By Darryl Cooke
Jack Welch, the former CEO of GE and once described as the greatest CEO in history, saw people as the ultimate answer to boosting productivity and taking an organisation to a higher level. He felt that there was no limit to what people can do and to what can be achieved. Or, as he described it, ‘unlimited juice in the lemon’.
Welch called this view of life ‘stretch’, which soon became a way of life at the company. No longer would the company set modest goals and celebrate mediocrity. Instead, the company would ask, ‘How good can you be?’ He thought that budgets should reach for the unthinkable rather than be an ‘exercise in minimisation’.
In the same way, Jim Collins and Jerry Porras determined that each great company had a compelling vision from an early stage in their now classic study of visionary global companies. They defined this as a BHAG – a big hairy audacious goal. It was clear, enormous, compelling and would stimulate and drive progress.
Stretch goals or BHAGs create a focus, confidence and light the touchpaper that leads to dynamism in an organisation and relentless momentum.
That said, if you don’t have the right culture, it won’t work and indeed can be detrimental to your organisation. If you have a culture that does not encourage failure but instead has a fear of missing targets, where managers know that they are evaluated against the targets , the behaviours of your people will be very different and not conducive to achieving stretch goals. They will much prefer to set incremental targets of a few percentage points change from the previous year.
At gunnercooke we have a mantra that promotes constant endeavour – ‘There is no such thing as failure. The only failure is not trying.’ For stretch to work, your people must have the desire to reach for the unreachable and to commit everything to do so. The whole point of stretch is to ask how good you can be – that can only be achieved if the fear of failure is removed.
If you have the right culture, the following actions will help:
The benefits to the organisation of success in setting stretch goals is that it will encourage greater innovation, build greater team commitment and produce a dynamic driven organisation with an output that will lead to greater profits.