“It should never happen. They should never be able to complete that play. But they do.”
Although my interest in professional sports peaked in elementary school and then quickly evaporated, I was a fan long enough to be impacted by the glory that is a completed Hail Mary pass. That unbelievable attempt, often motivated by desperation, to cover impossible distances to make a touchdown, a goal, or a basket. If you’ve seen it done successfully, (or even unsuccessfully), you are hooked. It’s dramatic; it’s energizing; it’s inspiring. As noted by an LA Times sportswriter, “It’s the most exciting play in [American] football, and it rarely works.”
It rarely works.
The same might be said of the widespread use of the organizational equivalent of the Hail Mary pass — the stretch goal. Stretch goals, which are goals that are seemingly impossible to attain, were popularized in the 1990s in several business books, such as Built to Last by Jim Collins and Jerry Porras. Such books highlight cases of incredible performance gains catalyzed, at least in part, by stretch goals.
However, recent research indicates that such success may be the exception, rather than the rule. While stretch goals have been associated with breakthrough performance for some, such gains seem to happen only under certain circumstances and for few of the organizations that adopt them.
Research also provides a reason to be skeptical of a “shoot for the moon, and even if you miss, you’ll land amongst the stars ” philosophy. Stretch goals can have negative consequences beyond simply not hitting the goal. In fact, some researchers argue that alternative types of goals, such as small wins or small losses, might be the better choice for organizations in a variety of circumstances.
Whether you are setting goals for a team or a globe-spanning organization, I'd argue that the type of goals you elect to develop is itself a strategic choice. Given that we tend to make better choices when we explore and evaluate options, in this article I review recent research on several types of goals, highlighting, in particular, the stretch goal. In addition, I review several factors to consider when determining which type of goal-setting strategy might work best for your current situation.
What are stretch goals and how are they different from challenging goals?
Difficulty and novelty Although some researchers use the terms “challenging goals” and “stretch goals” interchangeably (e.g., Ordonex, 2009), in their work on the topic, Sim Sitkin and colleagues indicate that stretch goals are not just really hard. Rather, they define stretch goals as “seemingly impossible” goals. Stretch goals are beyond the reach of the organization given its current knowledge and capabilities. Second, stretch goals are distinguishable for their novelty. When these types of goals are used, the path to success is not known to the organization, or perhaps even to others in the industry. Sitkin and colleagues do note in their discussion of stretch goals that they are relative and context-specific. That means, what is impossibly difficult and novel for one organization or team may not be for another. (See more on context and change here.)
Performance goals, not learning goals In their definition of stretch goals, Sitkin and colleagues also make clear that they are not learning goals, focused on developing a new skill or body of knowledge. Stretch targets are performance targets, ultimately aimed at a specific "tangible outcome" (2011).
An oft-referenced example of a stretch goal is from Southwest Airlines. After the airline was forced to sell off a portion of its fleet it was left with a reduced number of planes to work with. From this constraint sprang a stretch goal — 10 minute turnaround times at the gate. Southwest hit the goal, to the astonishment of just about everybody, by adopting practices used by race car pit crews (Sitkin, 2011).
That’s a great story — you can see how the idea of stretch goals can be infectious! But, it’s important to understand what lies behind the success of those using stretch goals.
What are the purpose and intended benefits of stretch goals?
“It’s not the number [goal target] per se, especially because it’s a made-up number. It’s rather the process you’re trying to stimulate. You’re trying to get people to think of fundamentally better ways of performing their work, to cut out unnecessary work.”
Exploratory thinking and innovation The intention behind stretch goals is less about the performance target than the “exploratory” process that the target facilitates. Without this process, the target will never be achieved. Some researchers liken stretch goals to a crisis, which forces people to break out of their routines and habitual thinking to find new ways of doing things. At their best, stretch goals can “shift attention to possible new futures, spark energy, and prompt learning…” (Sitkin, 2011). In this line of thinking, such profound changes are necessary to avoid complacency; organizations can’t break through to the next level without being jolted into action.
It’s that type of exploratory and analogous thinking that enabled Southwest to find inspiration in an unexpected place— Indy racing — and also to translate that inspiration into effective practices to achieve its goal.
What are the drawbacks of stretch goals?
“Mandating the use of an organizational stretch goal can be done almost instantly, but actual attempts at implementation demand radical organizational change under vague guidance.”
