Has the Time Come for “Stretch” in Management?
Summing Up HBS professor Jim Heskett sums up comments from his readers on the topic of stretch goals. Does stretch still make sense as an organizing principle? What, if anything, should be done to ensure that stretch is allowed to flourish in companies today? What do you think?
Stretch—its meaning, uses, and pitfalls—could fill a book, judging from responses to this month's column.
First, there appears to be limited agreement about what stretch is and how it works. Some saw it as a variation on long-range planning. Others saw it as a strategic planning tool. Yet others viewed it as a means of getting more for less out of people, something to be tried when other approaches don't work. Howard Esbin likens it to "strategic scenario planning or futurism. The more one is able to ask 'what if' and 'why not', the more creative and abundant the results will be."
It raises the question, would we know a stretch goal when we see it? Perhaps the best response to that question was from Sujeet Prabhu, who commented that "Stretch goals are goals (which), if achieved by your competitors, could drive you out of business."
There was some agreement that stretch, by itself, is not a useful management concept. Nishant Miglani pointed out that "as a complement to stretch, GE also had this notion of the 'boundaryless organization' ..." Matthew Tuttle suggested that "Stretch goals have their place, but need to fit within the organization's abilities." Stephen Denny advised that "It takes a management culture with drive, consistency and a strong dose of killer instinct to make stretch ... stick." Anju Kotwani advanced the opinion that "'Stretch' works better in organizations where some rules can be bent to achieve organizational efficiency ... (by) highly motivated and committed staff with the passion to overachieve." Further, it is thought to work best in cultures where people have the latitude on occasion to fail (or as Mariana van der Walt put it, "having a culture of learning from mistakes") while attempting to achieve the goals. Joe Violette advised that, in his experience, stretch goals "have only succeeded (when) they are developed by the project team" (vs. management).
The downside of stretch as a management concept was expressed most memorably by Greg Della-Croce when he said, "Stretch ... allows those with the biggest vision to express it in a tangible way… However, in my experience, it is also used in the same way the rack was used." Carl Binder pointed out that "... stretch goals have led mostly to intentional fuzziness and obfuscation as schedules slip and targets are missed...."
Above all, leadership is generally thought to be critical to the successful application of stretch. Edward Hare reminded us that "the essence of great management, leadership even, is applying the right tool, at the right time, with the right emphasis, that 'fits' the situation and the people involved." Ryan Jones pointed out that most successful applications of stretch have involved the "presence of a strong and visionary leader." Given the long-term nature of stretch, several raised questions about the tensions created between the long-term vision and short-term realities of the need for performance. Mike Flanagan asked, "Why have goals that are strived for in 10 years when the CEO and others will be gone?" And Kathryn Alexander asked why, in those companies in which employees are "free to explore their dreams and ideas," stretch is even necessary? As she put it, "Stretch goals seem like a crutch to me."
What do you think?
The leadership of General Electric introduced the management concept of "stretch" in the 1990s. The idea was not just to create extraordinary goals higher than those thought achievable for the coming year. It was to set outlandish, almost unthinkable goals that business groups might achieve in the longer-run. For example, instead of striving for an inventory turnover (sales to inventory) ratio of 4.5 instead of 4 in the coming year, a stretch goal would be a turnover of 10 in five years, with improvements toward that goal recognized and rewarded on a year-to-year basis. One goal of this philosophy was to eliminate the time-wasting annual budgeting game in which middle managers would argue for 4, top management would argue for 5, and they would both know in advance that they were going to end up with a goal of 4.5.
In my experience, GE's "stretch" was often confused with annual business planning concepts that used the same term. I'm not aware that it ever gained much acceptance. But are we at a point where it may come into fashion? For example, I was reminded of stretch when the goal of a 50 percent reduction in carbon emissions by 2040 was at least informally agreed to at a recent economic summit. In that case, the end date was conveniently set so far in the future without any provisions for recognizing progress that the effect of such an agreement may have been fatally compromised. But at least it was discussed and publicized.
Is it time to revisit stretch? For example, if the concept had been employed in Detroit, would the American auto industry have found itself in the position of being caught flat-footed on the issue of fuel efficiency? Granted, Detroit was busy catering to consumer demands for more profitable, lower-mileage vehicles. But at the same time, could stretch have given greater urgency to responses to alternative needs in at least its tech centers? Now that its consumer world is changing, will Detroit adopt the stretch concept in the development of, say, 100-mile-per-gallon vehicles by 2012?
There may be reasons why we will increasingly underestimate our capabilities, giving greater credence to stretch. We are learning more and more about how our brains function and the conditions that foster creativity. Combined with the development of new communication technology that connects information workers (and their brains) at precisely the moment that a new generation of workers trained in the use of the new technology is joining the ranks of both information workers and their managers, can we expect a flourish of innovation greater than anything we might be expecting? What might stand in the way of this achievement of stretch? A lack of understanding on the part of managers of new ways of organizing information work and workers? Increasing "burnout" of knowledge workers confronted with a barrage of data and distractions delivered by new information technologies? A reluctance on the part of managers to relinquish "ownership" over activities and processes needed to achieve stretch? What, if anything, should be done to ensure that "stretch" is allowed to flourish? Or is this just another management concept whose time has passed? What do you think?