How I Set Goals That ACTUALLY MAKE MONEY
Video
Summary
- I'm not a fan of most goal-setting literature; we have a unique four-step process for setting goals that I took from a science book instead of business books.
- Always start by identifying the problem your goal is supposed to solve. A goal should help us get more customers, make them worth more, or increase the enterprise value of the company.
- You need to tie any goal directly to one of these three outcomes: more customers, higher customer value, or increased enterprise value. If not, you might not understand your role in providing value to the business.
- After identifying the problem, create a hypothesis rather than setting a definitive goal. Articulate what change you expect to see by taking a certain action.
- For example, if the hypothesis is decreasing lead call time will lead to more booked calls, then call leads within five minutes (input) and monitor if the percentage of leads scheduled increases (output).
- Review your goals in a two-column 'before-and-after' phase, comparing the input change and the output change to check if the goal was met and what actually happened.
- Understand that small, consistent 1% improvements often lead to substantial growth over time without the need for constant innovation.
- The whole organization should engage in this goal-setting process, from top to bottom, helping each team member understand their contribution to the larger company goals.
- Encourage employees to think why they do what they do, enhancing motivation and alignment with company growth.
- Use this framework across all departments and portfolio companies: What problem are we solving? What's our hypothesis? What are we going to do? What do we think is going to happen? Did we do it? Did it happen?
- This framework has worked well for us and could potentially work for others who apply it.
How To Take Action
I would suggest implementing a four-step process for goal setting that prioritizes solving problems within your business. First, focus on goals that help you get more customers, make customers more valuable, or increase your enterprise value. If a goal doesn't align with these, reconsider its purpose.
Next, instead of just setting a goal, create a hypothesis. For example, you might think, "If I call leads within five minutes, I'll book more calls." Then, you focus on the action you're going to take and what you expect that will happen as a result. This is the input and output.
After that, you'll want to review your actions. When you achieve your goal, look at what changed. Did calling leads faster actually book more calls? You're comparing the "before" with the "after" to see if your hypothesis was right.
Remember, even small improvements can grow your business over time. Consistently improving little things adds up fast, and you don't always need to find something new.
Make sure everyone in your company is involved in this goal-setting process. It helps them understand how their work affects the bigger picture and keeps them motivated. Your team needs to know why they're doing what they are and how it helps grow the company.
Here's a simple framework you can follow: Identify the problem, create a hypothesis, decide on the action (input), and predict the outcome (output). At the end, review if you did what you intended and if it led to the results you wanted.
Apply this framework to each part of your business. It's worked for us, and it might just work for you too.
Quotes by Alex Hormozi
"If you can't articulate why the goal is going to do that, then you shouldn't do it"
– Alex Hormozi
"Most goals have to be chunked up to one of three things: get more customers, make customers worth more, or increase the Enterprise value of the company"
– Alex Hormozi
"If you can just knock out your goals really really fast, it probably means you haven't thought through them well enough"
– Alex Hormozi
"A lot of shiny objects, a lot of new things, a lot of trial and error, a lot of iterate iterate iterate until something clicks"
– Alex Hormozi
"If you do that year after year after year, you become very hard to beat"
– Alex Hormozi
Full Transcript
a lot of literature and videos and blog posts talk about setting goals and I hate almost all what I'm going to walk you through is our four-step goal setting process and I promise you it's probably not what you have seen in the past from basically another company because I actually didn't take how we set goals from any business books I actually took it from a science book number one is what problem are we solving a lot of times you realize that you're not solving a problem at all which means you probably don't need to do it this is especially true the lower in the organization it goes because people who are lower down in the org tend to not be as connected to the overarching picture of the company simple example most goals have to be chunked up to one of three things number one they're going to help us get more customers number two is that it's going to help us make customers worth more and number three it's going to increase the Enterprise value of the company if you can't articulate why the goal is going to do that then you shouldn't do it so number one pick what problem you're actually trying to solve simple example if it decreases the page load times on all of our sites we will get more leads we get more leads we get more customers Etc if it improves the sign-on process for customers to have access to something that will mean we have fewer customers churn which means we will make customers more valuable if you can't tie how your department and the function that you have either gets us more customers makes them worth more increase the Enterprise value of the business means you don't understand your job and if you're the entrepreneur or the head of the department you don't know how you're actually providing value the business breaking that down is the first and most important part of goal setting if this process actually makes you think that it means you're doing it right because if you can just knock out your goals really really fast it probably means you haven't thought through them well enough number two we create a hypothesis and the reason for that is when you set a goal usually it's like we want to do this thing right well you're not actually trying to do the thing you're hoping that something's going to happen if you do the thing we like to Define both of those variables in the hypothesis for example if I wanted to have