37signals on Goals: Beware the Side Effects of Numbers

#BuildAnEfficientStartupTeam #37signals How to think about goals Founded in Chicago in 1999, 37signals is a small team creating simple, focused software. Its main commercial products include Basecamp, Backpack, Campfire, and Highrise. It primarily provides collaboration solutions for business customers. Basecamp has served more than 100,000 companies, yet the company has only fifty-something employees. They never work overtime: at most 40 hours a week, and only 32 in summer. There are no performance reviews or KPIs, and it does not even set hard sales targets. First, how do the authors view goals? Goals are generally seen as things that must be completed, the basis of teamwork and a prerequisite for consensus. The authors see another meaning: a goal is fundamentally a ranking. When a company establishes one, it tells employees this is the top priority and everything else matters less. If new users are the goal, you must exhaust every means of maximizing that number. If retention is the goal, you must stop users canceling. If revenue is the goal, you must find every way to get customers to pay more. A clear numerical target locks the company’s attention onto one thing. Side effects are almost inevitable. Telecom companies, for example, target customer retention: keep the number active rather than cancel it. To achieve this, they make cancellation extremely complicated and unpleasant. The target appears met, but the customer’s overall impression of the brand is damaged. The authors’ company once considered a revenue target, then rejected it after careful thought. Basecamp charges per company: whether you have 10, 100, or 10,000 people, you pay only US$99. Many competing products charge per person. Basecamp could do that too—and would have to if revenue became the overriding goal. But product development would become captive to large customers. Eventually, it would become a product tailored to one major customer rather than one meeting customers’ common needs and offering genuine long-term value. 37signals therefore never sets hard, quantifiable goals: no revenue targets, retention targets, or new-user targets. Its only goal is to return to its original purpose and people’s real experiences, making the product that satisfies customers most. To borrow from the Greek philosopher Protagoras, the human being is the measure of all things. The authors do not claim setting goals is wrong. They want us to reconsider goals in the digital era. In the industrial age, a large collaboration network required everyone to understand their particular role clearly; goals were the most suitable tool. In the digital age, change is too rapid. Turning a goal into a five- or ten-year corporate plan can cause problems. The farther away something is, the less clearly we see it; goals are no different. Nobody knows where opportunities will be in ten years. Nokia aimed to make the most reliable feature phones, but while immersed in that field, it missed the smartphone wave. The authors’ view is a reminder: do not let goals become shackles that block your vision. Keep two perspectives. Look down to recognize the company’s foundation—its ultimate value—and look into the distance for new opportunities approaching. Tomorrow, we will explore how the authors view opportunities.