Most companies fall for the urge of setting extremely lofty a corporate strategy for themselves. While, aggressive goal-setting may improve the performances, setting unrealistic ones may instead hurt the same. There is a thin line between realistic and unhealthy stretch targets. One such unhealth stretch target is the strategy being formulaic. It could also be excessive. It could be too broad-based and thus neglect the fine details. Being opaque could be another issue as that would lack clarity. There are related behaviour symptoms too associated such as manipulation, hedging, too many surprises and having misplaced priorities. To rectify this, cross-functional trade-offs need be calibrated between targets. A level of trust needs to be forged with the employees. One needs to be careful that this does not instead backfire. Employees must also feel confident in sharing bad news in case there is any. This will encourage risk-taking, which will ultimately be beneficial for curating business innovations.

Source:https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/in-search-of-a-better-stretch-target?cid=other-soc-twi-mip-mck-oth-1711&kui=jogbwsjVnJKcIIei7k-QHw

Uploaded Date:13 December 2017