Stretch goal or easy target – why should you care?

How do you know if your growth goal is big enough?

Most times when CEO’s or company leaders are seeking to grow their business they look to establish a goal. Usually it’s a revenue goal, or a market share goal or maybe a geographically-based goal. The idea is the goal creates the ‘end state’ and represents what everyone in the business will strive to achieve.

Sometimes there is a Vision for the business which helps to guide the selection of the goal. But not always.

No matter what the goal is, there is often a question hanging over whichever goal is chosen. Is it big enough?

Senior leaders may try to establish a bigger goal, thinking it will motivate the team, push performance, and increase profits. Managers with a more operational focus may tend to think of it from a practical perspective and shy away from goals they think are beyond the reach of current performance levels and team capabilities.

Which approach is best?

Ultimately it comes down to what you are aiming for. If you’re looking to achieve consistent growth and make significant future progress your goal is likely to look quite different compared to a goal based only on achieving this years budget.

Business leaders can easily get caught up in a goal setting process that embodies existing limitations and assumptions. Everybody is too busy to look for alternatives that may be over the horizon of current activities. While a goal may still be established in this way it would be a mistake to believe the goal has a significant strategic impact.

Looking over the horizon & Big Hairy Audacious Goals

In contrast, many years ago in the book Built to Last: Successful Habits of Visionary Companies authors Jim Collins and Jerry Porras introduced the concept of the BHAG, that is a Big Hairy Audacious Goal. This type of goal looks 10 years or more into the future and ideally is based on the Values and Purpose of the company.

While many people might think the concept of a BHAG is more suited to larger organisations (on which the initial concept was based) the idea of looking further ahead when creating strategic business plans can be very useful for any business.

Create a different lens

In fact, for businesses in a growth phase, or scaling up, the idea of creating a longer term big-picture goal can present an entirely different lens through which to develop plans for the business.

We need to rise above the pressing operational activities and year-to-year targets and consider “If the ladder is not leaning against the right wall, every step you take only gets you to the wrong place faster” to paraphrase the late Steven Covey author of 7 Habits of Highly Effective People.

Looking over the horizon can be a challenging process. CEO’s often feel they should already have all the answers, and doing the extra research or gathering information can be time consuming for whoever has that responsibility. The process also requires some critical assessment and application of judgement because it’s hard to talk in black and white terms about future possibilities.

The over-the-horizon paradox

Creating an ‘over the horizon’ goal can feel like a paradox as we need to articulate a destination yet can’t be sure about the environment we’ll be facing at that time.

In fact this quandary is addressed in the BHAG concept by noting these factors as elements of a good BHAG because they provide certainty for a long-term goal:

• Feels as if it’s 70% achievable (meaning there is a chance you won’t succeed)
• Has to be clear and compelling (to encourage buy-in from staff)
• Expands your company’s current capabilities (what you now do or can learn to do)
• Is measurable (all good goals are)
• Must be connected to your company’s strategy (for consistency)

In the BHAG framework there is a clear message that the goal should feel like it’s nearly out of reach, that is, nearly unattainable. But in striving to achieve that outcome the thinking and actions within the business operate at a different level than if the business did “planning as usual” by only looking a year or so ahead.

What do you want to achieve?

Having a target that everyone agrees is pretty much achievable may be an expedient way to establish goals and create a 12-month plan for the business. But is the incremental change that comes from that approach going to take you to where you want to be? Is your ladder against the right wall?

This approach can be like going on a world trip, but only planning how to get to your first destination. Sure, you can always plan the next stage when you get there, but will you find yourself facing limited options and possibly miss important opportunities?

The stretch goal cliché

On the other hand, if you talk about a ‘stretch’ goal to most people it will usually sound like a planning cliché that means adding a little bit more to what you’re already planning to do. But it doesn’t have to be that way.

If you’re serious about establishing a longer term goal, rather than calling it a stretch goal consider calling it your Destination or North Star, or another term which reflects the unchanging nature of this type of larger goal that will span multiple business planning cycles.

However it is important to recognise that larger long-term goals should be based on company capabilities that exist or can be attained (that is, what can you achieve) as well as being profitable, and most importantly being emotionally attractive to those working in the business (that is, they believe in it).

Is your goal big enough?

To answer this, apply some critical thinking skills and consider how you identified that goal. Was it business as usual plus some year-on-year percentage increase? Or was it a process to identify a significantly better future which is very exciting but may feel a bit scary or unrealistic at this point in time?

Which outcome would you prefer?

For further information on creating an exciting future for your business you’re invited to contact us for an obligation-free consultation to explore the possibilities.