Ready, Aim.....

Targets

We were sat on the sofa one rainy evening the other day and I mentioned the “ACME company” to my kids. A look of confusion appeared on their faces; a look of horror appeared on mine!! “What do you mean you don’t know what the ACME company is?”. Thereby followed a session of some of the finest TV ever made with the viewing of a number of original (yes there is a PC remake!) Road Runner and Wile E Coyote partnerships and I was struck with two thoughts. 

Firstly, the supply chain logistics of the ACME company were far superior many decades before Amazon even thought of remote location drone delivery but secondly, with my slightly twisted logic, helps to show the futility of targets. 

Mr W.E. Coyote appears to only have one target “Catch Road Runner”. Which as we all know he endlessly failed to accomplish over roughly two decades and nearly 50 episodes, mostly in hugely humiliating and very painful ways.

Had old Wile been assessed and rewarded on the basis solely on this target – which many organisation do by measuring the performance of their workforces - he’d not be doing so well. 

Whilst his aptitude and get up and go however should be rewarded, (which would be harder to quantify), the enduring requirement for him to meet his target maybe meant he missed greater and more plentiful opportunity elsewhere – like ground squirrels.

Now before I upset cute fluffy animal lovers we’ll move on to the real topic here, Targets. Quite simply I am not a fan.

Why?

Targets (at least too many targets) can easily overcomplicate the business, slow it down, make it less efficient and over time reduce quality. In too many instances I have seen targets as box ticking and compliance for the sake of it. Here are a few examples:

In NZ following the Christchurch Earthquake of February 2011 the Earthquake Commission set a target for the number of housing surveys to be undertaken; not undertaken accurately and well; just done. Whilst that might have appeared great at the time for stakeholders the need to fulfil the target has now led to extensive issues of missed repairs and huge compensation issues. 

Furthermore, in a 2016 global fraud survey EY discovered that 42% of c.3000 executives questioned would justify unethical behaviour to meet financial targets.  A genuinely frightening figure and I am guessing/hoping not symptomatic of lack of values or ethics of those individuals but a huge frustration of the system they find themselves in. 

Health care is a great example of an industry using too many targets. The all too familiar requirements to be seen in a certain amount of time in the Emergency Room/ED/A&E as well as appointments for cancer and non-urgent care are clearly put in place with the best of intentions; just not backed up with resources to enact. 

Many UK NHS trusts have reached a point where they cannot meet these targets and they just “accept” the fines - these totalled ￡600mn in 2016. Just follow this spiral of decent for a second. A struggling business already with resources at breaking point and inadequate funding, which is wholeheartedly trying to achieve its direction and purpose although with cultures at breaking point, has essential money removed from its budget and told to get better next time.  However, the main reason patients are overwhelming services is the lack of service provision downstream of the hospitals and outside of the budgetary control of the NHS Trusts therefore unable to be improved by direct measures. Historically these fines were reinvested into Trust by the funding body but since April 2015 the fines became real and were retained by the funding bodies (CCG’s) to improve their own balance sheets. 

A number of clear examples of too many targets been inefficiently and ineffectively used and there are plenty more. At the very least targets cause gaming and lots of creativity amongst leadership and staff but sadly not useful creativity. 

Most targets by their very nature are retrospective, measuring things the previous month, quarter or even year. In addition, the criteria for the targets are often set years ago, probably by someone who has left the firm, and very rarely are open to rapid changes in circumstances in the environment. 

On an individual basis targets such as “Make 10 phone calls a day”; becomes “make the 10 easiest phone calls”. “Fix five washing machines a day” becomes “fix the easiest five”. Or how about “Increase EBITDA by 20% each year”…can lead to “change the way you measure revenue recognition, cut costs so that sustainable operations are not feasible two years down the line”.

So what can we do?

Thomas Edison probably didn’t set himself the target of having over 1,000 patents; he set out to solve problems, be curious, inventive and constantly pursuing positive change - the patents were merely a happenstance of his work. Similarly, major drug companies don’t insist on a major drug breakthrough every quarter where as it is perfectly acceptable – and indeed required under some regimes – for companies to have to produce quarterly accounts and be held accountable for targets; constantly. This creates a culture of short termism and singular focus for many companies.

My issue around targets is many fold but most importantly my distrust of their wide application boils down to this simple reason; just because we are meeting targets does not mean the strategy and therefore the firm is, or will be, successful.

Let’s go back to complex adaptive systems like we did in our last post which I think helps demonstrate the futility of targets. 

In a mechanistic system, the system will do the same thing every time for a given input. Input A outcomes B every time…Therefore there is no need to measure the output since you know what is going to come out. 

