When Firms Pursue Multiple Goals, Organization Design Is Crucial

Multiple goals create trade-offs that good organizational design can manage

Companies do not chase a single goal. A manufacturer cuts costs, grows revenue, and improves margins all at once. A public company juggles quarterly earnings with long-term shareholder value while managing employees, customers, and regulators. Pursuing several goals at once is the norm, not the exception.

Simultaneous pursuit of multiple goals can come at a cost. Research on individual incentives and job design shows that asking someone to hit several targets at once splits effort and hurts performance on each one. Management thinking has long argued that the same applies to firms: Multiple goal pursuit should breed confusion and undermine a clear sense of direction for the firm. That conceptual argument, however, is largely untested against data on what firms actually do and how they perform.

My co-author and I found support for this idea in the manufacturing sector: Firms improve on a metric, such as market share or low cost, when they set it as an explicit goal. But improvements become less likely as firms pursue more goals simultaneously. Multiple goals carry a cost that compounds with each added goal.

Our big idea is that there might also be benefits to multiple goal pursuit, and our work has revealed one. When a firm pursues two goals together, say efficiency and quality, performance on those two metrics moves together more closely than when pursued separately. Hence, rather than just adding to confusion, pursuing multiple goals together can help firms discover actions that raise them at once (e.g., a process change that improves quality without reducing efficiency, or even improves both).

How firms capture the benefit of multiple goal pursuit, and blunt its cost, comes down to organization design. Firms with frequent face-to-face coordination or performance-based pay absorb the cost more easily, while those leaning on information technology for coordination pay a steeper price. My research on dual-purpose companies shows that structure matters too. The right structure depends on the activities involved. Firms should integrate when one activity creates both economic and social value, and split activities into specialized units when the two values come from separate activities needing different skills. The core lesson is to design organizations that manage competing goals on an ongoing basis, not after conflicts become costly.

This has a practical takeaway for anyone running a modern, complex organization. The cost of multiple goals is not fixed. The firms that manage it well are not necessarily the ones with fewer goals, but the ones that design their organization around the trade-offs those goals create.

Obloj, T. and Sengul, M. 2020. “What Do Multiple Objectives Really Mean for Performance? Empirical Evidence From the French Manufacturing Sector.” Strategic Management Journal, 41(13): 2518-2547.

Battilana, J., Pache, A.-C., Sengul, M., and Kimsey, M. 2019. “The Dual-Purpose Playbook: What It Takes To Do Well and Do Good at the Same Time.” Harvard Business Review, 97(2): 124-133.