Every company sets up targets. But whether it achieves it or not often remains just a paper exercise. Allow me to share my views on how to set targets firstplace.
That, to a large extent, would determine if it’s up to your company to realize them or not.
Spare falling in love with Excel sheets
Admit it: Often the senior leadership team of any company get too much into what’s being shown by excel sheets’ data. They are only too happy with inserting hi-end formulae and feel content with projecting growth of numbers in a continuous pattern. They fail to realize that actual growth can almost always be in a random pattern rather than in a linear curve. This leads to unrealistic expectations.
Why not infuse a bit of realism and then chart your company’s growth graph? For instance, instead of randomly assuming a 10% jump in revenues for the next FY, take into account that the investments done this year might not reach their gestation till the next three years?
Charting Irregular Growth
It’s better to inculcate a logistic growth model while making assumptions – this makes it possible to infuse non-continuous growth parameters by using three factors: Your revenue goal; initial-year revenue assumption; and the inflection point, which is a period you feel would be required to get to the half-way mark of your desired revenue.
Such an exercise might expose that the cumulative revenue projection you have so beautifully been depicting hasn’t taken into account the time factor dynamics.
Transcending to a Major Launch
Often the management doesn’t understand that if spearheading a major growth project the investment pattern would be nonlinear. Majority of resource would be required at the early stages. For instance, if a company looks to achieve serious growth in 2017, major chunk of investments would be required possibly in 2014-15. Also, bear in mind that not all projects would succeed.
At the same time, you might need to bring in a new team, which possesses better operational expertise than your regular start-up team.
How to imbibe a disciplined growth projection?
Firstly, ascertain your growth gap scenario. Rather than focusing entirely on what your investors and employees feel on the growth trajectory pay attention to your growth trends of past few years and compare all factors with those where you feel your strategy needs to go at a future point of time. In all likelihood you will find gaps.