Today, I'm sharing a question from a reader who started their career at Toyota and now works at another company. See previous posts with reader questions.
The reader has given me permission to share this — to get your input — and there are no identifying details included.
I came across something interesting at work around goals that I wanted to share with you and perhaps get your thoughts.
At the beginning of the fiscal year, our manufacturing sites submitted their cost savings targets to me. I looked them over to make sure they both seem reasonable yet challenging and asked questions as needed. From there, I submitted them to the operations VP for final approval. The VP accepted them without question.
We're at the end of the first quarter, and 3 of the 9 sites are not meeting their run rate target.
I'm not surprised — it's early in the year, and I expect sites will go red from time to time. Red doesn't “bother” me, it's just a trigger for action.
But the Process Improvement manager from one of the sites emailed me requesting that their annual savings target be reduced.
His reasoning was that the savings ‘forecast' had changed — but from what I can tell this forecast is a linear extrapolation of their current savings that are not meeting the run rate target. That's not technically a forecast.
This is very strange to me, and I'm not sure how to respond.
At Toyota, no one ever asked a target to be reduced because they thought they couldn't hit it. The pervasive mindset at Toyota was that it was better to be red because the bar was set too high than green because it was set too low.
This was ingrained in me, but I'm battling between what I learned at Toyota vs. conditions of my current organization where not meeting target is viewed much more negatively.
I told the PI manager that he needed to get approval to reduce the goal from the GM and operations VP, not me. I also told him I did not believe the response to not meeting a run rate target was to reduce the target but rather to view as a challenge and problem to be solved.
I expect I will get some sort of response about how “business conditions” have changed, etc. etc. but I still believe even if that was the case it would send the wrong message to reduce the annual target. They should aim to hit the original goal in spite of those changing conditions.
I'm curious as to if you have seen this before and if my approach might be too harsh for an organization less mature than Toyota…
My initial reply was this:
I agree that it's unfortunate that they'd lower the target instead of working harder to figure out how to achieve it.
Are you working in an environment where people get punished for not hitting targets? That might make people very risk averse…
I'm not sure what to suggest. From your position, you might not be able to change the culture that's driving people to lower the bar…
Their reply was that it probably wasn't a matter of fearing punishment, but more just a matter that the culture is one where people like to hit targets (or they hate to miss them).
What are your thoughts?? Is it ever appropriate to revise a goal or target downward, or should we always be striving to coach people up?
Is it the case that we “can't hit the goal” or that we “haven't figure out how yet”?
What do you think? Please scroll down (or click) to post a comment. Or please share the post with your thoughts on LinkedIn – and follow me or connect with me there.
Did you like this post? Make sure you don't miss a post or podcast — Subscribe to get notified about posts via email daily or weekly.
Check out my latest book, The Mistakes That Make Us: Cultivating a Culture of Learning and Innovation:
Mark, if the focus is on a goal, then we move everyone’s focus away from what is most important, which is improving the processes and system that will ultimately achieve the present goal and push the organization beyond. That’s exactly why Deming’s principles discourage goals and quotas being placed on the workers, it’s an unnecessary distraction from what is most important: continuous improvement so the system produces a higher quality product/service at a lower cost by reducing variation. Goals and quotes hold the workers hostage. This is a traditional management method and it’s destroying many businesses.
Yes, it’s very strange. Surely this focus on targets must be a recent thing in Toyota — does anyone know? Seems very anti-Deming and can lead to distortion of system or numbers. (I need to get around to reading The Toyota Way.)
I think the question is what you do with targets. I’d be surprised if Toyota set challenging numerical targets for the sake of blaming or punishing.
I did cringe a bit, though, when I visited the Toyota plant in San Antonio a few years back and I saw that they were offering financial incentives to employees if they hit certain employee safety performance goals. That disappointed me and that seemed like a very un-Toyota-like thing to do. It was certainly not the approach that Deming taught.
LinkedIn Discussion:
This could be an excellent opportunity to coach both downward and upward; to change the mentality of missing a target from “deserving of punishment” to “opportunity to learn” both for the plant team and the leadership team.
