Quarterly goals are wishful thinking until they pass two gates: people and budget

The steps go like this: retrospectives of previous periods, a summary of how far existing goals were achieved, a financial summary with the person responsible for finance, a strategy update, annual goals with hypotheses, quarterly goals with hypotheses, a capacity check, a reality check against the budget, communication, building teams and contracting them around the goals, and finally work with the teams, which means putting the first weeks into the calendar. The quarter is a conventional cycle here. With seasonality, or with software release cycles, it may not fit at all, and then forcing the company into quarters just because that is what the textbook says is the facilitator's mistake, not the company's.

The first four steps are a study of where things stand now. Each working team does its own retrospective, and with five quarterly goals and five teams that means five conversations about where each of them ends up compared with the hypothesis from the start of the quarter. The conclusions from all the teams then go into one document, and you look for repetitions in them, because what comes up in several groups at once is usually a systemic problem of the company, not a problem of one team. At the same time we read off the hard values of the metrics and write them down in black and white. A situation in which one board member says we achieved the goal and another says we didn't is not a dispute about assessment. It is proof that the metrics were not set at the start of the period. Then comes the financial summary, and only with that input do we update the strategy, over several sessions with a data-gathering stage between them, bringing in directors and subject-matter experts. Not in one workshop lasting a dozen or so hours, after which nobody remembers what was agreed in the morning.

Only then do we write the goals, and this is where the part companies skip most often begins. At this stage a written quarterly goal is wishful thinking, and you can check it before the quarter starts, not during it. The first gate is capacity: whom we need, with what skills, and who the bottleneck is. If one specialist is involved in all four goals, and each of them is important, you already know today that those goals won't be delivered. The calculation also has to include the day-to-day work you know about in advance: onboarding a big new client that will take up half the company for the whole of January wrecks a neatly planned quarter, and it doesn't follow from any strategy. We do this with a dependency table: items to deliver in the rows, people and teams in the columns, conflicts in red, resolved on the spot during the session. With most clients this falls in December. The second gate is the budget, and here the exchange goes both ways, because growth, investment, entering new markets and recruitment all have to add up in the numbers, and sometimes it is the budget that changes the goals, because sales have to catch up first.

The process is closed by two things that look soft but decide the rest of the year. The first is communication: one page of strategy plus a short recording, two minutes at most, of the board explaining the company's direction as if to one of its directors. The recording stays in a shared space and comes back later when the quarter is refreshed and when new leaders are onboarded. The second is contracting the teams, which doesn't mean handing a finished goal down the line. It is a negotiation: the team gets the context and the reason the direction was chosen, checks the metrics, and has the right to say the board has lost touch. The value of the method, by the way, doesn't lie in the goals themselves but in the conversation that produces them, because operations, finance, marketing, production and sales sit at one table, so contradictions in the strategy come out right then, not halfway through the year.