Working exclusively with the owners and directors of accounting firms for 15 years, I’ve seen staunch resistance to ambitious goal setting. These are just a few of the things I’ve heard in response to goal setting:
- We don’t want to be disappointed about missing ambitious goals so we prefer to set realistic goals.
- Our people don’t want ambitious goals because they’re scared we’ll use the results against them.
- Goal setting is an academic exercise that has no influence over the firm’s results.
These arguments seem reasonable, however they prevent firms achieving their full profit potential.
In this 4 minute video you’ll hear about an accountancy firm that disappointingly fails to hit the ambitious profit goals they set. They have, in fact, failed to hit their ambitious profit goals three years on the trot. However, in the process, this accountancy firm has doubled its profits.
As this story suggests, there’s real merit in setting ambitious goals (even if they get missed).
A global example
To see a real-life example of ambitious goals in action, you don’t need to look any further than General Electric. They went from $12bn in shareholder value to $280bn in 20 years. With that kind of growth it’s worth learning what they did to achieve that outlandish growth. On average, GE added $13.4bn every year for 20 years!.
Ambitious goals have been a fundamental part of the GE approach to growth. And they used an orange from a fruit bowl to teach all their managers how stretch goals work!
…the team at Xero thought the idea of stretch goals rather interesting and wanted to experience the same process that was used to teach the GE managers about stretch goals.
Check out the video and you’ll see how much fun the Xero team had discovering the power of stretch goals. You’ll also hear a little more about the firm of accountants who doubled profits. All thanks to an orange exercise.
The science backs up the stories
The most wide-ranging study of goal setting research is summarised brilliantly by Edwin Locke and Gary Latham in their book New Developments In Goal Setting And Task Performance.
They review over 1,000 research projects about goal setting across 20 years of study.
They reach two conclusions:
- The most common feature of success across the 1,000 studies is the idea of ‘stretch’ goals rather than ‘realistic’ goals.
- The second is the familiar adage of SMART goals. The research suggests that you make your goals Specific, Measureable, Ambitious, Relevant, Timely (SMART) if you want them to work for you.
Notice how the usual ‘Achievable’ for ‘A’ is replaced by ‘Ambitious’ – Back to the orange exercise!
The post Why don’t more accountants make the science of goal setting work for them? appeared first on Xero Blog.