Do Super Stretch Goals Require More Commitment Than a Large Organization Can Muster?
Youth of an organization or its members is not the primary determinant of whether an organization successfully utilizes super stretch goals. The majority of respondents to this month’s column offered other explanations for the phenomenon and its success or failure. These included such things as the nature of the industry or product, the way such goals are implemented, and the size of the organization making use of them.
There were, nevertheless, arguments for the proposition. JT Goh opined that, “A ‘young’ organization defining its role and finding its niche and space in the world will find it easier to communicate and achieve that super stretch goal. They start with a blank piece of paper. They do not have to re-design.”
Alex Kahel attributed the success of such goals to the nature of an organization’s products. “The tech industry in general, young or old, can accommodate stretched goals, simply because … digital can reach millions of people worldwide in one second, and all that they have to do is to create the product once … [versus] other industries where the expansion is limited to its geographical and physical condition.”
KevinJFichtner focused on implementation. “Anyone at any age can be inspired to accomplish something that is truly important to him or her… I think it depends on how the goal is incentivized.” Ed Hare appeared to agree: “The problems arise from money and how people will abandon their ethics to get it.”
When applied to individuals, the question prompted an interesting exchange between Sandeep and Phillippe Gouamba regarding the effect of wealth and poverty on the tendency of managers to employ super stretch goals. On the one hand, Gouamba attributed the lack of audacious goals among managers in some parts of the world to a lack of wealth, resources, and the risk aversion that accompanies these conditions. Sandeep, on the other hand, citing those who have risen from poverty to achieve extraordinary goals, attributed the achievement at least in part to their meager beginnings and the incentives they foster. As he put it, “the hunger to rise is most strong in those who fight through the odds. That warm meal may lull someone better off to pause and rest a while…”
Asrarqureshi attributed the success of super stretch goals to the size of the decision-making group. “Super Stretch Goals are for the agile, small groups, for two reasons. One. Missionary zeal and commitment is easily caught by small groups, particularly those who are out to show the world who they are… Two. Super Stretch Goals remain alive due to close communication which is possible in small groups, but not large blocks. If a large corporate wishes to pursue such a goal, it is more prudent to execute it with a small team.” In a related comment, Ashok Jainn stated, “Age is no bar… Super stretch goals, when they’re not handed down from the top but decided by team members, jointly infuse a sense of co-creation and ensure engagement.”
Do asrarqureshi and Jainn have something here? Do super stretch goals require more commitment than a large organization can muster? What do you think?
Original Column
Remember the days when management by objectives was a widely accepted practice? Even Peter Drucker became skeptical of the methodology, particularly when it was tied to monetary incentives that led managers to game the system by understating what they could achieve.
Slowly, the notion of stretch goals emerged. Jim Collins and Jerry Porras put a memorable label on them when they came along with the results of their study of companies capable of achieving success over long periods. These visionary companies, when compared with their comparison counterparts, employed BHAGS (“Big Hairy Audacious Goals”). As they put it, “Like the moon mission … A BHAG engages people—it reaches out and grabs them in the gut. It is tangible, energizing, highly focused. People ‘get it’ right away; it takes little or no explanation.”
Now when we read of stretch goals they often involve objectives so rigorous—often a ten times increase in something good—that they require a significant redesign of a product or a new way of thinking about the business. The leader of the Google X team that developed Project Loon (the self-driving car), Astro Teller, is cited by investor John Doerr for this elegant definition: “If you want your car to get fifty miles per gallon, fine. You can retool your car a little bit. However, if I tell you it has to run on a gallon of gas for five hundred miles, you have to start over.” This kind of goal deserves the “super stretch” label. Increasingly, it is being cited as a reason behind the success of one Silicon Valley startup after another.
"Increasingly, [super stretch goals] are being cited as a reason behind the success of one Silicon Valley startup after another."
Super stretch goals are thought to provide inspiration, a sense of mission, for the most capable and adventurous of those seeking to join startups. They help define the pot of gold at the end of the rainbow. As such, they have been associated with young organizations starting from a small base and feeling a necessity to grow very fast.
The downside of BHAGs
For the adverse outcomes of super stretch goals poorly managed, we can turn to two examples: Wells Fargo and Volkswagen.
At Wells Fargo., objectives were put in place to broaden the bank’s relationship with its customers. This involved selling existing customers many more products, a goal based on research showing a relationship between breadth of customer relationship and profitability in banking. Unfortunately, the introduction of stretch goals was also accompanied by both positive and negative incentives. The message to the frontline, whether intentional or not, was hit the goal; don’t necessarily tell us how you did it.
The result, as we know, produced several behaviors for hitting the goal. The most egregious was the creation of false accounts for added products without existing customers’ knowledge. Just as egregious was leadership’s claim it did not know of the practice. The result was the imposition of huge fines on the company, the departure of two successive CEOs, regulatory restrictions on the Bank’s further growth, and essentially the loss of control of the company by the board, which was even required to remake its composition.
At Volkswagen, eerily similar things happened, this time with engineering practices and goals. This sad episode in the history of a proud company began with an innovative solution to a problem. It involved the development, under someone who later became CEO of Volkswagen, at Audi in 2006 of a way to eliminate the clanking sound made by diesel vehicles when started. The solution increased pollution levels over established standards. If corrected to meet pollution standards, the fix would have added too much weight (in the form of stored chemicals) to the vehicle. One answer was to develop software that automatically turned off the noise reducer during emission testing. It was tempting, but illegal. The temptation was too attractive. The potential profit from adding the software was very large. The engineers undoubtedly felt the pressure of a long-standing culture comprising equal parts of pride, arrogance, and fear.
The Company is still recovering from the costs of enormous government fines, the loss of two CEOs and other key personnel, costs of continuing litigation, and (perhaps most important) damage to its reputation, which included bragging rights at Wolfsberg social events.
Consider the parallels in just these two examples. Two relatively mature organizations. Both very large, with proud histories. Both employing super stretch goals, with little communication between the ranks and the top about how they were (or were to be) achieved. Both are now trying to regain reputations that may be lost for some time.
Stretch goals have wide acceptance in the business world. Experience shows, however, that there is a downside to them, a downside to which super stretch goals may be particularly vulnerable. It suggests the questions: Can that downside be anticipated and dealt with? How? Are super stretch goals only for the very young? What do you think?
References:
James C. Collins and Jerry I. Porras, Built to Last: Successful Habits of Visionary Companies (New York: HarperBusiness, 1994), especially pp. 81-115.
John Doerr, Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs (New York: Portfolio/Penguin, 2018).