The concept of purpose: purpose in focus

Growing the BSC methodology on the soil of domestic corporate cultures does not always yield fruitful results. Many articles have been written about this by disappointed authors who are skeptical of all popular management methodologies. If desired, reasons for disappointment can always be found… I propose to discuss one of them – this is the inaccurate transfer of the meanings of concepts in foreign business vocabulary, which causes uncertainties in the application of the BSC methodology in practice. I myself witnessed a similar case in one of the companies…

In English business vocabulary there are several basic concepts that denote the goal :

purpose (goal, intention, benefit),
objective (goal, aspiration),
goal (goal, task, although there is also task…),
target (goal, target, task).

There is also the term “aim” (goal, intention), which is used in English business vocabulary somewhat less frequently.

When adapting English-language goal-setting methodologies to the needs of your own company, it is important to take into account the differences in the meanings of the concepts of goals so that employees do not get confused in the terms, and the goal-setting and reporting processes are built “correctly”.

For example, when talking about the long-term goal of the entire organization (its mission), “purpose” is used – p.9 of source (1) and p.10 of source (2).

Sometimes examples of formulations of “goals-objectives” in business literature cause bewilderment due to their vagueness and ambiguity, especially this observation concerns examples of goals from the BSC perspectives – personnel development and internal business processes.

Using the example of the figure (Figure 2), source (1), one can see that the “objective goals” themselves do not fully correspond to the SMART criteria, and are rather development directions, semantic vectors, where to move. But the SMART criteria were formed and proposed to the business community so that the goal could be recognized as a goal.

Figure 2. An example of a “link” of a strategic map, BSC, — source (1).

We need “objective goals” to define in a big way the priority areas where we need to increase resources, concentrate the efforts of personnel and make a breakthrough. Then we don’t need to demand that they meet the SMART criteria.

In general, the transition from the intangible (from the field of mission, vision and values) to the tangible (what is easy to understand and clear how to do) is multi-stage and complex. And it is logical to build this transition in the management practice of the company step by step, perhaps build it over a long period of time, consistently, for years, support it with “subtle” tools of corporate culture or, to put it more simply, by personal example of the top officials… If some “pieces” fall out, then the “puzzle” does not fit together, and the staff feels it “with their skin”. Beautiful slogans will not help, or will help, but not for long.

Where do “goals-objectives” “grow” from? There are two ways in which they “grow”:

“Stalactite goals” are “objective goals” that grow from above when there is intuition, a sense that one needs to move “there,” a sense of vector is invested in “objective goals” that inspire the staff;
“Stalagmite goals” are “objective goals” that grow from the bottom up by first looking at key business metrics, analyzing “dashboards” of metrics, and setting inspiring “objective goals” for those where there has been a major failure or “dip.”

The risk of “stalagmites” – you can “get bogged down” in the details, working with individual trees, and not with the forest massif.

The risk of “stalactites” – you can “break away” from reality, remain in the pink clouds of a goal as a dream, and real daily work will not bring us any closer to achieving “goals-objectives”… This risk increases when there are no reliable measures or indicators.

Let’s consider three variants of the goal-setting process as a transition from the intangible to the tangible, and in each variant we will try to remove some part of the transition:

If you shorten the goal-setting from above (remove the “abstract” concepts of mission, vision, values), you will be left with a set of indicators, and in this case the criteria for assessing their actual values and the meaning of achieving them will not always be clear.

If you shorten the goal setting from below (remove the indicators), you will be left with a dream that has no relation to the operational processes and real life of the company.

You can also be clever and shorten the goal-setting process in the middle, i.e. have a beautiful mission on the website and developed indicators for employees – formally everything is there, but formally… When “objective goals” contain the characteristics of a “purpose” and at the same time an attempt is made to tie indicators to them, then nothing good comes of it… Everyone is loaded with unproductive work, reports are written, presentations are drawn, “and nothing has changed”…

The SMART criteria correspond to “goals-targets”, however, in the source (2) “target” is translated as “task”, I suggest we disagree with this…

If you look closely at the original, when it comes to setting stretch goals, it’s not so much about “objectives” as “targets”. Set stretch targets! – the BSC gurus urge us.

“targets” – in my understanding, these are planned values for indicators, but the gap between the actual value of an indicator for the past period and its planned value for the future period is where the goal lies, and this gap is where the tension lies. It is for this tension that events need to be planned and budgets calculated, and not for “objectives”.

“Objectives” constitute the content of the strategy at a qualitative level. The same list of “objectives” is valid for the period for which the strategy is defined.

From the “objectives” you can build a strategic map, which will be a means of communication for managers about priorities and nothing more.

In order to measure the implementation of the strategy, it is necessary to form a strategic map from measures (indicators) and form a BSC from “targets”, an example in the figure, Figure 2.

Accordingly, for the period for which the strategy is defined, the same list of “targets” applies; the question is how their planned values are balanced among themselves in the context of one year and in the dynamics of their annual values for the period of the strategy.

		Goals (targets)
Indicators	Fact 2009	Plan 2010(ST)	Plan 2013(MT)	Plan 2015(LT)
Revenue	560 M$	700 M$	750 M$	890 M$
Customer Service Ratio	8.5	9.3	9.3	9.6

Figure 2. Example of “targets”.

The planned values of the indicator set the gap that needs to be overcome, in comparison with its actual value. And for this gap, a training program will be formed, certification of sellers will be planned, and other events will be carried out, the final goal of which is to increase the level of service, measured by the corresponding coefficient, by 10%.

If we return to the beginning of the article, then the conclusion proposed is obvious: let’s get acquainted with the original source, dear colleagues, and adapt it to our specifics…

Original and source: