Target setting
A target is the number on a Key Result, and it has to do three things at once: stretch far enough to change how the work is approached, stay credible enough that the team believes it, and be fair enough that missing it by a little is survivable.
This is chapter 7 of From Trading to Scaling, “The Goals”. The book is free and takes about an hour.
The obvious bit
The number isn't the goal. It's a device for changing how people approach the work, and it only does that if they believe it.
Which is why the most common target-setting failure isn't the number being too high or too low. It's the number arriving without a reason, from a spreadsheet, and everyone quietly deciding it's decoration.
Where a defensible target comes from
The model, first. If you have a metric tree, the target is an argument: this lever moves that driver by roughly this much, so this is what a good cycle looks like. Without the model, you're picking a number and hoping.
Then the baseline. What happens if nobody does anything? Startling numbers of targets are quietly below trend, which is a target to look busy.
Then the stretch. Far enough that the current approach won't get there. That is the actual test of ambition, and it's a better test than a percentage: if the team can hit it by doing more of what they already do, it's a forecast, not a goal.
Write the reasoning down alongside the number. A target with its argument attached survives a change of personnel. A bare number does not.
Fairness, which isn't softness
Three conditions, and all three are structural rather than sentimental.
The resource arrived. A stretch target set without the capacity to reach it's not ambition, it's a message, and people read it correctly as decoration.
The lever is genuinely theirs. A target on something a team can't influence teaches learned helplessness in about one cycle.
An honest miss is survivable. If the team that reached hard and missed by ten percent has a worse quarter than the team that comfortably delivered a small number, you have set the real target, and it's lower than anything you wrote down.
The failure modes
The negotiated target. Two rounds of haggling produce a number both sides can live with and neither believes. Everyone learns that the first number is theatre.
The target that is also a bonus gate. Attach pay to the number and you haven't created ambition, you have created a strong incentive to set a low one. That is a design decision, and it should be made deliberately rather than by accident.
The precise target on an imprecise thing. A number to two decimal places on something you measure roughly is a confidence signal you haven't earned.
Sandbagging, treated as a personality problem. It's almost never one. It's a rational response to what the last few cycles rewarded.
Our opinion
Most companies argue about the number and ignore the two things that actually determine what people write down: whether the resource is real, and what happened last time to someone who reached and missed.
Get those two right and target setting becomes a straightforward conversation about the model. Get them wrong and no amount of encouragement to be ambitious will survive the first review.
One line to keep: a target people don't believe changes nothing, and a target that punishes an honest miss changes only what people are willing to write down.
How ambitious should a target be? +
Far enough that the current way of working won't reach it. That is a more useful test than any percentage, because it puts the emphasis on changing the approach rather than on the number itself.
Should targets be tied to bonuses? +
Only with your eyes open. Attaching pay to a target creates a strong, rational incentive to set a low one, so if you do it, design the gate deliberately rather than letting it happen by default.
Why do teams sandbag? +
Because something taught them to. Usually a review where an ambitious miss went worse than a comfortable hit, or a stretch goal that arrived with no extra resource. Sandbagging is a designed behaviour, not a trait.
From the ZOKRI OKR Handbook, the methodology we install and maintain. Written by Matt Roberts.
A UK-based strategy and OKR consultant and two-time SaaS founder with a venture-backed exit, Matt turns strategy into execution for teams scaling from tens to thousands. He co-founded ZOKRI in 2018, having previously co-founded Linkdex, a venture-backed enterprise SaaS platform he led to a trade sale. He writes the methodology behind these notes.
Target setting is where most of the honesty in a goal system is won or lost. We bring the model, the questions and the awkward comparison to last year.
Already running OKRs? Get an objective read on the implementation: the OKR Implementation Review, free, 45 minutes.