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A flight-tested framework for effective goal-setting

Written by: Lenny Rachitsky
Advisor & Former Lead PM at Airbnb
Innovators_Headshot_Lenny

One of the most impactful things a product leader can do to help their team succeed is to point everyone in the same direction—to channel all of the team’s energy, focus, and resources towards an aligned outcome.

As an engineering leader, startup co-founder, and former PM heading up supply growth at Airbnb, I’ve learned a lot about successful goal-setting. 

Below, I’m sharing a framework that I’ve leveraged to set goals and effectively institute them across an organization.

Why set goals?

In its purest form, a goal is a way to track whether you’re achieving what you set out to do. Let’s start by thinking about where goals fit into the big picture: a goal tells you if you’re successfully executing your strategy. And strategy is just a plan to achieve your company’s mission. 

All together, it looks something like this:

Mission → Vision → Strategy → Goals → Roadmap

 

When setting goals, start with what you’re trying to achieve as a company. What’s your ultimate mission? A goal should never be an end in itself—the end is achieving your mission. 

In my work advising product teams, one of the biggest traps I see leaders fall into is assuming that everyone on their team has the same idea of what success looks like. The metaphor I like to use for this—inspired by a former colleague—is a silver foil-wrapped burrito (like the ones you see on the Chipotle billboards). The burritos look delicious because we’re all picturing our favorite ingredients inside that silver wrapping. A product leader’s job is to unwrap the burrito. That is, to make sure everyone is seeing the same thing.

How to set goals

Now that we know a goal is just a way to measure whether you’re achieving your strategy, let’s talk about how to decide what the actual goal should be.

A good goal has the following attributes:

  1. Concrete: It’s clear and unambiguous (something that isn’t subjective).
  2. Simple: Everyone understands what it is and how it’s measured.
  3. Quick feedback loop: The results of your changes can be seen quickly. Think about how long it takes for a user to reach the milestone you’re tracking, and whether you can expect movement in a reasonable timeframe.
  4. Business-oriented: It’s easy to see how this goal actually drives the larger business.
  5. Stable: It’s a predictable measurement tool, and you’re confident your work won’t be drowned out by noise.

With these attributes in mind, the next part of the goal-setting process requires you to think about two things: the metric you want to move, and the threshold you want to hit.

How to determine your metric

Start with the “north star” metric of the business—whether it’s revenue, subscriptions, or media consumed—then, figure out what set of levers move that metric.

During my time at Airbnb, for example, we were focused on nights booked. The levers that moved this metric were loosely broken up into demand, supply, and the dynamics between the two. One level deeper, we looked at things like site visits, conversion, and cancellation rate.

 

This combination of metrics is often referred to as a company’s growth model. The key here is that all of the levers add up to 100% of what drives the business (essentially, it’s the math formula of the business). 

Now that you have this collection of levers, figure out which amongst them presents the largest constraint (or bottleneck) for your business, and then determine the best concrete metric to track that lever. Ask yourself: what’s the one thing that, if moved, would unlock the most growth? For instance, at Airbnb, after we determined that home supply was our primary constraint to growth, we built a team focused just on growing supply.

Our success metric? New listings that received at least one booking.

 

How to determine the metric’s threshold (i.e. the goal)

With your metric set, landing on the right threshold for that metric (your goal) requires a combination of tops-down and bottoms-up thinking.

  • Tops-down: In order for your business to achieve the ideal level of growth required for long-term success, how much does this metric need to move?
  • Bottoms-up: Knowing what you know today, what impact could your team realistically deliver with current resources (or, with some increase in resources)?

 

Your resulting number usually ends up being a healthy middle ground between these two—adjusting based on final resource considerations, and any new information you receive along the way.

I want to spend a bit of time here on one of the intangibles of effective goal-setting: ambition. I often get asked just how ambitious leaders should be when setting goals. 

If used well, goals can serve as a powerful way to motivate your team. If used badly, they can kill morale.

I like to think about a goal like a video game. Video games are built to ensure that the next level is just hard enough to motivate you to continue, but not so hard that you give up. You want to win—even if it’s tough—and victory always seems just within reach. Only when it feels impossible do you think about throwing in the towel (case in point: the now legendary, E.T. game).

Just like in a video game, you want your goal to motivate your team to level-up. It should feel uncomfortable—but not impossible.

 

Finally, while you’ll want to be looking for a defined metric and number when setting your goal, don’t get stuck if you can’t find one. Instead, figure out as concretely as possible what success looks like, and go with that. What would be true in the world if you succeeded? What qualitative signals would you like to see? For instance, a goal for a product launch could be “launch a product by this date, with this many resources, with no more than this many bugs.”

How to use goals once you have them

You’ve done the hard work to set a concrete goal that’s aligned with your mission and vision. But now that you have it, what the heck do you do with it?

  1. Get buy-in: Make sure everyone on your team (as well as the folks above them), buy into it. 
  2. Instrument: Implement a tool that allows your team to easily watch this metric. Build a dashboard that’s accessible and easy to find. Make sure the data in it is valid, and that people trust the numbers innately.
  3. Prioritize: Decide what to prioritize based on what will have the most impact on your goal. With alignment on what success looks like for the team, decisions that felt hard before should be much easier (everyone is incentivized to care).
  4. Operationalize: Build this metric into your team workflows. Find a cadence of checking in on this metric individually with your team, and with management. Share progress on the goal frequently and consistently.
  5. Revisit: As you continue to monitor your metric (and how your work is impacting it), you might conclude that something just isn’t right. Give yourself an opportunity to revisit the goal (e.g. next quarter). Consider whether it still meets the attributes above, and if your team has the ability to move it.

So, go ahead—unwrap that silver burrito and reveal your team’s collective hopes. As a product leader, you’ll be rewarded with clarity, focus and a voraciously hungry team.

Author's Bio

After graduating from college and immediately joining a San Diego-based startup as their first engineer (and, soon, leading their Eng team), Lenny moved to Montreal, Quebec to co-found a company—Localmind—that aimed to connect curious travelers with knowledgeable locals. A year-and-a-half later he sold the company to Airbnb, where he spent seven years helping create their first host community platform, optimizing guest conversion, launching the Superhost program, building out core host tools, and, eventually, leading their supply growth team. Today, Lenny writes, advises, and helps product teams achieve their goals for growth.

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