Have you ever pushed yourself to achieve a goal that you thought was too lofty? How did it feel? In 2012, Daniel Markowitz wrote an HBR article called “The Folly of Stretch Goals,” in which he argued that they demotivate employees, tempt us to engage in unethical behavior, and encourage us to take unnecessary risks. Entrepreneur contributor Jeff Shore argues the opposite - that "stretch goals fuel remarkable success.” So, who’s right? Are stretch goals a good or bad thing when it comes to motivating the team to achieve high performance?
Here’s an example of the problem from Patrick Thean's book Rhythm:
I received a call from a friend: Jack, a CEO. He wanted some help because his sales team was not achieving quota. To top it off, performance was getting worse, even though the sales quota was well set and extremely clear. He was not quite sure what to do. Jack figured that he had a problem with one of the three Ps - people, process, product - but he was not sure which. When I interviewed his sales team, I discovered that no one had ever achieved the sales quota, including the top salesperson. When I shared this insight with Jack, he replied, “Of course! If the quota is too low, that would be too easy. You’ve always said that if you aim for the sky and hit the trees, it’s okay. But if you aim for the trees and hit the dirt, no one is happy! So I am aiming for the skies and hitting the trees.” This was a classic example of an ambitious CEO who wanted to set ambitious goals. Unfortunately, his stretch goal was demoralizing the troops.
If you define success as hitting your stretch goals and anything short of that as failure, then it’s easy to see how striving for stretch goals would be frustrating. By their very nature, stretch goals are difficult and might require you to innovate to reach them. Constantly striving for a goal that seems unreachable would be very demotivating. That’s why we recommend using Red-Yellow-Green success criteria to set SMART goals (emphasis on Attainable and Realistic) and then setting a SuperGreen stretch goal. This way, you can get all the benefits of inspiring your team to achieve remarkable results while avoiding the pitfalls of demotivation that can happen when you just set the goal too high.
Jeff Shore agrees with our recommendation for using a SuperGreen stretch goal in combination with a Green attainable goal: "And here's an extra secret for success: many successful people keep two sets of goals - business-plan goals and stretch goals. Business-plan goals revolve around maintaining a healthy organization, keeping the doors open and making a living. Stretch goals focus on doing much more. Stretch goals mean reaching for big opportunities and accomplishing extraordinary results."
Here’s how to set your Red-Yellow-Green success criteria and add a SuperGreen stretch goal:
- Set your Green criteria: This is your attainable goal. In the sales quota example above, Jack might need to achieve $1 million dollars in sales to hit his targets for the quarter. So, the Green goal would be $1 million.
- Determine what Red is: What is an unacceptable level of sales for the quarter? What number would force Jack to reconsider his budget for the year? This is the “hitting the dirt” level for Jack. A sales number in the red range has real negative consequences. Let’s say for Jack, red is anything less than $700,000.
- Determine what Yellow is: Yellow is between red and green, so between $700,000 and $1 million.
- Determine what SuperGreen is: Here’s where you set your stretch goal. What would motivate your ambitious A Players? For this example, let’s say that Jack’s SuperGreen stretch goal is $1.25 million and above.
When it comes to execution, having your SuperGreen goal defined can give you a real edge. If your team achieves the Green goal early in the quarter, they have a clearly defined goal to shoot for with any extra bandwidth. And, if someone on your team does status SuperGreen on a KPI or Priority, you can determine whether there are any bright spots that can scale across the rest of the company. If one sales person figures out a technique that is closing deals left and right, don’t you want that person to share what they learned with all the other sales people?
I hope you achieve your SuperGreen goals!
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