At a Work-Out inside the engine factory in Massachusetts, one worker told his bosses they were making a mistake by outsourcing construction of protective shields for their grinding machines. The factory could make them in-house for half the cost, he said. Then he unfurled a piece of butcher paper covered with scribbled blueprints. There was nothing SMART about the man’s proposal. It was unclear if it was realistic or achievable, or what measurements to apply. But when the factory’s top manager looked at the butcher paper, he said, “I guess we’ll try it out.”
Four months later, after the blueprints had been professionally redrawn and the plan transformed into a series of SMART goals, the first prototype was installed. It cost $16,000—more than 80 percent less than the outsourced bid. The factory saved $200,000 that year on ideas proposed at the Work-Out. “Everybody gets caught up in this tremendous rush of adrenaline,” a team leader at the plant, Bill DiMaio, said. “The ideas that people come up with are so encouraging, it’s unbelievable. These people get psyched. All their ideas are fair game.”
Then Kerr helped take the Work-Out program company-wide. By 1994, every GE employee within GE had participated in at least one Work-Out. As profits and productivity rose, executives at other companies began imitating the Work-Out system inside their own firms. By 1995, there were hundreds of companies conducting Work-Outs. Kerr joined GE full-time in 1994 and eventually became the company’s “chief learning officer.”
“The Work-Outs were successful because they balanced the psychological influence of immediate goals with the freedom to think about bigger things,” said Kerr. “That’s critical. People respond to the conditions around them. If you’re being constantly told to focus on achievable results, you’re only going to think of achievable goals. You’re not going to dream big.”
Work-Outs, however, weren’t perfect. They took an entire day of everyone’s time and usually meant the plant had to slow down production so that workers could all attend the meetings. It was something a division or plant could do once or twice a year, at most. And though the Work-Outs left everyone feeling excited and hungry for change, the effects were frequently short-lived. A week later, everyone was back at their old jobs and, often, their old ways of thinking.
Kerr and his colleagues wanted to foster perpetual ambitions. How, they wondered, do you get people to think expansively all the time?
IV.
In 1993, twelve years after becoming chief executive of General Electric, Jack Welch traveled to Tokyo and, while touring a factory that made medical testing equipment, heard a story about Japan’s railway system.
In the 1950s, during the lingering wake of the devastation of the Second World War, Japan was intensely focused on growing the nation’s economy. A large portion of the country’s population lived in or between the cities of Tokyo and Osaka, which were separated by just 320 miles of train track. Every day, tens of thousands of people traveled between the cities. Vast amounts of raw industrial materials were transported on those rail lines. But the Japanese topography was so mountainous and the railway system so outdated that the trip could take as long as twenty hours. So, in 1955, the head of the Japanese railway system issued a challenge to the nation’s finest engineers: invent a faster train.
Six months later, a team unveiled a prototype locomotive capable of going 65 miles per hour—a speed that, at the time, made it among the fastest passenger trains in the world. Not good enough, the head of the railway system said. He wanted 120 miles per hour.
The engineers explained that was not realistic. At those speeds, if a train turned too sharply, the centrifugal force would derail the cars. Seventy miles an hour was more realistic—perhaps 75. Any faster and the trains would crash.
Why do the trains need to turn? the railway head asked.
There were numerous mountains between the cities, the engineers replied.
Why not make tunnels, then?
The labor required to tunnel through that much territory could equal the cost of rebuilding Tokyo after World War II.
Three months later, the engineers unveiled an engine capable of going 75 miles per hour. The railway chief lambasted the designs. Seventy-five miles per hour, he said, had no chance of transforming the nation. Incremental improvements would only yield incremental economic growth. The only way to overhaul the nation’s transportation system was to rebuild every aspect of how trains functioned.
Over the next two years, the engineers experimented: They designed train cars that each had their own motors. They rebuilt gears so they meshed with less friction. They discovered that their new cars were too heavy for Japan’s existing tracks, and so they reinforced the rails, which had the added bonus of increasing stability, which added another half mile per hour to cars’ speed. There were hundreds of innovations, large and small, that each made the trains a little bit faster than before.
In 1964, the Tōkaidō Shinkansen, the world’s first bullet train, left Tokyo along continuously welded rails that passed through tunnels cut into Japan’s mountains. It completed its inaugural trip in three hours and fifty-eight minutes, at an average speed of 120 miles per hour. Hundreds of spectators had waited overnight to see the train arrive in Osaka. Soon other bullet trains were running to other Japanese cities, helping fuel a dizzying economic expansion. The development of the bullet train, according to a 2014 study, was critical in spurring Japan’s growth well into the 1980s. And within a decade of that innovation, the technologies developed in Japan had given birth to high-speed rail projects in France, Germany, and Australia, and had revolutionized industrial design around the world.
