OK, 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 eyes 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.
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."
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."
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.
Make your goals, and you stay in business. Advance your objectives, and you build a business worth having.
At 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.
Companies spend days, if not weeks, agonizing over their mission statements and business plans. How much precious, misspent time goes into the process? Get the business model right, and then accessorize it with the details.
In real estate, it's location, location, location. In management, it's preparation, preparation, preparation. But 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. Vidmar 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 Olympic gold. He is chairman of the USA Gymnastics Board of Directors and a broadcast commentator.
Vidmar understands goal-setting in a very tangible way. 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 feet 5 inches 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. " ... 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."
Mackay's Moral: You'll never reach your goal if you don't have one.