Strategy · Proving to Scaling
Objectives for this year
You set two or three numbers for this year, each from where you are now to a target, and each comes back as a KPI on your scoreboard and as a rock in your quarter.
Does this sound familiar?
- In January you say this will be the year of growth. In December nobody knows whether it was.
- Revenue went up 15%, exactly to plan. In October the bank rings about your overdraft.
- You set 200 customers as the target and find out in March you already had 190.
- The annual objective is on the canvas, and nobody looks at it again until the annual session.
Who it's for, and when
For founders who make good resolutions for the business every year, and in December can't say whether it was a good year. It starts in Proving, with your first KPIs. From Growing onwards, you work out this year's numbers from your three-year objectives.
The model
“Focusing is about saying no.”
This box says in two or three numbers what has to happen this year. McChesney, Covey and Huling found that a team with two or three goals usually hits two or three, with four to ten it hits one or two, and with eleven to twenty it hits none. Include at least one about what's left over: net profit, gross margin, cash or debtor days. Revenue on its own doesn't tell you whether you can pay your bills.
Write each number as from X to Y by a date: 'gross margin from 24% to 27% by 31 December 2027'. X is where you are now, taken from your figures and not from memory. From Growing onwards, Y follows from the lesson Three-year objectives: how much of the gap has to close this year? In Proving there aren't any three-year numbers yet. In that case, pick the number that shows whether it works, such as the share of customers who come back.
A number on the canvas doesn't move by itself. So every annual objective comes back twice. As a KPI on the scoreboard, with an owner, so you can see every month whether you're on track. And as a rock in the quarter: the work that has to be finished this quarter to move the number. Without a KPI, you only find out in December how an annual objective went. Without a rock, it's a wish.
Verne Harnish, Scaling Up (2014): the One-Page Strategic Plan has a Goals (1 year) column next to the Targets (3 to 5 years) column and the quarterly column. Chris McChesney, Sean Covey and Jim Huling, The 4 Disciplines of Execution (2012): every goal from X to Y by a date, and few goals alongside the day-to-day.
From X to Y by a date
Each line has a KPI name with the year in it ('Gross margin 2027'), a target value and a unit. Write X down for yourself: without X you don't know whether Y is a step of 5% or 50%.
The bottom line
At least one of the numbers is about profit, margin or cash. If revenue grows while margin drops or the money's still sitting with customers, you'll only notice when the bank rings.
On the scoreboard
Every annual objective gets a KPI with an owner, measured monthly or weekly. That way an annual objective is something you look at every month, not once a year.
A scoreboard the team keeps up itselfIn the rocks
Each quarter, one or two rocks that move the number. For debtor days, that might be: 'Every invoice goes out within two days of delivery.' Whether it's a rock, an OKR or a project is covered in the lesson Rock, OKR or project: which do you choose?
A rock you actually hitPitfalls
Last year plus a bit
You take last year's growth and add a few percent. It feels safe, but it says nothing about where you want to be in three years. If this year only covers a tenth of the way, the two years after it have to do the rest.
Watch and read
From the man who came up with it: a few goals that really matter, each from X to Y by a date, and a scoreboard that shows the team whether it's winning.
Watch on YouTubeA Dragon asks two founders whether they understand what gross profit is. That's the question this box asks: what's left of the revenue?
Watch on YouTubeTo go further
Two Y Combinator partners on goals set too high or too low, numbers that tell you nothing, and sandbagging. For companies in Proving.
Watch on YouTubeRead
The 4 Disciplines of Execution
Chris McChesney, Sean Covey, Jim Huling · 2012 · ISBN 9781451627053
Discipline 1 is about this box (few goals, from X to Y by a date), discipline 3 about the scoreboard. The first part is enough for this lesson. Published in Dutch as De 4 disciplines van uitvoering (Business Contact).
View the bookApply it
- 1
How much of your three-year objectives has to be done this year?
Put the three-year numbers next to where you are now and work out how big this year's step needs to be. In Proving you skip this and pick the number that shows whether it works.
- 2
Where are you now?
Take revenue, net profit, gross margin, cash and debtor days from last year's figures. Those are your Xs.
- 3
Which two or three tell you whether it was a good year?
With at least one about profit, margin or cash. Put them on the canvas: KPI name with the year, target value, unit.
- 4
Which KPI shows it every month?
Put each number on the KPI scoreboard, with an owner and the target for this quarter.
- 5
Which rock moves it this quarter?
For each annual objective, pick the work that has to be finished this quarter and put it on Priorities. Fill in the card for each objective and take it to your leadership team: do you believe it can be done, and what would have to change to get there?
Examples
The card for each annual objective
Objective on the canvas: ... [year] From: ... (value on 31 December) To: ... (target for 31 December) KPI on the scoreboard: ... , owner ... , monthly or weekly Rock this quarter: ... , owner ... Rock next quarter (first idea): ...
A wholesaler
Revenue had been growing for years, but every autumn the bank asked for an explanation. Three objectives for 2027: gross margin from 24% to 27%, debtor days from 52 to 40, revenue from €11m to €12.5m. Debtor days went on the scoreboard with the accounts assistant as owner, with the rock 'invoices out within two days of delivery' for the first quarter. For margin, the rock was a new price list for the twenty biggest customers.
A construction company
The goal was 'more profit'. Starting point: 3.1% net profit on revenue. The three-year objectives said 8%, so almost half the step had to happen this year. The annual objective became 5%, with checking actual costs against the quote on every project as the first rock.
A software company in Proving
No three-year numbers yet. They chose two objectives for 2027: customers renewing after a year from 60% to 80%, and the cost per new customer under €2,000. The rock for the first quarter: every new customer gets three fixed check-ins in their first month.
Do this in your own business
Everything up to here is free. What you fill in for your own business, you keep in Boldcaster.
- You write the Doelstellingen dit jaar section of your strategy, and it stays on your strategy page.
- You assign the lesson to your team and see who has done it.
- The quiz counts towards your progress, and you see which lesson comes next.
Four weeks free. You'll land straight in this lesson.
Quiz
6 situations. You need 5 of 6 right. You can try again at any time.
1.Revenue went up 15% this year, exactly the target. In October the bank rings about your overdraft. What does this lesson say?
2.You set 200 customers as the target for the end of the year. Afterwards it turns out you already had 185 in January. What went wrong?
3.The three-year objectives say 8% net profit. It's 3% now. You set 3.5% as this year's objective. What does this lesson say about that?
4.Your leadership team puts eight annual objectives on the canvas. By June the day-to-day takes up all the time and nobody gets to the objectives. What follows from 4DX?
5.Debtor days from 52 to 40 has been on the canvas since January. In September it's still at 51. What was missing?
6.Your company is in Proving: customers are buying, but you don't know yet whether they'll stay. There are no three-year objectives. What do you put in this box?
Nothing is saved here. In the app, the quiz counts towards your progress.
Read next
- An annual theme · You give the year a short name with one number attached, so everyone in the company knows what this year is about without reading the canvas.
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