For Jack Welch, this story was a revelation. What GE needed, he told Kerr when he got home from Japan, was a similar outlook, an institutional commitment to audacious goals. Going forward, every executive and department, in addition to delivering specific and achievable and timely objectives, would also have to identify a stretch goal—an aim so ambitious that managers couldn’t describe, at least initially, how they would achieve it. Everyone, Welch said, had to partake in “bullet train thinking.”
In a 1993 letter to shareholders, the chief executive explained that “stretch is a concept that would have produced smirks, if not laughter, in the GE of three or four years ago, because it essentially means using dreams to set business targets—with no real idea of how to get there. If you do know how to get there—it’s not a stretch target.”
Six months after Welch’s trip to Japan, every division at GE had a stretch goal. The division manufacturing airplane engines, for instance, announced they would reduce the number of defects in finished engines by 25 percent. To be honest, the division’s managers figured they could hit that target pretty easily. Almost all the defects they found on engines were small, cosmetic issues, such as a slightly misaligned cable or unimportant scratches. Anything more serious was corrected before the engine was shipped. If they hired more quality assurance employees, managers figured, they could reduce cosmetic defects with little effort.
Welch agreed that reducing defects was a wise goal.
Then he told them to cut errors by 70 percent.
That’s ridiculous, managers said. Manufacturing engines was such a complicated affair—each one weighed five tons and had more than ten thousand parts—that there was no way they could achieve a 70 percent reduction.
They had three years, Welch said.
The division’s managers started panicking—and then began analyzing every error that had been recorded in the previous twelve months. Simply hiring more quality assurance workers, they quickly realized, wouldn’t do the trick. The only way to reduce errors by 70 percent was to make every single employee, in effect, a quality assurance auditor. Everyone had to take responsibility for catching mistakes. But most factory workers didn’t know enough about the engines to identify every small defect as it occurred. The only solution, managers decided, was a massive retraining effort.
Except that didn’t really work, either. Even after nine months of retrainin
g, the error rate had fallen by only 50 percent. So managers started hiring workers with more technical backgrounds, the kind of people who knew what an engine ought to look like and, therefore, could more easily spot what was amiss. The GE factory manufacturing CF6 engines in Durham, North Carolina, determined that the best way to find the right employees was to hire only candidates with FAA certification in engine manufacturing. Such workers, however, were already in high demand at other plants. So to attract them, managers said employees could have more autonomy. They could schedule their own shifts and organize teams however they wanted. That required the plant to do away with centralized scheduling. Teams had to self-organize and figure out their own workflow.
Welch had given his aircraft manufacturing division a stretch goal of reducing errors by 70 percent, an objective so audacious the only way to go about it was to change nearly everything about (a) how workers were trained, (b) which workers were hired, and (c) how the factory ran. By the time they were done, the Durham plant’s managers had collapsed organizational charts, remade job duties, and overhauled how they interviewed candidates, because they needed people with better team skills and more flexible mindsets. In other words, Welch’s stretch goal set off a chain reaction that remade how engines were manufactured in ways no one had imagined. By 1999, the number of defects per engine had fallen by 75 percent and the company had gone thirty-eight months without missing a single delivery, a record. The cost of manufacturing had dropped by 10 percent every year. No SMART goal would have done that.
Numerous academic studies have examined the impact of stretch goals, and have consistently found that forcing people to commit to ambitious, seemingly out-of-reach objectives can spark outsized jumps in innovation and productivity. A 1997 study of Motorola, for instance, found that the time it took engineers to develop new products fell tenfold after the company mandated stretch goals throughout the firm. A study of 3M said stretch goals helped spur such inventions as Scotch tape and Thinsulate. Stretch goals transformed Union Pacific, Texas Instruments, and public schools in Washington, D.C., and Los Angeles. Surveys of people who have lost large amounts of weight or have become marathon runners later in life have found that stretch goals are often integral to their success.
Stretch goals “serve as jolting events that disrupt complacency and promote new ways of thinking,” a group of researchers wrote in Academy of Management Review business journal in 2011. “By forcing a substantial elevation in collective aspirations, stretch goals can shift attention to possible new futures and perhaps spark increased energy in the organization. They thus can prompt exploratory learning through experimentation, innovation, broad search, or playfulness.”
There is an important caveat to the power of stretch goals, however. Studies show that if a stretch goal is audacious, it can spark innovation. It can also cause panic and convince people that success is impossible because the goal is too big. There is a fine line between an ambition that helps people achieve something amazing and one that crushes morale. For a stretch goal to inspire, it often needs to be paired with something like the SMART system.
The reason why we need both stretch goals and SMART goals is that audaciousness, on its own, can be terrifying. It’s often not clear how to start on a stretch goal. And so, for a stretch goal to become more than just an aspiration, we need a disciplined mindset to show us how to turn a far-off objective into a series of realistic short-term aims. People who know how to build SMART goals have often been habituated into cultures where big objectives can be broken into manageable parts, and so when they encounter seemingly outsized ambitions, they know what to do. Stretch goals, paired with SMART thinking, can help put the impossible within reach.
