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For many organizations “higher, faster, further” is a guiding principle. You have to create more customer value, be more innovative and increase your efficiency further. It seems like this is the only way to survive in the highly competitive and dynamic business world of today. To achieve this organizations have to surpass themselves.

Many leaders and managers are therefore fascinated by moon shot goals, also called stretch goals. Stretch goals, which became famous thanks to Google, pose a great challenge for many organizations though. Especially in the German-speaking market. And that although they seem to perfectly work for companies like 3M, Airbus or Apple. In this article we from Workpath summarized, what stretch goals actually are and when and how the tool can be reasonable put into practice.

What are stretch goals?

Stretch goals are a special kind of goals, which are set very ambitiously. It usually seems like they are impossible to accomplish. This is because they aim to reach results that go beyond current capabilities and performance. The extreme difficulty of goal achievement is one of the 2 main characteristics of stretch goals. The second characteristic of stretch goals is novelty. Whatever you want to accomplish, has never been accomplished before.

Stretch goals are defined by their high degree of difficulty and their novelty.

Why should you go for stretch goals?

Stretch goals can build the foundation for extraordinary long-term achievements. Through their motivating and inspiring character they often lead to more employee and leader commitment, efforts and a better performance. Even if first efforts fail, stretch goals help to come closer to truly meaningful achievements in the long run. Moreover, they can be a great motivation for organizations that are looking for extreme change and radical innovation.

When are stretch goals (not) appropriate?

So, with all those upsides, why should you not use stretch goals in certain cases? This is due to the fact that great opportunities also bring about great risks. Over-ambitious goals can in the wrong context demotivate or unsettle employees and lead to defensive and resistant attitudes. Furthermore, not every company can allow for failure in each situation.

Two factors are especially decisive, when you want to decide on the appropriateness of stretch goals for your own organization.

1. The current situation of the organization

When companies strive and are in an upswing, the use of stretch goals usually brings about positive impacts. In difficult and burdensome times they can however lead to additional pressure. This can then cause the above mentioned demotivation, feeling of uncertainty and defensive and resistant attitudes for employees.  

2. Availability of sufficient resources

Another important aspect that oftentimes is closely connected to the current situation of the organization is the availability of resources. Because it is often the question if organizations can cope with failed initiatives or if resources have to be allocated as thriftly and economically as possible. That is because in difficult times usually realism and small wins are more sensible to rebuild confidence and success step by step. Also if many managers in such situations think taking very aggressive risks is a good idea. Organisations should be certain about that their “experiments” can only lead to minor losses, which they can cope with and learn from.

Next to those two factors the company culture and the general attitude towards risk is very important. Failure should not be condemned in the firm and extreme risk aversion surely is not the best foundation for stretch goals. An aspect where many organizations from German-speaking companies significantly differ from their north american counterparts. This means you have to understand which values are held high by the company as well as individuals and personal and organizational development is pictured. This should be brought in line with the requirements and needs of the organization.

You can find more information about which aspects you have to consider for goal oriented employee management here.

Conclusion

In general it is important that leaders support their employees to learn from their experience with stretch goals, when they are used. Solution oriented thinking and not blaming for failure should be the focus of attention. This tolerance towards failure is not sensible in every context though. Thus, you should always take into consideration the available resource as well as the competences of the team members and the overall company culture and situation.

When stretch goals are introduced in the course of the implementation of a new management method like the OKR framework you have to consider that through this implementation oftentimes enough change and complexity is already brought into the organization that first has to be coped with. When implementing such frameworks it is therefore usually adequate to pursue goal achievement of 100%, to initially focus on reducing complexity.

In summary a differentiated view on stretch goals is important. Although they offer a lot of potential, stretch goals should not blindly and hastily be implemented in every organizational context. A good understanding and thoughtful consideration of the above mentioned factors however helps to mitigate the risks of stretch goals and successfully leverage their potential. Next to this, it is important to keep in mind that goals can also be set not ambitiously enough. Such goals will sooner or later have negative impacts on the firm performance and employee motivation.

Thus, one has to find the right balance between ambition and achievability for the respective situation of the organization. The key to success hereby is always a collaborative approach to goal setting. The definition of goals should ergo not only be understood as leadership but also as team task.