Most great companies are formed to meet the goals and express the values of their founders, which is not always the same as maximizing shareholder wealth. For them, profit is simply a strategic necessity rather than the supreme end point.

This may be a jolting concept, we realize. But we’re certainly not the only management writers who have come to the same conclusion. Peter F. Drucker, in his classic text, Management: Task, Responsibilities, Practices, reached the same conclusion years ago:

Business cannot be defined or explained in terms of profit... The concept of profit maximization is, in fact, meaningless... The first test of any business is not the maximization of profit, but the achievement of sufficient profit to cover the risks of economic activity.

Commercial data is similarly open. This includes bids, orders, inventory, shipments, return on assets—anything that’s potentially relevant to running the business. Most of this information is available in real time, but in each facility, performance data also gets posted weekly near the plant entrance or in the cafeteria.

Nucor’s profligate transparency creates a healthy competition between divisions, prompting friendly contests to see which plant will be first to achieve a particular goal around safety or efficiency. It also makes it easy to spot plants and practices that deserve to be best-marked.

To determine how to win, an organization must decide what will enable it to create unique value and sustainably deliver that value to customers in a way that is distinct from the firm’s competitors. Michael Porter called it competitive advantage—the specific way a firm utilizes its advantages to create superior value for a consumer or a customer and in turn, superior returns for the firm.

A sample OGSM (objectives, goals, strategy, and measures) statement:

Objectives

Strategy

Measures

Improve the lives of families

by providing consumer- preferred paper products for kitchen and bathroom Be the operating TSR leader in North American tissue/towel and value creator for P&G

Where to play:

• Win in North America

• Grow Bounty and Charmin margin of leadership

• Win in supermarket and

mass discount channels

• Build performance, sensory, and value consumer segments

• Operating TSR progress

• Share and sales growth

progress

• Profit growth progress

Efficiency measures:

• Capital efficiency

• Inventory turns

Goals

Year-on-year operating

TSR > x%

x% annual share and sales Growth

x% annual gross and operating profit margin Improvement

x% return on capital investments in plant equipment and inventory

How to win:

1. Be lean

• Get plant/equipment

capital spend to xx of sales

• Reduce inventory by x%

1. Be the choice of consumers

• Superior base products, prices right

• Preferred product

formats and designs

• Manage category growth

1. Be the choice of retailers

• Improve shelf availability

and service

• Develop differentiated

shopping solutions

• Win with the winners

Consumer preference measures:

• Weighted purchase intent

• Trial, purchase, and loyalty

Retailer feedback measures:

• Key business drivers (distribution, share of shelf, share of merchandising, etc.)

• Preferred vendor

Expected outcomes should be noted in writing, in advance. Specificity is crucial. Rather than stating “increase in market share” or “market leadership,” quantify a thoughtful range within which you would declare success and below which you would not. Without such defined measures, you can fall prey to the human tendency to rationalize any outcome as more or less what you expected.