STRATEGY

To achieve an impossible goal, focus on inputs not outputs

by Jeff Haden: Bestselling non-fiction ghostwriter, speaker and columnist for Inc.com.

Have an impossible-sounding goal? Jeff Bezos says work backward until you find controllable inputs.

I was talking with a company owner who needed to increase sales by at least 40 percent. High fixed costs, and a significant debt load, made saving his way to profitability impossible.

Goal clarity? He had it. How to achieve the goal? That part was less clear.

It’s a common problem. You probably know what you want to do. (It’s easy to think of things you want to do.)

How you’ll get there is the problem, especially if the goal doesn’t seem directly - much less easily - controllable. Like “building a reputation for excellence.” Or “becoming the employer of choice.”

Or, in the example below, “increasing your company’s stock price.” Sure, you could go out and tout the stock, telling everyone who will listen how bright the future will surely be. (I’ve sat on a few earnings calls that were super long on promise and extremely short on details.)

Or, as Jeff Bezos said in 2014, you can flip it around (long, but worth it):

If you focus on the controllable inputs to your business, in the long term, you get better results.

Say somebody came up to me and said, “Jeff, I want your job to be to drive up the Amazon stock price, and just manage that directly.” Many companies actually try to do this. They go out and try to “sell” the stock. That’s a silly approach, that’s not sustainable.

It’s much better to say, “What are the inputs to a higher stock price?” OK, well, free cash flow and return on invested capital are inputs to a higher stock price. Let’s keep working backwards. What are the inputs to free cash flow? And you keep working backwards until you get to something that’s controllable. A controllable input for free cash flow would be something like lower cost structure.

Then you back up from there and say, if we can improve our picking efficiency in our fulfillment centers and reduce defects - reducing defects at the root is one of the best ways to lower cost structure - that starts to be a job you would accept.

If you’re a reasonable person, you would say, “I have no idea how to drive up the stock price. I can’t manage that directly. It’s not a controllable input.” But I can make picking algorithms more efficient, and that will reduce cost structure.

And then you follow that chain all along the way.

The same holds true for your business. Want to increase sales?

Focus on controllable inputs: the number of leads generated, the number of cold calls made, the type and frequency of follow-ups. Turn the goal into a series of controllable, manageable inputs. (“Manageable” not in terms of easily attainable, but a task or process that can be actively and objectively managed.)

Want to get new employees up to speed faster and better? Focus on controllable inputs. As Google learned, always meet with new employees on their first day. Schedule weekly check-ins. Match the new hire with a peer “buddy.” Set short-term goals, and set the stage for a feedback loop. Turn the goal into a series of controllable inputs.

The same is true for personal pursuits. Want to be fit? (Not just get fit, but stay fit?) Manage controllable inputs: how, and how often, you work out. What you eat. How much you sleep.

Manage controllable inputs, and the output almost always takes care of itself, especially over the long term. Success typically results not from a relentless focus on an end goal, but on the daily process required to achieve that goal.

Set goals that allow you to work backwards to find the controllable inputs that allow you to achieve them. Follow that chain all along the way until you find concrete steps you can take, and then focus on improving those controllable inputs.

Do that, and the output will almost always take care of itself.

Useful resources:

Jeff Haden learned much of what he knows about business and technology as he worked his way up in the manufacturing industry from forklift driver to manager of a 250-employee book plant. He has written more than 30 non-fiction books, including four Business and Investing titles that reached #1 on Amazon's bestseller list.

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