Get a Goal: The One Number That Runs Your Company

Bill Canady: Here's something I do in my first week at a company, and it has never gone once the way the CEO expected. I walk into a building. It's not a tour, nobody escorting me around with a clipboard, nobody warned that I'm coming. I just walk and I ask people the same question. Eight simple words. What are we trying to accomplish this year? Last time I did it at a manufacturer about 40 minutes outside of Cleveland, I asked five people in the space of one morning. And the VP of sales said, Well, we're going to grow that top line. We're going after the big accounts. And the plant manager said, on-time delivery above 95%. A production scheduler, 22 years in that building, knew more about how the place actually ran than anyone else I met, said, Well, I think we're trying to get the second line up. The customer rep said, honestly, fewer complaints. And the CFO gave me the number straight out of the sponsor's model. To the decimal because knowing it is his job. Five people, five answers, not one of them wrong, exactly, and every one of them working hard on something real. I took that back to the CEO and he was genuinely surprised. He said, Bill, we've communicated this plan extensively. It's in the town hall decks. I send it out in January. And he had. And he wasn't lying. He wasn't lazy. He had communicated it. He had just never installed it. The gap between communicated and installed is worth about six million bucks a year. Let me show you the arithmetic. All right, here's the proof. A hundred and fifty million dollar manufacturer, not a turnaround, a decent business, profitable, bought at full price by a sponsor who needed to get materially better on schedule. That CEO ran one meeting, walked out of it with one goal, one, a number, a unit. And a date. Then he made two moves against us. Two, he simplified the product line and he fixed a price. Nine months later, that business had six million more dollars of EBADA on the board. Now let me tell you about the other version, because I've seen it a great deal more often than I've seen the first one. Same size company, same kind of sponsor, same caliber of operator. And he came out of his planning process with 25 initiatives. 25. Gorgeous deck. Every function represented an owner and a date on every line. Nine months later, nothing. Not a disaster, nothing. None of them were at 40% done. Four of them were finished and didn't matter. And the Ebad line was inside the noise of where it started. Same market, same year, roughly the same people. The difference was one number versus 25. Here's my promise. By the end of the next half hour, you'll be able to write your company's one goal on a single line. Test it in about 90 seconds against three questions that tell you whether you got a goal or a wish, and run the meeting that installs it in the building. And here's the plan. First, I'll give you the four meetings that make up your first hundred days, just so you know where this sits. Then I'm going to spend most of this episode on meeting one because it's the one that decides whether the other three are worth having. Then three moves, and you can run all three before your next leadership meeting. This is the Thousand Day CEO. I'm Bill Canady and let's get into it. Let's start with the problem. Let's talk about the laundry list. I want to be fair to it before I take it apart because nobody arrives at twenty five initiatives by being stupid. They arrive for three reasons, and all three of them are reasonable. Reason one is inclusion. You have eight functional leaders. If the plan has one item on it, then seven of those eight people feel like they're not on the plan. And you're new and you need them and you can fill the room when you get to the end of the list and quality isn't on it. So quality gets one. Well, IT gets one because they need one too, and let's not forget about HR, they get two. Because HR always gets two. And now you have a list of enormous political advantage of being a list that no one has to fight about. Reason two is you honestly don't know yet which one matters most. You're on day 20, the data's a mess, everybody's opinion contradicts everybody else's. Twenty-five is not what dot choosing looks like once it's been typed up and it's put into a template. Reason three is no one says out loud, a long list is safer. If you commit the company to one number and you miss it, well you missed it. If you commit to 25, you deliver eleven. At least you build a slice that says meaningful progress across the board of the portfolio of initiatives. You made some progress. I've watched people survive two quarters on that slide. I've never watched anyone survive four, though. Now here's the arithmetic that kills it. Your leadership team can carry about three genuine changes at one time, on top of running the company. Three. And notice what's already true about their week before you hand them anything. It's full. It was full before you got here. The day job is still 100% of the available hours, and the day job is what produces this year's number. So it wins every conflict, every time, without anybody deciding that it should. So you hand eight people 25 items. That's three apiece on top of a week that's already at capacity. And here's what happens next. And it's the part you need to see clearly because it happens quietly and it happens fast. Your organization sorts your list for you. They decide. You didn't ask them to do it. Nobody held a meeting about it. But within six weeks, 25 items have become the six that people are actually working on. And the six that survive are not the six with the most value on them. They're the six that are comfortable. They're the ones that don't require telling a customer no. The ones that don't require telling a 20-year salesman that his largest account is about to get repriced. The one that can be done inside of one function by people who already like each other without a hard conversation. Which means the rank of your company's priorities got made by default. By people optimizing for friction, and you are not even in the room. Now let's put a dollar figure on it, because I'd rather you felt this in the P&L than in the abstract. Take that $150 million business. Say it earns 12% EBITDA. That's $18 million right there. The model that sponsor in the rope needs EBITDA to grow to 10 to 12% a year, and that's the going rate now, against about 5% historically. 