Musing January 2008

Defining a company’s ambition is a process that has been on business owners/managers agenda ever since business enterprise exists. But the process has taken new scope and urgency amongst Indian SME enterprises; having seen a rocking year 2007 go by, where we saw Sensex grow by 47%; mid-cap and small cap indices grew by 68% and 94% respectively with biggest gainers amongst small and midcap stocks recording growth of over 700%. Now these were unimaginable numbers same time last year. But these numbers are real now!!!

Let’s look at the process of defining ambitions. The first step in the process is defining objectives you want to achieve, sounds easy enough. You simply examine the realities of the situation – the upside and downside risks of the opportunity against the assets in money, time and talent that you must throw behind the opportunity – then take a sound judgment call based on ‘reasonable’ set of objectives.

When I see managers setting ‘reasonable’ and ‘realistic’ objectives for a work process or team or division or company; I begin to wonder whether such managers are in sync with times we are living in – a vibrant, high growth economy. What companies actually require to thrive in today’s bullish climate is seldom anything so ‘reasonable’ or ‘realistic’ as 10% growth. What we actually require is more often something like 50% or 75% improvements.

Defining objectives is one of the tools of management, as everyone knows. In this piece, I am going to highlight that how ‘defining objectives’ can be used as a tool for business transformation. To do this, we have to set goals that repeatedly force us back to square one and back to clean slate. That’s where the most frightening and fundamental questions arise: not just the usual questions about how we can do this process/operation better, but whether we should be doing it at all.. Its only through this radical kind of critique that we can hope to get rid of all the fragmentation, complexity and bureaucracy within our work and management processes. And often the best way to get started on that critique is to define our goals radically – not 20% “better”, but “twice (200%)”

Cost reduction is normally the most favored whipping board for setting objectives. However in my view, to gain and sustain real competitive advantages, cost reduction may be necessary but not sufficient. Moreover, objectives should always be positive and real rather than being negative and illusory. Set yourself truly ambitious goals for reducing your delivery cycles, product development and production times; radically increase the quality and timeliness of your service delivery; get absolutely ruthless about deployment of capital. Define your goals in this way, and the whole company will transform itself in wake of them.

Finally radical transformation through radical goal definition holds out a ‘special’ satisfaction to the business manager who can pull it off. If you can learn to do what other professionals in your industry thought to be impossible, you will literally redefine the industry.