Annual targets set as “last year plus a reasonable increment” feel prudent and add up to a breakthrough that never arrives. Setting them from the trajectory produces harder numbers and a more honest conversation about whether the breakthrough is still real.
In this guide
Key Takeaways
- →Forward targets are each defensible and together bend away from the breakthrough. That gap shows up in year three.
- →Five steps: end state, path shape, required position, momentum, and the gap between the last two.
- →Agree the shape of the path explicitly. It decides how much of the breakthrough falls in each year.
- →The gap is the contribution budget. Priorities claiming more than it are inflated; claiming less leaves the plan short.
- →When the backward number looks impossible, that tension is the method working, not a fault in it.
- →Record the commitment and the required position separately. Never split the difference silently.
Two ways to set a target
There are two ways to arrive at next year’s target for a KPI. The forward method starts from this year’s result and asks what improvement is achievable. The backward method starts from where the breakthrough needs to be and asks where the KPI must be by next December to stay on course.
Most planning rooms use the forward method without realizing it, because this year’s result is the number on the screen. Every forward target is defensible. Together they produce a trajectory that bends steadily away from the breakthrough, which is why so many multi-year objectives are quietly rewritten in year three.
Keeping annual objectives linked to their breakthroughs during the year is covered in Breakthrough and annual objectives in one system. This article covers the target-setting itself.
The method in five steps
| Step | Question |
|---|---|
| 1. End state | What value must the KPI reach, and by when, for the breakthrough to be achieved? |
| 2. Path | How is the KPI expected to move between now and then: steadily, slowly then quickly, or in steps? |
| 3. Required position | Given the path, where must the KPI be at the end of next year? |
| 4. Momentum | Where will the KPI be at the end of next year if nothing new is done? |
| 5. Gap | The difference between required position and momentum is what next year’s priorities must deliver. |
Step 2 is where judgment comes in. Few results move in straight lines. A new service network takes time to fill before attach rates rise; an emissions program ramps as suppliers convert. Agree the shape of the path explicitly, because it decides how much of the breakthrough falls in each year.
A worked example
A breakthrough commits to raising services from 31% to 40% of sales by the end of 2028. It is now late 2026.
| Item | Value | How it was reached |
|---|---|---|
| End state | 40% by end 2028 | From the breakthrough |
| Path | Slower in 2027, faster in 2028 | New service centers need a year to mature |
| Required position, end 2027 | 34% | Three of the nine points in the first year |
| Momentum, end 2027 | 32% | Current trend with no new priorities |
| Gap for 2027 priorities | 2 points | 34% minus 32% |
Illustrative figures.
The 2027 target is 34%, and the priorities correlated to this KPI must together account for about two points of movement. That is the contribution budget for the primary correlations on the matrix. If the proposed priorities claim five points, the claims are inflated. If they claim one, the plan is short.
A forward target, by contrast, might have been 33%: a respectable improvement on 32% momentum, and a year behind the breakthrough before it starts.
When the backward target looks unreasonable
Often it will. The required position may be well beyond anything the organization has achieved in a year. That tension is the point of the method. It forces one of three honest conversations:
- Raise the plan. Find priorities that can close the gap, and staff them.
- Reshape the path. Accept a slower first year with a deliberate, recorded case for a faster second year.
- Revisit the breakthrough. If neither works, the breakthrough is no longer realistic. Change it through the strategy process, openly, rather than letting the annual targets quietly abandon it.
A forward target hides the gap. A backward target puts it on the table while there is still time to do something about it.
Commitments and stretch
Targets agreed through catchball are commitments. If the backward target is above what anyone will commit to, don’t split the difference silently. Record both: the commitment the owner accepts, and the required position the breakthrough needs. The gap between them becomes a visible risk the quarterly review tracks, rather than an argument that resurfaces in December.
- End state stated for every breakthrough KPI.
- Path shape agreed and recorded.
- Required position and momentum both calculated for next year.
- Priority contributions fit the gap.
- Any shortfall recorded as a risk, not hidden in a lower target.
What backward targets need from the software
The second paragraph of this article contains the whole product requirement: rooms use the forward method because this year’s result is the number on the screen. Change what is on the screen and the default changes with it. If the breakthrough’s trajectory and its end state are visible at the moment next year’s number is typed, the backward method stops needing discipline and becomes the obvious thing to do.
