[You need] to write down these behavioral outcomes, [then] translate [them] into objectives. For example, the behavioral outcome "they buy more" for customers is translated into [the objective] "to increase sales." "They buy our high-margin products" is translated into "to increase sales of high-margin products."

Performance Indicators on Objectives

If you're going to establish strategy that is framed by objectives, the objectives need to be quantified. Many organizations develop vague statements of "objectives" that are often described as "motherhood statements" or platitudes. I develop measures based on objectives and, from this working list of measures, distill a shortlist of key performance indicators (KPIs). How to translate objectives into key performance indicators is illustrated by the example of Suncoast Cancer Council (not its real name).

Suncoast Cancer Council was established by one of Australia's state governments to promote cancer care in the community. It promotes cancer prevention, sells cancer prevention products through its 13 retail stores, collects information on cancer cases and fatalities, and reports this data to the government. It has a wide variety of key stakeholders, including the government (its client), supporters, and volunteers. For each of these key stakeholders, the council established behavioral outcomes, a sample of which is shown in exhibit 2, below. One of the outcomes was for the government to provide grants and contracts. In the case of supporters, one of the behavioral outcomes was to provide funds. With volunteers, one of the outcomes was to provide their time.

Exhibit 2 shows how each behavioral outcome has been converted into an objective. For example, the behavioral outcome "provide grants and contracts" for the government has been converted into the objective "to increase funds from government via grants and contracts." It's important to realize that objectives don't have to be in dollar terms. In the case of volunteers, the behavioral outcome "provide their time" has been converted into the objective "to increase volunteer time." Once you approach developing objectives in this way, measures emerge almost automatically.

This example illustrates how I develop quantified objectives via our system. The first step is to identify key stakeholders. The second step is to write down the behavioral outcomes required from them. The third step is to convert those behavioral outcomes into objectives, and the last step is to develop measures, the shortlist of which constitutes the KPIs for those objectives. Of course, in undertaking these steps, you must be selective about whom you nominate as key stakeholders and about the behavioral outcomes you list. Select only the important ones. If you are selective at this point, you will end up with a shortlist of objectives and key performance indicators. This helps to achieve focus in strategy development and, as a consequence, implementation effort.

Establishing Targets on Objectives

The extent to which objectives influence strategy depends on the specific targets established for those objectives. In the case of Suncoast Cancer Council, if the target over the next three years were to maintain the existing level of government grants and contracts, a certain strategy would be developed to achieve this. If, on the other hand, the target were to double the dollars received, then an entirely different strategy would be designed.

Though not shown, you can imagine an additional column in exhibit 2. It would be to the right of the "KPIs for Objectives" column, and its heading would be "Targets." These would be targets on the KPIs for objectives -- which, in turn, are targets on the objectives themselves. For example, a target on "number of hours provided by volunteers" could be "5,000 hours."

Much target setting is a haphazard affair. They are set, for example, on customer satisfaction, without reference to their effect on revenue, and vice versa. Hence an organization may set the targets to raise revenue by 10 percent and customer satisfaction by 5 percent but not establish a cause-and-effect relationship between them. Of course, this should and must be done. Key stakeholders have an impact on each other. In setting targets for owners, then, you are able to identify the targets necessary for suppliers, customers, and employees.

Streamlining Objective Setting

Planning teams have the potential to produce a vast array of statements that lead an organization or business unit nowhere. While no one may disagree with them, they do not advance an organization or business unit very far.

Our system provides a significant advancement. The first of its components is that objectives are established by key stakeholder. The second component is that for each key stakeholder, I write behavioral outcomes -- i.e., what an organization or business unit wants from them. The third element is converting these behavioral outcomes into objectives, and the fourth is converting each objective into one or more KPIs via a set of measures. Establishing targets on these KPIs is the final ingredient. I believe this is a far better way to set objectives because I have used the method with clients and seen their obvious delight at being able to undertake objective setting with clarity.

Graham Kenny is CEO of Strategic Factors, an Australian consulting firm that specializes in strategic planning and performance measurement.