Okay, all you golfers—ever played a skins game?  In simple terms:  players during a round of golf wager on the best score for a single hole.  If there’s a tie, the “pot” rolls over to the next hole.  One result of a skins game can be to up the ante on each hole.  The backlash is taking your eye off the long haul.  In a skins game, you play for short-term stakes.  As a result, strategy goes out the window.

Unfortunately, some people run their businesses that way.  They muddle along in a never-ending skins game.  This doesn’t just happen in tiny companies.  An insider at a famous blue-chip giant once quipped:  “Our idea of long-term planning here is deciding what we’ll do after lunch.”

Anyone who has participated in a skins game on a golf course knows the painstaking attention paid to the line of every putt.  It’s a lot like what Peter Drucker describes as “the last of the deadly sins” of business, which he defines as “feeding problems and starving opportunities.”

Peter Drucker has long been considered the definitive authority on business planning.  His principles are still widely used decades after his revolutionary writing on the concept of “Management by Objectives.”  Drucker sorted out a baffling world.

Planning boils down to two fundamental processes:  goals and objectives.  It is important to distinguish between the two.  Goals are considered the purely quantitative and mostly financial targets.  Objectives are more qualitative and elusive.1

Make your goals, and you stay in business.  Advance your objectives and you build a business worth having.  The distinction between goals and objectives is hardly pure.  Often objectives have quantitative measures attached to them as well.  But they are rarely just numerical yardsticks.

At the age of 85, Drucker wrote Managing in a Time of Great Change.  A key premise:  “Uncertainty – in the economy, society, politics – has become so great as to render futile, if not counterproductive, the kind of planning most companies still practice:  forecasting based on probabilities.”

Translation:  Things no longer rest on a predictable base.  How would I describe this sort of uncertainty?  We live in a world where:  “Computers make very fast, very accurate mistakes.”  And, “Artificial intelligence usually beats real stupidity.”

Companies spend days, if not weeks, agonizing over their mission statement and business plan.  How much precious, misspent time goes into the process?  Get the business model right.  Then accessorize it with the details.  You may not need more than a few action plans focused on very restricted areas.

In real estate, it’s location, location, location.  In management, it’s preparation, preparation, preparation.  But, be very, very careful.  It’s not the sheer magnitude of the preparation that matters.  It’s the relevance of what you do.  Is it clear?  Will it change behavior?  Does it sizzle?

Business can take some lessons on preparation from world class athletes.  For a recent seminar on goals and planning, I invited Peter Vidmar to be my guest.  Peter is the highest scoring American gymnast in Olympic history and was the star of the 1984 Olympic Games in Los Angeles.  He captained the USA men’s gymnastics team to its first ever Olympic gold.  He is now chairman of the board of USA Gymnastics and a broadcast commentator.

Peter understands goal-setting in a very tangible way.  Preparing for the Olympics is a life quest for these athletes.

He offered this advice:  “Goals have to be realistic.  I really take issue with any of those people who say you can be anything you want to be because that’s really not true.  I’m 5’ 5” and 130 pounds.  There is no way I’m going to end up in the NFL.  I think goals need to be measured and clearly defined.  They also need to be time sensitive.  You should give yourself deadlines.

“I think a goal should answer some questions,” he continued.  “In other words, be specific.  It should answer ‘what’ – what is it that you want to accomplish? It should answer ‘why’ – why is it important to you?  It should answer ‘when’ – when are you going to get this done by?  It should certainly answer ‘how’ – how are you going to do it?  Make sure your goals are meaningful for you.”

And finally, Peter said:  “When you work with a team, and when this goal is going to take a team effort, you’ve got to figure out a way to get each member of the team to take ownership of the goal themselves.”

Mackay’s Moral:  You’ll never reach your goal if you don’t have one.