Revenue targets. You’ll find them scrawled on whiteboards, thrown about in meetings, and broadcast to shareholders with the kind of enthusiasm usually reserved for football scores. But what really goes on when companies base their entire roadmap on a figure they’ve pulled from the ether?

Let’s unpick the pros and cons of setting strategy based on a revenue target, examine why leaders do it, hear what strategy experts recommend, and consider some key takeaways for anyone thinking of taking this approach.

The allure of the magic number

Leaders are often drawn to revenue targets like moths to a flame. And it’s not hard to see why. Revenue targets provide a clear, measurable goal. There’s a certain comfort in being able to say, “We’re aiming to hit £100 million by the end of the year.” It’s tangible, precise, and can be understood by everyone from board members to interns.

But what’s really going on beneath the surface? For many leaders, setting a revenue target taps into a deep psychological need for control. In an ever-shifting world, where market forces, competitors, and global crises all play their part, having a figure to aim for gives the illusion of order amidst chaos. It’s a way of saying, “We’ve got this under control.”

Yet, as we’ll see, basing your entire strategy on this figure can be more problematic than it seems.

The pros: Clarity and motivation

Let’s start with the positives. For all the potential issues, setting a revenue target can bring clarity. If you know where you want to end up, you can begin to map out the steps to get there. This is particularly true for companies in growth phases. Startups, for example, often need an ambitious revenue target to rally their teams, attract investors, and measure progress. It’s a powerful motivational tool.

From an operational standpoint, a clear revenue target can also help guide decision-making. Leaders can prioritise resources, identify key markets, and focus sales efforts based on where the most revenue opportunities lie. In this sense, a revenue target can act as a north star.

Equally, setting a revenue target can help teams align around a common goal. When everyone is focused on hitting the same number, there’s a sense of shared purpose. Marketing, sales, finance, and operations all have a clear mandate: contribute to hitting the target. This can streamline communication and drive performance.

But here’s where the cracks start to show.

The cons: Tunnel vision and short-term thinking

The problem with focusing on a revenue target is that it can encourage short-termism. All too often, leaders get caught up in the race to hit the magic number and lose sight of what really matters: long-term sustainability and strategic growth.

The drive to hit a revenue target can push companies into risky behaviour. Discounts are slapped on products, salespeople are pushed to close deals at any cost, and suddenly, the company’s brand takes a hit. In the pursuit of revenue, the bigger picture gets lost.

Worse still, focusing solely on revenue can lead to tunnel vision. By narrowing the company’s attention to this one figure, other important metrics—like profit margins, customer satisfaction, and employee engagement—are often neglected. Sure, the company might hit its £100 million target, but if it’s haemorrhaging money, losing customers, and burning out its employees, it won’t be a win in the long run.

Why leaders do it: The pressure to perform

So, if focusing on revenue targets is fraught with risk, why do leaders keep doing it?

One answer lies in the pressure to perform. Publicly traded companies, in particular, are under constant scrutiny from investors, analysts, and the media. Revenue targets become a way to appease these groups, providing them with a straightforward metric of success. A CEO can stand in front of a room full of shareholders, declare the company is on track to hit £100 million, and everyone goes home happy.

There’s also a certain simplicity to it. In a world of complex strategy frameworks, revenue targets cut through the noise. It’s easy to communicate and rally around. And let’s face it, people like round numbers. They look good in reports.

But, as we’ve seen, there’s a danger in reducing strategy to a single number. And increasingly, experts are urging leaders to take a more nuanced approach.

What strategy experts recommend

While revenue targets can play a role in shaping strategy, most strategy experts recommend a more balanced approach. They argue that revenue targets should be one part of a broader strategic plan, not the plan itself.

Michael Porter emphasised the importance of competitive advantage over sheer size. Instead of asking “How can we hit £100 million?” leaders should be asking, “What makes us unique?” or “How can we deliver more value to customers?” In other words, focus on building a sustainable business, and the revenue will follow.

Similarly, experts caution against using revenue as the sole metric of success. Jim Collins, author of Good to Great, suggests companies should measure success by their ability to build a lasting, resilient organisation—not by how fast they can grow. His advice: shift focus from “What number are we chasing?” to “How are we creating value in a way that will endure?”

Finally, many strategists advocate for the use of multiple metrics. Alongside revenue, companies should track profitability, customer satisfaction, employee wellbeing, and other key indicators that offer a more rounded view of the company’s health.

