Wise Objectives -litt2021

©2021 Steven Litt. All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.
Marketers!
Professor Steven Litt
@StrategySteven
Ready to draft Business or Marketing Objectives?
Wise Objectives: PRACTICAL TIPS
Giving the Objectives SPACE

WISE Objectives
Giving the Objectives SPACE!
by Steven Litt
@strategysteven
©2021 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.

Wise Objectives: A note of caution
“Just because Objectives are ‘SMART’, doesn’t
necessarily mean that the Objectives are wise” (Litt, 2020)
If the objectives are all SMART, are they ready to approve?
Maybe.
But being SMART is not the final hurdle before moving forward.
What is the final frontier?
Space is the final frontier.

Avoid Unwise Objectives
Savvy managers, investors & watchdogs may be wise to
‘question the Objectives themselves’.
Ask yourself:
● What’s going on here?
● If everyone in the company drives towards that objective,
from top of organization to the front line, what are the
consequences?
● Where will this lead?

Too-common Unwise Objectives:
These are classic situations where you may be wise to
‘question the Objectives themselves’.
1. Gameable Objectives: vulnerable to manipulating the Data
2. Gameable Objectives: vulnerable to manipulating the Baseline
3. Myopic Objectives that allow borrowing success from the firm’s other brands
4. Objectives that often compete with each-other: Sales & Profit
5. Objectives that contain Hyperbole
6. Oversimplified Objectives
7. Misguided or Irrelevant Objectives
8. An Incomplete Set Of Objectives
9. Myopic Objectives that allow borrowing success from the future of the brand
10. Objectives that often compete with each-other: Distribution Growth vs
Reaching The Target
11. Objectives that often compete with each-other: Distribution vs Autonomy

Avoid Unwise Objectives!
How can you avoid unwise objectives?
Even if the objectives did pass the SMART test?
My Recommendation:
“S.M.A.R.T. is the start, but creating Wise
Objectives means giving them S.P.A.C.E.”
Skeptical
Panoramic
Astute
Complete
Enduring

Unwise Objectives: Situation 1
1: ‘Gameable’ Objectives (too easily manipulated):
Vulnerable to Data Manipulation
Head offices of franchises in the Quick Service Restaurant, retail, auto service & cleaning
businesses want to gauge Customer Satisfaction at various outlets & compare satisfaction
scores for different outlets as a ‘performance’ metric. The Research Sample should be a
representative selection of customers, but survey execution is not closely supervised.
The Result: Local Franchise managers routinely got friends, friends’ friends, staff &
relatives to fill out surveys with glowing reviews. Managers encourage cashiers to spend
extra time to stop the checkout line and circle on a receipt a survey invitation ONLY to
someone they identify as a happy customer, or one for whom they do a favour. Customers
with a negative service experience are not told about the survey invitation.
End Result: survey data is biased or intentionally ‘gamed’; instigators are rarely caught or
punished. The top-down demand for positive survey data has rewarded decades of ‘data
manipulating’ by or for franchise managers. Any manager who does not commit to ‘gaming’
the metrics (in theory: the only manager with integrity) is exactly the manager most likely to
be fired, for falling short of the Objective.
To Fix This: Be Skeptical!
In this case, be skeptical enough to oversee the survey execution, run
spot checks, etc

2: ‘Gameable’ Objectives (too easily manipulated): Vulnerable
to Manipulating the Baseline
Example 1: “Grow profit 20% in Year 3 after Launch vs Year 2”
This allows a Brand Manager to ‘tank’ (minimize) the Year Two profit so that Year 3
profits more easily achieve their objective.
Example 2: Generate X$ sales within one year of launch.
This Objectives lets a cagey Brand Manager delay the launch date and maximize pent-
up sales; it may tempt a Marketing manager to create chaos in the Shipping
Department (ship all those pent-up orders at once) &/or ‘push’ the launch components
out of sync ie advertising happens too early, as opposed to when the product reaches
the shelves.
To Fix This: Be Skeptical!
In this case, be skeptical enough to ask the manager about the
executional fit upon execution, of all final plan elements and consider
adding objectives about forecast accuracy, lead time management, etc.

3: Myopic (short term) Objectives that allow
borrowing success from another of the firm’s brands:
Context: It’s not uncommon, at Auto firms, for Brand Managers to only
serve a role for a short time, then be moved on to a ‘new desk’.
1990’s North American Auto Brand Managers assigned to newly
imported econobox vehicles struggled to meet same-year sales goals;
they turned to the company’s inventory of revered legacy brands,
especially of 1960’s-70’s muscle cars, not being used at the moment.
Opportunistic Brand Managers hastily stuck ‘GTO’ & ‘Duster’ badges on
underpowered, unreliable vehicles to ‘borrow that equity’.
The Result: sales of the econoboxes increased a fraction, but billions of
dollars of brand equity was squandered.
End Result: Pontiac felt uncomfortable resurrecting the (formerly
revered) GTO brand for another 15 years, until every last 1 of the
econobox disasters was gone from the roads, landfills, human memory.
To Fix This: Use a Panoramic Perspective!

