Using goals to achieve success is a well-researched and widely accepted practice. One goal-setting term that has entered into our common sense is the acronymn, S.M.A.R.T. According to this system, goals should be: Specific, Measurable, Achievable, Reasonable and Time-Bound. (Note: There are variations on what the acronym stands for.)
I’m fine with 3 of the 5 elements of SMART: Specific, Measurable and Time-Bound. These three elements promote commitment and accountability, the lifeblood of any organization. Show me a company culture that is in turmoil or characterized by low morale and finger-pointing, and I’ll show you a company where commitments are rarely made and routinely missed, without any fear of consequence.
My problem with SMART lies in “Achievable” and “Reasonable.” For many businesses, these elements give permission to set modest, even ridiculously easy goals. “We will grow our top line by 10%,” is a classic achievable, reasonable goal. Here’s the problem with this orientation: To achieve 10% growth, a company will not need to make any significant changes in how it operates. Increasing by 10% can usually be achieved by a little luck, some extra hours of work and through the organic growth that comes with being above average in what you sell.
A client of mine had this orientation to 10% growth. One day, I challenged him to consider a goal of 100% growth in his monthly revenues. I asked him what it would mean to him and his business to achieve such lofty heights, and he rattled off about a dozen reasons why this would be a great thing for him personally and professionally.
But after the giddy sensation of this possibility wore off, he said what many good leaders would say. “I have two problems with this idea. First, what if we fail?”
My answer was a slam-dunk: Assume a goal of 100% growth is set and the company achieves only 50%. Compared to current projections of 10% growth, would 50% be considered a failure? For reasonable folks the easy answer is, “Hell, no!”
His second objection was, “How would we ever achieve such a goal?” While many a good consultant would revel in this question, offering case histories, models and solutions, I was more restrained: “I have no idea how you can achieve this goal.”
He looked at me, as if waiting for a punchline. Instead, after a long pause, I explained: “I do not know the specific plan that will help you double your business. But I do know that the key is to tap the collective energy, enthusiasm and insight of your team. I can help you do that.
That conversation set in motion a series of meetings with his small company. These meetings led to a few powerful initiatives that changed how the firm approached business. Whether it was the power of the stretch goal, the process of getting his team enrolled, the ideas that came out of the team meetings, or the stars all aligning — whatever the cause, my client attained his goal (doubling monthly revenue) within three months. Within 12 months, they were at four times the original monthly revenue.
Stretch goals do not guarantee dramatic results in and of themselves. They require a commitment to a process that challenges the status quo and confronts uncomfortable truths. More important, they require steady follow-through, including progress reports. But the results can make a leader look plenty smart.
Warning: If you belong to a publicly-held company, do NOT announce stretch goals. The common sense of Wall Street cannot grasp the power of using stretch goals to radically shift a company’s growth trajectory.