Annual Goal Setting – Step by Step

Top performance athletes and top performance companies have something in common. Both are aware of power of goal setting and importance of figuring out their annual goal respectively. Irrespective of actual success towards end of the year – goal setting and progress measurement works like a compass in ever increasing complexities to manage businesses – small and big alike.

CipherOn is a mid size organization based out of New Delhi – they have discovered a simple yet powerful way of arriving at their annual goal. 4 steps are involved.

Step 1 : Analyze Potential of Org

Step 2 : Decide on Goals & Objectives

Step 3 : Determine Success Factors

Step 4 :  Plan and Control activities

Lets look at each in further depth

Step 1 : Analyze Potential of Org

In consideration of organization’s ‘Vision’, ‘Business Model’ and ‘Mission’ it is important to access ‘Market Attractiveness’ and ‘Competitive Advantage’.

‘Market Attractiveness’ can be accessed based on ‘Investment Portfolio (risk return portfolio by Harry M. Markowitz, 1952)’, ‘Ansoff Matrix ( Markets Vs Products matrix between new as well as present ones in both by Harry I. Ansoff, 1965)’, ‘Product Life Cycle (profiling under – introduction, Growth, Maturity and Decline by Theodore Levitt, 1965)’, ‘BCG Matrix (Market Growth Vs Market Share to classify Cash Cows, Poor Dogs, Question marks and Starts by Bruce D. Henderson, 1968) ‘, ‘Supply Portfolio (deciding buy/control/make based on Potential for competitive Edge Vs Risk of Outsourcing by James B. Quinn, 2002).

‘Competitive Advantage’ can be evaluated on corporation level criteria and product level criteria between your org vs competition orgs. Common corporation criteria are market share, financial strength, management, employee skills, R&D potential, Time to market and cost efficiency. While common product criteria are function, quality, cost and reliability. Each of these criterian can be measured on scale of average, good and excellent.

Lastly both ‘Market Attractiveness’ and ‘Competitive Advantage’ can be plotted on 2X2 matrial as suggested by GE-McKinsey, 1970s to complete the visualization of step 1 – Analyze Potential of Org. As a matter of facts, largely most organization are not completing this step due to lethargy of top management.

For each of the above concept a free of cost template is available on request by writing to author at

Step 2 : Decide on Goals & Objectives

Goals and Objectives can be defined in 4 sub steps of building document for each of the following – Strategy Map, Balanced Scorecard, Sales Plan, Business Plan taking in consideration customer needs, supplier capabilities, product portfolio and production/service footprint.

Strategy Map is building four perspectives further.

Financial Perspective : What financial goals & objectives do we need to achieve, not only to survive, but to develop our business?

Customers & Markets Perspective: How do we need to be recognized by our customers, not only to keep,but to develop our competitiveness?

Internal Business Processes Perspective : How do our business processes need to perform, so that our customers recognize us as a competitive, first class supplier?

Learning & Growth Perspective: What kind of resources do we need to acquire and what talents and skills do we need, so that our business processes perform to the expected level?

Each of above can be called Financial perspective, sales perspective, operations perspective and human resources perspective respectively.

Balanced Scorecard is breakdown of strategic objectives into key indicators and each key indicator is assigned a strategic value target. For example sustainability and growth, a strategic objective can be broken into key indicator like productivity and it can have a numeric target like 240 products per man-hour. This enables identifying gap against this target at any given point in the year.

Sales Plan to include number of products/ services to be sold in the year month by month for each customer, for each product group and for each region.

Business Plan to contain resources in form of investment required to achieve proposed sales plan and expected return of the investment by customer, by product groups and by region.

Step 3 : Determine Success Factors

Success factors can be determined by doing ‘SWOT Analysis’ considering potential, new targets & objectives and actual performance. Internal SWOT will map Strength and Weakness of org while external SWOT will map Opportunities and Threats.

For each business process SWOT can be run by asking simple 5 questions for each of sub business process. Lets take example SWOT – Internal of ‘Scrap’ as a subprocess in a manufacturing org:

Q1: In general , what is your status today?

The actual scrap rate is about 3.5%.

Q2: How us the actual position f your direct competitor(s)?

Our direct competitor has achived a scrap rate of 2.2%.

Q3: Did you achieve your defined targets and objectives?

We did not achieve our scrap target of 2.9%.

Q4: Is your status a strength or a weakness?


Q5: What is your improvement action proposal?

Project: Reduce scrap. Target 2.0%. Dollars 500k savings.

SWOT summary of each process can give prioritization of strength, weakness, opportunity and threat to work on.

Step 4 :  Plan and Control activities

Based on the SWOT summary in a priority order for each business process, divide the identified objectives within each process into ‘project of the process -X’ assign a project team to each project and in the process eliminate less important projects if you can not find resources to do it or if you are overloading some specific resource. What you will end up with is to-do for entire organization.

The guided approach enables 1 day workshop with some advance preparation to arrive at ‘Annual Goal Setting’ document for entire organization – irrespective of size. Unprepared Orgs will anyway will not do it or will do it half-hearted for no or poor results. If org evolve and follow what works for them annual goal setting can do wonder in the space of Organizational Performance.

For needed support (free content / workshop) contact author at or +919810637103

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