In one experiment conducted at Duke University, for instance, varsity athletes were asked to run around a track and, when signaled, get as close as possible to a finish line 200 meters away within ten seconds. The runners in the study all knew, simply by looking at the distance they were being asked to cover, that the goal was absurd. No person has ever run anything close to 200 meters in ten seconds. The athletes made it 59.6 meters, on average, during their sprint.
A few days later, those same participants were presented with the same task, but this time the finish line was only 100 meters away. The goal was still audacious—but it was within the realm of possibility. (Usain Bolt ran 100 meters in 9.58 seconds in 2009.) During this trial, the runners made it, on average, 63.1 meters in ten seconds—“a large difference by track and field standards,” the researchers noted.
This difference in performance was explained by the fact that the shorter distance, while still challenging, lent itself to the kind of methodical planning and mental models that experienced runners are accustomed to using. The shorter distance, in other words, allowed the runners to participate in the athletic equivalent of breaking a stretch goal into SMART components. “All runners in our sample engaged in regular workouts,” the researchers wrote, and so when confronted with running 100 meters in ten seconds, they knew how to wrestle with the task. They broke it into pieces and treated it like they would other sprints. They started strong, and paced off other runners, and then pushed themselves as hard as possible in the final seconds. But when they were confronted with running 200 meters in ten seconds, there was no practical approach. There was no way to break the problem into manageable parts. There were no SMART criteria they could apply. It was simply impossible.
Experiments at the University of Waterloo, the University of Melbourne, and elsewhere show similar results: Stretch goals can spark remarkable innovations, but only when people have a system for breaking them into concrete plans.
This lesson can extend to even the most mundane aspects of life. Take, for instance, to-do lists. “To-do lists are great if you use them correctly,” Timothy Pychyl, a psychologist at Carleton University, told me. “But when people say things like ‘I sometimes write down easy items I can cross off right away, because it makes me feel good,’ that’s exactly the wrong way to create a to-do list. That signals you’re using it for mood repair, rather than to become productive.”
The problem with many to-do lists is that when we write down a series of short-term objectives, we are, in effect, allowing our brains to seize on the sense of satisfaction that each task will deliver. We are encouraging our need for closure and our tendency to freeze on a goal without asking if it’s the right aim. The result is that we spend hours answering unimportant emails instead of writing a big, thoughtful memo—because it feels so satisfying to clean out our in-box.
At first glance, it might seem like the solution is creating to-do lists filled solely with stretch goals. But we all know that merely writing down grand aspirations doesn’t guarantee we will achieve them. In fact, studies show that if you’re confronted with a list of only far-reaching objectives, you’re more likely to get discouraged and turn away.
So one solution is writing to-do lists that pair stretch goals and SMART goals. Come up with a menu of your biggest ambitions. Dream big and stretch. Describe the goals that, at first glance, seem impossible, such as starting a company or running a marathon.
Then choose one aim and start breaking it into short-term, concrete steps. Ask yourself: What realistic progress can you make in the next day, week, month? How many miles can you realistically run tomorrow and over the next three weeks? What are the specific, short-term steps along the path to bigger success? What timeline makes sense? Will you open your store in six months or a year? How will you measure your progress? Within psychology, these smaller ambitions are known as “proximal goals,” and repeated studies have shown that breaking a big ambition into proximal goals makes the large objective more likely to occur.
When Pychyl writes a to-do list, for instance, he starts by putting a stretch goal—such as “conduct research that explains goal/neurology interface”—at the top of the page. Underneath comes the nitty-gritty: the small tasks that tell him precisely what to do. “Specific: Download grant application. Timel
ine: By tomorrow.”
“That way, I’m constantly telling myself what to do next, but I’m also reminded of my larger ambition so I don’t get stuck in the weeds of doing things simply to make myself feel good,” Pychyl said.
In short, we need stretch and SMART goals. It doesn’t matter if you call them by those names. It’s not important if your proximal goals fulfill every SMART criterion. What matters is having a large ambition and a system for figuring out how to make it into a concrete and realistic plan. Then, as you check the little things off your to-do list, you’ll move ever closer to what really matters. You’ll keep your eyes on what’s both wise and SMART.
“I had no idea how what we were doing would affect the rest of the world,” Kerr told me. GE’s embrace of SMART and stretch goals has been analyzed in academic studies and psychology textbooks; the firm’s system has been imitated throughout corporate America. “We proved you can change how people act by asking them to think about goals differently,” said Kerr. “Once you know how to do that, you can get pretty much anything done.”
V.
Twenty-seven days after fighting concluded in the Yom Kippur War, the Israeli parliament established a national committee of inquiry to examine why the nation had been so dangerously unprepared. Officials met for 140 sessions and heard testimony from fifty-eight witnesses, including Prime Minister Golda Meir, Defense Minister Moshe Dayan, and the head of the Directorate of Military Intelligence, Eli Zeira.
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