I defined Business Readiness here, but you probably want to know what to do! So,…
In projects and when we build our business plans we use a lot of similar words. Goals, targets, deliverables, KPIs, benefits. And, of course, objectives. But aren’t they all the same thing? Are we splitting hairs when we use them differently?
I believe not. But I am a project manager with a strong background in process and product improvements. So, the question is
Can I show you the value of giving these terms distinct definitions?
It’s all about planning and communication
Let’s say you run a business. You have a mission and a vision. Your business plan makes assumptions about revenue and expenditure. You need to tell your people what they have to do this year. You will set sales targets. And you will budget for operating expenses and capital investments. Believe it or not, you have set an objective.
In this case, you want to be profitable.
Unless, of course, you budget to spend more than you earn, but that isn’t the normal state of affairs...
You have also declared a few KPIs.
In this case, you are focusing on revenue and expenditure. From these KPIs, an accountant will calculate profitability.
You have also set targets.
In this case, you have said exactly how many pounds you want to receive and how many you are willing to spend.
When you deploy this objective to a team or person you use all three and add a date.
If you give your team an objective but miss out KPIs, targets or a date, you are giving them a blank cheque.
Congratulations, you now planned and communicated your objectives.
But your organisation operates in a competitive market. It is dog eat dog out there. You need to invest to stay ahead of the pack. So you set an objective to change.
Now you want ‘to increase profitability’.
TOP TIP: When writing a change objective include the motivator for change. In this example, our objective could be ‘To increase profitability to generate cash for investment’.
Before you get to your KPIs, you need a goal that relates to the Objective
In this case, you will ‘Increase profitability by 30% over last year by year-end’. Your goal is Specific, Measurable, Achievable, Relevant and Timebound. (It is not dissimilar to the deployed objectives we met earlier.) Now we can move onto our KPIs.
In this case, your KPIs match your operational KPIs: revenue, expenditure and profitability. You have also set targets.
TOP TIP: Matching project KPIs to operational KPIs makes measuring and demonstrating success easier and more understandable.
But in this case, your targets are the difference between a baseline and this year’s performance. Say, ‘Increase revenue by 25%’ and ‘Decrease operating costs by 20%’. You now need to think about deliverables.
Another way of putting this is that deliverables are the means to the end. The end being your objective.
In our example:
- You might introduce a Customer Relationship Management (CRM) system to increase revenue.
- You might invest in a new type of widget-maker to cut costs.
A project manager will help you realise these deliverables. AND deliver the benefits in order to achieve your objectives.
If you have several deliverables, then you may seek the help of a Programme manager to make sure your projects work together, minimise costs and maximise benefits.
Featured Image by: Glen Carrie