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On the Nestle example: One of the biggest constraints in a business is employee focus. Theoretically, you want to maximize future free cash flow. Unfortunate
by wtvanhest 9y ago
On the Nestle example:
One of the biggest constraints in a business is employee focus. Theoretically, you want to maximize future free cash flow. Unfortunately, there are many inputs: rev growth, solid roi on capex, lowering non-essential costs, employee retention, unit costs, brand etc.
Management teams have to distill the message about what they want in a way that many employees can get behind. Nestle was too focused on unit costs, and should have likely added one more constraint like rev growth, but if they added too many, employees as a group would lose focus.
Most businesses have 2-3 essential business drivers. 1 is never enough, 4+ is likely too many to focus on.
- pasta 9y agoI think Alibaba has a nice priority list: Customers, employees, shareholders.
- triplesec 9y agoThat looks on the face of it nice and worthy but it's rather be meaningless because those are not actual goals. Those words are way too loose for that. The other thing about it is it smells like a marketing phrase rather than anything truthful
- pasta 9y agoWhy would they be meaningless? You can use this list in any way. For example when you want to increase your product price. This is fine when it is good for the customer (because they will get a better product). But it is not fine when you do it for the shareholders alone. They are also goals because the ultimate goal is to please the customer, then the employee and than the shareholder. I think they are great guidelines.
- slii 9y agoDoes that also mean it is always a great idea to decrease your product price? In the consulting company where I work at employees come before customers. Employees are the single most important asset and much harder to replace than customers.
- wtvanhest 9y agoWhy not make everything free? That would benefit the customer dramatically. The reality is that 'customer first' is a good idea, but not actionable.
- cpeterso 9y agoGoogle uses a hierarchical system for quarterly and annual goals called OKRs (Objectives and Key Results) that tries to align goals for the company, orgs, teams, and individuals. http://www.businessinsider.com/googles-ranking-system-okr-2014-1 http://www.businessinsider.com/googles-ranking-system-okr-20...
- matrixagent 9y agoAnyone else using that? We use it at my company with very varying levels of success.
- groby_b 9y agoA lot of places. It dates back to (IIRC) Intel in the late 70s. Doerr brought the idea to Google.
- matrixagent 9y agoOh, I hadn't heard it was that old. Fascinating, so far I've always thought it was something that came directly out of Google itself.
- groby_b 9y agoGoogle has a good PR department? ;)
- wtvanhest 9y agoAlmost all big companies. It was done when I worked at Intel 2010sh
- matrixagent 9y agoInteresting. How did you like it? Does every person at Intel have their own quarterly OKR list, or do they stop propagating down at some level? Were they always on time? How did lower levels give input with regard to what they thought were important goals? Or did really everything come top-down?