SMART goals for your business, with examples

"Grow revenue." "Make customers happier." "Work more efficiently." Goals like these turn up in many annual plans, and they have one thing in common: at the end of the year anyone can claim they were met, or that they were not. The salesperson sees a few big orders, the controller sees a shrinking margin, the owner mainly sees that it was a busy year. Nobody is wrong, because the goal was never pinned down.

SMART goals prevent that. A goal that is specific, measurable, achievable, relevant and time-bound leaves no room for argument afterwards. More importantly, it makes clear beforehand how much effort will be needed.

What are SMART goals?

The acronym goes back to an article by George Doran in the journal Management Review in 1981. Doran wrote about management goals and objectives, so SMART goals and SMART objectives mean the same thing. Since then the letters have been interpreted in several ways. The version below is the most common in English, with the main alternatives alongside, including the words Doran himself used.

Which version you choose matters little, as long as everyone in the business uses the same one. It is worth adding acceptance as an extra test, though: do the people who have to deliver the goal actually back it? The research on goal setting further down shows why that matters. And keep relevance in view: a measurable goal that leads nowhere only absorbs attention.

Writing a SMART goal in five steps

1. 01

   Start with what you want to change

   Not with the number, but with the situation you want to reach. "Our customers reorder more often" is a better starting point than "revenue has to go up". The number follows in the next step.

2. 02

   Choose the measure and the starting value

   Which number shows that the situation is changing, and where does it stand today? Without a starting value, every target is a guess. Pick a measure that your bookkeeping already tracks or can easily track.

3. 03

   Set the ambition with an outside view

   How far can you go? Look at your own track record and at comparable businesses. The profit and cost benchmark shows whether a margin target is genuinely ambitious or already achieved across your sector.

4. 04

   Set an end date and checkpoints

   An annual goal without interim readings turns into a surprise in November. Agree which value you expect each month or each quarter, so you can adjust in time.

5. 05

   Give the goal an owner and resources

   One person is responsible, even if several people contribute. And if the goal needs time or money, that goes into the budget. A goal without resources is a wish.

Examples of SMART goals for business

Fictitious Firmfocus examples. The values are illustrative.

Each example has the same four building blocks: a measure, a starting value, a target value and a date. Often it also says how the goal will be reached. Strictly speaking that does not belong in the goal, but it helps you judge whether the goal is achievable.

What research says about goals

The psychologists Edwin Locke and Gary Latham brought decades of goal-setting research together in a review article in American Psychologist. Their finding is clear: specific, difficult goals consistently lead to better performance than an appeal to "do your best". That conclusion rests on research covering more than 100 different tasks and more than 40,000 participants (source: Locke and Latham, September 2002). Three conditions make the difference:

• Commitment: the link between goal and performance is strongest when people are committed to the goal. So let the people who will do the work have a say in the target value.
• Feedback: goals combined with feedback on progress work better than goals alone. A goal without interim readings misses that spur.
• Interim goals for complex tasks: for new and complicated work, short-term goals help, because people first have to find the right approach.

There is a flip side. Researchers from Harvard Business School, among others, have warned that goals can become too narrow: everything outside the goal gets less attention, the temptation to dress up the figures grows and intrinsic motivation can suffer. So never tie a bonus to a single number, and always set a quality or margin goal alongside a revenue goal.

Where SMART falls short

• Measurable is not the same as important: what is easy to measure soon gets too much weight. Start with what matters and then look for a measure.
• Achievable can hold you back: if you only set goals you are sure to reach, you miss the breakthrough. For deliberately ambitious goals, OKRs are a better fit, because nobody expects you to hit all of them.
• Too many goals: twelve SMART goals mean twelve claims on the same attention. Three to five goals per year or per department is enough for most businesses.
• A goal is not a strategy: "revenue grows by a fifth" says nothing about the route. Make the choice first, then set the goal; see good strategy.
• One template for everything: Bjerke and Renger pointed out that context determines how the criteria apply. A customer satisfaction goal calls for a different kind of measurement from a margin goal.

From SMART goal to annual plan and dashboard

A SMART goal does not stand on its own. It comes out of the strategy, is translated into actions and returns in your meetings. It helps to keep three terms apart.

Fictitious Firmfocus example.

The goals come together in the annual plan or an OGSM, the KPIs in a KPI dashboard and the discussion in the monthly management report. That keeps the goal turning in the PDCA cycle.

SMEs and large organisations

SMART goals are where the planning and control cycle begins: without a measurable goal, there is nothing to compare or adjust later on.