12 is a new five. So the business owner roughly owes two million dollars of new EBITDA every year. Every year for the length of the hold The one goal CEO put six million on the board in nine months. That's about three years of required slope delivered in three quarters. Well, we like that. The 25 initiative CEO put nothing. He didn't owe two million anymore. Now he owes two million plus the two million he just missed. And he owes it against a board that has started to wonder and a team that has now learned that the plan is a document rather than a fact. And then there's the cost in days, which is worse because you can't refinance days. Your first hundred days are the only clean pass you get at establishing command. On day 101, you're not the new CEO anymore. You're just the CEO. And every single thing you didn't change is now something you've endorsed. You own it. That's right. It's yours. So the question isn't whether you have a plan. Everybody has a plan. The question is what are you going to do that first hundred days? What are they actually made of? Here's the framework. First four meetings, 100 days. That's the whole structure of phase one. And I want you to hold it in that shape because the sequence matters as much as the content. Here are the four meetings. Meeting number one, get a goal. Week one and two, the output is one measurable goal for the enterprise. One sentence, that is the whole subject of today. Meeting two, well, that's where you set the strategy. Weeks three through six, now that's the goal, and you decide where the company will and will not compete to hit it. Which segments, which customers, which products. You cannot do this first. Strategy without a number attached is just a preface. Meeting three, reorganize the company. weeks six through nine, structure follow strategy. You put the right people against the segments and you just choose and you take people off the segments you just walked away from. Well, that's episode eight. Meeting four, take action. Weeks nine through twelve, and then forever. This is where the cadence starts. The store scoreboard, the reviews, the countermeasures. That's episode nine. Four meetings, a hundred days, and here's the rule that makes them expensive. The CEO only gets one clean pass through these four meetings. One, you can hold the meetings again later and people will attend, but it will not have the same effect because the second time you're not announcing a new era. You're correcting a failed one. And that's a different room with a different error in it. These meetings are the CEO's power tools. Most people treat them like they're calendar entries. They're not. They're the four occasions on which you get to reset. What a company believes about itself. And each one only works if the one before it actually landed. On the first meeting, let's get that goal. It's a half day long, your direct reports, no observers, no consultants presenting, no one from the sponsor sitting at the back. They'll get the output and they'll get it better if the room was honest. And the output of that half day is one sentence. And here's what the sentence looks like. Improve EBITDA margin by 300 basis points in 12 months. That's it. That's the entire artifact of meeting one. Read it again in your head and notice it what's in it because every word is load bearing. There's the number, 300. There's a unit, basis points of EBITDA margin. There's the date, 12 months. There's the denominator, which I'll come back to because that's the one part people leave out, and it's the part That stops the goal from being gamed. It has to be measurable. That means somebody in finance can calculate it from the actual books, the same way, every month, without a debate about definitions. If two smart people can compute your goal and get different answers, you don't have a goal. You have a topic. It has to be time bound, not over the next couple of years, a date, because a goal without a date can't be behind schedule. And a goal that can't be behind schedule cannot be managed. And it has to be recitable by anyone in the building. Not understood, recited. There is a woman running a machine on second shift who has never met you and probably never will. And the test of your goal is whether she can say it back. If she can't, you don't have a company goal. You have a leadership team goal. And a leadership team is not where the work happens. Okay, how to write this? It's one sentence, a number, a unit, a date. That's the whole specification. And it takes most executive teams about four hours to produce, which tells you something about how rarely anyone makes them choose. Now let me give you the trap because this is where almost everybody lands the first time. Most goals are wishes because become the supplier of choice in our category. That's a wish. Drive operational excellence. A wish. Deliver world class customer experience. Well, that's a wish wearing a suit. None of them have a number, not a unit or a date, and none of them can be missed, which is precisely why they're popular. A wish is a goal with the accountability taken out of it. Well, here's a subtler one, and this is the version that fools sophisticated teams. Grow revenue fifteen percent this year. That does have a number. It has a day, and it's still functionally a wish. Because it has numerator with no denominator. And a goal with only a