Defining a good goal is hard enough in itself, but people still fail even with well thought out SMART goals. Why? The answer is simple: they fail to turn these goals into actions. Generally, a goal is broad and it is hard to identify ways to achieve it. To transform your goals into practical actions is to keep asking the question “How”, until you have a atomic and manageable set of actions that can directly and effectively impact the outcome.
An Example of Turning Goals Into Actions
Let’s take a theoretical media business that thrive on advertisement and paid subscription revenue. The business has the following high-level goals:
- Increase Revenue
- Reduce Costs
As you can see it’s a little hard to think of something practical we can do to impact these high-level goals. And if we fail to break it down into smaller chunks, we may end up doing unproductive activities like obsessively going over the data looking for trends, having meetings about why the revenue is flat, etc.
Let’s take a look at just the first goal and ask how can we increase revenue?. Our next set of sub-goals may look something like this.
- Increase circulation size (e.g., number of subscribers, number of copies sold, etc.)
- Increase number of advertisers
- Increase revenue per advertiser
- Increase revenue per subscriber, or per copy sold
- Increase revenue per publication
As you can see, each sub-goal is more specific than the original goal. However, we can still continue ask “How” and make it even more actionable.
Let’s take a look at the first sub-goal, and ask how can we increase the circulation size?
- Increase marketing and advertisement spending — e.g., to build brand recognition and demand
- Lower subscription cost — e.g., to increase value and make the purchase more attractive
- Lower cost per copy
- Broaden the scope within the niche — e.g., turning a magazine about dogs into one that’s about pets
- Improve distribution channels — e.g., sign up new retailers to carry the magazine, expand into neighboring regions, etc.
- Expand into other media — e.g., expand from hard-copy publication to web-based publication
I think you can see where I am going with this. Notice that each time we ask the question “How”, we make a goal more actionable, and the actions to accomplish it more defined and productive. In essence, we are building an upside down tree as illustrated below.
Applying the Principal to Personal Finance
How can this business concept be applied to personal finance? Well, let’s take a look at a common goal:
- Securing a comfortable retirement
How are we going to secure a comfortable retirement? By definition, retirement means we have enough income to cover our living expenses so we don’t have to work, therefore:
Take it a step further…
- Build passive income
- Invest in the stock market
- Invest in side businesses
- Social Security
- Reduce expenses
- Eliminate debt — this also eliminate all the interest payments
- Frugal living
- Find lower cost alternatives to products and services that you need
Let’s zoom in on “Invest in the stock market”
- Invest in the stock market
- Set up 401(k) plan
- Open a Roth IRA account
- Learn to invest
- Save money for investing
You can keep drilling down until the high-level goal become actionable.
There you have it, the basic principal of turning high-level goals into productive actions.
Pinyo Bhulipongsanon is the owner of Moolanomy Personal Finance and a Realtor® licensed in Virginia and Maryland. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, financial literacy author, and Realtor®.
Pinyo, this is a very good example of how to turn a large scale goal into manageable tasks. Great article.
I’m with Patrick on this. Plus, I’ve been thinking of making my 2008 meta-financial goal about my blogging (and entering it in Patrick’s contest, of course!). This will be a handy brainstorming tool! 🙂
@Ryan Guina – thank you!
@Mrs. Micah – Good luck with the contest. I’ll be submitting one too. Who can turn down a chance at winning an iPod. 🙂
I hear ya! The key is just to keep writing regularly and good things will happen. Time is our ally!
Perfect Timing Pinyo! I’m reviewing my 2007 goals and trying to start on getting my 2008 goals up. I’ll include the smart system on my 2008 goals.
@Laura – excellent. And don’t forget to submit your post to Cash Money Life for a chance to win an iPod. 🙂
We call it a “fish bone” diagram and though I have used this in my work life, I have never used it in my personal life.
There you go. Another great positive effect from reading blogs. And yours is just great.
@Fathersez – welcome to Moolanomy and thank you. Yeah, there are so many names for these great tools — e.g., 5 whys, cause and effect, etc. And thank you for the kind words about my blog. I subscribed to your and will be keeping an eye on it.
Turning goals into actions is always difficult that’s why I really rate SMART objectives because done properly they virtually write your actions for you. Whilst they may seem time consuming and just a waste of effort, they really can help you to transform the way in which you translate words into actions and also give you a sense of acheivement to look back on. By the way any chance of an up date about how things are going in relation to your blog goals for this year, in terms of visitor traffic, ad space selling etc? Keep up all the… Read more »
I think this is very smart. If you can’t measure it, you can’t manage it. Or as Yogi Berra said, you can observe a lot just by watching. I used to hate budgets. But since I also hated spending money I didn’t have, I set a small goal of just trying to rein in “regular” expenses. Easy right? I dumped my credit cards except for one for EMERGENCIES. Cash or debit card only now. I looked carefully at “regular” expenses and decided to dump my AT&T phone for a prepaid phone. Got a Tracfone for 30 bucks but it was… Read more »
Cheap Chick – Thank you for sharing a real life example. Always good to hear success stories.