By Alexander Vuylsteke for Enlivening Edge Magazine
Targets might not fit well in an organization built on principles of purpose, self-management and wholeness. However, it’s important to replace them with something more meaningful instead of doing away with numbers altogether.
Our 15-person team at Yools builds websites for small businesses in Belgium. We have been successful after entering this industry four years ago by focusing on operational excellence. Individual targets used to be an important part of this. Although we always envisioned a more authentic organizational model, we applied traditional management practices most of the time. We achieved great results, but at some point we became very uncomfortable with top-down targets and the unsustainable pressure that came with it. So we started looking for other ways.
The problem with targets
As soon as we became aware that we deeply care about purpose, self-management and wholeness, we couldn’t live with traditional targets any longer, especially not if they are imposed on you by someone else, and calculated as an arbitrary number. We saw three problems with targets:
Targets are frustrating. A target is usually defined in terms of relevant output. For example, as a sales rep at Yools you were supposed to commit to acquiring 15 new customers per month and if you were not able to achieve it, you were considered under-performing. However, you can’t commit to such target because there are often unforeseeable obstacles outside your control which prevent you from achieving the target. For instance, the summer holidays can result in fewer inquiries from potential customers.
Targets don’t motivate. Targets are used to control someone else’s performance. However, good performance is a result of motivation; talking about 15 new customers per month all the time does not create long-lasting motivation. At most, targets create a short-term boost through gamification or pressure.
Targets distract from purpose. Targets made people focus on the wrong thing: making the numbers instead of working towards our purpose—democratizing webdesign. (Purpose does help create long-lasting motivation). Consequently, what has to be done is not always done.
Not all numbers are bad
At first, we misunderstood the precise problem with targets. Consequently, our aversion to targets expanded into an aversion to numbers in general. We stopped looking at most numbers altogether, even though they were still accessible somewhere (number of sales per sales rep and of the team as a whole, number of inquiries resulting in a quote, etc.). We simply did our jobs, not assessing where we ended up.
It didn’t take long before someone did take a look at the numbers and realized that financially we were doing much worse than we assumed.
We learned that we have to look at least at aggregate team sales and expenses, and some early predictors of these results (such as number of information inquiries). This way, we see it coming when we’re going bankrupt. Such numbers also help to analyze and improve our performance.
Even at the individual level, we want to see what numbers are resulting from our efforts, without necessarily attaching a target to it. Our web-designers compare the number of websites they finished this week with last week, compare with each other, and explore why they are getting different results, etc.
Bottom-up plans as an alternative
To solve our complicated relationship with numbers, we decided to keep the best and get rid of the rest. Bottom-up plans were born. What’s the difference between a bottom-up plan (BUP) and a target? We define a BUP as follows:
A BUP is bottom-up. It is based on each team member’s estimation of what she thinks she can realistically do, and it serves as tool to align the work planning of different team members. For example, if sales expects to acquire 50 new customers next month, then web-design should foresee sufficient capacity to build those 50 websites. Once the BUP is there, it’s simply a matter of executing it.
A BUP is an expectation. It is something you expect or hope to do, not something you commit to do (since there can be problematic external circumstances). There are no consequences when an individual or team is not able to implement the BUP. The BUP is simply revised. For example, if sales acquires only 40 new customers, web-designers will adjust their planning and spend more time on other projects (such as our own marketing).
A BUP is team-centered. It prioritizes the team performance over individual performance. The team’s aggregate numbers are evaluated on a weekly or daily basis, while the individual contributions are only assessed if the team as a whole is not implementing the BUP accurately.
A BUP is focused on the daily activities. A sale rep’s daily focus is not on the “big number 50” but on the next (potential) customer that she is talking to and how she deals with this person in alignment with our purpose & values. We believe that good performance follows automatically from that.
Wait, but… how do you control performance?
Teams create their own bottom-up plan. How do we ensure that the company performs?
First, we believe that good performance follows from being purpose-driven. Everyone at Yools is intrinsically motivated and determined to make the best of his or her life. Yools should create the right environment for people to flourish, and the rest will follow.
We don’t set a minimum profitability target. Very often, this becomes a maximum. By setting no profitability target, the team will focus on the right thing: our purpose. Whatever is the right amount of profit will follow from that.
Second, we build in a safety procedure in case we risk going bankrupt. Everyone at Yools receives a monthly report about the financial health of each swarm as a whole. (A “swarm” is a highly-independent mini-business of about 10 people, named in line with our bee brand). When a swarm appears to be loss-making at the end of a quarter, someone at Yools triggers a performance emergency procedure. The swarm is then asked to propose convincing measures to improve the performance during the next quarter, so that the entire company doesn’t go down with it.
You might be concerned that this break-even line will become the new target and the new maximum, because there is no consequence whatsoever as long as a swarm reaches this line. Honestly, it is too soon to provide evidence that disproves this. However, we are confident that this will not happen. The entire team wants to make a profit so that we can invest in growth and make a bigger impact towards our purpose. Our team is not just here to count the hours and go home. We are here for a purpose and we choose how we define our roles. Why wouldn’t we make every hour at Yools matter?
Third, we still evaluated individual performance, but not constantly. Instead of looking at someone’s performance vs. the target every week (or even every day), we evaluate each other’s performance less frequently, and not only by looking at the individual numbers, but also by assessing someone’s fit with our values. If a web-designer is not performing well and there is no improvement, the other members in his swarm will let this person go in order to keep the swarm financially healthy (so that the performance emergency procedure is not triggered).
There is no large body of research on alternative, more authentic organizations yet. We don’t really know for sure what works and what doesn’t; we rely mostly on our values, our intuition, other pioneering businesses, and our own preliminary experiments.
If you have been doing your own experimentation with more authentic alternatives for targets, please be invited to share your experiences in the comments! Alexander Vuylsteke is an entrepreneur passionate about building authentic and thriving next-stage organizations. At Yools, he’s currently creating a company where he would love to work as an “employee” himself. He’s also a Global Shaper in the Brussels hub. Before, he was consultant at Bain & Company and business developer at the social investing firm Incofin. One day, he hopes to create a next-stage educational institution. Profile: Linkedin. Email: [email protected]