2010 is over half over, which makes it a good time to reflect on the year so far and revise your startup’s plans – if necessary, of course – for the year ahead. Are you on target? Have your targets changed? And if so, have you adjusted course to compensate?
Mark MacLeod posted his thoughts on the midyear point on the Startup CFO blog today, noting that it can be difficult for startups to establish accurate targets. Even so, he notes, there are two schools of thoughts when it comes to targets. The first: you set the targets, now stick with them. The second: if you can’t meet the targets, it only makes sense to adjust.
If you’ve determined that, indeed, your targets need adjusting, MacLeod suggests the following:
Diagnose: “Hold a post mortem,” he writes, “ideally involving much or all of your team.” What went wrong? Were the targets unreasonable? If so, why were they set in the first place? If the targets were reasonable, why weren’t they attained? What can be done about that?
Reset: Now that you have new insights into your performance, you can set new targets – making sure that your investors support them, of course.
Communicate: After you’ve reviewed your year-to-date performance, make sure you share that diagnosis with your whole team. Explain not only what the new targets are, but why the targets are changing.
Partial Mulligan: If employees’ compensation is tied to meeting targets, MacLeod argues that “resetting targets should not be the equivalent of a Mulligan. You need to retain some incentive to hit the new targets, but unless your diagnosis tells you that the targets were flawed to begin with, there should be consequences (in terms of reduced incentive) as a result of lowering your targets.”
Revising your targets may involve slight tweaks or it might mean major upheaval. As Chris Dixon writes on the subject of pivoting, “You aren’t throwing away what you’ve learned or the good things you’ve built. You are keeping your strong leg grounded and adjusting your weak leg to move in a new direction.”
