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Of goals and plans

by Greg Spira
Indian Management August 2023

When a leadership team has common understanding, clear goals, and trustworthy behaviours, incredible results can be achieved.

Having worked with several companies to examine their planning processes, I have seen so many different words used to reflect forecasts, plans, and goals that I am never surprised to find confusion. In fact, I always expect it. Terms like plan, budget, objective, projection, forecast, latest estimate, latest thinking, best estimate, and most likely are used frequently, and often interchangeably.

If this were simply a problem of terminology, then it would be easy to solve. In fact, addressing terminology is how I lead executive teams to sort out and clarify the language that they use in their organisation. However, the important lesson is not what words we should use, rather it is how many terms we should have.

For example, one organisation was insistent that they only had one plan—what they called the Annual Operating Plan. It was set at the beginning of the year and did not change. It was determined based on top-down direction, and typically reflected an expected growth in revenue and profit that would satisfy the board and shareholders. The CFO was proud that they had one number, and everyone knew what it was.

While that was true, the problem was that across the organisation, there was no clear understanding of how they would achieve it. That led to significant misalignment, performance issues, and frustration with the executive team.

The Annual Operating Plan was not a plan at all. It reflected a set of goals for the organisation, but not how to achieve them. Goals reflect a result or outcome. Plans denote actions that will deliver a result. If you take a moment to think about the language in your organisation, are your plans really plans? Or are they goals in disguise?

To the point on how many terms an organisation should have, the answer is at least two. The goals and objectives of an organisation should be stated and clear. They are typically fixed over a longerterm period (commonly a year or more). Separately, the plans to achieve those goals should also be stated and clear but they may change more frequently. In fact, the ability for an organisation to adjust its plans in pursuit of goals defines how agile it is. Agile organisations can pivot, adjust, and adapt to changing business dynamics. Agile organisations are much more successful in achieving their goals.

Why then, do businesses commonly confuse plans and goals? Goals are frankly much easier to define. It is easy to set a goal of losing 20 pounds. It is a lot harder to define the actions that I can and will take to achieve that goal. Goals can be set top-down by a board or leadership team. Plans, by contrast, cannot. Plans must be aligned bottom-up and top-down, and regularly synchronised across all the functions in a company.

Importantly, it is foolish to expect that an organisation’s goals and plans are always aligned. Certainly, in a perfect world they would be, but we do not live in a perfect world. Situations where plans are not sufficient to achieve goals are frequently real and must be made visible. Perhaps counter-intuitively, those organisations that embrace and manage these gaps are those that routinely achieve their goals.

Wise leaders ensure that conversations about plans address the following questions:

  • Do we still agree on the goals that have been established, or are changes needed?
  • Will our current operating plans enable us to achieve the stated goals?
  • If not, what do we need to change or do differently? 

While this may seem simple, it is certainly not always easy. Leadership behaviours come into play in these conversations. I have observed many who are of the mindset that when they give their team an objective, they do not want to hear about all the reasons why it cannot be done. They feel that if they give in to listening to what they believe are excuses, the goals will be undermined. They fear hearing their teams say, “I told you we couldn’t do it.”

Other times, leaders feel compelled to ‘help’ their teams when there are gaps between plans and goals. Yet the help they try to offer is not always perceived as helpful. Additional scrutiny, deep dives, and micromanagement are all reasons why a team may not want to expose gaps at all.

The root of these symptoms is a lack of trust. Trust cannot be dictated. It must be earned, and it begins with a common understanding that trustworthy behaviours are beneficial to everyone.

As stated earlier, I use the exercise in defining terminology to frame the issue with an executive team. That is an important first step in diagnosing whether there are behavioural gaps, process gaps, or both.

The good news is that leadership behaviours are within the control of leadership.

  • Take a moment to think about your own organisation and whether its processes and behaviours promote trust. Answering these questions might help you to find opportunities for improvement.
  • Is there an understanding of the difference between goals and plans—and what they are called?
  • Is there a tendency to ‘shoot the messenger’, making it difficult for people to deliver bad news?
  • Are goals achievable? Are they set based on a realistic set of expectations?
    Is there a routine process to align plans across functions, and assess whether those plans will deliver your stated goals and objectives?

As you reflect on your answers, keep in mind that these problems are rarely solved with software tools, analytics, or processes alone. Successfully addressing these opportunities starts with education to ensure that a leadership team has a common understanding of what good looks like, and what behaviours are needed from them. When a leadership team has common understanding, clear goals, and trustworthy behaviours, incredible results can be achieved.

Greg Spira Greg Spira is an instructor of the Oliver Wight Demand Management course. Greg is also author, Trust the Plan: Demand Management for Business Leaders.

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