No recent success story in the business world has been as electrifying as the one where a lowly English teacher, earning $12/month, became a multibillionaire in less than ten years. That person is Jack Ma of Alibaba. The founder of the gargantuan e-commerce business has accomplished in China what Jeff Bezos did in America with Amazon.
The really curious thing about Ma is that he had no previous experience or academic background in business. What then contributed to his immense success in such short order? Certainly, the sheer size of the Chinese marketplace provided scales that are difficult to match elsewhere, and the emergence of a huge middle class in that country, in the last two decades, was another hugely positive demographic statistic. This defines opportunities but does not answer why it catapulted Jack Ma to the pinnacle of business success.
That answer comes from a self-evaluation by Jack Ma. It was hiring managers who were brighter than he was, and finding a way to make them work cooperatively towards common goals. This is a classical prerequisite for a business leader, but too often it gets superseded by the huge egos and hyper-competitiveness of business entrepreneurs.
Great success has always been forensically examined for bits of information that may be useful to others. Although not everyone can aspire to reach the heights of a Bezos or a Ma, their personal leadership philosophy can be emulated by even the smallest of business entrepreneurs. With Jack Ma, it was all about developing a cohesive group of managers.
Setting organizational goals is a primary requirement to develop cohesiveness in the management team. In order for the organization to actually fulfill their goals and objectives requires: clarity, conciseness, attainability, measurement, time specificity, definition of responsibility and prioritization. Objectives are statements of intent, like sales and profit growth, new products/services introduction, new market penetration and expansion from mergers and acquisitions. Goals provide quantifiable specifics for the objectives like 10% sales growth,15% profit increase, etc.
Guidelines in setting goals and objectives:
– Set goals where attainment can be measured or at least verified.
– Adjust the goals to the available human resources.
– Set up a database that continuously measures progress.
– Focus the goals and objectives on the key drivers of your business.
– Review the objectives with all the managers to assure cooperation and support.
– Update and modify your objectives regularly to meet changing market conditions.
Importance of Goal-Setting
Planning and goal setting are essential parts of every business. A plan of action must be established to attain the goals and objectives so that the managers’ energy and resources are directed in a controlled and coordinated manner toward the accomplishment of these goals and objectives. Good managers direct their personnel. They manage the everyday activities without losing sight of the long-term horizon. They make decisions and changes, as required, to maintain momentum.
Without a plan, a business tends to run on historical precedence or on a crisis management mode. Employees operate in conflict to the best interest of the business. This creates confusion, inefficiency, and reduction of profits. Although businesses cannot plan for all contingencies, planning will reduce risk and provide guidelines for staying on course.
Key elements in long-range planning
Define your business by stating the company’s mission – “What business are you in?” Concentrating solely on your products or your services is a trap. You must frame your company’s identity and core purpose in broader terms. In this fast-paced digital era, what you produce can become obsolete quicker than it ever has in the past.
The long-range goals and objectives are usually set for a period of three years. They can be extended to five years, and in some industries, they must be. For most businesses, three years is a more manageable horizon. The long-range plan must address the following questions:
– What profit levels can be reasonably expected?
– What human resources and assets do we require to achieve the long-range goals?
– When will these resources and assets be required?
– How will we finance the plan and what will the capital requirements be?
– What are our profit goals and strategy for reaching them?
Follow this up with a market segmentation analysis. Through careful study, determine and categorize those markets, which will generate demand for the company’s products and services. This will serve to uncover previously overlooked markets; be helpful in deciding where to concentrate the company’s sales efforts; identify specific target markets.
Expand the company’s horizons in determining what new products and service offerings the company should make in the future, in order to stimulate both the existing client base and expand to new customers. Merger and acquisition options should be carefully studied, as a potentially more rapid entry into a new market segment.
After identifying the existing and new market segments, a forecast is needed of how these segments are going to perform over the span of time covered by the long-range plan. Using a “what if” approach, determine the effects of potential declines, increases, and what the company must do to meet its goals under the various assumptions.
Review the total market potential in size and value in each segment, and determine what percentage you can effectively target with your existing capacity and planned expansion for each of the next three years. This establishes the goal for market share. After determining your market share objective for each of the years, you must formulate plans for the personnel, facilities and financial requirements to support the projected growth. You must respond to the following needs:
Human resources: Finding the personnel available to support the growth and explore the sources from within or outside the company; deciding whether the compensation package is competitive; determining the details of a training program
Facilities plan: The new equipment and facility to support the sales forecast, the necessary replacements and upgrades to existing equipment and infrastructure.
Financial plan: Project the three-year cash requirements necessary to support the projected growth. Determine the long-term borrowing needs and banking support required. Adjust for additional interest on loans and for inflation.
Know Your Competition
You must obtain as much data as possible on your competitor’s strengths and weaknesses, market share, and geographic coverage. A competitors’ database should be set up. It should contain specifics on the competitors’ products/services offered, pricing structure, website quality, search engine ranking, chosen advertising media, innovations, and growth. Such information can be obtained by a careful analysis of competitors’ websites, trade associations, website graders, chambers of commerce, trade journals, Dunn and Bradstreet reports, and other similar business compilation reports.
Some of the competitive factors to monitor on a regular basis are: market share, cash resources, management strengths and weaknesses, new markets into which they are moving, new products/services offerings, distribution channels, quality of service, pricing points and strategies, promotional and advertising direction.
Upgrade the promotion and advertising strategy
While it is at times difficult to identify the immediate results from advertising and promotion, it is an essential part of a good marketing plan. In this way, the company can establish its brand, culture, and stimulate customer traffic leading to conversions. A carefully designed promotional program must be continuously monitored to confirm that it positively affects key drivers such as gross and net profits. There are many media choices to get your message out to the targeted customers. In today’s market, the use of digital advertising and marketing has become a prime choice for innovative companies. The employment of an established website designer and traffic control agent assures competence in this promotional field.
However, some of the tried-and-tested promotional programs should not be neglected. This includes: word of mouth endorsements from customers, testimonials on your website and other publications, trade magazines, trade shows participation, industry forums, blogging that promote your products/services on the Internet, free publicity in articles written about your company or featuring your employees.
Monitor the managers
Create a formal spreadsheet of your organizational, marketing and financial goals, and the strategies and tactics (specific actions) needed to achieve them within a specified time frame. These are the company’s milestones. Set up regular meetings with key managers to follow up, update and revise them as necessary, to meet any changes in the marketplace.
Key factors in short-range planning
The long-range planning forms the basis for the short-term goals and objectives. Quantifiable annual goals and objectives are set for each month and fiscal quarters that closely reflect the three-year plan. Responsibility and accountability of the managers in charge are monitored to confirm that the stated goals are being consistently achieved in the short- term. This is the only way to assure that long-range plans are achieved. Don’t wait for the annual financial results. Also verify the non-financial objectives such as customer satisfaction, employee team spirit, manager effectiveness and other soft issues that are very much part of the success parameters.
Annual income and cash flow budgets, broken down into monthly and weekly segments, are an integral part of the short-range plan. This must be tied to a variance report that clearly signals the inconsistencies between the goals and their actual achievement. This allows for speedy corrective action where necessary.
There are times that a business owner or manager may offer the excuse that there is not enough time or resources to formally set goals and objectives. Time is indeed scarce when operating a business, but goal-setting is completely indispensable in managing it successfully. By setting specific goals and relating them to performance at every level of the organization, you build in responsibility and accountability for desired results. Celebrity CEOS know this and practice it religiously.