How I Set Goals That ACTUALLY MAKE MONEY

A lot of literature and videos and blog posts talk about setting goals and I hate almost all of them. What I'm going to walk you through is our four step goal setting process. And I promise you it's probably not what you have seen in the past from basically any other company. Because I actually didn't take how we set goals from any business books. I actually took it from a science book. Number one is what problem are we solving? A lot of times you realize that you're not solving a problem at all, which means you probably don't need to do it. This is especially true the lower in the organization it goes because people who are lower down the org tend to not be as connected to the overarching picture of the company. Simple example. Most goals have to be chunked up to one of three things. Number one, they're going to help us get more customers. Number two is that it's going to help us make customers worth more. And number three, it's going to increase the enterprise value of the company. If you can't articulate why the goal is going to do that, then you shouldn't do it. So number one, pick what problem you're actually trying to solve. Simple example. If it decreases the page load times on all of our sites, we will get more leads, we get more leads, we get more customers, etc. If it improves the sign on process for customers to have access to something, that will mean we have fewer customers churn, which means we will make customers more valuable. If you can't tie how your department and the function that you have either gets us more customers, makes them worth more. Increase the enterprise value of the business means you don't understand your job. And if you're the entrepreneur or the head of the department, you don't know how you're actually providing value to the business. Breaking that down is the first and most important part of goal setting. If this process actually makes you think, then it means you're doing it right. Because if you can just knock out your goals really, really fast, it probably means you haven't thought through them well enough. Number two, we create a hypothesis. And the reason for that is when you set a goal, usually it's like we want to do this thing right. Well, you're not actually trying to do the thing. You're. You're hoping that something's going to happen if you do the thing. We like to define both of those variables in the hypothesis. For example, if I wanted to have a sales goal, it might say something like if I decrease the time to call leads from 30 minutes to 5 minutes, we will get a higher percentage of leads to book calls. That's literally the hardest part of this whole thing is what is the hypothesis that you're trying to test? Because whenever we actually do something, the business we're not guaranteeing the outcome and we're not guaranteed from the business that it's going to create the result we want. I'm sure you've tried plenty of things that have been goals and it didn't result in the thing that you wanted. Right, which is why you shouldn't state it as a goal necessarily, but as a hypothesis. What you think will happen once you have the what problem we solving and your hypothesis of how you're going to solve it, then you only have two variables that you have to determine. One is what's the thing I'm going to do? Which is the activity? That's the input. And then what do I think is going to happen? Which is the output number three, what are we going to do? We are going to call leads within five minutes, right? That is the input. We check that box. Great. Output is we will get a higher percentage of leads to schedule or show. So you have your baseline of the input, which is today we're at 37 minutes and we want to be at 5. That's the input change. The output change is going to be. We go from 50% scheduled to 70% scheduled. That's the output change. That is a goal. That is what we call the before phase. The after phase only has two columns and that's what you review after the quarter is done or the year is over. Number four, what do we think is going to happen? You say, okay, did I do the thing? Did I do the input? Did we actually decrease the call time to five minutes? If we did, then that's a green. And here's where this is important. We may have decreased the call time to under five minutes, but we may not have increased the scheduling at all. That's why it's a hypothesis. Now, did what I wanted to have happen actually happen? And then that is where you can put comments here. And so what we ended up doing is we ended up getting it down to seven minutes and it didn't improve it at all. At this point we don't need to get it down to five because we didn't have any directional improvement. It takes a lot of 0 to 1. A lot of shiny objects, a lot of new things, a lot of trial and error, a lot of iterate, iterate. Iterate until something clicks in the beginning. But big businesses often grow by a series of 1% improvements. 1%, 1%, 1%. Because you've seen the Excel math when you're like, well, if I only got 10% more people to opt in, and I got 15% more people to schedule, and I got 20% more people to show, and I closed one from 25% to 35%. You add all this together and all of a sudden you tripled the business. And the thing is, is that everyone gets so distracted with like the, I'm going to reinvent the wheel rather than just making the wheel a little smoother so it runs fast. And so a lot of times, especially in the 5, 10, 15, $20 million top line range, that's some of the systems we have to put in place because that's how the big boys play. They beat you because they actually can do 100 tiny increments. I think gym launch grew 40% last year, and we did nothing new. All we did was do everything we were currently doing a little bit better. If you do that year after year after year, you become very hard to beat because people will see your marketing on the outside. They'll try and copy your pages, they'll try and copy your emails, and one, it won't be you. So it won't matter because it's not, not your story. But they don't know all the internal standard operating procedures, the internal metrics that you guys are tracking that actually create the growth in the company. And a lot of times in the early business, just measuring metrics may be the important goal for the quarter so that you can then improve it. Let's say you're videographer and a marketing department, right? Each of these goals should start from the top down. So if we say these are our five goals as a company, the department heads are going to probably have multiple activities to make the first hypothesis true or not. I like to have everybody as far down in the organization do this because it actually causes you to think about why you do what you do. A lot of times employees lose motivation because they don't know how what they do every day ties into the bigger picture of how the company grows and makes more money. With a videographer, for example, they're like, well, what do I do? Like, what problem am I solving? The problem is get more customers. They might not think about it that way, but that's the goal. Well, my hypothesis is either we might say it's a volume thing, which is if I double the amount of shorts I make, then we will get more traffic to our website from our organic content. And at the end of the quarter, did you make twice as many shorts? Okay. Green. Fantastic. Did that result in more link clicks on the site? Oh, it didn't, huh? Interesting. I wonder what would do it. Okay, we need to create more content that's more story based. Great. Go back to the beginning. If we create more story based content, we will get more link clicks to website. That's why goal setting, if done right, should take work. Because it makes you think, why am I even doing what I'm doing? And if you don't take like a day for a whole quarter to think, why am I even bothering to do this? Then why are you bothering to do it without understanding what you're trying to improve? And the thing is, is if you think this way as a teammate or an entrepreneur, I promise you, you will be so much more valuable to your company if you can even think like a business owner. And this is how a good business owner should think. And if you can approach whoever runs your company with this model, you may find that they will see you differently because they're like, wow, Timmy, who's making these video clips is actually thinking about what I care about, which is how I'm going to get more customers. Whatever. The second part of the statement is, if you know what you're actually trying to accomplish in the business, then it makes a lot easier. What problem are we solving? What's our hypothesis? What are we going to do? What do we think is going to happen? Did we do it? Did it happen? That's it. And so that has been the simplest goal setting framework that we've used. We use this across all portfolio companies. That's what we do, across everything. And it's been the simplest thing that I've seen. I haven't seen it anywhere else. It's worked for us and maybe it'll work for you.