Originally published: Harvard Business Review

“If we were drinking champagne on New Year’s Eve because your organization had just completed an outstanding year, what would have been accomplished? How would you measure that success?”
The “champagne question” is the first one we typically ask during interviews as we begin a strategy development process. For over three decades, we’ve posed the same question to thousands of executives and board members globally, from Fortune 500 companies to German mittelstand businesses to non-profits, asking them to define success one to 10 years into the future.
Their responses consistently reveal a striking truth: the vast majority of teams aren’t aligned on what constitutes success. In fact, we’ve yet to encounter a group with an entirely consistent view of what warrants “popping the champagne.” While initial responses occasionally center on a few basic measures like revenue and profitability, notable differences emerge when leaders describe their individual “pop-the-champagne” answers.
It’s no secret that having a common vision of the future is crucial for setting a cohesive strategic direction for any enterprise. The cost of misalignment is steep: strategic dissonance, political infighting, inefficient resource allocation, decision paralysis, and a sluggish response to market shifts, among others.
With the new year just underway, what better time to engage your team in defining what champagne-popping success looks like this year or the future? Here’s how to prepare for and lead this success-defining discussion with your team.

Before the Conversation

Preparing to discuss what constitutes success requires some pre-work. Here are two steps to take ahead of time:

1. Ask the champagne question individually

Begin by asking each team member to respond to the champagne question individually, either through an interview or a survey.
Associating success with a celebratory event like popping champagne on New Year’s Eve evokes a more valid, sometimes emotional response. It moves people away from what’s in the budget (or the compensation system) and leads to more genuine, creative, and comprehensive thinking about goals and achievements. By gathering both qualitative and quantitative indicators, the conversation that follows can lead to a more specific set of aspirations.

 2. Analyze the responses

Before discussing the results with the team, group the individual responses into broad themes like revenue growth, profitability, global expansion, innovation, and culture. This allows for commonalities and misalignments to be more easily identified in advance.
Typically, differences among team members fall into three categories:
Same goal, diverse targets. Typical responses often center on areas such as financial performance and customer engagement, but specific targets vary significantly. For example, members of the senior management team at a $10 billion information services company gave us three-year revenue targets ranging from “doubling revenue” to “achieving modest growth of 4-5%” as reasons to pop the champagne. This disparity, even with a three-year revenue target embedded in their incentive compensation plan, revealed a major gap between the team’s formal targets and individual ideas of revenue success.
Same goal, diverse interpretations. Teams might agree on a goal like “going global,” but interpret it differently. At an HR services company, while the CEO and direct reports all agreed on global expansion as a common goal, their understandings of what it meant varied significantly. A follow-up discussion on whether “going global” meant serving non-U.S. customers in their local markets versus supporting existing U.S.-based multinational clients in their various regions revealed divergent views of success. Months after their Board had endorsed global expansion as an objective the champagne question uncovered significant disconnects among individual views of what that phrase meant.
Different goals. Team members frequently have different views of success. Across an apparel industry team with decades of experience together, leaders’ views on the key indicator of financial success ranged from focusing on revenue growth to maximizing profit to maintaining a high credit rating. This highlights the difficulty in aligning priorities around collective success. All three outcomes have virtue, but when tradeoffs are necessary how should they be ranked?

During the Conversation

Aligning the team requires careful thinking about the process in the meeting, especially if their answers show widely varying perspectives across the team. Consider the following:

1. Level set the group

Even seasoned executives may not have a consistent understanding of the business’s trajectory. At the conversations’ starting point, make sure everyone is up-to-speed on important data like growth rates, revenue mix by product and geography, and insights from employee surveys. If one person proposed 15% revenue growth and another proposed 3%, understanding how those compare to historical and projected revenue growth is a key input.

2. Review the responses as a team

Review the champagne question responses together, highlighting similarities and differences within the themes you established earlier. Explore where similar answers have different targets, where responses may have different underlying meanings (e.g., global), and where views diverge. This naturally leads to a discussion of tradeoffs.
For example, in a rapidly growing company, the push for new customers could potentially undermine year-end profitability. Similarly, emphasizing rapid response times might boost customer satisfaction, but could adversely impact cost or quality. Don’t try to resolve the tradeoffs this early, but seeing the data gives the group the ability to overtly and impersonally discuss what those tradeoffs are.

