I will caveat this entry with the following: Even though Jack Welch is a business icon, I personally think he is a bit of an ass as I have blogged before. That out of the way, from a PowerPoint sent to me – Jack on stretch goals, there are some good sales culture nuggets in there:
- The budget is the bane of corporate America. It never should have existed. Making a budget is an exercise in minimization. You’re always trying to get the lowest out of people, because everyone is negotiating to get a lower number.
If I worked for you, you would come charging into the boardroom and say, “I need four!” We’d haggle all day, me making presentations, with 50 charts, saying the right number is two. In the end we’d settle on three. We’d go home and tell our families that we had a helluva day at the office. And what did we do? We weren’t dreaming, reaching. I was trying to get the lowest budget number I could sell you. It’s all backward. But if instead you ask people, “Give us all you can; give us the best shot at what you can do,” then you won’t believe the numbers you’ll get. You’ll get more than you need. There’s a trust built that people are going to give their best.
- Stretch is setting business targets that force managers to change their way of doing things. If you want a 10-mile-per-hour increase in the speed of a train you tinker with horsepower. But if you want to double the speed, you have to break out of both conventional thinking and conventional performance expectations. To some, setting stretch goals might seem laughable. But it works at GE. Our company now rewards progress toward stretch goals, rather than punishing shortfalls. As a result, the setting of these goals, and quantum leaps toward them, have become daily events.
Most organizations don’t have a clue about how to manage stretch goals. It’s popular today for companies to ask their people to double sales or increase speed to market three-fold. But then they don’t provide their people with the knowledge, tools and means to meet such ambitious goals … To meet stretch targets, people use the only resource that’s not constrained, which is their personal time. I think that’s immoral. People are under tremendous stress … People are working evenings, working Saturdays, working Sundays to achieve those stretch targets … We have a moral obligation to try to give people the tools to meet tough goals. I think it’s totally wrong if you don’t give employees the tools to succeed, then punish them when they fail.
If done right, a stretch target, which is basically an extremely ambitious goal, gets your people to perform in ways they never imagined possible. Stretch targets force you to think “out of the box.” Steve Kerr – GE Chief Learning Officer
I really like Steve Kerr’s rules of stretch goals:
1. Do not punish failure
2. The rest …
- Do not set goals that stress people crazily
- Give people whatever tools and help you can to achieve the stretch goals
- Stretch targets should be supplemental to basic goals such as earnings or sales targets
- Don’t give tough stretch goals to people already pushing themselves to the limit
- Share the wealth generated by reaching stretch goals
- Expect stretch targets to affect the entire organization
GE is a great company and these last points are pillars to that greatness.