Defensive reactions and muddled thinking Setting a stretch goal is easy and just about anybody can do that part. Operating effectively under such radical circumstances is another story. A stretch goal, intended to be motivating and to facilitate breakthrough performance, can just as easily be viewed as an insurmountable challenge or impossible goal. When seen as a such, stretch goals can be a negative force, increasing threat responses, defensiveness, and a focus on “quick fixes” (Sitkin, 2011).
Decreased goal commitment and increased risk-taking In their 2017 paper, Micheal Gary and colleagues report on the results of two experiments they conducted using stretch goals in management simulations. They found that stretch goals increased variability in performance and also increased perceived risk-taking, when compared with moderate goals. They also found a decrease in goal commitment, for those assigned stretch goals versus those assigned moderately difficult goals. This finding is a notable because research on goal setting has consistently found that the link between goals and performance is highest when there is a strong commitment to the goal (Locke and Latham, 2002). Based on their findings, Gary and colleagues argue that if the gap between current and desired performance seems too wide, people may just adopt a less ambitious survival goal.
Alternatively, some people, particularly high performers, may work themselves silly trying to achieve a nearly impossible goal. This is what Steve Kerr, who was involved in the successful use of stretch goals at GE, refers to as the dark-side of stretch goals. He observes: “To meet stretch targets, people use the only resource that's not constrained, which is their personal time. I think that's immoral. People are under tremendous stress. And that's what I'm seeing all around this country, people working evenings, working Saturdays, working Sundays to achieve these stretch targets” (Sherman, 1995).
Increased potential for unethical behavior Other researchers have focused on the potential for increased unethical behavior in the face of highly challenging goals. A narrow focus on achieving a goal (the ends) can cause people to ignore unethical behavior (the means). Additionally, some theorize that individuals who are exhausted, such as those working towards an impossibly difficult task, are less able to regulate their behavior (Ordez, 2009). Finally, the focus of the goal, for example targeting revenue rather than profit or linking individual rewards to stretch goal attainment, may also increase the risk for unethical actions (Ordez, 2015).
The sales scandal at Wells Fargo, an American bank, is an example of the potential ethical hazards of stretch goals. The bank set a stretch goal to sell at least eight financial products to all customers. They even branded the goal, calling it the “GR-eight initiative.” In pursuit of this goal, thousands of bankers opened millions of accounts without customers’ knowledge, to collect fees on those accounts. The environment at branches at the time was caustic, as one former employee explained: "I had managers in my face yelling at me. They wanted you to open up dual checking accounts for people that couldn't even manage their original checking account" (CNNMoney, 2017).
Do stretch goals work?
Yes, but in limited circumstances Certainly, stretch goals would not have become so popular if there were no cases in which they contributed to radical performance improvements — Apple, Southwest Airlines, GE, are all commonly cited. Stretch goals can have big payoffs. In fact, in their experiments, Gary and colleagues found the performance distribution for those assigned stretch goals to be skewed right, due to the impact of extremely high performance by a few. (Performance under moderate goals was normally distributed). However, researchers argue that focusing on evidence of these rare wins paints a rosy and biased picture. A more accurate assessment is that stretch goals work, but only under a limited set of circumstances, as we’ll discuss in the next section.
Stretch goals have also been linked to reduced performance In two experiments, Gary and colleagues found that the median performance of those assigned stretch goals was not significantly different from those assigned moderately difficult goals. They also found that when adjusting performance for risk, performance levels under stretch goal conditions was significantly lower than under moderate goal conditions.
Specific, difficult but doable goals are consistently associated with performance gains It’s also useful to remember that a comprehensive body of research indicates that setting specific and difficult, but doable, goals is associated with performance gains. Additionally, some research indicates that when people must attain a new skill to achieve a goal, their performance is enhanced by setting a learning goal, rather than a specific performance target. As Barends and colleagues note in their evidence summary on goal setting research: “When knowledge acquisition is necessary for effectively performing a task, setting a specific high goal for a level of performance can lead people to focus on the potential negative consequences of failure rather than on task-relevant ways to attain the goal.”
Why are stretch goals successful for some, but not for others?
“Most organizations don’t have a clue how to manage stretch goals.”
Research indicates that (at least) three factors may be essential for stretch goals to be effective: recent success, slack resources, and a high-risk tolerance.
