Once you’ve established your commit goals, you should also set stretch goals. Learn how to use the one-third, two-third method to set a stretch goal.
In addition to setting a commit goal, you should also set a stretch. A stretch goal is what’s going to push people to achieve more. It still needs to be achievable when you go back and look at SMART goals, but it won’t have a guarantee of success. More often than not, you’ll fall short of your hitting your stretch goal. If you’re always hitting your stretch, you’re not stretching far enough.
So why should you set stretch goals? Well, if you only set a commit goal, the team might coast once you reach it. They’re going to say, “Well, we hit our goal. We don’t have to push ourselves so hard. Let’s just relax and get to the end of the year.”
A stretch goal gets them to continue performing. Once they hit the commit, there’s still something more that they can go out and achieve. A stretch goal can motivate and excite people. When they hit it, it creates a sense of shared achievement that’s going to build morale and team identity. Stretch goals force people to think differently.
Many times, a commit goal is based upon what people know they can do. They don’t challenge constraints or look for new ways of doing things. A commit goal is about getting things done and doing it the way we’ve always done it. A stretch goal gets them to challenge assumptions. They’ll look at the business differently. They’re going to be willing to make large changes and they’re going to take risks to achieve that stretch. A stretch goal helps them build new skills from trying new things.
So by combining a commit goal that they can achieve and they can deliver to the organization, and a stretch goal that pushes them to improve their performance, you’re getting the best of both worlds.
The one-third, two-third method for stretch goals
I often get asked, “How can I set a good stretch goal?” I like to tell people to use the 1/3, 2/3 rule. For the gap between your commit and your stretch, your team should have a good sense for how they might close 2/3 of that gap, and no idea for where the other 1/3 will come from.
Why 1/3, 2/3? Well, if it’s more than 1/3 that they don’t know where it’s going to come from, they’re going to give up and just say, “This is too hard. I don’t have any ideas.” If it’s less than 1/3, it may be too easy and they might coast. To create this list and understand what this 1/3, 2/3 is, gather a list from your team for ideas beyond the commit and add them up.
Let’s walk through an example. Let’s say we set a commit goal of X, and now we’re trying to figure out what the stretch is. I tell the team, “I need all your best ideas for how we’re going to drive revenue beyond that commit event.” The team goes off, they come back with their ideas, and they come up with $2 million worth of ideas. Now these will be hard, but they have a reasonable idea of how they can capture $2 million. That two million is my 2/3. What I need to do next is add another third beyond that. When you look at the math, you just divide that two million in half and add it. So I would add another $1 million, and then I’d have a total stretch goal of three million. Now let’s look at that 1/3, 2/3. 2/3 of that $2 million, they have ideas. 1/3 of it, $1 million, they don’t know where it’s going to come from. They’re going to have to innovate to find that incremental $1 million.
When you set your stretch goals, following this 1/3, 2/3 rule will help you identify ideas and make that stretch feel like it’s something they can get, but it will still push them beyond the ideas they’ve already got, and hopefully drive incremental innovation.
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