Ben Horowitz is co-founder of Andreessen Horowitz, the US venture capital firm and one of Silicon Valley’s most respected and experienced entrepreneurs. He bought and then sold Skype to Microsoft for a $5.75 billion profit within 20 months. His book, ‘The Hard Thing About Hard Things’ contains chapters like “If you are going to eat shit, don’t nibble”, prompted the title of this column.
In 2000, as CEO of Loudcloud, he nearly lost $186 million of other people’s money and 600 employees when the dotcom crash of 2000 took it from one of the hottest startups to having just three weeks worth of cash before bankruptcy. No private investor would give them money.
In what BusinessWeek billed ‘The IPO from Hell’ he got Board backing to go public and eventually raised another $162.5 million. This was while the market was losing 93% of its value.
Ben succeeded after setting a specific, difficult goal because he had to. The outcome was however predicted by the second of two core findings of goal setting science (over 1,000 empirical studies over 50 years). Specifically, difficult goals lead to higher performance than abstract goals such as “do your best.” (Latham & Yukl, 1975).
This may not come as a ground shaking surprise to a number of you although the first core finding might rock you a little more. There is a linear relationship between the degree of goal difficulty and performance, with the performance of participants with the highest goals over 250% higher than those with the easiest goals (Locke 1967, 1968).
In fact, even though ability is one of the things that limits this relationship, humans put in place a learning goal to develop the skills and knowledge required to achieve their original specific, difficult goal.
If the science of goal-setting is this straightforward, why do people seem to perpetually set and fail to achieve goals? Whether sales numbers, weight loss targets or marathon training sessions most of us have experienced abject failure. What’s the answer?
As the comedian David Walliams slipped into the English Channel on the morning of July 4th 2006 his coach reminded him of why he was there. A year earlier he made the commitment to train – as an occasional swimmer – to swim the English Channel to raise money for Sport Relief after being introduced to systematically abused girls in Ethiopia. After nine months of training he swam the 22 mile stretch in the 167th fastest time. He became the first person ever to raise £1m in a solo, one-off challenge.
Self belief is one of the most frequently-cited psychological terms in goal setting study results. Goal commitment is however the magic ingredient, which has self belief as a primary driver. The goal setting equation is therefore roughly: Specific, difficult goal + Commitment + Self belief = 250% increase in performance
So, for 2017 and beyond, can we agree to get past the SMART acronym (yes, goals have to be specific, measurable, actionable, realistic and timely), and join me in this column in getting sexy with some leadership psychology?
Oh, and Ben sold Loudcloud – renamed Opsware – to HP seven years later for $1.6 billion in cash.