What there is in for me:

  • Should a startup use stretch goals?
  • What a startup needs to use a stretch goal?
  • The framework of The Stretch Goal Paradox works for startups?

I recently read an interesting article about setting stretch goals, “The Stretch Goal Paradox” by Sim B. Sitkin, C. Chet Miller, and Kelly E. See.

Setting stretch goals became quite famous recently, especially in the tech world because of the OKR methodology that Google, Intel, Twitter, and other use. In the OKR (if you don’t know what it is, read these slides), the goal isn’t to achieve 100%, but rather to set a challenging goal that even you working hard you would probably achieve 70-80%.

They are also very common when a new CEO is hired to turn around a company and needs to change moral of the team and also to convince the investors.

The article argues that not all companies should use stretched goals because it can backfire. Also, the authors propose a framework to evaluate if a company should use it or not, as you can see below.

r1701f_sitken_stretchgoals-850x578

They use two variables to evaluate: Past Success of the Team, and Uncommitted Resources. The framework seems to make sense, at least for big corporations. However, my interest is in startups! Would this framework work for them?

Let’s check each variable for a startup. First the past success of the team, by definition, startups are still in early stage, not having any real past success, at least in the actual company anyway.
Regarding uncommitted resources, we all now that startups don’t have spare resources, they always lack resources. They are most of the time working beyond their capacity.

Using those assumptions for variables in the framework, we got that none startup should use Strech Goals. But… Should they?

Growth is the fuel for startups, a startup without growth is a walking dead startup. So, startups should grow, not only grow but grow really fast. That means that they should put hard goals to achieve and work as hard and intelligent as they can to achieve it. Would any of the great startups we have been successful if they didn’t have bold and audacious goals?

That leads me to conclude that all startups should use stretch goals, meaning that the framework won’t work for startups.

Although I think all startups should use it, they have different problems than big corporations. Therefore they need to evaluate different variables to check if they should use or not.

  • The startup should have a metric-oriented and accountable culture. If the team isn’t focused on metrics and it isn’t held accountable for their results, setting a higher goal will just make the CEO get even more stressed;
  • Startups should understand well their business metrics before commit to a stretched goal. It’s bad to walk in the wrong direction, but it’s even worse to run with all your strength to the wrong direction;
  • The startup should have a Big, Hairy, Audacious Goal (BHAG). The team will put all their effort to achieve a challenging goal if it’s linked to a remarkable purpose, not just because the CEO set the goal.

There might have other pre-requisites for a startup to use stretch goal in a proper way, even though those seem to me as the main ones.

What do you think? Should a startup use a stretch goal or not? Why? When to use and when not to use?

Key Takeaways:

  • Stretch goals are even more important for startups
  • Use stretch goals when you have a metric-oriented and accountable culture
  • Use stretch goals when you know well your real business metrics
  • Use stretch goals when you have a Big, Hairy, Audacious Goal (BHAG)

Here follows some BHAG to inspire you with yours:
“A computer on every desk and in every home.”Microsoft
“Organize the world’s information.”Google
“Connect the world.”Facebook
“Transportation as reliable as running water, everywhere for everyone.”Uber
“Tesla’s mission is to accelerate the world’s transition to sustainable energy.”Tesla
“Make easy to do business anywhere.”Alibaba
“Remember everything.”Evernote

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