Today’s topic addresses a question I get asked quite often. “How can the goal-free concepts be applied to business?” After 20 years of helping companies be more innovative and creative, I could (and may) write an entire book on that concept. Then again, 24/7 Innovation, my first book, handles the topic quite nicely already.

Before getting started, let’s be clear, being goal-free means being free from the burden of goals. It is not about being goal-less – a complete lack of goals. Organizations need goals. However they must not be constrained by them.

As Einstein once said, “If I were given one hour to save the planet, I would spend 59 minutes defining the problem and one minute resolving it.” The problem with a goal-oriented business is that it tends to spend 1 minute defining the problem (and associated goals/objectives) and 59 minutes finding solutions. When I work through the creative process with organizations, I get them to spend more time finding the right opportunities rather than chasing problems they think need to be solved.

A simple example is from a retailer that has a process referred to as “reactivation.” For customers that do not purchase products for more than 90 days, they try to lure them back with huge discounts and lots of freebie items. This company had a goal of improving its reactivation numbers. Of course, to an outsider, this is not an ideal goal. Instead, they should focus on keeping their customers in the first place. Most goals are based on faulty information and hidden assumptions.

Sometimes, having the wrong goals can be fatal. Sears back in the 1960’s accounted for 1% of the United States Gross National Product. In 1983, Sears was ten times the size of Wal-Mart. Fast forward 20 years later, and we find that Wal-Mart is three times the size of Sears; a 30 fold change. And, to add insult to injury, Sears was recently purchased by K-Mart, a company that only recently emerged from bankruptcy. Or take Digital Equipment Corporation (DEC), a pioneering technology company. In the mid 1980s they were the same size and equally successful as Hewlett-Packard (HP). In June 1998, when DEC was bought by Compaq, HP was over three times larger. HP has since purchased Compaq and the DEC brand no longer exists. DEC was too enamored with their mini-computer technology that they missed new and emerging micro-computers (PCs).

Success breeds complacency. Future goals are often driven by past successes. Sears and DEC had excellent management, goals, and strategic plans. But that was clearly not enough. In fact, I have found that the more companies focus on their goals, the more myopic they get. While focusing on achieving your goals, some new competitor inevitably changes the rules of the game, and forces the incumbent into a catch-up situation. This has happened in nearly every industry from telecom to fast food. Did you know that in 1965, Howard Johnson – the restaurant with the orange roofs — had sales greater than McDonalds, Burger King, and KFC combined? The marketplace changed but HoJo’s did not. Howard Johnson set goals based on old business models. Their survival would have been questionable had they not been purchased by Cendant and converted primarily into a hotel business.

Even if you have the “right” goal, it may still set you off course. Setting high sales targets for employees – a worthy goal of course – may have a detrimental impact on your organization. When people “try” too hard to hit their targets, they sometimes become desperate in their approaches (see “Remain Detached” in the book). They may come across as the proverbial used car salesman, turning off customers. They may no longer collaborate with colleagues. Infighting and unhealthy competition between employees may break out. Or even illegal activities can result. Several years ago, Sears measured its auto centers on sales. The result was massive fraud. The auto centers started billing customers for repairs that weren’t necessary and sometimes weren’t even performed. That landed Sears in court. While this is an extreme example, it is telling.

Reduced costs – another worthy goal – right? A large beverage company, to improve its profitability picture, kept fully depreciated vending machines in the field well beyond their normal useful life. Customers suffered because older machines broke down more frequently. In the end, sales suffered. Another example: A purchasing department initially measured its success in terms of how well it bought the lowest-cost items available. Over time, the department learned that low initial costs sometimes correlated with long lead times, less-frequent deliveries and large lot sizes — all of which contributed to increased inventory levels. The department modified its measures to track costs over the entire life cycle, thereby using a single measure to encourage people to balance low cost with quality.

As a colleague of mine once said, “Yes, you will get what you measure, but will you get what you want?” Goals will give you results. But are they the right results?

A few other thoughts on goal-free business.

– Expertise is the enemy of creativity: In business we encourage knowledge and experience. But this blinds us to newer and bigger opportunities. Innovation rarely comes from your past experience; it tends to come from insights that result from “connecting” ideas together. This requires more experiences. Companies and employees need to try new things. (See “Seek Out Adventure” in the book)

– Travel lightly: Companies are often mired with complex processes and rigid computer systems. Flexibility and collaboration are often sacrificed. Using a musical analogy (I’m a saxophone player), most companies are like classical music – complex compositions (e.g., processes) written by someone who is long gone and performed the same way each and every time. Instead we need to create jazz organizations with simple structures so that employees can improvise as needed. (See “Use a Compass, Not a Map” and “Want What You Have” in the book)

– Turn a potential weakness into a strength: From today’s Wall Street Journal – In bringing the movie “Memoirs of a Geisha” to Japan, distributor Buena Vista International faced a quandary: How do you market an exotic Hollywood fantasy about geisha to a country that knows the real thing? Buena Vista’s answer: Flaunt the fantasy. Kimonos wrapped wrong? Hair too windblown? Actresses the wrong nationality (a Chinese actresses plays the movie’s lead)? Well, the movie ads trumpet, this is a “Japan that the Japanese will envy,” playing up the Western flavor by printing “Japan” in the Roman alphabet rather than the country’s traditional characters. By embracing and acknowledging a potential weakness, you can turn it into a strength. (See “Embrace Your Limits” in the book)

– Goal-Free Evaluation: Anyone who has worked in the corporate world is familiar with traditional evaluation methods — set goals at the beginning of the year and then evaluate progress against them at the end of the year. There are a number of problems with this approach. Did the company set the right goals (see points above)? In the process of achieving the set goals, did the employee perform negatively in other, unmeasured areas? Enter the concept of Goal-Free Evaluations. In its simplest form, it is used to measure people on the “intent” of the goals rather than the actual measure. Did they help the company, regardless of whether or not they hit the specific targets? Google “Goal-Free Evaluations” and you will find lots of references to this expression. The concept was originally developed by Michael Scriven.

There is so much more to be said on this topic…