If you've read many business how-to articles, you've read about the need to set targets and objectives. Business-speak sometimes makes the difference between target and objective unclear, though. If you understand the differences in meaning, you'll find it easier to set and achieve them.
Objectives are big-picture goals such as "increase sales revenue" or "expand into three more states". Targets are precise goals, such as "increase revenue 25%" or "open our first out-of-state branch in Georgia".
One difference between a target and an objective is that targets tend to be precise and quantifiable. Objectives are vaguer than targets; they indicate where you're going but not necessarily how far. Your objective might be to boost sales revenue, while your target might be to boost revenue by 30% over the coming year.
Objective-setting and target-setting are also different. Setting an objective is relatively clear-cut: boost revenue, reduce errors, improve your presence on social media, or reduce workplace accidents. With a given objective, there may be several different targets that meet the objective, such as boosting revenue 10%, 30% or 37.2%.
Picking the right target requires knowing the trade-offs and potential benefits of each alternative. A revenue increase of 30% brings in more money than a 10% increase, but if the added advertising expense and the demands on your sales force to meet a 30% increase are too high, 10% might be a better target.
Suppose your company's mission is to dominate your industry with a line of widgets cheaper and more efficient than any competing widgets. You and your team sit down to plan out the coming year when you release the widgets, including objective and target setting for the year.
Your objective or goal for the year is to launch the widget line and draw customers away from the competition. Your target has to be more specific. It could be that you want 45% of widget users to try your brand or that you want 15% to switch brands permanently.
You may also have other targets or objectives that relate to this one. For example, your objective on the manufacturing end may be to have fewer faulty widgets roll off the assembly line. The target might be to achieve Six Sigma levels of perfection.
Objective-setting and target-setting need to give you a clear direction to move. You may want your business to be more profitable, but that's a vague objective. Increasing revenue, cutting costs or trimming excess management are much more focused, useful objectives.
Your company's mission statement may suggest an objective, but if not, ask some questions.
- What is the problem? If your team is underperforming or competition is siphoning off customers, that's where you need to focus. Maybe there's no problem; you simply have an ambition to be number one in the industry. Define the issue, and you can figure out your objective.
- What does success look like? It could be anything from doubling your revenue to enjoying your workday more.
- What are the consequences of failure?
Once you have a clear understanding of where your dissatisfaction lies, define the objectives that can improve things.
Objectives tell you the direction you're moving in. Targets tell you how far you want to go. Neither one defines how you get there; that's a matter of strategy.
Strategy is the plan for how you're going to achieve your targets and objectives. If your objective is to dominate the market, achieving Six Sigma levels of perfection is one strategy. Possible alternative strategies include an advertising and marketing blitz to convince customers to buy your products or making them cheaper so you can undercut your rivals' prices.