Setting a goal for the team is the first step to ensuring the whole project runs smoothly, everyone understands their role and cooperates to target the common goals. But when it comes to stretch goals, it is a different story.
Employers are likely to use stretch goals to exceed employees’ current abilities and resources and increase performance twice or triple. Besides positive benefits, stretch goals might raise plenty of negative outcomes. Thus, in this article, we try to figure out the best way to build stretch goals in the business landscape by providing real-world examples. Let’s check out the top example of stretch goals and how to avoid negative consequences!
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What is Stretch Goals?
Rather than setting ordinary targets that employees can achieve easily within their reach, employers sometimes set more ambitious and difficult challenges, which are called stretch goals, also known as management moonshots. They are inspired by the “moonshot” missions like landing a man on the moon, which require innovation, collaboration, and a willingness to take risks.
This can help to stretch employees out of the limit and make them strive harder than they might have with more humble aims. Because employees are pushed hard, they try to think big, more innovatively, and achieve more. This is a basis for leading to breakthrough performance and innovation. An example of stretch goals is an increase of 60% in sales revenue compared to the previous year, sound possible, but an increase of 120% is likely out of reach.
What If You Stretch Your Team Too Much?
Like a double-edged sword, stretch goals showcase many disadvantages for both employees and employers. They can cause more harm than good when used in inappropriate situations. According to Michael Lawless and Andrew Carton, stretch goals are not only widely misunderstood but widely misused. Here are some negative examples of stretch goals’ effect in the workplace.
Increase Stress for Employees
Stretch goals, if set unrealistically high or without proper consideration of employees’ capacities, can lead to increased stress levels. When employees perceive the goals as unattainable or overly challenging, it can result in heightened anxiety, and burnout, and negatively impact mental well-being. In addition, employees under constant pressure may find it difficult to remember details and information crucial to their tasks or stay focused on a single task for an extended period. The pressure to constantly exceed expectations may create a hostile work environment and affect overall job satisfaction.
Cheating Behaviors
The pursuit of stretch goals can sometimes lead to unethical behaviors as employees may feel compelled to resort to shortcuts or dishonest practices to meet the targets. The intense pressure to achieve ambitious objectives might encourage individuals to compromise on integrity, potentially engaging in actions that could harm the company’s reputation or violate ethical standards.
High-Stress Frequency for Giving Feedback to Employees
Providing feedback on stretch goal performance can become a stressful task for managers. When goals are set at an extremely challenging level, managers may find themselves in the position of delivering frequent negative feedback. This can strain the employee-manager relationship, restrain effective communication, and make the feedback process more punitive than constructive. Employees may become demoralized, leading to decreased morale and productivity.
“The vast majority of firms should not aim for the moon.”
Havard Bussiness Review
Real-World Example of Stretch Goals
Stretch Goals often come with two crucial notions, extremely difficult or extremely novel. The success of some giant firms in the past encouraged more and more firms to use stretch goals as a resuscitate or transformation for ailing innovation strategies. However not all of them are successful, many of them turn to desperate attempts to generate breakthroughs. In this part, we introduce real-world examples of stretch goals in both positive and negative approaches.
DaVita
The best example of stretch goals is DaVita and its breakthrough in 2011. The kidney care company set the objective of radically enhancing the efficiency and effectiveness of an array of processes.
For example: “Generate $60 million to $80 million in savings within four years while maintaining positive patient outcomes and employee satisfaction”.
It sounded impossible target for the team at that time but it did happen. By 2015, the company had reached $60 million and was projected to hit $75 million the following year, while there was a significant increase in patient hospitalization rates and employee satisfaction.
Another great example of stretch goals in product development and technology to look at is Google. Google is known for its ambitious “moonshot” projects and stretch goals, pushing the boundaries of technology and aiming for seemingly impossible achievements. When starting working for Google, all new employees have to learn about the company’s 10x philosophy: “More often than not, [daring] goals can tend to attract the best people and create the most exciting work environments…stretch goals are the building blocks for remarkable achievements in the long term.” This philosophy led to the creation of Google Maps, Street View, and Gmail.
Another Google example of stretch goals is often related to OKRs (Objectives and Key Results), which was used by its founders in 1999. For examples:
- Key Result 1: Increase monthly active users by 20% in the next quarter.
- Key Result 2 (Stretch Goal): Achieve a 30% increase in user engagement through a new feature rollout.
Tesla
An example of stretch goals in production by Tesla is an illustration of overly ambitious and too many in limited time. In the past decade, Elon Musk has set many stretch targets for their employees with more than 20 projections, but only a few are fulfilled.
- Car production: Tesla would assemble 500,000 cars in 2018—two years ahead of the earlier announced lightning-fast schedule—and would double that volume by 2020. However, the company fell short of 367,500 car production in 2018 and reached approx. 50% of deliveries in 2020. Along with the huge job cuts of thousands of employees within 3 years.
- Tesla Semi Truck development was declared in 2017 for 2019 production but has been delayed multiple times with deliveries still not started.
Yahoo
Yahoo has lost its market share and position in around 2012. And Marissa Mayer, who was positioned as CEO of Yahoo represented her ambitious goals in business and sales to bring back the position of Yahoo in the Big Four—“to bring an iconic company back to greatness.”
For example, she aimed to “achieve double-digit annual growth in five years and eight additional highly challenging targets”, however, only two of the targets were achieved and the firm reported a 2015 loss of $4.4 billion.
Starbucks
An excellent example of stretch goals is Starbucks with its constant effort to improve customer satisfaction while driving employee engagement, operational efficiency, and business growth. In the past few years, Starbucks has promoted many stretch goals, which are:
- Reduce customer wait times in checkout lines by 20%.
- Increase customer satisfaction scores by 10%.
- Achieve a Net Promoter Score (NPS) of 70 or higher (considered “excellent”).
- Fill online orders within 2 hours (or less) consistently.
- Reduce stock-outs (missing items) on shelves to below 5%.
- Reduce energy consumption by 15% in stores and distribution centers.
- Increase the use of renewable energy sources to 20% of total energy needs.
- Reduce waste sent to landfills by 30%.
By excelling in these targets, as a result, Starbucks is one of the most innovative and customer-centric companies in the retail industry. It continually growing every year despite economic challenges and changes in consumer preferences.
When Stretch Goals Should Be Pursued
Have you ever wondered why some might be successful at stretching goals, while some fail? Experts from HBR concluded that two key factors that affect how stretch goals should be established and attainable are recent performance and slack resources.
Firms without recent positive performance or increase and slack resources might not benefit from stretch goals and vice versa. Complacency organizations might get high rewards by exceeding their current goals though it might also come with risk.
In the era of disruptive technologies and business models, successful and well-resourced organizations need to explore dramatic changes by setting stretch goals, and the above example of stretch goals is clear proof. Note that hitting stretch goals is not only dependent on the management of employers but also the individual efforts and cooperation of all team members. When employees are more likely to see an opportunity than a threat, they are more likely to work harder to achieve.
Key Takeaways
Management, employee collaboration, recent success, and other resources are the core of implementing stretch goals. So it is essential to build up a strong team and great leadership.
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FAQs
What are some examples of stretch goals?
Some examples of stretch goals are:
- Decrease employee turnover by 40% in 12 months
- Reduce operational costs by 20% in the next year
- Achieve a 95% defect-free rate in product manufacturing.
- Reduce customer complaints by 25%.
What is an example of a vertical stretch goal?
Vertical stretch goals aim to maintain processes and products but with higher sales and revenues. For example, an increase of doubling the previous year’s target from 5000 units sold per month to 10000 units.
Ref: HBR
