The Digital Leader Newsletter — Strategies and Techniques for Change Agents, Strategists, and Innovators.
If you don't set goals, you'll never reach them. Or like they say in golf, if you aim for nothing, you'll hit it every time — Yogi Berra1
Happy new year! The start of the new year presents an opportunity to reflect on the past year and set significant goals, plans, and priorities for the coming year.
I work with a number of teams on the broad topic of goals — setting goals, working to make progress on goals, meeting goals, learning, rinse and repeat. Here’s what I've learned from some of my sources of inspiration.
The Fourteenth LP
The fourteenth leadership principle at Amazon is “Deliver Results”
Leaders focus on the key inputs for their business and deliver them with the right quality and in a timely fashion. Despite setbacks, they rise to the occasion and never settle.
At the end of the day, delivering results matters. This simple fact, however, belies a wildly complex reality. These delivered results are neither arbitrary nor do they overemphasize revenue. Carefully crafted and thoroughly debated, a set of “controllable inputs” clearly ties the individual’s goals to those of the team, the business unit, the executive team, and the organization as a whole. Here are four subtle but critical lessons to help build a culture of accountability and pioneering based on Amazon’s mission to consistently “deliver results.”
The Digital Leader Newsletter -- By John Rossman is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
1. Focus on the Inputs
Ever struggled to achieve goals or felt that your goals were overly ambitious? Amazon has a deep belief in setting goals that stretch teams and individuals but defining them in a way that puts the team in control of hitting these lofty goals. This empowers teams and stretches them to great achievements. Of course, many of the goals have a direct customer experience component, and rarely are they revenue-oriented.
Senior leaders that are new to Amazon are often surprised by how little time we spend discussing actual financial results or debating projected financial outputs,” wrote Bezos. “To be clear, we take these financial outputs seriously, but we believe that focusing our energy on the controllable inputs to our business is the most effective way to maximize financial outputs over time.
Amazon’s annual goal-setting and initiative review process hasn’t changed in many years. It begins in the fall and concludes early in the new year following the peak holiday quarter. These “lengthy, spirited, and detail-oriented” goal-setting sessions are designed to raise the bar on customer experience, operations and initiatives it will proceed on. In 2010, for example, the sessions produced 452 detailed goals, each with its own set of owners, deliverables, and targeted completion dates. These aren’t the only goals the teams set for themselves, but they are the ones that are most important to monitor. None of these goals are “low-hanging fruit.” Many can’t be achieved without assistance. What’s more, senior leadership reviews the status of each goal several times during the year, adding, removing, and modifying them as necessary. “Taken as a whole, the set of goals is indicative of our fundamental approach,” explains Bezos. “Start with customers and work backwards. Listen to customers, but don’t just listen to customers—also invent on their behalf. We can’t assure you that we’ll meet all of this year’s goals. We haven’t in past years. However, we can assure you that we’ll continue to obsess over customers. We have strong conviction that that approach—in the long term—is every bit as good for owners as it is for customers.”2
2. Intensely Debate and Coordinate
I recently interviewed a fifteen-year Amazon leader about the goal-setting process at Amazon. Each annual goal required four multi-hour reviews before they could be submitted. The debate is a combination of clearly understanding what they are trying to achieve, understanding the “controllable input” to achieve that goal, and then setting a stretch but achievable target. These goals never have an “earning per share” and often don’t have other output financial metrics attached to them. Leaders who think like owners are crucial to this process because you don’t want people who prioritize short-term results at the expense of long-term enterprise value. When organizations prioritize output financial goals, they often sacrifice the big picture. As a result, it’s important to debate and coordinate annual goals more intensely than ever before.
3. Good Teams are Gritty
At Amazon, a stretch objective is called a “BHAG,” or “Big, Hairy, Audacious Goal.” Amazon empowers its teams with BHAGS. By removing all excuses as a fallback position, Amazon allows high-performing teams to overachieve and underperforming teams to fail, inevitably improving their performance. When the goals are clear, achievable, and within your control, good teams double-down, recommit, and overcome—regardless of challenges and obstacles. They have grit.