Unwise Objectives: Situation 3 (cont’d)
3: Myopic (short term) objectives that encourage borrowing success
from the future of the same brand. A SECOND EXAMPLE!
This is a big enough risk to warrant showing you a second example.
Brands are sometimes tempted to ‘license out’ their name (typically for a
One-Time upfront fee plus a ‘% of Sales’ Royalty); the licensee then ‘taps
that equity’ in a new category or business. This is not unwise, as long as the
brand’s presence in the new category doesn’t harm a ‘core brand business’.
The Dr. Scholl’s footcare products brand were long ago licensed out to firms
that made electric foot baths- results were overall positive – no significant
negative repercussions to the trust in the footcare brand.
The brand was then hastily licensed out for use in footwear; sneakers with
the brand name, that lacked style & durability, but did offer a low price point
were sold in the Mass/Discount channel. Consumer research immediately
showed a negative impact on the brand trust & premium image in the ‘core
business’ the healthcare products category.
You might say the brand… shot itself in the foot
To Fix This: Use a Panoramic Perspective!

4 Conflict between Objectives: Sales vs Profit
EXAMPLE 1:
● “Achieve 50%+ trial among Target X by May 1” and
● “Generate 25% ROI on the new line by June 1”
Which one do you want achieved?
● Trial is best achieved via eg Free Samples, Discount offers etc
that go against maximizing short term ROI!
To Fix This: Check that the Objectives are Astute!

5: Objectives that contain hyperbole:
It’s tempting to confuse a rather general, ill defined theoretical wish, to be an
Objective- don’t confuse them!
Avoid hyperbole in Objectives →if you to aim to
● ‘become recognized as superb’
● ‘be seen as the leader’
● ‘be praised for our virtues’ etc
Such platitudes are self-serving, ridiculously good looking statements, of
no value as Objectives
https://www.youtube.com/watch?v=NHHEcmZtJvY
Per Shakespeare’s MacBeth:
“It is a tale told by an idiot, full of sound and fury, signifying nothing”

6: Oversimplified Objectives:
Upfront Admission: I admire simplicity in business writing, but even I
admit there’s a limit. eg OVER-simplifying may introduce errors.
It’s evident that a manager has ‘slapped down’ objectives, even if they
DO meet the SMART criteria, if there’s a whiff of oversimplification.
“Generate 25% growth in Sales and Profit in Year 3 vs Year 2”
Seriously? This smells.
When as the last time you saw Sales and Profit grow in perfect,
matched harmony ie at exactly the same rate?
Most Executives who see this proposed Objective would be wise to
reply with: “Show me your calculations!”

7: Misguided or irrelevant Objectives:
In the 1990’s Wells Fargo bank learned that the higher the number of products
per customer (bank accounts, credit cards, mortgages etc) the more ‘loyal’**
the customers was, to the bank. Executives thought they could “reverse-
engineer” greater numbers of loyal customers
ie by selling more products to customers (whether they wanted them, or not)
more customers would adore their bank.
The Executives created ‘increased cross-sell’ objectives for the organization.
The Result: Retail service reps & bank managers sold countless customers
new, unneeded back accounts, rather than focus on customers’ needs. Fake
accounts were created. Customers were give credit cards they hadn’t asked
for, lines of credit they didn’t want. Customers pleading to be released from
escalating monthly service costs for all the unwanted ‘products’ were ignored.
This accomplished the OPPOSITE of improving loyalty. Wells Fargo became a
widely detested banking monster.

8: An incomplete set of objectives:
eg a supplier of Over the Counter (OTC) Healthcare lines gave its Sales
Department Execs a Sales goal, but no Market Share goal.
Sales were defined as ‘Revenue $ shipped’; the Sales Executives had no Sell-
through (Market Share) goals.
When it seemed Manufacturer sales would miss the quarterly goal, the Director
forged a deal with a major wholesaler; the wholesaler agreed to accept a large
shipment at the end of December, for far more product than they might
realistically sell through to retailers.
The Result: The ‘Revenue $ Shipped’ goal for the year was met and the Sales
Director got their bonus, however,…..
The End Result: one week into January, the Wholesaler ‘unexpectedly’
returned millions of dollars of ‘excess’ inventory. The $ Sales achievement was
illusory & yielded no improvement to Market Share (sell-through)
To Fix This: Check that the Objectives are Complete