The last item in the gate list is the second requirement. “Any shortfall recorded as a risk” needs a place that is neither the target field nor a meeting note, and it has to survive until the quarterly review asks about it.
| Step | What the tool has to show or hold | How to test it in a demo |
|---|---|---|
| 1. End state | Objectives on a multi-year period with a stated end value | Show me a 2026 to 2028 objective and its target |
| 2. Path | A phased path, not a single annual number | Can I phase this objective unevenly across years? |
| 3. Required position | The trajectory on screen while the annual target is entered | What is visible at the moment I type next year’s number? |
| 4. Momentum | Actual movement to date, across years, not just this year | Show me how far this KPI has moved since 2026 |
| 5. Gap | Correlation contributions that can be compared with the gap | Show me what these priorities claim for this KPI |
| Stretch | Commitment and required position held separately, as a tracked risk | Record a shortfall and show me where the review sees it |
Row 3 is the one that changes behavior in the room. The rest make it checkable afterwards.
Row 4 is quietly the hardest. Momentum means the trend across years, and a tool that archives or overwrites the matrix each cycle has no multi-year series to draw it from. The room is then estimating momentum from memory, which is the same failure mode as estimating effort from memory in . Hoshin kanri software vs Excel covers where spreadsheet versions of this stop working.
What a forward target costs over three years
Run the worked example forward and the arithmetic makes the case on its own. A 33% forward target instead of 34% looks like one point. Repeat the same habit in 2028 and the breakthrough ends around 37% rather than 40%, which is a third of the ambition lost without a single decision to abandon it. Nobody is at fault, every annual target was defensible, and the only visible event is a quiet rewrite of the breakthrough in year three.
Set against that, the shape of a license matters less than whether the tool keeps multi-year objectives at all. Of the published options, OnStrategy lists $200 per month for unlimited users, and i-nexus publishes a free Starter tier for up to five users with $28 per user per month at its Standard tier. The question to ask either one is row 1 of the table above, not the price: can an objective span three years and keep its cumulative movement?
Profit.co publishes two plans, Essentials and Enterprise, quoting against modules and scale rather than a public seat rate. Objectives can carry multi-year strategy periods, which is what makes steps 1 and 4 possible, and Hoshin Kanri sits in Essentials with OKRs and Goals, Balanced Scorecard and Strategy Roadmap. That matters at the other end of the method: the gap at step 5 becomes contribution claims on the matrix, and the priorities carrying them run as team OKRs through the quarters on the same data. What drives the cost of hoshin kanri software covers the full list to total.
The 30-day free trial is long enough to load one breakthrough and set a single target backwards, which is the exercise worth doing before the planning room meets.
Trajectories in Profit.co
In Profit.co, breakthrough objectives carry multi-year strategy periods and the X-matrix can be viewed across years, so each annual target can be set against the breakthrough’s progress so far. Monthly plan values on each objective feed the bowler chart, so the agreed path shape becomes next year’s plan row. More on the planning software page.
Read against the five steps, that puts step 1 and step 4 on the same screen: the end state the breakthrough states, and how far the KPI has actually moved toward it. Step 2’s path shape stops being a sentence in a document and becomes the phasing that the bowler chart reads month by month, which is also what lets the review notice in April that the slower-then-faster path is running slower than agreed.
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Questions this article answers
From the breakthrough trajectory: where the KPI must be at the end of the year for the multi-year objective to stay on course, compared with where current momentum would take it.
Each target looks reasonable, but together they produce a trajectory that falls short of the breakthrough, usually noticed only in year three.
Raise the plan with more or better priorities, reshape the path with a recorded case for a faster later year, or revisit the breakthrough openly through the strategy process.
The gap between required position and momentum. Primary correlations to that KPI must together account for about that much movement. Claims well above it are inflated; well below it leaves the plan short.
The breakthrough’s end state and the KPI’s movement across years, at the moment the annual number is entered. Rooms default to the forward method because this year’s result is what is on screen.
Record both numbers: the commitment accepted and the position the breakthrough needs. The difference becomes a risk the quarterly review tracks, rather than a December argument.
