While helping a client through their hoshin kanri process last month one of the leaders in the company raised an interesting question about the selection and definition of breakthrough objectives as part of the hoshin plan. Breakthrough objectives should be stretch goals that require cross-functional cooperation. Stretch goals should be SMART: specific, measurable, attainable, realistic and time-bound. Last but not least the breakthrough objective should build significant capability for the organization, meaning that both the what and how are important, and breakthrough financial results achieved Chainsaw Al-style is no breakthrough at all.
The question asked was about the seeming conflict between stretch and SMART goals. Stretch goals are meant to be ambitious, challenging and out of reach according to the current ways of working. SMART goals are by definition narrowly scoped and individually and discretely attainable. There seems to be a large gap between these two types of goals. This may be true in how goals are traditionally deployed in top-down fashion such that both the goal (what) and the means of achieving the goal (how) are largely dictated. In hoshin kanri there is a positive tension between stretch and SMART that exists when defining the breakthrough objectives. The new definition of STRETCH we can use to integrate it with SMART for the purpose of hoshin kanri is:
S = SMART goals that
T = teach an organization how to
R = reach higher levels of performance by
E = engaging everyone in
T = testing hypotheses through
C = cross-functional cooperation
H = in a humane fashion.
That last word is for Al Dunlap. Try creating our own set of words for S-T-R-E-T-C-H.
This positive tension between stretch and SMART goals is deeply reliant on the third component of breakthrough objectives: the condition that accomplishing the objective must build capability in the organization. While objectives that are both SMART and stretch may be achieved through cost-cutting, this can leave an organization hobbled and unprepared to meet future challenges. Toyota’s recent woes with overcapacity and quality defects could be viewed as both due to the fact that their hoshin objectives for growth did not build capability but rather built factories, and that their cost cutting and lead-time reduction efforts the supply chain (CCC21) cut into their capabilities, leaving suppliers and engineering teams unprepared to rapidly develop thoroughly reliable automobiles in the short term.
Toyota will come out of their current slump just fine. They know how to learn, though hubris can make even the best learners forget this at times. How have you learned to balance SMART and stretch goals?