4. The Closed-Loop Management Process
Once you focus on controllable inputs, create SMART goals (Specific, Measurable, Achievable, Relevant, Time-bound), and set stretch initiatives for individuals and goals, you must commit to a closed-loop performance management approach. Amazon has had several different approaches to the performance review, including a system providing employees daily feedback from their peers. However, Amazon’s performance management philosophy is rooted in three principles:
1) A BIG difference exists between “A” and “B” performers. As a result, “A” performers receive a majority of the company’s compensation rewards, primarily in the form of stock.
2) Promotions are heavily scrutinized. They require multi-page written documents with hard evidence rationalizing the promotion. They must be debated and read all the way up the chain of command to the CEO. These promotion documents can also be audited to ensure claims are not inflated. Finally, every year, Amazon terminates five to eight percent of the organization for not reaching the required standards of excellence.
3) Live the leadership principles. Annual reviews factor in how well an employee “has lived up to the leadership principles.” This review metric requires employees to account for “how” they reached their goals while perpetuating and reinforcing the leadership principles as the company’s North Star. If you violate the leadership principles by failing to obsess over the customer, communicating vaguely, or failing to hire or develop a first-rate team, or if you allow low standards, ignore details, or fail to “think big,” you won’t deliver the right results.
There is tremendous pressure to deliver results at Amazon. Being a pioneer doesn’t come easy. Leaders have to get results the right way, but they still get results.
The GOAT on Goals
Since it’s January and Tom Brady is having his predictable and consistently great season and team results, I asked myself “what does Tom Brady say about setting goals and plans?” It won’t surprise anyone, that he sets stretch goals. They are specific, measurable, vivid, and most important — he ties his everyday priorities to the goal. He understands the “inputs” to hopefully, with no guarantees, have the opportunity to achieve the “outputs”. These are everyday choices and sacrifices.
Here’s a great story written by Jeff Howe from The Athletic bringing this home
Julian Edelman had never seen the board. During the 2013 offseason, he uncovered Tom Brady’s greatest source of motivation. The teammates had been working out together in Los Angeles when Edelman saw a prominently displayed whiteboard in Brady’s home gym, scripted with a sole objective.
“Super Bowl XLVIII: Feb. 2, 2014, MetLife Stadium.”
At the time, Brady had three Super Bowl rings — modest, by his standard. That’s because Brady’s standard, as Edelman would find out in that moment, was well beyond the scope of anything he could imagine.
“Bro, how crazy is it that you’re going after Montana?” Edelman asked Brady.
“I ain’t going for Montana,” Brady responded with an unmistakable air of confidence. “I’m going for Jordan.”
For as long as anyone can remember, Brady has kept a Super Bowl countdown clock in each of his home gyms — Brookline, Mass., L.A. and now Tampa — as a way to remind himself of his eternal sacrifice. It’s been said the boards have been updated as early as the day after each year’s Super Bowl3
And Finally — From the Master Jedi
My personal fault relative to goal setting is not “thinking big”. This is the time and place to set big goals and start with belief.
“[Luke:] I can’t believe it. [Yoda:] That is why you fail!” – Yoda
I encourage you to think big, have belief, and commit to the everyday work and choices required to achieve stretch goals.
Onward to a great 2022!
—Subscribe to The Digital Leader Newsletter for Free!
About The Digital Leader Newsletter
This is a newsletter for change agents, strategists, and innovators. The Digital Leader Newsletter is a weekly coaching session focusing on customer-centricity, innovation, and strategy. We deliver practical theory, examples, tools, and techniques to help you build better strategies, better plans, better solutions — but most of all, to think and communicate better.
From “What Time is It? You Mean Now? Advice for Life from the Zennest Master of Them All”