In a complex adaptive system, we input A and outcomes G, enter A again and out comes Wombat, try again with another A and Orange145 comes out. We cannot measure the output in this system as we haven't the faintest clue what is going to come out. Therefore, there’s not much point in measuring this system either. And what better example than our hero roadrunner of a complex system, so why do we set targets????? 

They give the impression we are doing something, that we are “improving” or being “more efficient”. Whereas we are simply just amassing lots of data which take a lot of time to compile, generally involves vast amounts of simplification and as discussed in our last post we cannot measure momentum and position simultaneously, creates management fog and confusion. We are not being adaptable and flexible if we have too many targets.

To be fair, in general, Targets are set to be well intentioned. Companies – hopefully – don’t set out to create the jungle in their organisations but far too frequently this happens as competition between units and individuals spirals out of control instead of trying to inspire innovation and healthy competition.   

Targets are in essence a form of extrinsic motivation; however this is exactly the opposite of what you need to develop for long term success. For this you need to develop Intrinsic motivation; the starting point for this begins again with setting and communicating direction and purpose of the company and also ensuring our culture is able to achieve that.  

Just Do A Bit More !?

So what is and how can we create intrinsic motivation. For this we turn our attention to computer games. They start easy and before you get too bored they become just that little bit harder but you keep playing, this is you being intrinsically motivated. If they were too hard at the outset we wouldn’t play them….it’s about gradually increasing the challenge, variety, empowerment, psychological safety to experiment and fail but also being able to do “a little bit more”.  

“Just do a bit more?”. Okay so I sound like your mum asking you to do a bit more homework or eat extra broccoli. But it does work and has been demonstrated in the area of how to get people to do more exercise.

A recent report in the British Journal of Sports medicine has shown that for the vast majority of the populace targets for exercise just don’t work.   So here’s the reason, you’re told to run 5kms but you only manage 4.5km, you have failed to meet your extrinsic target therefore your brain figures out without your help that you are a failure (intrinsic). Same with being told to exercise four times a week, only manage three ! You’re a failure…. give up.  

In actual fact as your usual form of exercise is getting off the sofa to fill the chip bowl and refill your glass with another fine example of Central Otago Pinot Noir actually doing three sessions is pretty significant, even one is pretty cool. The study showed that exercise performance targets only work for High Performance Athletes but since they are so intrinsically driven to win they actually work.  For the rest of us mere mortals “just do a bit more” exercise is the target that makes people actually achieve better health and wellness. 

Don’t forget people are wired for short term reward even though we know the long term might be good for us. This is why strict diets don’t work and we failed with our 5km runs, any target you have has to be transparent and above all understood as to why it is being measured….

Reality Check

In reality we are not going to get rid of targets - some people are addicted to them, so we have to reduce and wean them off if nothing else. We absolutely have to make sure we are measuring the right things and that help us achieve our company purpose and direction. Let’s at least ensure we make them Customer centric, not the “I must contact five customers” or “make 10 cold calls” type but the fluffier, qualitative “is everything good” “can we do anything else to help you” targets. After all isn’t that the purpose of being in business, shouldn’t we be pleasing our customers and our employees. 

We need to measure useful things – only customers and employees can judge whether they have been dealt with effectively and efficiently. Why not have a conversation with employees about how they’d like to be accountable for performance?

Here’s some other thoughts. Why not have a target responded to negative things. Which hospital is safer, the one that reports lots of near misses or errors or the one that doesn’t. One is either really clumsy and the other exceptional or one is transparent and open to learning and improvement and the other smoothers anything negative in a culture of fear?

How about instigating a small monthly prize for the most accident and near miss reports, turn it into a learning exercise. After a few silly months it settles down and builds a culture of transparency, reporting and learning.  

So here are some tips:

• Make them more short term
• Make them intrinsic…encourage accomplishment and mastery, make people feel valued – a “thank you” is quite amazing,
• Ensure resources are in place to meet them
• Make targets relevant and transparent. Get employees engaged as to how they want to be “accountable”
• Don’t tie them to long term compensation
• Make them unit or team centric rather than individual
• Have a positive culture before you have targets, so they are viewed constructively
• Ensure your customer is front and centre of the process
• Ensure they are relevant to the purpose and direction of your business

The ability to respond to changing circumstances within a company, a clear direction and purpose and a correct culture will see underlying performance rise without a ridiculous level of targets that aren’t doing anything.

Just do a little bit more…..Adopting this you just may catch your roadrunner….I guess they taste like chicken.