It's not always good to create goals

Paint peels from the GM logo painted on a chimney at the shuttered GM assembly plant in Janesville, Wis.


Kai Ryssdal: If you work in a place that's got a halfway decent performance review system, you know all about companies setting goals. Just as in personal life, they can be a good thing for businesses to have. Goals can keep people focused, give 'em a target to shoot for. But if you don't use those goals right, things can go pretty far wrong, as Marketplace's Sean Cole explains.

SEAN COLE: Things are different now. That's what General Motors keeps saying. It said so at the Detroit Auto Show this week, and on a surprisingly interesting conference call with the media last month. GM is literally a different company since emerging from bankruptcy protection.

SUSAN DOCHERTY: And what's different here is that in the old GM we had a tendency to buy our market share.

This is Susan Docherty, the new VP of sales for North America. By "buying market share," she means offering lots and lots of incentives, 0-percent financing and the like.

DOCHERTY: I'm certainly not proud of the fact that we've been the incentive leader. There's lots of things I'd like to be a leader in, and it certainly isn't in incentives.

The reason this is interesting is that about 10 years ago, GM had a goal. And it used all of those incentives to try to reach it. The goal was attaining 29 percent market share, which it hadn't reached for a couple of years at that point. According to legend, GM was so focused on this goal that its employees wore these pins.

TOM WILKINSON: Um, it was just a small gold lapel pin with the number 29 on it.

This is Tom Wilkinson, a spokesman for GM. The company never did attain 29 percent. Though it came close in 2002 with 28.3 percent market share, which is what I don't get. GM seemed to be fetishizing this particular number.

WILKINSON: No I think some people in the press were fetishizing it. I wouldn't take the pins too seriously. It was a stretch goal.

That is, a goal beyond your usual abilities.

WILKINSON: There's nothing wrong with stretch goals. People internally know what they are. It's like telling your kid, "Hey I'd like you to see if you can get A's in all of your classes." You know what's wrong with that?

I'll tell you what's wrong with it, says Lisa Ordonez, a management professor at the University of Arizona.

LISA ORDONEZ: I've actually seen that particular instance of children and students who have these stretch goals of all A's, especially if you incentivize them, like paying for all A's, can lead to unethical behavior like cheating on an exam or having someone write a paper for you.

Ordonez is one of four academics who released a paper last year called "goals gone wild." Now she's not suggesting that GM cheated or did anything unethical. But she says the example of the company lowering prices, etc., to sell a certain number of cars, it just shows how goals can get you into trouble.

ORDONEZ: And this led to, for them, a focus away from profitability. And to achieve this goal myopically. Now I'm not going to say that that goal was the entire downfall of GM, but obviously strict adherence to goals can cause these kinds of problems.

Problems like ignoring other more important goals such as customer service or product quality. Also different employees are motivated differently. Goals don't always work. And, yes, there's the cheating. Ordonez told me about a company called Miniscribe, which I had never heard of.

ORDONEZ: Well there's probably a very good reason why you haven't heard of Miniscribe. They're now a defunct company that had set sales target goals.

It was a hard-drive manufacturer. Turns out the sales were real, but the products weren't.

ORDONEZ: At the time, this was a while back when hard drives were about the size and weight of a brick. And so they mailed boxes full of bricks. To...

COLE: What?!

ORDONEZ: To mimic actual sales so they could achieve specific goals based on revenues.

Now this is a very extreme example and detractors of this research say it's just a bunch of extreme examples supporting a dubious premise. But Ordonez and her colleagues aren't saying don't use goals. They're just saying be wary of how you use them and which goals you set. And while Tom Wilkinson at GM rejects the professor's opinion of the company's actions back in the day...

WILKINSON: It's a gross over-simplification of the complexities that GM was facing 10 years ago.

The new president for North America, Mark Reuss, used the "29" pins as an example of what GM is not doing now.

MARK REUSS: We're not printin' pins. We're not doing any of that stuff.

And if you ask both of these guys what GM's goals are at the moment, they say the same thing.

