Many of our clients face a dilemma: their growth rate is too low and they are not achieving their full potential. The CEO wants to accelerate growth and mobilize their team to achieve an ambitious growth rate. To do this, they very often declare a breakthrough goal such as a “5x to 10x revenue increase over five years”, or “improve EBITDA by 50% in three years.” In doing so, they “create a game worth playing” and they have to develop a growth strategy. However, in order to mobilize a team to make the commitments necessary to achieve these types of goals, the CEO has to enroll everyone in the possibility that these goal are achievable, such that the team mobilizes themselves and others to take actions consistent with these goal. The entire enrollment process is a big conversation beyond the scope of this blog post.

Part of the enrollment process is the creation of a roadmap outlining the strategy and strategic initiatives to achieve these goal. This requires a collaborative strategic planning session to tap the best thinking of each team member to design the strategy and course of action that they will follow year by year.

Once the long-term goal are set, the key issue is how the intermediate stretch milestones will be set, especially for the first year or two. Unfortunately, these are usually set in a somewhat arbitrary fashion. In some cases a linear progression, in other cases, a more exponential-looking curve. In the latter case, the growth is back-end loaded, indicative of the fact that no-one knows how the growth will be achieved in the short term. Setting the first year goal is a critical factor in building credibility toward achieving the larger five year goal.

Our Approach To Setting the Stretch Goal For Year One:

After “creating the game worth playing,” we help CEOs and executive leaders set the intermediary goal with grounded data. This also helps build credibility into the possibility of achieving the long-term goal. In order to do so, we look at several things:

1) What is the best performance achieved by the company in a given month, that was not the result of an uncontrollable “special” cause? What would the stretch target be if we could consistently achieve this result?

Prior Year Metric-resized-600
2) What did competitors achieve for the same metric during the baseline year for comparable products and services)? For which of these competitors could the firm realistically achieve a comparable performance?


3) How did the market and the firm’s competitors grow in the past 3 years? What would our client achieve by outgrowing the market at the same rate as the best competitor?

Competitor Growth-resized-600

Triangulating those 3 ways to quantify the stretch goal yields the following:

Stretch Goal-resized-600

By sharing with the team the logic behind how the short-term stretch goals were established, it is easier to get alignment behind the longer-term stretch goals and enthusiasm by the team for doing everything in their power to beat their competitors and thereby gain market share.

The external commitment that executives make to their investors or to their Board (external annual plan) is usually more conservative that this short term stretch goal. Not only do you want to inspire the team to meet the short-term external annual plan, you want to encourage them to do everything they can to meet or exceed the short-term stretch goal, so the effort gets off to a great start. To do so, we found that the design of the bonus plan is critical to building alignment and reward the commitment necessary to try to meet or exceed the stretch goal. Here is an approach for doing this:


A plan of this type encourages risk taking towards achieving and exceeding the first year goal. The extra cost of higher bonus when higher performance is achieved is a small price to pay when compared to the benefits that the company and all its stakeholders will derive from achieving a higher performance level. In addition, it contributes to achieving a high performance culture in the company. Once the team gets a taste of victory nothing will stop them.

By using a more aggressive stretch goal grounded in data clearly explained to the team, and rewarding the team based on its ability to fill a portion of the gap between the official plan and the stretch goal, better results are achieved by the resourcefulness of highly motivated and stimulated employees.