When You’re Setting Quarterly Goals, Should You Measure Activity Or Results?
Within the Entrepreneurial Operating System, everybody in the organization has what we call "Rocks." These are clear, 90-day priorities designed to keep your team members focused on what’s important.
Rocks are one of the most valuable tools in the EOS process. I encourage my clients to make each one SMART: Specific, Measurable, Achievable, Realistic and Timely.
That being said, it’s not always clear whether you should measure your Rock based on 1) the activity that contributes to its completion or 2) the outcome?
For example, let’s say your leadership team needs to hire a new Sales Manager this quarter. As your team begins to make the Rock SMART, there are two approaches to setting the Rock:
- The activity-based approach
- The outcome-based approach
Let’s examine the difference between the two approaches.
Approach #1: Activity-Based Rocks
If you wanted to create an activity-based Rock for the example above, you’d focus on the activities that will lead to the completion, such as, "Interview three candidates before June 30."
Activity-based rocks would be useful in a situation like this where you might believe that you can’t control the variables of hiring someone for the seat. So you agree to call the Rock "complete" as long as you did the specified work that contributes to the outcome—even if no one got hired.
Approach #2: Outcome-Based Rocks
Other teams prefer to define their Rocks by an outcome.
If it’s critical to your company’s success to hire that Sales Manager as soon as possible, an approach that focuses on the outcome might be more effective. In this case, you wouldn’t call the Rock "done" until you onboard that position.
However, this doesn’t mean your team is naive to variables outside your control. Of course, there are external factors that may make it challenging to find the right person for the right seat. That being said, your team might prefer this approach because it clearly states what must happen this quarter. As a result, the person who owns this Rock will pull out all the stops to get it done.
As a side note, if you fail to complete an outcome-based Rock, you don’t have to beat yourself up for lack of trying. In fact, when it comes to outcome-based Rocks, completion rates often hover at 80% and above. Of course, 100% completion is always the goal. However, 80% completion of your outcome-based goals will still move your business forward.
Which Is the Right Approach?
The short answer is that both activity-based and outcome-based approaches work. There’s no one "right" way to do it.
What’s more important is that your team decides which approach aligns with your priorities and sticks with it. This will simplify your Rock-setting process, allowing your team to move forward in lock step as you accelerate your business.
Need help setting SMART and effective Rocks for you and your team? Just get in touch with me if you’d like to explore this topic further within your organization.