Recent success First, Sitkin and colleagues argue that recent success is thought to better position an organization to perceive stretch goals as an opportunity, rather than a threat, and likely indicates the organization has the capability to coordinate its resources in novel ways to attain the impossible goal (2011). This notion appears to be supported by the experiments of Gary and colleagues. They found that those few participants that succeeded with stretch goals were able to both identify successful strategies and effectively manage the complexities of implementing them. They observe: "The top 20% in the stretch goal condition successfully identified strategies that allowed them to profitably coordinate growth of the fleet and employees so as to maintain service quality. The other 80% failed to do so" (2017).
Slack The second factor, slack, (i.e., discretionary resources available to invest in the effort), is thought to provide organizations with greater freedom to undertake the exploratory and experimental processes required to attain stretch goals. “Greater slack reduces the pressure of obtaining resources necessary for trying to reach a seemingly impossible goal, and, thus, the pursuit of stretch goals can be met with more playfulness, curiosity, and enthusiasm, which are conducive to learning” (Sitkin, 2011).
High-Risk Tolerance Gary and colleagues add a third dimension to the list: risk tolerance. The results of their experiments indicate that when you control for risk, stretch goals are associated with lower performance than moderate goals. They note for organizations with a lower risk tolerance and less buffer resources, such as family-owned businesses, stretch goals may not be desirable. Those that are specifically looking to make big bets, such as venture capital firms, may find stretch goals a better fit (2017).
Another practical perspective is offered by Steve Kerr, formerly of GE, who shared the following advice on using stretch goals: “No. 1, don't set goals that stress people crazily. No. 2, if you do set goals that stretch them or stress them crazily, don't punish failure. No. 3, if you're going to ask them to do what they have never done, give them whatever tools and help you can” (Sherman, 1995).
The paradox of stretch goals Finally, a word of caution. Several researchers (Sitkin, 2016; Cunha, 2016) theorize about a stretch goal paradox. Those who may be most well-suited to use stretch goals often do not. Slack resources and recent success may provide organizations with a level of satisfaction that dulls any desire to take on impossible goals. However, organizations least likely to be successful with stretch goals, such as those who have suffered through a period of poor performance or have constrained resources, may be more likely to choose stretch goals in a go-for-broke effort to turn things around.
Alternative Types of Goals: Small Wins, Small Losses, and Challenging, but doable goals
If you are beginning to think stretch goals might not be the ticket for your team or organization, take heart. You have many other options. I review some below.
Small Wins In his paper of the same title, Karl Weick defined small wins as follows:
“A small win is a concrete, complete, implemented outcome of moderate importance. By itself, one small win may seem unimportant. A series of wins at small but significant tasks, however, reveals a pattern that may attract allies, deter opponents, and lower resistance to subsequent proposals. Small wins are controllable opportunities that produce visible results.”
Importantly, both Weick and authors who subsequently discuss the small wins strategy note that a series of small wins do not necessarily add up to a big win, or even create a clear path to one. Weick notes: “Careful plotting of a series of wins to achieve a major change is impossible because conditions do not remain constant" (1984).
Rather the intended benefits of a small wins strategy are building confidence, competence, and motivation. “If people can translate their excitement and optimism into immediate action, then a small win is probable, as is their heightened interest in attempting a second win" (Weick, 1984).
Small win goals are often criticized because they don’t lead to radical breakthroughs. Does that matter? Perhaps. Perhaps not. As Fritz Malchup noted:
“We eulogize the great inventor, while overlooking the small improvers. Looking backward, however, it is by no means certain that the increase in productivity over a longer period of time is chiefly due to the great inventors and their inventions. It may well be true that the sum total of all minor improvements, each too small to be called an invention, has contributed to the increase in productivity more than the great inventions have” (As quoted in Weick, 1984).
Small Losses To avoid the risk of complacency when using small wins goals, others suggest trying small losses. These are small, planned experiments, conducted for the express purpose of learning. In these experiments, the outcomes are unknown, but failure is considered likely. Such experiments particularly focus on the process, not the outcome (Sitkin, 1992).
The intended benefits of such “intelligent failure” are “resilience and confidence”. Additionally, these experiments are thought to increase people’s capacity to learn about what works, as well as what doesn’t and how to fix it. Finally, a small losses approach may help to protect against the overconfidence that can lead organizations to make risky bets in tough times (Cunha, 2016; Sitkin 1992). Rather than ‘betting the farm’, a small losses strategy would be more like betting some cows.
