Know the difference between a company's objectives and goals and understand how fundamental this is for managing your business.
You must have heard countless times colleagues talk about objectives and goals in an equivalent way.
As much as this exchange of terms affects relatively little the understanding of the message in a conversation, it can significantly affect the way you track the performance of your business.
From a management point of view, knowing how to differentiate goals from goals is fundamental and we will understand why, but first let's understand what each of these terms is separately.
What is an objective?
An objective is the end you want to achieve or accomplish. It can be broad, which is usually aspirational and has binary outcomes (achieved or not achieved), such as:
To be the largest technology company in the country;
To be the best sales team in the company;
To be the best company in customer service among competitors;
Or it can be more specific, which is often more easily quantified. It refers to the indicator with the problem to be solved and the trend of the expected result, for example:
Examples of company objetives
Increase Revenue;
Increase EBITDA;
Decrease fixed costs;
Increase the Net Promoter Score (NPS);
Decrease Turnover;
Decrease Churn rate.
Examples of personal objectives
Increase my monthly income;
Decrease my spending on clothes;
Increase daily reading time;
Increase the number of weekly physical activities;
Decrease the consumed amount of daily calories.
What is a goal?
A goal is a specification in value and time of an objective (generally more specific). It is the composition of an objective, a value and a deadline. An example of a business goal is:
Example: Increase EBITDA by 5% in 1 year.
Objective: Increase EBITDA
Value: at 5%
Deadline: in 1 year
To define a value and a deadline, we must compare our results with some benchmarking. Basically there are two types:
Internal Benchmarking: Historical data of the company's own results are used for comparison;
External Benchmarking: Results data from benchmark and comparable competitors are used.
Objective x Goals
As you could already see, the definition of the goal is much more linked to the objectives that we named as more specific, but what is the relationship with the broader ones, which we indicate as being aspirational?
To show this relationship, the OKRs (Objective Key Results) methodology is excellent.
As the name implies, Objective Key Results (OKRs) are composed of objectives and key results.
Objective: as we mentioned before, it is the end you want to achieve;
Key results: are the goals that, if achieved, define what broader objective has been achieved.
Therefore, in the case of OKRs, the objective is the broader and more aspirational end that one wants to achieve, and the key results are the goals, which are composed of more specific objectives, values and deadlines.
The image below shows these differences more clearly through an example of Objective Key Results (OKRs) from Google Chrome:
Why is it important to know the differences between objectives and goals?
If you are not clear on this difference, most likely you will treat everything as an objective, that is, you will not have well-defined indicators, values and deadlines to be achieved.
This will not allow you to draw good conclusions regarding your results and, consequently, whether you need to take any measures to improve them.
Brazilian graduated in Civil Engineering from the Federal University of Santa Maria (UFSM). Worked as a management consultant at Falconi on projects in the public sector, automotive retail, healthcare and pharmaceuticals, focusing on the application of PDCA to improve operating results. He is currently working as a Mkt Ops Business Analyst at RD Station, the largest SaaS company in Latin America.