3. Develop options for what success looks like

Divide the group into smaller teams of two to five members. Give them about 20 minutes to discuss and address two key questions:
  • What does winning look like for us? These should be 3–5 concise, descriptive, goal-oriented statements.
  • What specific measure(s) and target(s) would you suggest?
Essentially, the small groups are each coming up with a new, collective “revised and improved” answer to the champagne question. Have each breakout team share their ideas with the rest of the group. Appoint a facilitator to consolidate these and manage the group discussion.

4. Establish what winning looks like by setting measures and targets

Reviewing the collective responses from the breakout exercise often reveals a complex and sometimes cluttered picture, highlighting the need for further refinement and prioritization.
Start with the measures or categories. Guide the full team to narrow down their choices by asking, “Which 3–5 measures are most critical for defining what winning looks like in the next X years?” Should it be revenue? Profit? Customer satisfaction? New customer acquisition?  Employee retention?
We’ve found real-time polling to be a highly effective tool to quickly and anonymously capture opinions and preferences. Alternatively, display the options on a wall chart and ask participants to place dots on their chosen options for a more visual and interactive approach. By forcing individuals to choose their “top 3” or “top 5,” the group can rapidly whittle down a broad list to a manageable set.
Remind the group that while each executive and their team will have specific functional or departmental measures and targets, the group’s focus is on defining the key outcomes to evaluate the collective success of the team at year’s end.
Once the measures of success are determined, the discussion around targets — the quantified outcomes — naturally follows. How will we objectively know that we’ve achieved our goals? What should the target numbers be? Even if the group can’t come to full consensus in this first conversation, by the end of the meeting the range of possible outcomes will certainly have narrowed significantly.

5. Agree on next steps

At the end of this conversation, your team will be better aligned on what constitutes success, although further work will likely be needed to refine the collective answer. A measure or two may still require further investigation, or targets may need to be established and validated. At the end of the meeting, assign individuals to fill these gaps and bring recommendations back to the team for a subsequent discussion to finalize the team’s view of success.

Three Points to Consider as

You Work

1. Keep it focused

Teams tend to develop laundry lists of measures making it difficult to know what’s truly important. Push the team to establish clear objectives and limit the number of measures.
For instance, leaders of a $5 billion financial services company concisely conveyed their “champagne-popping” view of success across four “winning themes,” each with one or two specific measures.

How One Company Conveyed Their “Champagne-Popping” View of Success

They focused on four “winning themes,” each with one or two specific measures.
Winning themes Measures of success
Achieve industry-leading financial growth
Category: Performance
  • Revenue: $7 billion
  • Margin: 40%
Transform into a global information and insights powerhouse
Category: Mix
  • Non-U.S. revenue: 50%
  • Analytics revenue: 33%
Deliver superior customer experience
Category: Customer
  • Net Promoter Score: 50
Foster massive team-member engagement
Category: Employee
  • Crain’s Best Places to Work
2. Take a balanced, portfolio approach
Approach the measures of success as a portfolio. While tradeoffs might be necessary, ultimately the collective impact of these measures provides a holistic view of the organization’s success. A well-rounded portfolio of measures typically encompasses a diverse set of metrics in key areas such as financial, customer, employee, innovation, and brand.

3. Consider the stretch

In the course of a group working through this process, a leader has a unique opportunity to set the degree of stretch they want embedded in the team’s thinking. How far should the team’s reach exceed its grasp? A loftier vision of success will likely require more ambitious and aggressive actions to fill the growth gap, while a more incremental definition of success might be appropriate for a team needing encouragement and reinforcement.
The champagne question helps bring Stephen Covey’s principle of “beginning with the end in mind” to life. Far from being a one-time prompt, we find it sparks a continuous dialogue, integral to unifying around a shared vision of success. Business teams are frequently faced with multiple, sometimes conflicting goals. Asking the champagne question is an ideal start to your team spending time together defining and aligning around a clear and common understanding of what winning looks like.