How can you set stretch goals with OKRs?

If you never stretch, you can’t possibly know what you might achieve. That’s why stretch goals have become a remarkable tool for operational excellence and innovation, used by the most innovative organizations out there — from Google and Allbirds to 23andMe and Pinterest.

When we frame a stretch goal in the context or language of OKRs, it’s a high-effort, high-risk goal and, according to the subtitle of John Doerr’s Measure What Matters, a promise of “10x growth.”

“OKRs are the best system to achieve ambitious goals, because it’s a way to set the goalposts far and think of awesome ways to get there and then break them down,” says Rohan Pavuluri, CEO and co-founder of Upsolve, a nonprofit organization whose goal is to reduce poverty by becoming the largest nonprofit in bankruptcy legal aid. Then there’s The National Academy of Engineering, which uses stretch goals for audacious goals like reverse-engineering the human brain. Are you intrigued yet?

If you want to learn the basics of stretch goals, understand when and how stretch goals should be used, what a stretch goal is in the context of OKRs, and how to set stretch goals, keep reading.

Watch the video below on how Stretch Goals inspire us to think big.

What are stretch goals?

The most ambitious stretch goals are high-effort, high-risk, and “are often assumed to be impossible until a goal becomes possible,” says the father of OKRs himself, Andy Grove. But every goal should have at least a little stretch in it, pushing you to achieve a little more than you have before. Stretching is a measure of your team’s confidence at taking risks. In other words, they’re aspirational Objectives set to push the limits of our abilities. A culture that stretches well is comfortable taking big swings and with failure.

What are OKR stretch goals?

Putting a stretch goal into OKR language looks like describing the ideal outcome. But a stretch goal is still a goal, and the best way to meet that goal is through defining the milestones to get there. This means communicating specific thresholds for success.

Remember, when aiming high, even failed goals can result in substantial advancements. If you’re stretching enough, you won’t see 100% success. For most companies, success means achieving an average of 70% of the objectives you set. According to Pinterest’s SVP of Products, Naveen Gavini, “We [as management] have to identify what are the ‘must’ OKRs.” It’s that balance between ‘management’ and ‘stretch’ Objectives that keep Pinterest on track towards their long-term vision.

Why do stretch goals exist?

When you create a goal that forces people to achieve something they never thought possible, you in turn get them to rethink how to better leverage resources. Let’s use Southwest Airlines as an example. In 1972, the airline, besieged by legal battles to gain the right to fly, was running out of money. They sold one of their four planes to cover costs, leaving them with three planes that needed to do the work of four. But how?

Former VP of Ground Operations, Bill Franklin, calculated that if the planes were in and out of the gate in 10 minutes, they could do just this. Sounds like a daunting task, especially considering that most airlines at that time took almost an hour to turn a plane.

Franklin backed up the ambition, keeping only the team members willing to commit to making it happen. Despite the odds, employees rose to the occasion and figured out how to work together to get the planes cleaned, restocked and back in the air.

When implemented correctly, stretch goals can and should stimulate peak performance on teams and encourage trying new ideas, rather than stifling them.

What’s the difference between OKRs and stretch goals?

Stretch goals and OKRs are inseparable. In fact, with OKRs, every goal is a stretch goal. Consider the famous Norman Vincent Peale quote, “Shoot for the moon. Even if you miss, you’ll land among the stars.” That sentiment is why organizations who use OKRs attribute their growth and success to the practice. By continually setting their sights on where they want to be, eventually they begin to construct that future one step at a time.

You might be familiar with a couple of other kinds of goals, so we want to break those down for you as well. Let’s start with Moonshots.

Stretch Goals and Moonshots

A moonshot goal is the kind of thing that will change your entire organization. You might also call these BHAG’s or Big Hairy Audacious Goals. Larry Page, the co-founder of Google, said to start with “real-world physics and (figure) out what’s actually possible.” In other words, it’s important to distinguish between goals that must be attained 100% (committed OKRs) and those that are really big stretches.

Most teams don’t hit their BHAG or moonshot stretch goals very often. However, the mere act of reaching for the moon, so to speak, can have a positive impact on your vision and your choices along the way. Use moonshots when you strive for exponential outcomes, rather than incremental ones.

A perfect BHAG example: changing healthcare by empowering the patient to own their data. This is the aspirational goal of Anne Wojcicki, founder and CEO of 23andMe.

“I like to push the company to think big. If we aim for 80%, the reality is in certain areas if we get a 50%,(that’s good). We set super-aggressive goals and I don’t think we would have (otherwise) accomplished half the things that we did because of it.”

Having an environment that generates BHAGs means that sometimes quarterly targets will get missed. But that’s the point. Allowing people to fail without judgement helps to stimulate problem solving and spur people towards greater achievement.

When and how should stretch goals be used?

You can implement stretch goals at any time. But of course, they should be used to stimulate your organization to try new things and push the boundaries of what you might be able to achieve.

When setting stretch goals, a good place to start is to ask: What would amazing look like? While all OKRs stretch, the degree of stretch needs to be dialed in by a team. Depending on your finish line or what’s happening in your industry, you might need to stretch a little or a lot.

Remember, stretch goals aren’t meant to be set so high that the OKR is unrealistic.

3 things to watch out for with Stretch goals:

  1. Work best when employees have autonomy to figure out how best to achieve them. The path shouldn’t be dictated from the top down.
  2. Need to be specific. Vague or overly ambiguous stretch goals can lead to a disconnect from teams working to achieve them.
  3. Need to be fully aligned to your organization’s mission.

What are the benefits of a stretch goal?

You have plenty of benefits to look forward to as a result of using OKRs and stretch goals. They are what John Doerr calls “The 5 Superpowers” of OKRs, known by the acronym, F.A.C.T.S. It stands for Focus, Alignment, Commitment, Tracking, and Stretching.

Focus is the ability to choose what matters most. Alignment is effectively collaborating across an entire organization on what matters most. Commitment is participation and buy-in from all stakeholders to allow big goals to be successful. Tracking is monitoring progress and course-correcting when necessary. And Stretching is pushing beyond existing limits.

How to set stretch goals

When setting stretch goals, talk openly about the stretch, the potential risks and the tradeoffs you’ll be making in order to give your best effort. We recommend you start by asking open-ended questions like:

  1. What’s the most ambitious outcome you can imagine?
  2. How can you accelerate the process to achieve this outcome?
  3. How can your team improve current work processes?
  4. How can the company improve?
  5. How can employees get involved and excel?
  6. How can organizational resources be used best?
  7. How can your products or service bring more joy to your customers?
  8. How can your company positively affect your industry and move the needle?

Learn more about OKRs

An organization constantly reaching beyond its known capabilities will have made it much further in the course of a year than one who simply stays within the bounds of what it knows it can do. Stretch OKRs help an organization make moonshots or BHAGs a cultural norm.

If you’re ready to use OKRs to help you innovate and set stretch goals, take our OKRs 101 course or sign up for our Audacious newsletter.