The Positive Tension Between SMART and Stretch Goals

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?

Tim McMahon
December 14, 2009 - 5:20 pm
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Great Jon. I get that question all the time during Hoshin Kanri sessions. That tension is necessary in the process. The x-chart illustrates the links between those longer term often stretch goals and the focused (smart) shorter term goals for the next annual cycle. I am going to use your definition next time it happens. Thanks for sharing.
Yildiz Ellberger
December 14, 2009 - 8:13 pm
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I capture this tension by an alternative interpretation of the SMART acronym. I use the version where “A” stands for “ambitious” instead of “attainable.” So to me a SMART goal is ambitious (challenging) yet realistic. Thus it is a stretch but not fantasy. This interpretation also appears to me to be a less redundant use of the letters in SMART, since I don’t see a meaningful distinction between an attainable goal and a realistic (the “R” component of SMART) goal.
Owen Berkeley-Hill
December 15, 2009 - 5:00 am
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Jon,
Great article! I believe a Hoshin-free Lean journey is a pointless meandering, which then is reduced to a count of the tools deployed.
My studies into Hoshin (admittedly sometime back) gave me the impression that from a Western, traditional Command & Control perspective, it took too long. When I was at work, you started setting your annual objectives in the New Year, you were expected to have them done and dusted by the end of the month, or 1st Quarter at the latest. They were eventually changed by June and forgotten by August: a form of going through the motions and then letting sleeping dogs lie. Having all this up, down, sideways and diagonal catch balling just added time and ended up confusing things, and may have held people to account. Discussing objectives STRETCHed or SMART with another department or division was just beyond our ken.
But I wonder if size and existing paradigms matter? You can get the leadership of a small-to-medium organisation to consider changing their ways and applying Hoshin, but is it possible (in a sustained way) in a global organisation of say 100,000+ people which has been around for a century and was successful in the old ways? It is all very well asking people to “think outside the box” and apply a thick coat of “innovation”, but last year’s innovative thinking can become tomorrow’s limiting paradigm (Sacred Cows to me and perhaps “Moose Heads” to you).
Let me give you an example from Ford, which created the mass market. Having done so, the company developed the accounting practice of “Posting Profit at Gate Release”, which did exactly what it said on the tin. As soon as a car left the factory gates, the company assumed a profit: nice if you sell everything you make and there is little or no marketing expense, but bordering on the barking in today’s climate. This was not just a sacred cow, it also corrupted common sense: you built what you could to make the numbers because that meant a notional profit, and then parked much of your output in fields for months until you sold the stuff at a massive discount. I once asked the then CFO why we did not abandon this outmoded practice. He was honest enough to admit that changing this accounting practice would mean a big hit to the bottom line, which no CEO would suffer on their watch. In these circumstances, can you imagine how long the dialogue would take between a plant manager and his colleagues in Marketing and Accounting?
So, Hoshin is essential, but it might not be possible in large, multi-national organisations which suffer from debilitating paradigm blindness.
Jon Miller
December 15, 2009 - 3:29 pm
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Hi Owen
Thanks for your comments, and good question. I think hoshin kanri can work at a 100,000 person organization as well as a 100 person organization because ultimately it’s about changing how the top 50 or so people work and think.
The size of the organization isn’t the key factor. Rather it’s whether they have a sense of urgency and commitment to making a change. That can be as much of a struggle in a small company as a big one. Small firms may not have the time, savvy or the focus to do strategic planning at all while large firms have their current way of developing and deploying strategy with all of its trappings. Build from scratch with limited resources can take as long as tear down and rebuild sometimes.
Part of hoshin is to stick with it, learn and change how you manage. The PDCA cycle is built in. Without that it is just another management program that fails and is abandoned. Large organizations are ultimately a collection of smaller organizations. Changes comes through leaders and teams to the rest of the population.
Alexander Zubov
December 26, 2009 - 3:25 pm
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Jon,
I believe that in organization with strong hoshin kanri process can hardly be any conflict between stretch and SMART goals. It is simple. We start with stretch goal and make it SMART through catch ball. Defining means for achieving goal, engaging everyone in, building consensus and support make it realistic and attainable.
Jamie Flinchbaugh
December 31, 2009 - 2:57 am
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Great mnemonic Jon. I think people think of stretch goals just as things that are impossible, or they take what they think they can achieve and just add 10 percent. Not really a stretch goal.
Although it’s not the main point of your post, I’d like to comment on the use of SMART goals. I don’t like them. Well, I like the goals, but I don’t like the use of SMART. I think it’s too complicated. I think people get hung up on stuff. I rarely see it really helping the goal process. I’ve even seen people write articles or blog posts about it and they get the specific words wrong, or don’t actually spend the time testing for each letter, in which case it serves no purpose. Even in your list, you use Realistic instead of Relevant for R. Both have been used, but Relevant is the more common use, or perhaps the original use. I would argue that Attainable and Realistic are pretty much the same thing. Here’s why I think MT is enough:
If it’s measurable and time-bound, it’s going to be specific. So that’s not a problem. You don’t need the S.
Attainable I think is a struggle. How do you know? If you wrote a goal to learn how to beam yourself across the room, unless you are a particle physicist who actually had a shot at it, then it’s not very attainable. But as far as goals that are just out of reach because of some barriers, how will we really know that? We don’t until we try. This is why we need STRETCH goals.
Relevant – well, if you’re writing irrelevant goals and need a reminder to not do that, then we have bigger problems.
That’s why I believe Measurable and Time-bound are the only two you really need.
I write more about goal setting in Forget the New Year’s Resolution: http://jamieflinchbaugh.com/2009/12/forget-the-new-years-resolution/
Thanks,
Jamie
Jon Miller
December 31, 2009 - 5:47 pm
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Hi Jamie
I wasn’t always a fan of SMART goals either but I’ve found that many people are helped by having the specific, attainable and realistic / relevant parts to it. We should use the simplest effective solution, I agree so MT or SMART, either way.
The points you made in your video about setting specific dates for the goal rather than “by December 31” is an example of the need for S. “Lose 100 lbs next year” could be a MT goal. A SMART goal would force you to detail how much of it by when, and by what means (diet, exercise) and even whether that level of weight loss is realistic (is it healthy?). The A for attainable forces you to question whether you have the time for exercise, the budget, or other barriers as you pointed out in your video and listed on your Goal-Setting Template.
I may be using the SMART goal differently from how it was originally intended.
Allan Dean
January 4, 2010 - 12:28 am
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Enjoyed this post and comments. Suggest you create the “STRETCH GOALS” page in Wikipedia. There isn’t one yet!