guide for any goal framework you may be using. Simply apply the seven goal-setting rules below to whatever you’re using, and your goal system will become 10x stronger. 

In a later post, I’ll introduce the goal framework that I came up with called Why-Go’s, which is built entirely on the foundational principles in this post.

Aligning Vision & Business Goals

Before diving into the 7 rules of goal setting, it’s important to understand how company vision and goals relate to each other. 

Your company vision is the roadmap for where you want your business to go in the long run. It outlines the major milestones on the way to achieving your mission.

I wrote about creating a company vision people actually want to follow using the 1-4 method, where your 3, 5, 10, and 20-year vision is illustrated on just one slide. This approach enables you to clearly communicate your company’s vision, while also providing sequence and rough resource allocation. 

So, every year, when the company creates its annual goals, it’s essential that they align with the company vision – especially the 3-year vision because it’s closest.

There should never be a scenario where your company’s annual goals do not align with your vision. If this is the case, you need to re-write your goals or rework your vision. Something is off.

The 7 Rules of Goal Setting 

I’ve spent the last two decades in business leadership stress-testing various goal frameworks, especially the OKR (Objectives & Key Results) framework. I found the holes in all of them but created these 7 rules to plug them. I’m confident that applying these 7 rules can massively improve any goal framework. 

Ready? Here we go…

Rule 1. Three Business Goals or Less!

Complexity is the enemy of success.

One of the biggest startup founder mistakes I made early on was setting too many business goals. I quickly learned that the more goals you set, the less focused you and your team will be. 

Think of it this way: if a 20-person company has 10 goals, and each person creates 10 individual goals, that’s 200 individual goals and at least 600 key results across a very small team 😵

That’s why I set a hard rule for my team of no more than three goals for the year. This applies to the company (company creates 3 or fewer goals for the year) and to each individual on the team (each person creates 3 or fewer goals that align with the company’s). 

Each goal should be short, specific, and crystal clear. No more than one sentence each. 

Here’s an example goal for myself: 

“Become a top content creator for startups on Linkedin.”

This hits all the right notes: short, specific, and crystal clear.

Rule 2. Challenging But Realistic 

Business goals should be hard but not so hard they become unrealistic.

Ambition can sometimes get in the way of progress. We all want our businesses to thrive, but nothing is more demotivating than being set up for failure. 

That doesn’t mean sandbagging (making your goals super easy to hit). Goals should still push you and take you slightly outside your comfort zone. 

My rule of thumb for setting challenging but realistic goals is what I call the 80% sweet spot:

• If there’s less than 80% chance of succeeding, the goal is too hard. 
• If there’s a greater than 80% chance of succeeding, the goal is too easy. 

When the CEO creates goals for the year, the Board of Directors (if they have one) should sign off on the business goals. Similarly, when individuals create goals for the year, their manager should sign off on them. I call this the “handshake”. Mutual agreement that the company goals are aligned and challenging enough.

Rule 3. Always Be Measurable

“If you can’t measure it, you can’t improve it.”

Now that you’ve written your three (or less 👀) company goals, define what success looks like for each goal. 

For each of your business goals, define success by creating 3 or fewer metrics (no more). 

Goal #1: Become a top content creator for startups on Linkedin. 

• metric 1 
• metric 2 
• metric 3

Each metric should focus on the outcomes, not a list of tasks to perform. In other words, it should focus on what success looks like (the “what”), not how you plan to get there (the “how”). 

The ‘how’ will change throughout the year, so it doesn’t make sense to assume you know the solution upfront when crafting your business goals. 

In my content creator example, each metric should define what a “top content creator” means to me. Like this: 

Goal #1: Become a top content creator for startups on Linkedin. 

• 100+ million impressions
• Top Voice recognition  
• Top 10 ranking 

Notice these metrics are outcome-based, not task-based. An example of a task-based metric might be, “Create 2 new videos per week”. This may seem harmless, but it embeds an assumption that becoming a top content creator MEANS I need to create 2 videos per week. This is the “how,” not the “what,” and it’s really just a guess.

Rule 4. Each Goal Needs a Strong ‘Why’

My team used to ask me this all the time: 

“Why did we choose this goal?”

