Goals, outcomes, KPIs and initiatives are all important parts of leading an organization. Good leaders use all of hem to set vision, communicate, and track progress. Some leaders use the three interchangeably. The key to their effectiveness is using each one in the right way.
Goals/outcomes
Goals and outcomes are statements about positive changes to the business or organization. A goal might be to increase revenue, decrease costs, or increase customer satisfaction. Each of these should be quantified. The goal is what everyone in the organization should be trying to achieve. Goals reflect results rather than activity. Creating a preferred vendor process is an activity. Reducing procurement costs is a result and therefore an outcome.
Initiatives
Initiatives are specific actions or programs that support goals. They are not the goals themselves.
In the earlier example, creating a preferred vendor program is an initiative that supports the goal of lowering procurement costs.
I often see leaders combining the two into a single “goal” statement (e.g., develop a preferred vendor system to reduce procurement costs). The argument for doing this is that combining them keeps the focus on the outcome.
I tend to disagree. The goal and initiative should be kept separate for three reasons:
- The initiative is always more visible and immediate. The “measure” will almost always wind up being the completion of the initiative.
- The initiative will have to be executed to completion, even if it is not working or no longer needed. For example, suppose the “goal” was stated as “Conduct ten focus groups in order to improve customer satisfaction.” If, after five focus groups, there were clear, consistent requirements there would be no need to conduct the other five. Yet, to meet the goal, the remaining five focus groups would have to be conducted even though they might not add any more value to the true outcomes. Alternatively, suppose the focus groups yielded no new information to drive changes. Completing all of them would still be necessary to allow the “goal” to be met even though there was no real change to the organization.
- Combining the goal and initiative limits options. If the preferred vendor program is written into the goal statement, that’s the only available option to meet the goal. Alternative such as outsourcing procurement, automating or some combination are no longer options. Having the initiative separated allows for resequencing, reprioritizing, adding, or deleting in order to make progress toward the true outcome.
KPIs
KPIs provide diagnostic information about the performance of key processes. KPIs might include # of calls handled by a call center per day, evaluation scores on training programs, number of sales calls made, etc.
KPIs should be used to monitor processes and take action but they are generally not final outcomes. The organizational goals should be the result that is expected when the organization is meeting its KPIs.
Putting it all together
Here is a simple example that combines all three.
Goal: Lose 15 pounds (note, this is a result, an actual change)
Initiatives:
Low calorie diet
Agressive exerciseprogram
KPIS:
Low calorie diet: 1500 calories per day
Low calorie diet: < 30 grams of fat per day
Aggressive exercise: Work out 3 days per week
Aggressive exercise: Average 1800 calories burned per workout
In this example, success (and the big piece of chocolate cake) doesn’t come until all fifteen pounds are lost.
The KPIs are helpful in that they can help a person diagnose why his or her weight loss program isn’t working. Even if they are being met, they are still not a reason to celebrate. If the KPIs are being met but the outcome is not being met it could mean that the KPIs were set wrong. It could mean that the wrong initiatives were chosen (perhaps there is a medical condition preventing the person from losing weight). That is the value of using KPIs.
Goals, initiatives, and KPIs are all important to running a good business. They key is to keep them separate and use them in concert with one another.