9: Myopic (short term) objectives that encourage
borrowing success from the future of the same brand.
Context: at FMCG firms, Brand Managers only serve a role for a short time,
then are moved on to a ‘new desk’ (ie to manage a different brand).
A Consumer Packaged Goods Brand Manager’s authority lets them opt to
either spend a Brand’s ‘Consumer’ budget on Media, or on Promotion.
Result: Media is a long term business builder, while Consumer Promotion
programs ‘lift’ market share immediately. However, consumers loyal to a brand
are more than willing to ‘buy forward’ an item to ‘pantry load’ it at home.
Brand Managers seeking a short term market share lift will raise the number of
Bonus Pack or Bonus with Purchase events and cut Media spending; the next
Brand Manager will inherit a consumer Segment already ‘loaded with inventory
and hesitant to replenish their supply. The harmful effects of reduced media are
also typically not felt immediately, but longer term after the manager has been
moved up or onto a different brand.
End Result: Lots of short term Promotions for brands that didn’t really require
them, which results in less brand loyalty.
To Fix This: Check that the Objectives are Enduring!

10. Conflict between Objectives:
Distribution Growth vs Reaching The Target (new entries)
● “Gain >70% All Commodity Distribution of New Entry X by 9/30/2021” and
● “Generate $5M in sell-through of New Entry X by end of Yr 3”
Which one do you REALLY want?
● Mass Distribution theoretically wins you Mass Market exposure, but it’s
no place to reach Innovators/ Early Adopters with Net-New entries
● Review the Concept Appeal scores and Target Research: who will buy it
first? Where do they shop now? Where do they expect to find new
entries?
● Going Mass too early reduces your ability to effectively reach Early
Adopters/ Innovators who (if the correct, higher involvement channel
has been pursued) might have initiated WOM ie ‘start the ball rolling’
towards greater market success. Picking a weak-fit channel also denies
you ‘Assisted Sale’ benefits of presence in a High Service channel.

11 Conflict between Objectives: Distribution vs Autonomy
● “Gain 70% + All Commodity / Mass Distribution for New Entry X
by Sept 30…”
Which do you want- distribution? or control?
● Mass Distribution is often seen as a victory that will bring improved
profitability ‘on paper’. However, if you gain distribution at a Mass channel
partner, you may find the ‘costs’ include reduced autonomy (a loss of control
over own fate/decisions)
● Big Retail Chain ‘partners’ leverage their power over suppliers eg
demand one-time discounts, special deals, ‘Inside program’ funds; donations
to their charities, or they may demand you reveal proprietary info- eg
specifications, sources, formulae, etc for them to use on their own Private
Label. If you say No, you may well be delisted.
● Prepare yourself for unanticipated costs that go with the ‘victory’ of being
carried by a Mass Market reseller.

Unwise Objectives: Situation 11 (Cont’d)
11 Conflict between Objectives: Distribution vs Autonomy
(continued)
If you do ‘win’ distribution at a Mass Market retailer, here’s a TIP:
Never let them know how dependent your firm is
on them. If they learn they account for a large % of your sales, they may
‘leverage’ that knowledge, eg demand a big % price rollback. You will be
caught between refusing them (which involves a big production rollback,
and layoff notices) or rolling over ie saying Yes (and disappointing
shareholders with vastly reduced margins on that business).
Sound merciless? It is!
It’s business. Grow up. Wake up; smell the coffee.

Recap: To avoid Unwise Objectives…
How can you avoid unwise objectives?
Even if the objectives did pass the SMART test?
“S.M.A.R.T. is the start, but Wise Objectives
means giving them S.P.A.C.E.”
Skeptical
Panoramic
Astute
Complete
Enduring

Avoid Unwise Objectives!
Be sure to ‘question the Objectives themselves’.
1. Gameable Objectives: vulnerable to manipulating the Data→ be Skeptical
2. Gameable Objectives: vulnerable to manipulating the Baseline → be Skeptical
3. Myopic Objectives that allow borrowing success from the firm’s other brands →
make’em Panoramic
4. Objectives that often compete with each-other: Sales & Profit → make’em
Panoramic
5. Objectives that contain Hyperbole → make’em Astute
6. Oversimplified Objectives→ make’em Astute
7. Misguided or Irrelevant Objectives → make’em Astute
8. An Incomplete Set Of Objectives → make’em Complete
9. Myopic Objectives that allow borrowing success from the future of the brand →
make’em Enduring
10.Objectives that often compete with each-other: Distribution Growth vs
Reaching The Target → make’em Enduring
11.Objectives that often compete with each-other: Distribution vs Profit →
make’em Enduring

SOURCES
• Cover photo courtesy of Mandy S Photography

Wise Objectives -litt2021

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