Roger Martin, the former Dean of the Rotman School of Management and a renowned business strategist, would likely raise an eyebrow at the fixation on revenue targets. Martin is known for his emphasis on integrative thinking, and he tends to look at strategy through a more holistic lens. For him, revenue is an outcome, not a strategy. To base a company’s direction on a revenue target, in Martin’s view, is to mistake the effect for the cause.

Martin has often criticised what he calls “goal obsession”—the tendency for leaders to zero in on a number, a figure, or a specific target without properly considering the underlying mechanisms that drive success. In his world, strategy is about making choices, about where to play and how to win. It’s not simply about running the numbers higher and higher.

A revenue target can lead to comfort in the wrong answers. You might hit your target, but if it was the wrong one to begin with, or if the way you got there eroded your competitive position, it’s a hollow victory. Consider the broader landscape: What’s the value proposition? What’s the competition doing? What capabilities need to be developed? These are the real levers of success—not just the top-line figure.

Limited by numbers

One of Martin’s favourite anecdotes involves the Chevrolet Malibu and the Toyota Camry—two mid-sized sedans that at one point were locked in a fierce competition for dominance in the US market. It’s a classic case study he uses to show how revenue targets can blind leaders to the real issues at hand.

The crux of Martin’s Malibu vs Camry story is that the Malibu team at GM had their eyes glued to the wrong target. They weren’t asking, “Are we building the best car?” but instead, “How can we double our sales numbers?” They wanted to go from the previous year’s Malibu sales of 60,000 to reach a new target of 120,000.

The Malibu’s main competitor, the Toyota Camry, sold 560,000 per year.

Martin asked the Malibu team: “How does the new Malibu stack up against the Camry?” to which they answered: “We don’t know.”

The Malibu team, obsessed with achieving a revenue target, lost sight of what really mattered—whether their product could compete with the Camry on quality and customer experience. They weren’t thinking about the larger competitive landscape. They were focused on improving against the last Malibu, rather than making the big, strategic choices needed to actually win against the Camry.

Martin went on to work with the Malibu team to benchmark against the Camry, and make the necessary improvements so it could compete. As a result, the Malibu went on to reach sales levels similar to the Camry—way above its initial target.

This is a classic cautionary tale. When you focus too much on revenue targets, you risk missing the bigger picture. The numbers can become a distraction, pulling you away from making the bold, strategic choices that lead to real, lasting success. Instead of chasing after a number, the goal should be to create value so compelling that the numbers take care of themselves.

Key insights and takeaways

So, where does this leave us? Should you set strategy based on a revenue target, or is it a trap?

The truth lies somewhere in between. Revenue targets have their place—they can provide clarity, motivate teams, and help guide decision-making. But they should never be the sole focus of strategy. Instead, they should be part of a broader, more balanced approach that takes into account long-term sustainability, competitive advantage, and value creation.

Focusing on a number, even if it’s an ambitious one, can paradoxically limit you. When you lock yourself into chasing a specific revenue target, you risk putting artificial constraints on your thinking. You’re not just aiming for a number; you’re potentially boxing yourself in, restricting your ability to explore bigger, bolder strategic options.

When leaders fixate on hitting a target—whether it's doubling revenue, hitting £100 million, or overtaking a competitor—they often default to conventional, short-term tactics: pushing harder on sales, cutting corners to reduce costs, or launching aggressive marketing campaigns. The focus narrows to how to hit that number, not why you're making those decisions in the first place or whether the number is the right measure of success.

This kind of thinking can cause companies to miss opportunities for transformational growth. The revenue target, no matter how ambitious, becomes a ceiling rather than a floor. Instead of asking the bigger, more open-ended questions—“How can we truly change the game in our industry?” or “What value can we deliver that no one else can?”—leaders become overly focused on the smaller question of “How can we hit this target?”

In other words, you can end up limiting your potential by setting a goal that, while ambitious, keeps you thinking within the lines. Step back and make sure that, in your pursuit of a number, you aren’t losing sight of the bigger strategic choices that could unlock far greater possibilities.

If you’re a leader setting strategy based on a revenue target, ask yourself: Are we focusing on short-term gains at the expense of long-term growth? Are we measuring success through multiple metrics, not just revenue? Are we clear on what makes us unique in the market?

And remember: It’s not just about hitting a number. It’s about building a company that can thrive, endure, and create real value. After all, as any seasoned strategist will tell you, the road to sustainable success is rarely a straight line—and it certainly isn’t measured by revenue alone.