Why a company will always miss its target

Dr. Goldratt, in his wonderful work on project management, demonstrates that a project is guaranteed to be late if it is managed in the conventional way break down the project into work units, assign deadlines to each and build in buffers in each time estimate. His reasoning is roughly as follows: nobody is going to finish early because there is no incentive to do so, anyway work always expands to fill the time available, and so on – when we bring in what he calls ‘Murphy’, by which he means unpredictable uncertainty, ‘some s---‘ happening, basically, which will cause some overrun somewhere, the project as a whole is guaranteed to overrun, since nobody is going to make up for it. If we apply this same kind of thinking to revenue targets, we get a similar law – a company as a whole will never meet its target if its target is simply the aggregation of individual targets, for instance, on accounts. I have observed the same kind of behavior by account managers that Goldratt describes in the context of a project: as the year end, or quarter end approaches, an account manager who knows he is going to meet his target, eases off and coasts. Meanwhile, something is bound to go wrong in some other account, which will end up falling short of its target, thereby guaranteeing that the aggregate target is not met! This is a behavioral issue and cannot be resolved by adding or subtracting buffers to targets. It can only be met by recognizing, rewarding absolute performance, not performance against targets.. ‘run as hard as you can’ in Goldratt’s words. I believe the very process of target setting is causing us to underperform as an organization.