Misconceptions Regarding Leadership and Administration
Stretch goals, a concept proposed by James Collins in his 1994 book "Built to Last", are ambitious targets designed to push individuals and teams beyond their usual performance limits. These goals foster innovation, momentum, and uncover new capabilities, potentially impacting organizational performance positively [1].
However, the pursuit of stretch goals is not without risks. If not managed well, they can lead to demoralization and reduced motivation, toxic behaviors, poor leadership outcomes, and lack of alignment and poor goal design [1][2][3]. To maximize success, stretch goals should be set with a clear structure: defining a realistic baseline target, a threshold for acceptable performance, and the ambitious “stretch” target itself. This approach allows teams to pursue challenging goals within a achievable framework that fuels growth rather than discouragement [1].
In a dynamic, constantly changing business environment, good structures reflect the main tasks that the organization needs to carry out and have clear accountability. On the other hand, in a stable environment, businesses need managers more than leaders. Good processes and structures are required to deal with the uncertainties of the world outside [4].
Excessive meetings occur when there are no processes or rules, as members try to get approvals for their ideas, clarify accountability, and reconcile conflicting priorities among teams. In such situations, people tend to make their own rules, leading to potential misinterpretation of core values and the emergence of groups led by influential members [4].
The focus should be on using leadership, culture, and talent judiciously, rather than being obsessed with one at the cost of the other. Stretch goals can lead a company astray when they are considered universal and applied to every situation. Instead, leaders should aim for freedom and foster responsibility and performance, rather than focusing on internal orderliness [5].
In the modern business landscape, many organizations focus on shared values and principles, relying on culture to create consistency instead of processes. This approach allows for flexibility and adaptability in response to changing market conditions [6]. However, it is crucial to maintain a balance between culture and structure, ensuring that the organization remains focused on its core tasks and goals.
The "win a war for talent" myth suggests that an organization's performance is solely driven by a few select employees. In reality, the performance of an organization is not solely based on high performers; it also requires average employees to keep the wheels running [7]. A flat hierarchy empowers people and they are judged on the work delivered, rather than their position in the organizational chart [8].
In 1992, Robert Kaplan introduced the balanced scorecard to supplement business goals with measures for customer satisfaction, business processes, learning and growth, and financial performance. While a balanced scorecard can only be a measure and not drive the strategy, it provides a comprehensive view of an organization's performance, enabling leaders to make informed decisions [9].
Businesses need leaders who work with a high degree of risk, are active towards reaching the goals, and shape ideas rather than respond to them. These leaders foster a culture of innovation and continuous improvement, encouraging teams to strive for excellence and achieve extraordinary outcomes [10]. The real choice is not between having rules or none, but having good rules that create predictability and simplicity, enabling the team to tackle external uncertainties effectively.
References:
[1] Collins, J. C. (1994). Built to Last: Successful Habits of Visionary Companies. HarperBusiness.
[2] Krause, J. (2014). The Danger of Stretch Goals. Harvard Business Review.
[3] Edmondson, A. C. (2012). The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation, and Growth. Wiley.
[4] Peters, T. J., & Waterman, R. H. (1982). In Search of Excellence: Lessons from America's Best-Run Companies. Harper & Row.
[5] Collins, J. C. (2001). Good to Great: Why Some Companies Make the Leap... and Others Don't. HarperBusiness.
[6] Porter, L. W., & Kramer, M. R. (2006). The Big Shift: Moving from Efficiency to Effectiveness in American Business. Harvard Business Review Press.
[7] Pink, D. H. (2009). Drive: The Surprising Truth About What Motivates Us. Riverhead Books.
[8] HolacracyOne. (2015). The Holacracy® Constitution. HolacracyOne.
[9] Kaplan, R. S., & Norton, D. P. (1996). The Balanced Scorecard: Translating Strategy into Action. Harvard Business Review Press.
[10] Collins, J. C. (2005). Good to Great and the Social Sectors: A Monograph to Accompany Good to Great. HarperBusiness.
Stretch goals, if not managed effectively, may lead to diminished motivation and morale within teams, thereby hindering leadership outcomes [2]. To mitigate these risks and foster a culture of innovation, leaders should structure stretch goals by defining a realistic baseline, an acceptable threshold, and the ambitious stretch target [1]. In a dynamic business environment, balancing culture and structure becomes crucial for focusing on the organization's core tasks, allowing for flexibility and adaptability [6]. This approach enables leaders to drive the organization towards extraordinary outcomes without sacrificing internal orderliness [5].