numerator can only be won by spending. You can't buy fifteen percent revenue growth. You can buy it with discounts, with terms, with small orders from small accounts, with a product line extension nobody asks for. You will hit the goal. You will just be poorer once you do. That's why the goal is expressed as a ratio, or as a dollar figure paired with a ratio. Margin has a denominator. It cannot be gained by adding volume because volume shows up on both sides of the line. And one clarification, because people hear one goal and panic. One goal does not mean one number on the scoreboard. You still run five to ten operating metrics weekly. It means there is one goal that all of them serve, and when two of them conflict, and they will roughly every Thursday, because everybody in the meeting knows what Which way it will break them. Here's an example. Back at the manufacturer, one hundred and fifty million in revenue, about twelve percent of EBITDA called it eighteen million dollars. The goal out of meeting one was to improve EBADA margin by three hundred basis points in twelve months, twelve to fifteen, on one hundred and fifty million dollars of revenue. Three hundred basis points is four and a half million dollars. Sounds good. We like that. Two moves, he picked one. And he said no to everything else, which was the actual hard part of the meeting. Move one was simplification. The product line had grown for 11 years by addition. Every custom configuration a customer had ever asked for was still quotable, still stocked, and still in the system. He cut the tail. The plant stopped changing over as often. Purchasing stopped carrying components for products that ship four times a year. Roughly three million dollars of that came from simplification, and almost none of it came from firing anyone. Move two was price, two points. And here's why price is the fastest lever you will ever touch. One point of price on $150 million of revenue is a million and a half dollars of EBITDA That's real money. at essentially a hundred percent flow through because there's no cost attached to a price increase. Two points is three million. They landed four hundred basis points, not three. In nine months, not twelve, six million dollars. You can bet they were happy about that. Now the twenty-three things he said no to did not disappear. Several of them were good ideas. Two of them got done anyway, by people who wanted them done and had room because the tail was gone. That's what capacity looks like when you free it instead of asking for it. Here's how to present it. The four B's, I love talking about these things. You got the sentence, now you got to put it into a room. The leadership team, the town hall, and eventually the board. How do you present it determines how it gets adopted or filed. I teach four rules for that, and they are be brief, be brilliant, be critical, and then be gone. First, be brief. One story, one message, one key takeaway, one minute per slide. maximum. And if that sounds severe, look at your last board deck and count the minutes you spent on slide four. If you can't explain it in 60 seconds, you don't understand it. That's not communicating problem you're having. It's thinking problem. It's a thinking problem and the extra slides are where you're hiding it. Next, be brilliant. That means deliver insight, not just data. Anybody can put a chart up. Your job is to translate the numbers into meaning. The so what? Not here's our SKU distribution by margin contribution. instead of our thousand SKUs, only two hundred and ninety drive ninety-five percent of our margin. We should cut the risk and free up fifty million dollars of working capital. Same data. One version is a slide, the other version is a decision. We prefer the decision. Be critical. This means no happy talk. Happy talk kills credibility faster than bad news ever will, and it kills it permanently. Leaders don't trust perfect stories, they trust prepared ones. So every risk you name, you name with a countermeasure attached. Never a risk alone, never a countermeasure without the risk it answers. That's the Stockdale paradox operationalized. Unflinching honesty about the difficulty in front of you, paired with a clear plan and absolute confidence you'll prevail. Both halves. One without the other is either denial or despair, and boards can smell each of them a long ways off. Next be gone. Once you've made your point, stop talking. Don't restate it. Don't fill the silence. Don't answer the question they haven't asked yet because you're prepared for it to answer. Executives respect people who respect their time and the last 90 seconds of most presentations are where the credibility is earned in the First 10 minutes get spent. Be brief, brilliant, critical, and gone. That's how you present the goal. It's also from that day forward the standard you hold your own team to when they present to you. Next, let's look at the plan. It's three moves. You can run all three before your next leadership meeting. And the first one takes about 20 minutes if you're honest, and about four days if you're not. Your first move, write the one goal. On one line, not a page, not a pyramid with three pillars under it. We all love creating those houses. One line written down in your own handwriting and then set out loud. Two constraints, no conjunctions to add a second goal. The moment you write, while also you now have two goals. And two goals is the beginning of 25. Secondly, say it out loud before you accept it. If you stumble reading your own goal, so will everyone else. And they'll stop trying by the second week. Format to start from in proof, insert your measure here, buy insert a number, insert unit, buy date. That's the shape. Fill it in with your business. Move two, pressure test it against three questions. Take the line you just wrote and run it through these 90 seconds. One, can a person pick that random from your