1: Jack Welch returned from his trip to Japan in 1993 on fire about the power of stretch goals.
As GE’s CEO, the story of the Japanese bullet train inspired him to rethink his approach to goal-setting, according to Charles Duhigg in Smarter Faster Better.
Within six months, every GE division had a stretch goal.
But there was a catch.
Jack and the division leaders didn’t always agree on what counted as a “stretch” goal.
Exhibit one: The division manufacturing airplane engines.
The leaders said their stretch goal was to cut defects in finished engines by 25 percent.
Jack wasn’t impressed. He told them the goal had to be 70 percent.
“That’s ridiculous,” the managers said. “There was no way we could achieve a 70 percent reduction.”
“You’ve got three years,” Jack told them.
Panic quickly set in.
2: To reach their original 25% goal, the managers had planned to hire more quality assurance workers.
Challenge #1: That plan wouldn’t get them close to a 70 percent reduction.
Response #1: The only way to reach that kind of drop was to turn every worker into a quality assurance auditor. “Everyone had to take responsibility for catching mistakes,” Charles observes.
Challenge #2: Most factory workers didn’t know enough about the engines to spot every small defect as it happened.
Response #2: The division needed to start a major retraining effort.
Challenge #3: “Even after nine months of retraining, the error rate had fallen by only 50 percent,” Charles writes.
Response #3: They needed to hire team members with stronger technical backgrounds.
Challenge #4: These skilled workers were in high demand.
Response #4: To attract the right talent, the GE division had to offer more autonomy. “They could schedule their own shifts and organize teams however they wanted,” Charles shares.
Challenge #5: This meant the division had to give up centralized scheduling.
Response #5: Teams now had to organize themselves and manage their own workflow.
So what happened next?
Jack’s stretch goal of cutting errors by 70 percent was so bold that, as Charles explains, “the only way to go about it was to change nearly everything about how workers were trained, which workers were hired, and how the factory ran.”
That’s what a true stretch goal can do: it can push teams to rethink how they work.
“By the time they were done,” Charles notes, “the Durham plant’s managers had collapsed organizational charts, remade job duties, and overhauled how they interviewed candidates, because they needed people with better team skills and more flexible mindsets.”
The payoff? The number of defects per engine dropped by 75 percent.
GE’s airplane manufacturing division didn’t miss a delivery for thirty-eight straight months.
On top of that, manufacturing costs dropped by 10 percent each year.
“No SMART goal would have done that,” Charles observes.
The stretch goal forced them to rethink the entire system. SMART goals turned that ambition into concrete action.
3: Stretch goals motivate and inspire. “Numerous academic studies,” he writes, “have consistently found that forcing people to commit to ambitious, seemingly out-of-reach objectives can spark outsized jumps in innovation and productivity.”
Stretch goals disrupt incremental thinking and force you to imagine a different way of operating.
This lesson applies to your personal life, too.
“Surveys of people who have lost large amounts of weight or have become marathon runners later in life have found that stretch goals are often integral to their success,” Charles writes.
These kinds of goals “serve as jolting events that disrupt complacency and promote new ways of thinking,” a group of researchers writes in the Academy of Management Review business journal. “By forcing a substantial elevation in collective aspirations, stretch goals can shift attention to possible new futures and perhaps spark increased energy.”
There is one important caveat: “There is a fine line between an ambition that helps people achieve something amazing and one that crushes morale,” Charles explains.
“For a stretch goal to inspire, it often needs to be paired with something like the SMART system,” he notes.
“For a stretch goal to become more than just an aspiration, we need a disciplined mindset to show us how to turn a far-off objective into a series of realistic short-term aims.”
The stretch goal gives you the destination. SMART goals give you the next steps.
More tomorrow!
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Reflection: What goal in your life or work is ambitious enough to force you to think differently, not just work harder?
Action: Choose one stretch goal, then identify the first concrete SMART step that would move you toward it.