I sit and smile whenever I hear or read the advice concerning the desirability, necessity or effectiveness of ‘stretch’ targets. BEHAGS, some call them; big, hairy, audacious goals. Sounds great doesn’t it? Reach for the sky! Go for gold! Shock’ em out of their comfort zone! If only it were that simple.
The problem comes when some idiot of a sales director decides to set the salesforce a target for the year of, say 20% increase in sales…..in an industry that’s flatlining…..when the company has already 40% market share…when production (who haven’t been informed, by the way) couldn’t handle an extra 10% share without significant investment……and the lead time for a new production line is 1 year. Apart from any of these factors, as soon as the team start falling behind plan (inevitably), the beatings alternate with the pep talks. Soon half of the team have simply switched off, realising that there is no way they are going to earn bonus that year and sales take a dive!
Don’t get me wrong, setting your team, division or company audacious goals can work as long as you follow some rules. I go with the French intellectual who said, when faced with an innovative solution, “That’s all very well in practice, but how will it work in theory?” Firstly, set the stretch target as a working, theoretical challenge after you have carried out a full situation analysis of where you, the company, the competition and the industry are (and don’t forget the SWOT). Go through this process with all relevant parties in the same room to ensure that you have both captured all the relevant information and can see where the people problems might lie.
Then, and only then, explore if such a leap can be made. Consider what has to fall into place to facilitate the growth. Can production meet such an uplift in volume, is investment required, when is the latest the decision can be made to still meet the target, do more employees need to be taken on, trained? What are the cash effects of such an increase, can the company finance the growth? Equally important, is this growth a zero sum game, what effect will the proposed move have on competition, which company will lose share, what is their response likely to be? Alternatively, can the growth be achieved by expanding the market, do we have the marketing budget and will all competitors simply share in the market increase?
If you sell via distributors or agents are your existing network capable of handling the volume; if you insure your debtors, can you get cover for the planned increase? Will additional training be required for your own sales team, for distributors or agents? What weak links are there in the team and the distribution channel, how can these be overcome? Consider also the effects that your big plan potentially is going to have on those aspects of the business that aren’t going to be receiving all this attention.
Bear in mind too how an element within your team might try to game the system – like the NHS department I read of this morning who arbitrarily struck patients of the operating waiting list for not responding to a request for confirmation (which hadn’t ever been sent….). I remember back in my selling days when a new sales manager decided he was going to get a more even spread of turnover across the year by making each month a discrete target with a set bonus that could be achieved for over-performance. Funnily enough it worked but a lot of customers had to wait longer for delivery as having achieved target in a given month we just sat on orders until the start of the next month. Finally, consider what the actions have to be, function by function and plot a critical path with all of the required milestones and measures.
This is not an exhaustive list, but having considered all of the above together with any additional issues, ask yourself, have you got the key people with you, and are they as committed as you? If you have got to this stage, have a plan that makes sense and is not just a fanciful wish, have the team with you and you really believe in what you are doing, then press the button. In this way, a stretch target, a really big, hairy, audacious goal stands a very good chance of becoming reality. And by teasing out all of the unintended consequences, you should avoid the embarrassment of having to explain why what wasn’t targeted suffered.
Have you ever planned, managed and achieved a really significant stretch target?