This is a really important question that most goal frameworks don’t answer. The ‘why’ brings out the strategy and vision behind the goal and provides business context to the team. Without a clear ‘why,’ you’ll leave your team guessing. Context creates clarity. 

And in the worst cases, this lack of purpose will de-motivate your leaders. They will think, “Why work my ass off when I don’t even know why we are doing this.” 

So, I learned to include the ‘why’ with every goal that we wrote. No more than a 1-2 sentence explanation of why you chose the goal in the first place. Like this: 

Goal #1: Become a top content creator for startups on Linkedin. 

• 100+ million impressions
• Top Voice recognition  
• Top 10 ranking 

• Why: Becoming a top content creator will create thousands of new relationships and increase the pipeline for our CEO accelerator & community.  

Now, this is starting to look good! Short & clear goal, measurable outcome, and a strong ‘why.’ Anyone reading this will immediately understand what my focus is!

Rule 5. Create New Routines

This one is often overlooked. Many people set business goals, but they don’t modify their own schedule and behavior enough to actually achieve them. Not long after, they completely forget what their business goals were in the first place! 

Instead, think of your daily routines as a support system for goal achievement. At least 80% of what you do during the day, week, month, quarter, and year should be in support of achieving your top three goals. 

Identify 3-5 new routines to shift your daily behavior and align your habits with your new goals. Common examples include schedule blocks and learning opportunities. 

In our example, my new routines could be:

1. Dedicate 1 hour a week to topic discovery
2. Dedicate 10 hours a week to writing
3. Take a course on writing 
4. Join a community for Linkedin Creators 

The point of these routines is to increase the likelihood of goal achievement. These 4 things will keep my goals front of mind and push me to master the craft. They create the right ‘environment of excellence’ that directly supports my goals.

Rule 6. Disciplined Tracking 

Tracking progress against your business goals throughout the year is essential. This sounds so simple, but most leaders don’t do it very well for some reason. 

First, I break the annual metrics (outcomes) into quarterly and monthly targets. Then, I create a simple Google Sheet to track our progress over the course of the year. 

I use a simple red, yellow, and green light approach to help us quickly see where we stand. This is what my grading system looks like: 

🟢 = On pace (pacing to 100% achievement or above)
🟡 = Slightly behind (pacing to 80-100% achievement)
🔴 = Behind pace (pacing to under 80% achievement)

It’s critical to update this frequently (weekly) so that you and your team can take action when the goal is in yellow or red. We established an internal motto called “Get to green,” a call to action for the team to work together and get every yellow or red goal back to green. 

This sheet is ALWAYS accessible to the entire team (entire company, not just executives). I always communicate our progress weekly to the entire team (even if there is no change to the status). This level of touch keeps the business goals front of mind and creates a proactive problem-solving culture.

Rule 7. Reward Your Team 

One of my biggest pet peeves about OKRs and OKR enthusiasts is their die-hard belief that goals shouldn’t be tied to individual compensation. Their main argument is that it’ll cause individuals to sandbag their goals, to hold back. But if you have the proper checks and balances in place (see rule #2), this won’t happen. 

In my experience, aligning financial incentives to goals is one of the most powerful tools you have as a leader. It’s a mistake to tie compensation to anything but! 

What I usually do is create a company-wide bonus program that gives each person a bonus for:

1. The company achieving its goals (50% of bonus)
2. The individual achieving her goals (50% of bonus)

Don’t lie to yourself. Money motivates. And this simple structure will keep people dialed in all year long. Layer in rules #1-6, and you’ll have the most aligned team you’ve ever seen. 

———-

A strong goal framework is essential for keeping your team aligned. 

Set clear and realistic business goals, track them religiously, and reward everyone for achieving them. This is a simple but powerful formula that works every time. Don’t be the leader that overcomplicates things. Keep it simple, and success will follow.

How I can help you… 

Are you a founder, executive, or manager? I’d love to support your professional growth. 

Here are three ways: 

1. Connect on LinkedIn and Instagram – where I post practical tips about leadership and startups every day.

2. Subscribe to my free newsletter – where I go deep on a variety of management and operations topics that will make you a better leader & operator. 
   
3. Join Highland – my executive coaching program for founders, where we help you become a top-tier CEO who can scale into the tens of millions & beyond.