PM Articles > Kent McDonald > SMART Objectives Aren't Always Project-Specific

SMART Objectives Aren't Always Project-Specific

by Kent McDonald

Project managers for years have measured project success based on three criteria: was it on time, was it within budget, and did it deliver the agreed upon scope? That definition of success is so widespread that the Standish Group has even used that criteria as the basis for its CHAOS Study on Project Management. Unfortunately these criteria are insufficient for measuring project success and can be misleading. Instead of using cost, budget, and scope as measure of success, I use the achievement of business objectives as a true measure of project success.

My friend, co-author, and ProjectConnections contributor Niel Nickolaisen shared the story of a 14-month, $27 million ERP project in Stand Back and Deliver that was on time, on budget, delivered all the agreed upon scope, and was considered a complete failure. The project did not add features that helped the organization build and maintain a sustainable competitive advantage. The team and the sponsors thought that budget, cost, and scope were appropriate measures of success, when really they should have focused on whether what they were doing would help them achieve their business objectives.

Niel would have been well served by having SMART business objectives to refer back to when making decisions on that project. You may be familiar with the SMART acronym. There are a couple of different ways to describe it, depending on what characteristics you want to stress. I prefer this selection of words: Specific, Measurable, Agreed-Upon, Realistic, and Time-Framed.

SpecificDo you have an actual, concrete way of knowing when you have reached your objective and hence were successful?
MeasurableOne way to get a concrete way of knowing that you were successful is to have a metric that you can look at it to see progress.
Agreed-UponOther people may use different words for the A, but I think this one is the most important. Objectives are not nearly as powerful or useful if all members of the team do not agree that they are important.
RealisticYou are setting yourself up for failure if you set an objective that is impossible to reach. You should stretch a little, but you should not set up an objective that you have no hope of meeting.
Time-FramedIdentify when you are going to reach the objective.

Things that I encourage teams to remember when working with objectives that line up with the SMART acronym:

  • Identify the metric used to track progress.
  • Know what the baseline for that metric is—where are you starting from?
  • Know your target value for that metric—what value do you expect to reach when you are successful?
  • When are you expecting to reach that target? Consider that you may need to allow some time after the project has been implemented before you can get a useful measure of success.
  • Do you have a plan for how to get the measure? You'll want to consider this, because it could impact the scope of your project.

Some examples of SMART objectives include (these are, of course, totally contrived):

  • Increase non-consulting revenues from $0 to $20,000 by December 2012.
  • Decrease average decision cycle time from five days to two days by June 2012.
  • Increase Net Promoter score from 45 to 60 by the end of 2012.

The one thing that the SMART acronym doesn't address is the perspective of the objective. Project-specific objectives may be convenient to define but they aren't very meaningful. Meeting a certain cost, time, and scope could easily be seen as project-specific objectives. Projects are generally undertaken to implement some form of change in the business, often implementing some part of the organizational strategy. Since the project is intended to help implement the strategy, the measure of success should be based on how the business is aided. The best way to measure that is to measure how the project contributes to business objectives.

Notice I said contribute. Take another look at the examples I gave above. A project by itself will not enable a small consulting firm to increase non-consulting revenues from zero to $20,000 in over a year. The consulting firm will probably undertake a project to position itself to grow non-consulting revenue, such as creating information products or setting up an affiliate program, but the project by itself will not generate that revenue. Operational efforts will also have to occur, and there may be multiple projects that occur to realize the targeted revenue. Projects often introduce changes which set the company on the path to reaching those objectives, but a lot has to happen in the way of ongoing operations to make that happen.

A different way to do it is to estimate what type of contribution a project will have on the overall business objective and watch to see if that contribution occurs. In some cases you may be able to empirically measure this, in others it may be a yes/no type of measurement: Did the product that the project created contribute to the organization meeting its revenue targets? Measuring objectives in this way may be a little more difficult than measuring whether you met budget, schedule, and scope but they go a long way toward aiding decision making during the project. When trying to make a decision, the project team can point to the objectives they are working toward and ask themselves, "Will what we are planning to do help us meet that objective?"

By focusing on accomplishment of business objectives instead of the points of the iron triangle to measure success, project teams will make more informed decisions about their projects. They'd be more likely to change or stop projects that are not heading in the right direction, and they would focus more on doing the right things instead of doing things right. I know Niel learned his lesson. The ERP project I mentioned above led him to create the Purpose-Based Alignment Model, which is one great way to determine if you are focusing on the right objectives.

Related Links
Niel's Purpose-Based Alignment Model is referenced in Kent's Agile Technique Brief on Project Value Models. Geof Lory has written about improving communication by sharing your goals. A Benefits Realization Plan can help you determine whether or not a project has actually achieved its objectives -- objectively.

Not all comments are posted. Posted comments are subject to editing for clarity and length.

Boy, do I take exception to your premise regarding the example ERP project. The project to install the ERP was a success, as defined. The decision to install an ERP, or that specific ERP, was flawed. Let's separate the project from the part of the strategic plan that it grew from. Don't denigrate the project team for the failure of the strategic planner(s). Someone decided that the strategic plan would be well-served by installing an ERP to provide specific benefits and supports to the current and future needs of the business.
This is not a Project Management failure - this is a strategic/operational planning failure, over which the PMO has absolutely no control.

Reading further into Niel Nikolaisen's Purpose-Based Alignment Model, which essentially identifies the "Differentiating" qualities of a project/product, I'm even more convinced that this is not a Project Management issue, but more of a Business Process Management/Review issue, again, stemming from strategic and operational planning decisions.

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