Goal cycles: how do they work?

Lucas Cordeiro

Goal Cycles – People doing high-five

A company’s goal cycle is the time lapse between each goal-setting process from the organizational level – from teams to, in some cases, individuals. Within a cycle, multiple phases take place, such as defining (the beginning of the cycle), executing, checking, and learning. The length of a cycle, or the frequency of a company’s goal process, can vary from monthly in some cases to yearly in others.

In this article, we discuss the factors that must be considered for a company to define the length of its goal cycle, provide an analysis of the pros and cons of shorter and longer cycles, and mention influencing factors – company maturity and industry, for example.

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What is the PDCA methodology?

PDCA is the continuous improvement cycle we should all practice. In it, hypotheses are defined in the Planning stage, tested in the execution period – or Doing stage, have their results evaluated in Checking, and finally, the hypotheses are calibrated to start another cycle in the last stage, Acting.

If we think of the goal cycle illustrated above, a goal-setting cycle is very similar to a PDCA cycle. In it, goals are also defined and need to be met based on hypotheses (action plans). The execution is verified, learnings are developed, and the cycle repeats itself.

So the more cycles the company develops, the more it learns and improves.

What factors influence the definition of the cycle?

Several factors impact your process of defining the ideal goal cycle for your company. Among them, we will discuss three of the most important: the company’s market, the maturity of the business, and the mastery of goal management practices.

Market

It is a fact that virtually all markets have become more unstable in recent decades, due to factors such as globalization, which has opened up many markets to competitors from all over the world, and the acceleration of technological development, with new media, new means of communication, and many new companies that have disrupted the status quo of very old markets such as taxis, hotels, and restaurants. 

In addition, the new coronavirus pandemic that occurred in 2020 made it necessary for companies to adapt by reviewing processes, restructuring their services and products, and searching for better ways to serve – especially in markets heavily affected due to social distancing measures.

However, certain niches can still be categorized as less “edgy” than others, and therefore more predictable in the way they affect companies included in them.

For example, it makes sense to think that the market for manufacturing and selling ketchup is more stable than the market for developing and marketing mobile apps. The manager of the condiment factory has reasonable visibility of what is likely to happen in his market in the next 6 to 12 months, while the manager of the app firm can predict little about what will happen in his market next week.

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The edgier the market, the shorter the cycles should be. After all, the faster the iteration and the PDCA cycle will be. Consequently, the faster the company will be able to react to what is happening in its market. If a game or app company waits 1 year to review its goals, it will probably go bankrupt before the new cycle starts.

Business Maturity

Goals can be used by any person or group of people regardless of size. In other words, goal management is not just something for big companies.

In this sense, it is important to emphasize that what makes a huge difference is not the size of the organization, but the maturity of the business model it proposes, since it mainly affects the ability to clearly see scenarios ahead.

Startups or departments that are doing something for the first time within their organization face more difficulties in analyzing the future. Everything is still very foggy for these groups.

In these situations, it is recommended to set shorter goals and fast iteration and course correction cycles, avoiding unplanned and unstructured goals that risk losing their relevance quickly and demotivating the team in the long run.

Usually, quarterly or even monthly goals will make more sense than biannual, annual, or multi-annual goals.

Mastery of methodologies

Whenever you start with a new methodology, it is not wise to imagine yourself being a ‘black belt’ on day 1, wanting to use it the same way other more experienced groups use it. No one learns to ride a bicycle by riding down steep cliffs.

Therefore, in case your organization does not have a culture of goals and especially of metrics, try to use very short cycles (monthly, bimonthly, or quarterly) to iterate faster, accelerating the organization’s learning through the methodology and consequently increasing the company’s skills in longer-term planning.

Checklist for Goal Cycle Development

As we have seen, some factors must be observed when defining the goal cycle. Below we have put together a checklist of what should be considered by your team:

  • Take into account these three factors in defining which cycle best fits your organization:
  • The edgier your market is, the shorter the cycle should be;
  • The more “immature” your business model, the shorter the cycle should be;
  • The less your company masters the management tools, the shorter the cycle should be;
  • Avoid implementing off-the-shelf models, especially through “blind” benchmarks from companies like Google, Netflix, etc. Each company has its own reality and needs.

In this material, we explained what a goal cycle is and how important it is for the company, and listed some factors that must be observed when deciding on your team’s goals. For this reason, by relying on good planning, your team will certainly be able to enjoy the benefits that this definition brings overall.

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