Matt the CEO loves to set super-ambitious goals. If a normal person would look at the numbers and suggest that his organization should grow 10 percent, you can bet your airline upgrade that he'll target 20 percent. Ask him why he does this and he has a simple, snappy answer: If we set high goals, even if we don't make those goals we'll still achieve more than if we set lower goals. Eighty percent of a super-aggressive goal is better than 100 percent of a lame goal.
I guess if Matt puts it that way, it's hard to argue with him. But I think his higher performance comes at a huge price. Let's look at it from the point of view of a sales executive named Jamie.
Jamie's been in the selling game for most of his career. He's done well and has a shelf full of plaques and a smartphone full of President's Club photos to prove it. Jamie's colleagues inaccurately assume that, like all salespeople, Jamie is coin-operated. Drop more financial incentives on him, and he'll be a sales machine. Don't get me wrong -- Jamie loves the ka-ching of that big bonus as much as the next guy. But Matt's miscalculation is that Jamie only cares about money. In fact, Jamie cares mostly about achievement and esteem. He gets a buzz out of hitting goals and being seen as a key player -- maybe the key player -- on the team.
So stretch goals work for Jamie. But over-stretched goals are counterproductive. Here are the costs of over-shooting on goals:
- Failure becomes excusable. Over-shooting often includes under-focusing. So instead of doing the hard work of sculpting goals down to a challenging-yet-achievable level, Matt piles unrealistic expectation on top of limited resources. At the end of the goal period, when the company has under-achieved its sales goals, Jamie has excuses. "We had too many responsibilities. We had to make hard choices during the game because we just didn't have enough (time/talent/money) to pull everything off." Whenever goal-setting is sloppy enough to create excuses, we've taken the first step down the road toward a culture of failure.
- Failure becomes acceptable. If we give people excuses enough of the time and we accept those excuses, it's not long before failure becomes acceptable. "Sure," Matt might say, "only half of our salespeople or a third of our business teams hit their goals. What's wrong with that? We still grew at double-digit rates." But what message is Matt communicating subtly to his whole team? It's okay to either a) set lousy goals that lack precision and critical thinking or b) not worry about keeping promises to ourselves. Whenever we accept mediocrity, we've taken one more step down the road to a culture of failure.
- Failure becomes expected. Once we've given people excuses and accepted failure, we're only a short hop, skip, and a jump from creating a culture where failure is expected. At this point, planning becomes a not-very-fun game of charades. Matt's team knows they're going through the motions. "Here we go again. We're going to plan for a hockey stick fourth quarter when we know it won't happen..." They all know that their way of working will predictably produce missed goals and accepted mediocrity mixed in with an unhealthy dose of finger-pointing. They're stuck.
Great organizations know that people are motivated by fully achieving challenging goals on a regular basis. Here are a few ways you can foster that kind of high-achievement atmosphere as you do your planning this year.
- Get your goals clear. Basics first: Are the stated goals specific and measurable enough that we can track progress and evaluate success? Have we identified leading indicators that will give us early warning when we're off track, allowing for course correction?
- Make sure you don't have too many goals. We've all seen organizations and individuals sign up for a laundry list of goals. Whenever you're in a planning session and a person says, "Okay, and another thing we're going to accomplish..." a little red flag should pop up. Strategy is as much about saying no as it is about saying yes.
- Make sure you have the resources to accomplish those goals. Behind every goal, there are actions that must be taken and resources that must be used. If we're unclear on those investments or we're all trying to tap the same scarce resource pool (I'm looking at you, IT), it's time to have a reality check. When you get in the car to drive, if you are going 100 miles and have one-eighth of a tank, you go to the gas station.
The spirit should be, "I'm here to do the best work of my career for our customers and for the rest of you on this team. I reach high and I keep my promises." Yes, that creates tension. But high performers happily choose to live in that tension.