If some goals tell you little or nothing about what strategies to pursue, other goals effectively tell you too much. This happens when goals are expressed in terms of metrics, for example, to achieve a certain size, market share, growth rate, margin, or rate of return. Where do such goals come from? In the end, they are arbitrary, no matter how much they might be informed by benchmarking or past performance. And they have a profound effect on the direction your strategies take.
For example, growth-oriented goals drive companies to chase high-growth markets even if they haven’t earned a right to win there. Companies with profit-oriented goals inadvertently underinvest in the capabilities that make them special — they cut costs to increase margin without regard to the effect on their capabilities, and they chase high-margin businesses whether they leverage their capabilities or not. Market share goals create a static mind-set of the market, thus causing companies to miss opportunities to disrupt and to react too slowly to disruptive forces. Some companies try to fix this problem by having a “balanced scorecard” of growth, profit, market share, and other such measures, but that just gives them a richer mix of the arbitrary biases these measures create when they come before strategy. Other companies try to fix this second problem by adopting goals that are broad enough to minimize arbitrary effects on the direction of their strategies, but that just takes us back to the first problem described above.
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