Why You Shouldn't Have Goals

Process Over Outcome

There's an often-told story of a young college graduate who got a job as a stockbroker at a regional broker-dealer in the suburbs of Vancouver. The financial industry is infamous for its cut-throat competition, and the new hire had very little to make him stand out from his peers. Nobody expected great things from him.

But something strange happened. The newbie began to bring in new clients and, with them, new business for the firm. He was directly responsible for generating tens of thousands of dollars in revenue, then hundreds of thousands, then millions of dollars. Within eighteen months, Trent Dyrsmid made over five million dollars in revenue for the firm, and he was earning the equivalent of $125,000. Not too long after that, he was hired by a prominent and more influential firm.

How did he do it? Did Trent have some exceptional talent as a salesman? Did he have a knack for picking stocks? Was he a financial genius after all?

Maybe he did have a unique talent, but that's not what led to his quick success in a notoriously difficult job.

What set him apart is that he developed a process and stuck to it, almost obsessively. It was a brilliantly simple is process that was likely to get him the results he wanted, and he executed it with rigor. Every day. Without fail.

Trent knew that to bring in new customers, he needed to cold-call them. He also knew that most cold-calls from stockbrokers end in rejection, which meant that his success rate would be low. Constant rejection and low hit rates will demoralize anyone, so he developed a simple process to overcome these obstacles:

He set two glass jars on his desk. One was filled with 120 paper clips, while the other was empty. Each day he would begin making cold calls, and, after each one, regardless of its outcome, he would take a paper clip from the full jar and transfer it to the empty one. As the day progressed and he made more calls, the full jar began to empty, and the empty jar began to fill. He would not leave the office until all 120 paper clips had changed jar.

He did this day in and day out. As time passed, his selling skills improved. I don't know his success rate, but it is not as important because he made 120 calls a day, 600 calls a week, and 2,400 calls every month. Even if he only got one new client out every 100 calls, he would get 24 new clients per month. And his success rate likely improved over time to more than 1 out of 100, compounding his results.

Trent could have done things quite differently. He could have gone with conventional wisdom and set goals. For example, Trent could have decided that he needed twenty new customers within 90 days, either choosing that number arbitrarily or because that is what the best salesmen did when they were rookies. He then could have compiled a list of friends and acquaintances that he might win over as clients and then called each one, hoping for the best. That's what most people do, and this is why most people fail.

You see, Trent was a genius of sorts. Instead of being "goal-oriented," he decided to focus on the process.

By focusing on the process, he concentrated on things that were under his control. He could not control how many new clients he got every day, but he could control how many calls he made. He couldn't control his hit rate, be he could tweak and adjust his sales pitch and improve it as he gained experience. The results followed as an almost natural consequence of his process.

Never mind the experts

Management gurus, text-book writers, and "experts" want us to focus on goals. But not just any goal will do. They will pontificate about how there are good goals, and there are bad goals.

Good goals are ambitious yet possible. They are precise, quantifiable, and measurable. They are easy to communicate to others and leave no room for ambiguity or interpretation. Good goals are binary: you either reach them by a specific date, or you don't.

Bad goals, as you might expect, are the opposite. Unambitious or impossible goals are not sound. Unquantifiable goals are downright stupid. And goals that are not easy to communicate in an elevator pitch are a waste of time. And of course, if you don't have any goals, you're a loser.

None of this is correct.

When the measure of something becomes a target, it ceases to be a good measure.

-- Goodhart's Law

Quantifiable goals are called hard goals. Not hard as in difficult, but hard as in solid. Non-quantifiable goals are called soft goals. Both are useful in the right context.

Bet first, we must acknowledge that goals, especially hard goals, have a dark side, even more so if they are linked to pay and incentives.

Goals can be gamed. If monetary incentives are tied to reaching a goal, cheating is likely to take place. People and organizations will likely focus their energy and attention on maximizing their bonus and self-interests, to the detriment of all else.

Hard goals must have constraints, rules, and conditions to limit, but never eliminate, cheating. So your easy-to-communicate goal now must be followed by a bunch of legalese. Not as sexy and as motivating as the experts led us to believe.