Others advocate putting in place a systematic means of learning from all failures, large and small. This involves reviewing and extracting lessons from the failure, sharing them broadly, and looking for patterns across a series of losses (Birkinshaw, 2016).
Challenging, but doable, goals Another alternative is to simply adopt good practices in goal setting and management. There is a dense body of high-quality research that indicates that clear and specific goals are associated with better performance than vague “do your best” goals. Additionally, there is strong evidence that challenging, but doable goals, are associated with greater effort and higher performance than easy goals. Finally, it’s important to remember that regardless of the type of goals you choose, it’s not enough to simply set the goal. Monitoring progress against goals, as well as providing feedback have also been linked to increased performance (Barends, 2016).
(If this is new to you, you may want to delve deeper into the basics of goal setting and management.)
Remember, it’s a choice.
A common thread across the research I reviewed for this article was a sense of exasperation amongst researchers on how causally organizations adopt stretch goals. Stretch goals seem to be treated as “no brainers” without a downside. Research indicates that is not so.
First, the paradox of stretch goals offered by Sitkin and colleagues should give you pause. Those who are best positioned to use them successfully often don’t. Those who are least likely to be successful with stretch goals are more likely to adopt them in a misguided, last ditch effort. You might also consider the recent empirical evidence reviewed in this article, which indicates that median performance with stretch goals might be about the same as with moderate goals, and less when adjusted for risk (Gary, 2017).
Perhaps it is the case that stretch goals may be just what your organization, or change initiative or project, needs at the moment. However, you truly can only conclude that after evaluating stretch goals as an option amongst a variety of alternative goal setting strategies, such as those reviewed in this article.
The point is, you have a choice, and like all choices, the type of goals you elect to use has consequences beyond the high hopes you might put on them.
References
Barends, Eric, Janssen, Barbara, & Velghe, Cedric (2016). Technical report: Rapid evidence assessment of the research literature on the effect of goal setting on workplace performance. (pp. 1-19). London: Chartered Institute of Personnel and Development (CIPD). See here.
Birkinshaw, Julian, and Martine Haas. "Increase your return on failure." Harvard Business Review May 2016: 88-93. Print. See here.
CNNMoney. "Workers tell Wells Fargo horror stories." CNNMoney. Cable News Network, n.d. Web. 19 Feb. 2017. See here.
Cunha, Miguel Pina E, Luca Giustiniano, Arménio Rego, and Stewart Clegg. "Mission impossible? The paradoxes of stretch goal setting." Management Learning (2016): 135050761666428. Web. See here.
Gary, Michael S. and Yang, Miles M, and Yetton, Phillip and Sternman, John. Stretch Goals and the Distribution of Organizational Performance. Organisation Science. (In Press). See here.
Locke, Edwin A., and Gary P. Latham. "Building a practically useful theory of goal setting and task motivation: A 35-year odyssey." American Psychologist 57.9 (2002): 705-17. Web. See here.
Ordóñez, Lisa D., and David T. Welsh. "Immoral goals: how goal setting may lead to unethical behavior." Current Opinion in Psychology 6 (2015): 93-96. Web. See here.
Ordóñez, Lisa D. Et al, ”Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting." HBS Working Knowledge. Harvard Business School, 11 Feb. 2009. Web. 19 Feb. 2017. See here.
Sherman, Strat, and Steve Kerr. "STRETCH GOALS: THE DARK SIDE OF ASKING FOR MIRACLES." Forbes 13 Nov. 1995. Web. See here.
Sitkin, Sim B., Kelly E. See, C. Chet Miller, Michael W. Lawless, and Andrew M. Carton. "The Paradox of Stretch Goals: Organizations in Pursuit of the Seemingly Impossible." Academy of Management Review 36.3 (2011): 544-66. Web. See here.
Sitkin, Sim , C. Chet Miller, and Kelly See. "The Stretch Goal Paradox ." Harvard Business Review Jan. 2017: 92-99. Print. See here.
Sitkin, Sim. "Learning Through Failure: The Strategy of Small Losses." Research in Organizational Behavior 14 (1992): 231-66. Web. See here.
Weick, Karl E. "Small wins: Redefining the scale of social problems." American Psychologist 39.1 (1984): 40-49. Web. See here.