Does Goal Setting Work?

10X Business Letter
San Diego, Ca
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Dear 10X Business Builder,

I’m curious, how are you doing with your New Year’s resolutions you set for yourself this year? To me a new year’s resolution is just another form of a goal.

Roberto and I recently posted our goal setting worksheet for you to use to set your goals. When I shared that blog post to my personal Facebook wall, directly underneath my post was a post from a friend and client, who had posted a blog post entitled, Don’t Set Goals for the NY!

He’s an intelligent person and a great writer so I was curious what he had to say on the subject. His point of view is that we get so caught up in creating goals that we never actually take the action to fulfill them. My interpretation of his article was that for many, the act of setting goals becomes the goal itself. Once you have set the goal, you feel you have made progress and therefore never completely follow through. He even cited some research that backs up his point that goals can actually be harmful.

It really sparked my curiosity – does goal setting work?

Let’s take a look….

For decades individuals, corporations and gurus have hailed that goal setting is the foundation for success.

It became an institutionalized movement.

The leaders of this movement are two renowned organizational psychology experts, Edwin Locke of the University of Maryland and Gary Latham of the University of Toronto, who wrote: “So long as a person is committed to the goal, has the requisite ability to attain it and does not have conflicting goals, there is a positive, linear relationship between goal difficulty and task performance.”

And I believed them.

All my mentors set goals. Tony Robbins, Chet Holmes, my grandfather… and year after year I set goals. Some years I reached my goals, other years, I didn’t.

Yet new research by Wharton professor Maurice Schweitzer and three colleagues documents how corporate goal setting can cause more harm than good. The paper, titled “Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting,” was co-authored by Lisa D. Ordóñez from the Eller College of Management (my alma mater), University of Arizona; Adam D. Galinsky of the Kellogg School of Management at Northwestern University and Max H. Bazerman from the Harvard Business School.

In a nutshell here is where they stand: “We take a strong stand in this article, because we are pushing against the pervasive use of goal setting in practice and a very large body of literature that has endorsed goal setting. We argue that managers and scholars have grown complacent in their endorsement of goal setting … often [neglecting] the harmful effects,” Schweitzer says. “We argue that goal setting is wildly over-prescribed.”

They go on to cite numerous cases where corporations had actually done more harm than good in the quest to achieve their goals.

For instance, the paper talks about how in the 1990’s Sears Roebuck had set a goal of $147/hr for their auto repair business. The report claims this goal caused the staff to overcharge and charge for work that wasn’t necessary.

Another case cited was that of Enron. Ackman (2002) compares Enron’s incentive system to “paying a salesman a commission based on the volume of sales [sales goal] and letting him set the price of goods sold.”

And lastly they used Ford Motor company as a case study. In the late 1960s, the Ford Motor Company was losing market share to foreign competitors that were selling small, fuel-efficient cars. CEO Lee Iacocca announced the specific, challenging goal of producing a new car that would be “under 2000 pounds and under $2,000” and would be available for purchase in 1970. Due to deadlines and schedules, senior managers signed off on underperforming safety performance, specifically a faulty design for the gas tank that later cost the company millions in lawsuits.

Ok, enough with the academic dribble…

As I read the reports I could feel the blood rushing to my brain and could feel my blood pressure building.

I could just imagine these researchers sitting around at table discussing possible topics that they could do their thesis on…

And one of them saying, “hey, let’s do a research paper dispelling goal setting and it’s efficacy.”

First of all, the majority of these case studies are at the corporate level, for international conglomerates.

The great majority of the goals you will be setting are for your personal lives or for your personal income from a small business.

What I find quite amusing is basically what these academics have built is a case that goals DO work. It created individuals to have desire and motivation to achieve their outcomes. And depending on your definition of goals – that’s exactly what they are supposed to do.

To me, the purpose of a goal is to narrow your focus, to help you take the time to figure out what you really want and should be spending your time on. It allows you to make decisions on whether you should or should not spend your most valuable resource – time – on a given task. By thinking through your goals it allows to create an action plan and causes you to plan out your time.

A goal should provide incentive and motivation for you to move closer to what you really want [or your boss wants]. When they say, Ford’s aggressive goal setting cost the company millions in lawsuits, I say it caused innovation.

I was just watching a special on a company called Ideo. The founder is one of the original advocates of ‘design thinking’. They worked closely with Steve Jobs for 30 years and designed many components for Apple. He explained how Steve Job’s came to him one day and said, “design me the best mouse possible for $17, and I need it by next production cycle”. The result: the precursor to Apples current mouse. What’s the difference between Lee Iacocca telling his senior management that I want a lightweight, fuel efficient car for under $2000 and this? For every Ford, there are 5 Ideo’s.

When they say that Sear’s aggressive goal caused unethical sales practices, I say they created performance motivation that probably wouldn’t have been there had no goals been set in place. Are the goals to blame for lack of personal integrity? If someone robs a bank to support a fund raising effort… do we say funding is flawed?

In each and every case study they were blaming ‘goals’ for the negative result. To me it was more likely a case of poor hiring practices, of poor strategy or of having a inappropriate goal– not the actual act of having goals.

That is why we designed our goal setting worksheet the way we did. How you set your goals effects whether or not you will accomplish them.

Let’s ask the same question another way, what would it be like if none of these companies set goals? What would happen to innovation, stock holder’s value? With no goals how could you have outcomes?

What could be the cost or consequence of not setting goals in your personal life?

According to the University of Scranton. Journal of Clinical Psychology
Published: 12.13.2012, people who explicitly make resolutions are 10 times more likely to attain their goals than people who don’t explicitly make resolutions.

If you don’t set goals and write them down, you’re more likely to not have a clear plan and you’re more likely to be distracted. Isn’t that why we write stuff in our calendars to help remind us of what we have to do?

According to this research the number one resolution is to lose weight. If I’m interpreting what my friend was saying in his blog post, a person who just ‘does’ it (“lives a healthy life style”) is going to be more successful than the person who creates a goal and writes it down.

But how can you just do something without knowing what you are trying to do? Take writing a book for example. You can’t write a book without creating a desired outcome/goal of writing a book. So even though you may not have written your goal down, you still had to ‘set it’. [on a side note: I have asked many authors how they write their books and no one of them has said they just sit down and write it. They research, they outline and then they write.]

And I’m further evidence that is not always true.

I have ‘been doing it’ for years. I worked out consistently most of the time. I was conscious of my diet and yet I didn’t have the body composition I truly wanted. It wasn’t until I actually sat down and asked myself, “what exactly am I trying to accomplish?” Once I did that, I created a 90 day plan. It consisted of what to eat for 90 days and what do while in the gym for 90 days. The results were almost unbelievable. What was the difference from all the previous times that I had been working out and eating?… I believe it was the plan that I created and the commitment to NOT deviate from it. I knew what I needed to accomplish each and every waking moment and I didn’t let other things distract me from it. That is the power of good goal setting.

Once you know exactly what you want in each area of your life and commit to that outcome it will be very hard for you to get distracted or derailed.

What do you think? Do goals work? Do you set goals?

[Ed. Note: Jeff Paro is the co-editor of the “The 10X Business Letter” and the co-creator of “Video Marketing Content” and “The Influencer’s Playbook“.]