Soft goals are derided by exerts precisely because of their ambiguity. They can mean different things to different people and lead to inconsistent behaviors.

Let's get something straight: the whole point of having a goal is to modify behavior, get people in an organization working towards a common objective, and focus on the activities to help them reach their objective.

Then why not focus on the behavior itself, instead?

Focus on the process

By focusing on the process, you concentrate on the behavior you are trying to influence in the first place. By focusing on the process, you emphasize the tasks and activities that are needed to reach your goal. In other words, you focus on what is under your control.

How many new clients you win every month is not under your control. How many cold calls you make to potential clients is. How you pitch to them and what you offer them is also under your control. How you serve new and existing customers is also very much under your control. Why not focus on those tasks? By focusing on each of these processes, the number of calls you make, refining your sales pitch and serving clients, you reduce frustration and enter a virtuous circle of trial and error. You create a constant feedback loop, which helps you improve.

This approach is much more resilient than a goal-oriented strategy because it allows an organization to adapt and make changes when warranted.

It helps to have goals. But you definitely can get away with soft goals if you are going to focus on processes.

Why soft goals?

Because what you want is to set the direction you want to go and then design and execute processes to take you there. Regardless of what the experts say, you can tell when a soft goal is reached or if you are moving in the right direction.

When you want to build a ship, do not begin by gathering wood, cutting boards, and distributing work, but rather awaken within men the desire for the vast and endless sea.

-- Antoine De Sait-Exupery

Goals should inspire and direct, but execution is king. Processes are where shit gets done.

So get to it

This isn't ivory tower theory. This is practical advice you can put to use in business, investing and life.

Consider diet and weight loss. Most people set a hard goal with a date attached: lose 40 pounds by summer. What do you do next? Starve near-to-death; take dangerous pills; suck the joy out of your life. If you are lucky and have Spartan-like disciple, you will reach your goal by summer.

But what's likely to happen next? Some prize-eating, some reward-binging and some weight-gaining. All that pain and effort for short-lived results sounds like a Pyrrhic victory. You obsessed over a quantifiable objective and reached it with unhealthy and unsustainable behavior.

What if you set a soft goal? What if you said you want a healthy lifestyle?

Experts and business gurus will cringe because it is not quantifiable. They'll say it's vague and progress can't be measured. Yes. It's all true, but it's also irrelevant.

Not everything that can be counted counts, and not everything that counts can be counted.

-- Albert Einstein

Any mature adult is smart enough to know what a healthy lifestyle means, even if you can't put it on a spreadsheet. In any case, most hard goals are set arbitrarily anyway. Having a hard number makes them feel more precise and scientific.

Your focus can now shift to designing and implementing healthy behaviors, which will later turn into habits, which will, in turn, lead to a healthy weight.

Do you drink a lot of soda? Don't cut it all off at once; instead, cut it out one day a week. Then two, and so on. Are you a couch potato? Do the 7-minute exercise routine every day and work your way up to hitting the gym four times a week. But focus on executing these small steps and add to them over time. Forget your weight. Your weight is mostly a product of your choices, so losing weight will be a natural result of your new processes.

But here's the secret: you must obsess over execution. Whatever steps you decide to take, follow them religiously. Forget everything else. As you progress along, you'll begin to notice and improve other aspects of your life, such as your environment. Are you trying to eat less candy? Get rid of the bowl of jelly beans. Are you trying to eat more vegetables? Change the store where you do your groceries and learn new recipes.

Your metabolism? That's outside your control. Your choices and habits? Those are all on you.

Get to work

Good processes can sometimes lead to bad outcomes. But it's about consistency. Good processes are more likely to lead to good outcomes, and if you execute on your processes over a long time, better results are all but guaranteed.

Remember, Trent didn't focus on bringing an X number of clients every month. That would have just frustrated him. Instead, he set the soft goal of bringing in new clients for his firm and then focused on the process: cold call 120 people every day. He spent his time and energy on executing the strategy of cold calling.

So to hell with management experts. Set a soft goal. Design a process and obsess over it. Repeat it. Tweak it. Improve it. The results will follow.

Buy a cheap calendar and mark a red X on every day you executed. Or copy Trent and place your jars on your desk and make sure to shift the paper clips every day.