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A Business Without Goals-Can it Succeed?

by Hal Levenson on Apr 30, 2014 11:32:26 AM

Can a business become successful if it is not motivated by the need to achieve specific goals? Most people in the business world typically would respond in the negative. Most business leaders are convinced that goals are necessary and desirable. Many firms use employee evaluation programs that utilize several types of goals: basic goals, contributions to corporate goals, growth goals, stretch goals, etc. Yet, a discussion that began in 2009 continues is some business schools, psychology classrooms, human resources departments, and corporate boardrooms about the theory that goals can have negative effects.

A story has been told by planners and by teachers of planning and goal setting since at least the 1970s. It is the story of a man hiking through a forest who came upon a target painted on a tree with an arrow in the very center of the bull’s eye. The man continued his hike, finding more trees just like the first. The more targets the man found, the more his admiration grew for the accuracy of the archer. Finally, the man came upon the archer. To his amazement, the archer was actually painting the target around an arrow he had just shot into the tree.

The popular interpretation of the story is that one can aim at nothing and hit it every time. But some would have us believe there is a better interpretation – perhaps that our goals should be what we actually achieve. Is there a downside of goal setting?

In 2009, a paper was published by professors from four universities entitled, “Goals Gone Wild.” In the paper these professors argued that asking employees to achieve corporate goals actually produces several negative outcomes. The negative outcomes identified included:

  • Limitations on actions
  • Limitation of opportunities to explore new territory
  • Inability to get excited about something other than the goal

Specifically, the authors pointed to “a narrow focus that neglects non-goal areas, distorted risk preferences, a rise in unethical behavior, inhibited learning, corrosion of organizational culture, and reduced intrinsic motivation.”

We have all seen cases of excessive focus limiting opportunity. Businesses often analyze lost opportunity cost. However, we are not accustomed to recognizing lost opportunities in conjunction with corporate goals. In a time when innovation is the word of the day, can our firms afford to retain such tight focus on merely the outcomes we can foresee? Would we do better to open ourselves to serendipity? Can a business succeed while it awaits serendipity?

The authors of the paper suggested that goals be redefined so they become somewhat less specific. This will require a significant change of attitude for those committed to the use of SMART goals. The true solution might be in flexibility that allows us to match the goals and the incentives to the individual. Clearly, some people need goals that are very specific and rigid. Others, however, will be blinded by overly specific or rigid goals. What is restrictive for one might be the direction needed by another.

Sales goals that point to 4 new customers per month might be more effective for some people if they point to 4 new customers at an average expenditure of $XX.XX or a smaller number of new customers at a higher average expenditure. The question remains, however, “What prevents the employee from stopping when they achieve the goal?”

Those that can succeed without goals are the people with the drive and desire to continually do more. These people require only inspiration and/or incentive to achieve and exceed expectation. But how do you exceed an unstated expectation? Do these people need goals or expectations to define what they will exceed?

Deciding if a business can succeed without goals must occur on an individual basis. Further, it must be determined by understanding the needs of the employees. Just as some people are driven to do more and more, others need a target. Of those people who need a target, some will need a goal to meet and others will need a goal to exceed.

What is best for your firm, and for your employees? Should all employees be guided or evaluated on the same terms? Ultimately, only you can decide if you should continue to use goals, redefine the goals you use, or eliminate goals. Further, only you can decide if all employees should be guided and incentivized the same way or if some are different.

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