a sales goal it might say something like if I decrease the time to call leads from 30 minutes to five minutes we will get a higher percentage of leads to book calls that's literally the hardest part of this whole thing is what is the hypothesis that you're trying to test because whenever we actually do something in the business we're not guaranteeing the outcome and we're not guaranteed from the business that it's going to create the result we want I'm sure you've tried plenty of things that have been goals and it didn't result in the thing that you wanted which is why you shouldn't state it as a goal necessarily but as a hypothesis what you think will happen once you have the what problem are we solving in your hypothesis of how you're going to solve it then you only have two variables that you have to determine one is what's the thing I'm going to do which is the activity that's the input and then what do I think is going to happen which is the output number three what are we going to do we're going to call leads within five minutes right that is the input we check that box great output is we will get a higher percentage of leads to schedule or show so you'd have your Baseline of the input which is today we're at 37 minutes and we want to be at five that's the input change the output change is going to be we go from 50 scheduled to 70 schedule that's the output change that is a goal that is what we call the before phase the after phase only has two columns and that's where you review after the core order is done or the year is over number four what do we think is going to happen you say okay did I do the thing did I do the input did we actually decrease the call time to five minutes if we did then that's a green and here's where this is important we may have decreased the call time to under five minutes but we may not have increased the scheduling at all that's why it's a hypothesis now did what I wanted to have happen actually happen and then that is where you can put comments here and so what we ended up doing is we ended up getting it down to seven minutes and it didn't improve it at all at this point we don't need to get it down to five because we didn't have any directional Improvement it takes a lot of zero to want a lot of shiny objects a lot of new things a lot of trial and error a lot of iterate iterate iterate until something Clicks in the beginning but big businesses often grow by a series of one percent improvements one percent one percent one percent because you've seen the excel math when you're like well if I only got 10 more people to opt in and I got 15 more people to uh schedule and I got 20 more people to show and I closed one from 25 to 35 you add all this together and all of a sudden and you tripled the business and the thing is is that everyone gets so distracted with like the I'm going to reinvent the wheel rather than just making the wheel a little smoother so it runs faster and so a lot of times especially in the 5 10 15 20 million dollar Top Line range that's some of the systems we have to put in place because that's how the big boys play they beat you because they actually can do a hundred tiny increments I think Jim launch grew 40 last year and we did nothing new all we did we did everything we were currently doing a little bit better if you do that year after year after year you become very hard to beat because people see your marketing on the outside they'll try and copy your pages they'll try and copy your emails in one it won't be you so it won't matter because it's not your story but they don't know all the internal standard operating procedures the internal message that you guys are tracking that actually create the growth in the company and a lot of times in the early business just measuring metrics may be the important goal for the quarter so that you can then improve it let's say your videographer and a marketing department right each of these goals should start from the top down so if we say these are our five goals as a company the department heads are going to probably have multi multiple activities to make the first hypothesis true or not I like to have everybody as far down the organization do this because it actually causes you to think about why you do what you do a lot of times employees lose motivation because they don't know how what they do every day ties into the bigger picture of how the company grows and makes more money with the vdr for example they're like well what do I do like what problem am I solving the problem is get more customers they might not think about it that way but that's the goal well my hypothesis is either we might say it's a volume thing which is if I double the amount of shorts I make then we will get more traffic to our website from our organic content and at the end of the quarter did you make twice as many shorts okay green fantastic did that result in more link clicks on the site oh it didn't huh interesting I wonder what would do it okay we need to create more content that's more story based great go back to the beginning if we create more story based content we will get more link clicks to website that's why goal setting if done right should take work because it makes you think why am I even doing what I'm doing and if you don't take like a day for a whole quarter to think why am I even bothering to do this then why are you bothering to do it without understanding what you're trying to improve and the thing is if you think this way as a teammate or an entrepreneur I promise you you will be so much more valuable to your company if you can even think like a business owner and this is how a good business owner should think and if you can approach whoever runs your company with this model you may find that they will see you differently because they're like wow Timmy who's making these video clips is actually thinking about what I care about which is how I'm going to get more customers whatever the second part of the statement is if you know what you're actually trying to accomplish in the business then it makes a lot easier what problem are we solving what's our hypothesis what are we going to do what do we think is going to happen did we do it did it happen that's it and so that has been the simplest goal setting framework that we've used we use this across all portfolio companies that's what we do across everything and it's been the simplest thing that I've seen I haven't seen it anywhere else it's worked for us and maybe it'll work for you