From the vision to the task: an introduction to goal-setting

Defining goals is one of the first and most crucial steps to take when managing a team, project, or even an organization. With so many related keywords—e.g., vision, mission, goals, objectives, SMART, Objective and Key Results (OKRs), and Key Performance Indicators (KPIs)—used in different areas of an organization, understanding and navigating through them feel daunting. However, these concepts are built on top of simple notions and theory that are easy to understand.

In this article, we present each concept by using theory in a simple and organized fashion. By the end of the article, we can have an overview of the concepts and how they relate within the different layers of an organization (from higher to lower management), ultimately aimed at motivating and guiding people.

This article can help managers in understanding concepts and theory, and, therefore, work better with other teams and throughout the hierarchy of an organization.

Why all of this?

Why do organizations care about goals, objectives, and frameworks like OKRs? Let's find out by going at the beginning.

An organization—such as a company or association—represents a group of people with a shared purpose. For a company, this purpose is to get economic benefit by selling goods and services.

Now let's understand what purpose is. The vision and mission are two concepts that help us define it.

The vision is the purpose itself of the organization. It is the why, that is, the reason this group of people are together and have formed an organization. In Qustodio (where I work), the vision is to help the world maintain a safe and productive digital balance.

The mission is what the organization is going to do to achieve the vision. It is the what and how of an organization. You might find the mission and vision mixed together, even described as one. For example, Nike's mission has an implied vision, which is to bring inspiration and innovation to every athlete in the world. This is telling us that the vision is about athletes gaining inspiration and innovation, and that their mission is about generating that inspiration and innovation. From this, we can extract that Nike's focus is not about trainers, but inspiring and innovating for athletes. In the case of Qustodio, it is to develop a seamless way for parents, schools, and teachers to work together to create safe and enriching online experiences.

A simple template to draft the vision is as follows:

We envision a world where [vision] by doing [mission].

In understanding the mission and vision, we talk about the organization in singular. However—as stated above—an organization is a group of people. In order to ensure every person is up to the task of fulfilling the mission, we use goal setting. Goal setting involves the development of an action plan designed in order to motivate and guide a person or group toward a goal, being in our case the purpose of the organization.

Now, we know why we need goal setting: organizations are a group of people with a shared purpose, and goal setting is how we ensure that these people work toward the purpose.

In the following sections, we see how goal setting works.

Goal setting and goals

As we defined it above, goal setting is about planning, motivating, guiding, and ultimately aligning people. In the heart of goal setting are goals.

A goal is the result that a person or group of people wishes to achieve. Therefore, the purpose (or vision) of the organization is their main goal. An individual can also have a goal, such as I want to lose weight, or in case of a group, we want to sell to the U.S. market.

Goal setting theory tells us how to make the most of goals to greatly motivate and guide the people who will work toward them. Some of the buzzwords to create goals are tools—e.g. SMART objectives—while others are frameworks—e.g. OKRs.

Given that goal setting is an overarching theory, people apply it differently, resulting in different ways (i.e. tools and frameworks) of solving the same problems. In fact, this usually happens inside a company. Higher management (e.g., c-suite) uses slightly different tools and frameworks compared to middle management (e.g., department managers), but all seem to revolve around the same concept: setting goals to guide and motivate people. For any manager reading this, it all boils down to choosing what best motivates and guides your team.

Let's see what are some of the most used tools and frameworks, and their most accepted (as per my personal understanding) definitions.

Defining "result" in a goal

What is the goal of a goal? It is to be resolved. And the process of resolving a task is what we call performance.

For the I want to lose weight, the result is a reduction of weight. The faster we lose weight, the higher is our performance. However, how do we know that we are losing weight? This can be observed by tracking how many kilos (or pounds) that we are losing; this is a KPI. A KPI ( Key Performance Indicator) is a metric (a.k.a. measurement or indicator) that tells us how close we are toward completing a goal, and, therefore, how effective we are.

Since goal setting is about guiding people, KPIs are a way to know whether we are advancing correctly.

In order to lose weight, we have to engage in several activities like eating healthy or exercising. We refer to these activities as sub-goals. A sub-goal is a goal whose result we require to fulfill a greater goal.

In fact, it is not rare for metrics to become goals per se—a side read of the Goodhart's Law could be interesting. The paper Motivate Employee Performance through Goal‐setting is a useful read in how to improve performance through goal-setting.

Everything is a goal

We defined above that an organization is a set of people with purpose, that the vision is a purpose, and that the mission is how to achieve the purpose. If we substitute purpose with goal, we could say that an organization is a set of people with a goal, which is quite close to the original message. Following this thought process, the mission could be the first sub-goal of an organization.

We get to the interesting conclusion that everything is a goal (and a KPI as a way to measure its completion). Thus, any organizational planning is a hierarchy of goals and sub-goals:

What the goal-setting tools and frameworks do is adding rules to goals and KPIs to make them more effective in specific contexts. For example, in firms, a usual context is the organizational layers shown above—higher management, middle management, and low-level management.

Objectives

An objective is a SMART goal. SMART is a mnemotecnic term that means Specific, Measurable, Assignable, Realistic, and Time-related; and these are the properties that transform a goal into an objective. Checkout this link for a description of each property. Therefore, a goal is an objective that is not SMART. I want to lose weight is a goal, and I want to lose 1 kilo in two weeks is an objective. Due to these properties, goals are usually broader and a bit blurry, whereas objectives are refined goals.

Many scholars and managers interchange the words objective and goal, whereas I find it useful to separate them with a clear definition. For example, the book Business A Changing World states that The principal difference between goals and objectives is that objectives are generally stated in such a way that they are measurable, which is a SMART property.

OKRs

OKRs (Objective and Key Results) is a goal-setting framework that adds some rules on top of the concepts we have seen above. OKRs is a framework tailored for the following context: 1) middle managers implementing the organization strategy, and 2) not for business-as-usual goals, which we explain below.

The framework divides the types of goals of middle managers into:

Business-as-usual goals

Goals that are related into maintaining the day-to-day operations. An example for a Marketing department is launching seasonal campaigns.

Non-business-as-usual goals

Goals related into increasing the strategic competitiveness of the firm. In other words, those projects that a middle manager engages to increase the competitiveness of their firm. For the said Marketing department, this could be expanding to a new market.

The OKRs framework is limited to the non-business-as-usual goals.

The core terms of OKRs are 1) the Objectives and 2) the Key Results.

Objectives

The framework adds a they should be significant (or meaningful) to the strategy of the firm or they are part of the non-business-as-usual goals.

Key Results

Key Results are the KPIs used to measure these objectives. The reasoning for not calling Key Results as KPIs is to help separating KPIs that track goals falling within the framework (i.e. tracking non-business-as-usual goals) from KPIs that track goals which are outside the coverage of the framework (i.e. business-as-usual goals). In a more technical lingo, Key Results are a subset of KPIs.

By separating goals into two and tackling the non-business-as-usual ones, the OKRs framework allows organizations to focus on their top strategic priorities (see the F.A.C.T acronym).

All together

The diagram below represents goal-setting in an organization using OKRs.

There are more goal-setting from full-featured ones like OGSM (Objectives, goals, strategies and measures) to tools like BHAG (Big Hairy Audacious Goals).

In sum, this article shows how different goal-setting frameworks and tools pivot around the same basic concepts (i.e., goals, KPIs, and OKRs), helps understand the meaning of such concepts, and finally maps them to identify where they are situated across an organization.