building recite it? Not this week, not have you installed it yet. But could they, once you said it fifteen times? If it takes two sentences to say, the answer is no. Length here is the enemy. The company can hold one sentence and cannot hold a paragraph. Two, does it have a denominator? Is it a ratio or a dollar figure tied to a ratio? If it's a pure numerator, revenue, units, headcounts, booking, someone can hit it by spending your money. Eventually somebody will, and you will not like how that goes. Three, does it name a date, an actual month, not this year, not over the planning horizon, a date you could be behind? And here's the informal fourth I'll apply before I sign my name to it. Does achieving this goal require you to say no to something? If the goal can be reached without stopping anything, without walking away from any revenue? Without disappointing anybody, then it's not a goal, it's a forecast. Real goals cost something on the day you set them. Move three, put the meeting on the calendar with a written agenda that end in named owners. Put someone's name next to each one of these. Half a day, your direct report, send the agenda out in advance in writing so that nobody arrives planning to present. Four blocks, block one, The situation in numbers only, 20 minutes delivered by the CFO. Where EBADIS, where it has to be, and the gap in dollars. Block two, the goal proposed by you, argued for real. Let them fight it. A goal that survives in arguments gets carried. A goal that was received gets forwarded. Block number three, the two or three moves that close the gap. And you cap it at three before anyone speaks out loud at the top of the block. So the meeting is a selection process rather than accumulation process. Block four is the one that makes the other three matter. Named owners and dates, not functions, not committees, a human being's name against each move, and that single human being is in the room when her name goes on it. You don't leave that room without block four being finished. If you run out of time, you cut block one. The situation can go in an email. Ownership cannot. So, what does it look like when it's working in the room? When it's theater? Here's the adoption test, and it's the only one I trust. You know a new standard is taken when people who don't report to you start citing it back to each other in rooms you're not in to settle arguments you never heard about, when a plant manager tells a salesperson that order doesn't help the 300 basis points. And when you weren't there and nobody told you it happened and you find about it six weeks later by accident, now that's adoption. People are doing it. You don't have to say anything. Until then, it's just a thing the CEO says. And it takes time. Realistically, two or three months of consistent enforcement. Consistent is the operative word. It means you open every meeting with it. You ask about it when you're being briefed on something else. And you decline at least one attractive opportunity out loud on the record because it doesn't serve the goal. That last one is what converts to it. People don't believe your priorities because you announce them. They believe them the first time you watch them pay for one. Theater looks like the opposite. It's easy to recognize because it's way more fun. The goal goes on the wall, it goes on a mouse pad. There's a banner in the lobby and a hashtag on the internal site. You've seen them, you know what they look like. And nobody ever uses it in argument because no one's ever killed a project with it. It's never cost anyone anything, which is how you know it's not real. The wall is not installation, the wall is decoration. Installation is when the goal starts making decisions that you didn't make. Okay, three things to keep from this one. First, one goal. 25 initiatives is nothing more than having none. Because Your organization will sort the list for you and it will sort it for comfort. One number and everything else is in the service of it. Second, a goal has a number, a unit, and a date, and it has a denominator, so it can't be bought. Improve EBITDA margin by 300 basis points in 12 months. If your goal doesn't have all four of those parts, what you have is a wish, and I've never seen a wish move an income statement. Third, you're not done when you say it, you're done when they say it to each other. That's the adoption test. It takes two or three months of constant reinforcement. And the thing that converts it is watching you turn something down attractive because it doesn't serve the goal. And when you get to the end of your 100 days, when the goal is set, the strategy is chosen, and the structure is aligned, and the cadence has started, there's one line to close on. I've used it in every 100-day meeting I've ever run, and I don't dress it up. This is our plan. Now we execute with discipline. No one else will do it for us. That last sentence is the one that matters. No one is coming. The sponsor isn't going to operate the business. The board isn't going to fix your product line. The market is not going to hand you 300 basis points as a favor. You've got one goal and about 900 days left to hit it. Next week we'll go on to day thirty through ninety and we'll find out where your profit actually lives because I'll tell you right now, it isn't the spread evenly. And your PL is an average at hiding two completely different businesses inside one set of bucks. I'll give you the four quads, the single best question I know to ask a leadership team, and the answers I got when I asked $310 million industrial business. The lowest answer in that room was 18%. The highest was 41%. If you want the one-page worksheet from today and the other tools that I talk about, check them out at the 8020institute.com. It's the same place you can go to find out how your business is doing. There's lots of classes you can take there. I'm Bill Canady Now go do the work.