Don’t stretch it – aspirational targets can be effective, but there is a downside
New research indicates setting challenging objectives – or so-called stretch goals – only works sometimes, for some companies
There has been a lot of work in the area of organisational psychology around challenging goals, and this has underpinned calls for adopting “stretch goals” to increase overall organisational performance.
Indeed, the leadership of chief executive Jack Welch and his implementation of stretch goals is often credited with the success of the US conglomerate General Electric in the 1990s.
The idea is that goals around metrics such as profit, market share and the share price would be set so high that achieving – and even attempting them – would inspire innovation that would not only boost short-term performance, but transform the company.
In describing stretch goals to his executives, Welch’s favourite example was reportedly Japan’s high-speed Shinkansen bullet trains. The goals for the bullet train project required the development of completely new technologies that would never have been attempted if the stretch goals had not been in place.
Despite their success at GE, and at many other organisations, stretch goals have remained controversial. In some cases, they have created both success and failure.
Toyota, for example, gave its engineers a year to create a vehicle that increased fuel efficiency by 100 per cent. The team tried out 80 hybrid technologies before narrowing the list down and creating the highly successful car, the Prius.