During my development as a leader I was urged to set BHAG (Big Hairy Audacious Goals) and whilst this can be useful in generating new thinking (e.g. a 40% increase in revenue is not going to be achieved with a “business as usual” approach) it can also go too far and disconnect people from the possibility of achievement.

In a HBR (Harvard Business Review article ) the importance of realistic goal setting is discussed and a number of behavioural traps identified,

The first behavioral trap—failing to set proper expectations—includes the following transgressions:

1. Establishing too many goals
2. Not requiring a plan for how and when goals will be achieved
3. Failing to push for significant improvement for fear that people are already overwhelmed
4. Not assigning clear one-person accountability for each key goal
5. Signaling an unspoken “if you possibly can” at the end of a statement of expectation
6. Accepting reverse assignments (“Sure, boss, I can get it done if you will see to it that…”)
7. Stating goals in ways that may not be definable or measurable

Setting goals is a real art of leadership and one that requires leaders to consult widely about yet realise that the final decision rest with them. The most important aspect is setting the right goal areas (e.g. determining the key focus areas to progress the business from where it is to where it needs to be). Is the critical need to gain traction in sales, systems, data mining, service delivery, value proposition, staff skills, attitudes or culture?

Having established where the focus and prioritisation should be what “level” of goal should be set? Think of a rubber band connected to both hands on a table. As we move one hand away from the table the tension increases creating a force that seeks to either lift the other hand off the table or return the first hand back to the table.

In goal setting you are trying to move the level (hand) to a position that maximises the movement away from the table without breaking the connection. It requires that the forces holding the hand on the table are released (via change management) to embrace the new goal.

Of course the setting of goals also relates to resource availability, financial condition of the business and risk appetite of the leadership and Board. Pre-GFC Boards were in a risk-taking growth mood and which quickly turned in the face of financial challenges. Boards, forgetting their earlier enthusiasm for taking risks, cast a severe assessment on management for the risks they took and, as a result, many CEO’s were shown the exit.

So when you set goals for growth that involve risks don’t forget to get your Board sign-on to the challenges and risks as it can get very lonely when things go in the wrong direction.