Stretch goals
Focusing on small wins in combination with process improvement will drive your organisation forward, without the negative consequences of stretch goals.
powerful incentive to deceive customers.
In his latest book, Toyota
About the author Dan Markovitz is the President of TimeBack Management and the author of A Factory of One (Productivity Press, December 2011). Follow him on his blog at www.
timebackmanagement.com or on Twitter at @timeback.
Kata, Mike Rother makes an important distinction between a traditional metric-based outcome (or stretch goal) and a ‘target condition’. A stretch goal is most often an outcome metric, and is influenced by so many variables that systematic, scientific improvement isn’t possible. A ‘target condition’, by contrast, describes how we want a process to function – and that description requires that you understand the current condition deeply enough to know where to begin your improvement efforts. Take the aforementioned Sears example: $147 per hour of revenue per person is an outcome metric that’s influenced by a huge number of factors. Perhaps the service staff spent an inordinate amount of time looking for parts, so it took them twice as long as necessary to do a repair. Or perhaps the process of getting customer information and relaying that to the mechanics took such a long time that mechanics couldn’t work on enough cars during the day. Or perhaps Sears’ reputation was only for simple repairs, and customers would only bring their cars in for low-priced oil changes. Who knows? Without sufficient knowledge of the current condition, there’s no way to make intelligent progress towards the ultimate goal of being a profitable contributor towards Sears’ growth.
However, setting a target condition with knowledge of the current state means solving a problem that will inevitably lead towards increased revenues. In Sears’ case, that might mean changing the layout of the shop and the way parts are supplied so that mechanics
Stretch goals can also – tragically – lead to excessive risk taking Enron rewarded its executives with large bonuses for meeting specific revenue goals, irrespective of the profitability or the riskiness of the moves. Although the final book hasn’t been written on sub-prime mortgages and the ensuing banking crisis, we do know that stretch goals played a large role in putting the investment banks in serious jeopardy.
Focusing on small wins, in combination with process improvement, will drive your organisation forward, without the negative consequences of stretch goals. However, this approach requires a willingness to abandon the ‘ready, fire, aim’ approach to problem solving. The heavy lifting has to be done at the outset – a deep understanding of the current condition is a prerequisite for true improvement. This approach also requires a subtle – but critical – shift in focus from improving outcome metrics to improving the process by which those outcomes are achieved.
A stretch goal is most often an outcome metric, and is influenced by so many variables that systematic, scientific
improvement isn’t possible.
Management Services Winter 2012
35
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