REUSS: To make, build and sell better vehicles than anybody else.

WILKINSON: Design, build and sell the world's best vehicles.

And if they can do that, the market share will take care of itself.

I'm Sean Cole for Marketplace.

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This article is right on target. Ever know someone who has bought their own products in order to "reach" the goal. It's very common. Pressure makes people desperate and leads to deceptive actions.

Goals are dreams with deadlines. Goals alone will not secure success. It's the owner of the dream that has the responsibility. I personally think that many kids to day would be better off if they were encouraged to have goals instead of floundering about and wait for the handout.

Not knowing, I'll still take a wild guess at why GM aimed for 29% of the market....

..to impress stock holders.

What are the chances that I'm right? And what does it really say about a company's potential for success, if it focuses its goals on making shareholders only happy?

How about, make the customer happy, and let the shareholders reap the benefits of that? Oh wait, as the other story pointed out, America doesn't produce anymore...it makes its profits from cutting, not from selling.

Anyone who would look only at goals as an objective for success, is doomed to failure. I believe goals are necessary and we can push ourselves to obtain them. However, the real foundation is in the leaders brought together to help reach those goals in any business. Do they know how to bring a team together, inspire them, and bring about the change necessary to reach those goals? I find it is true leadership that matters, not whether one has the right goal. So what were the GM leaders really like?? Were they made of a character of leadership that is considerate of all that is needed to inspire others??

A long time ago Edwards Demming taught to focus on process and the goals or results will take care of themselves. Ironically, it was this philosophy that was used by the Japanese to produce some of the best automobiles in the world. I guess each generation has to learn its own lessons.

Dr. Ordonez is a former professor of mine in the MBA program at the University of AZ, and though we haven't been in touch, I was naturally curious to read her findings. I think there's a lot to be said for them. Every job interview I've ever been on wants the candidate to share their five and ten year goals. I have always found those questions to be ridiculous. Goals that are too structured can pigeon-hole a person into one path that may lead to missing unexpected opportunities along the way. These missed opportunities may lead to even better outcomes than the creator of specific goals could have possibly envisioned. Big ideas with strategic plans: great. Overly specific goals: overrated.

I say that goals, seen in the future, often make you blind for the way it takes to walk in order to reach them. But each step on that road represents "the present" the "here and now". So often people cheat themselves of a whole way of "here and now" - a whole life. A confession: I wanted to reach the goal to tell you this - so I said I am in Arizona (where I would love to live)but actually I live in Switzerland!

What I find most striking -no, alarming- about the stated goals of GM's spokesman Wilkinson and president Reuss, is that they are solely GM-focused. They completely ignore GM's most crucial element for success: the consumer experience. This is unbelievable. And, dare I say, typical. It's time to look outward, people, to those car buyers upon whom your success depends. What about their objectives, their experience? GM, by the way, did have their 'best car in the world'. Or perhaps they do not wish to be reminded of the electric car debacle in California a few years back. That car alone could have made them one of the most admired and more financially stable auto manufacturers in the world. Instead? We have more self-absorbed bravado.

Your story on GM and goals ended with GM a spokesperson saying that their new "goal" was to build the best cars in the world. This isn't a goal, and I'm surprised that you let them get away with using a vague statement of simplistic bravado as a goal. Who decides what the best cars in the world are? If you ask some people at GM, they may already think their cars are the best cars in the world (which would indicate that they are seriously out of touch with reality).

A goal of 29% market share might be a damaging goal, but at least there is an actual objective measure of whether or not it has been met. Perhaps a better goal would be winning the North American Car of the Year award, as Ford just did.

Speaking of Ford, it might be a good show topic to talk to a SUCCESSFUL car manufacturer like Ford to see if they use goals and if so, what sort of goals they like.

"WILKINSON: Design, build and sell the world's best vehicles.
And if they can do that, the market share will take care of itself."
Ta Da! Finally, someone has recognized the central point. We've been saying this for 30 years.
Why did GM, Ford, and Chrysler not understand? Any why have we not heard anyone admit their mistakes?


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