Tips while setting the targets

I used to work with a large consulting firm before, and it was a tradition to review the status reports of all the deliveries with the "account manager" every two weeks. 

The delivery leads were grilled during the review process on various targets including the Planned vs. actual Velocities and estimations. A happy face at the end of the meeting would imply someone has met their target numbers. 

 The intent of this post is not to discuss the review meetings but more about the "targets." The managers are so obsessed with the numbers that they have forgotten to think about the process, knowledge and wastes in the system. You might be wondering where did this disease of "Management by numbers" started.

Based on my research, it was Alfred Sloan who introduced the phrase "management by numbers."  During his initial days at GM, he couldn't get the hang of the different departments making profits. So, he introduced this cost accounting method by setting the targets. 

During Alfred's tenure, promotion and demotion based entirely on meeting his targets. I can imagine a meeting with Sloan would be similar to the "Status Review" meeting shared before. Even though Sloan's method of setting and verifying the target worked to an extent, it created appalling behavior in the system. 

To achieve the targets, the managers/employees started short circuiting the process, sacrificing the quality and mostly gaming the system. Since Sloan was very clear that managers are only responsible for numbers and need not understand the operations, none of the managers looked under the hood to see what was happening. 

I also believe that "Management by numbers" lead to the existing hierarchical structure as each layer wanted something to protect themselves from the upper layers. Of course, "Tayloristic" thinking has made this structure even worse.  

Even though I am critiquing the concept of "targets," it is not the targets which are bad, but the "bad targets" which creates the sub-optimisation in the system. 

There are a couple of tips to remember while working with the targets:

1. Targets should be set keeping the systems' capability in mind. For ex: if the system doesn't have the ability, then setting a higher target pushes the system more towards gaming. 
2.  It should be co-created with the actors in the system 
3. The targets should enable the system to remove the waste and continuously improve by gaining more knowledge. 
4. Avoid the targets based on "yesterday's weather." It is quite possible that system from yesterday might be carrying too much waste. Setting a future target based on yesterday is like encouraging the system to carry the waste with no continuous improvement. One should be cautious about this. 

Before I end this post, let me ask you this, do you targets at work? What are some of the targets that you are currently working towards ?