Boundaryless people, excited by speed and inspired by Stretch dreams, have an absolutely infinite capacity to improve everything.
Most managers feel that reaching goals and meeting budgets translate into doing a good job.
That’s not good enough for Jack Welch.
He feels that goals exist to be exceeded and even to be blown away. He calls this business strategy “Stretch.”
Set the bar very high, advises Welch. If you don’t, you’ll never know how much your workers can really achieve.
MAKING STRETCH HAPPEN
Stretch begins with the definition of performance targets that are within a company’s capabilities.
The second aspect involves setting those sights higher—much higher—toward goals that seem beyond reach, requiring an almost superhuman effort to achieve.
We have found that by reaching for what appears to be the impossible, we often actually do the impossible; and even when we don’t quite make it, we inevitably wind up doing much better than we would have done.
Reaching and stretching, according to Welch, avoid the mediocrity that can arise out of compromise:
People work for a month on charts and presentations and books to come in and tell the CEO that, given the economic environment, given the competitive scenario, the best they can do is a 2. Then the CEO says, “I have to give the shareholders a 4.” They eventually settle on 3 and everyone goes home happy.
So Stretch means shooting for the stars. But what happens if employees fail to reach goals? Welch considers this a crucial Stretch issue.
If they don’t have the team operating effectively, you give them another chance. If they fail again, you hand the reins to another person. But you don’t punish for not meeting big targets.
If 10 is the target and you’re only at 2, we’ll have a party when you go to 4. We’ll give out bonuses and go out on the town and drink or whatever. When you reach 6, we’ll celebrate again. We don’t waste time and money budgeting 4.12 to 5.13 to 6.17.
Jeff Immelt, former head of GE Medical Systems who ultimately succeeded Jack Welch as CEO, observed that when Welch began the Stretch concept in the early 1990s, he focused on financial goals. By the late 1990s, he was concentrating on getting GE business leaders to stretch goals dealing with process (the new introduction of products, cycle time, etc.). “You’ll never get there if you don’t do process,” says Immelt.
STRETCH DOES HAVE RISKS
Too much Stretch can be a bad thing.
“It makes you think that your plan won’t get you to the Stretch goal,” explains David Calhoun, head of GE Lighting in the late 1990s. “So you might think about acquiring a new company, [or you] might decide to drop prices out of the bottom to get to the Stretch goal. In other words, stretching forces them to do stuff they wouldn’t otherwise do.”
And Stretch can lead to internal frictions. There was the example of a lower level employee who worked hard to improve on the previous year’s numbers. At the end of the year, that person did indeed get his numbers up. Yet the person’s boss, who was seeking a far higher Stretch target, scolded the worker for “only delivering” what the boss deemed to be mediocre results.
The result, not surprisingly, was an unhappy manager and an unmotivated employee.
Welch understands that Stretch is not an easy concept, and it takes time to implement.
If you have a lousy relationship where a boss takes a Stretch goal and stamps it as a plan and then nails you because you didn’t reach it, the Stretch program is dead.
WORTH THE RISKS
To some business leaders, Stretch may be out of reach.
And indeed, in Welch’s early years, Stretch was out of reach for GE. It would have been too much to ask of his GE colleagues in the difficult years of restructuring. They first needed to regain confidence in themselves and in their businesses. Once they did, Stretch became possible.
Reach for the stars, Welch exhorted his people.
The worst that can happen is that you will fail.
Indeed, you probably will fail.
But by stretching yourself and stretching your business, you may actually reach the stars.
WELCH RULES
- Get the most out of your employees. Each employee should be “stretched” to the maximum.
- Set Stretch goals and then push to exceed them. If people don’t reach those goals, fine—as long as they’ve truly tried to stretch.
- Push for the impossible. Instill in your employees the idea that they should go beyond ordinary goals.