I am having a similar issue due to the fact that some of these targets I envision on using are tied to compensation bonuses for providers. My impulse to make challenging goals is being put against some physician’s satisfaction. It’s become harder to motivate people to deal with and learn from the red of a challenging target, when it has such a specific extrinsic motivator tied to it. I am hoping to learn more about this compensation process to see what’s my wiggle room.
Deming was against setting targets as we are supposed to focus on improve the overall system, this will reflect on improving the outcome and achieve higher results.
Two problems with setting targets by management:
1- The is no science behind that ( system capability vs target level)
2- people might cheat just to achieve those targets.
I understand and appreciate the Deming perspective — I really do.
But the reality is that most every organization is going to have goals and targets. So, how do we best navigate those workplace environments??
I’m the head of excellence in a bank, last week one of the branch managers came to my office for discussion, I asked him “how do you balance service quality with the targets you have”, he said that he can’t, when he focus on quality service he gets behind in targets, and when he focus on targets he lose the quality in service. I asked him what would he do if he has no targets at all, he said “no target” “no target”, I said yes, no target. He said, He would treat the customers the way he treats his guests at his home with superior quality service.
My challenge back to ‘we have to have targets’ is this; let’s set the Target Condition as the ‘utopian’ view e.g. 0 patient falls. Then we should measure our performance against the methods/approaches/problem solving we are doing to achieve the Target Condition and NOT judge ‘good or bad’ against whether we have achieved the target or not. The performance conversations can then change from ‘why haven’t you hit the target to ‘what is being done to improve the system so we can achieve our Target condition?
I struggle daily with the view that we must have a ‘measurable goal’ to know what we want to achieve from a project as it is from my experience, always an arbitrary target e.g. we must reduce falls by 90% or we can only have x number of falls per year. For me it’s as simple as ‘let’s aim for perfect at all time and if we aren’t achieving it then judge us on the methods we are using to understand why we aren’t perfect, but don’t judge us just because we haven’t hit the target!’.
Whilst we as Improvement Professionals recognise that targets or goals should absolutely not be used to punish or reward, the fact is the majority of managers have a traditional mindset and allowing (and encouraging!) them to set targets arbitrarily allows this flawed thinking to continue.
Great opportunity for discussion of a very common scenario raised by this person, who I assume is in a PI related role, vs. operational (?). I think there are a number of unclear variables that would need to feed into the optimal response:
1. how reasonable (for me this is the A-chievable in SMART goal setting) was the original goal? the poster indicates he/she reviewed the goals for reasonableness, so this may not be a big issue, but one doesn’t know how other key stakeholders felt about it. Assuming the person who submitted the goal in the first place felt it was reasonable, how about others in the chain of command? Was there effective catchball conversation from the front lines all the way up to the most senior approvers, and back down again? Or were some left out and handed goals they might have seen as unreasonable? Is the goal achievable only by reducing performance in another area? My view on this comes with my own experience with organizations where this kind of goal setting conversation is unfortunately fairly rare, and the front lines and middle managers often take the biggest hit from non-achievement. To me that doesn’t seem respectful or conducive to building an improvement culture (the long game).
2. strategic priority of the goal, including impact on the organization, and how much other parts of the organization will depend on achievement of the goal. This case sounds like an important goal with direct impact on the bottom line, so I’d be more likely to push back on re-setting the target, other things being equal.
3. maturity of the organization and people involved, in terms of Op Ex and lean thinking. Some organizations lack skills for using data to set reasonable goals or assessing improvement potential, such as using process behavior charts.
In other examples, not this one specifically on cost savings, I’ve often guided people (as I myself was coached) who are early on the learning curve on lean thinking and setting improvement targets, to start with 50% better if there isn’t a good data and logic driven target at hand. In this kind of scenario I’d rather see people set a goal like 50% than let goal setting drag on for weeks over fear of not hitting it.
Why do all goals need to be “SMART”? That’s a cute and commonly-used acronym, but if I’m a health system executive, I’m setting a goal of “zero harm” whether it’s “achievable” or not.
Who decides that’s “achievable”? Achievable or unreasonable is an opinion, right?
I’ve seen instances when a seemingly “unreasonable” goal spurred more creativity and more progress than a “SMART” goal might have inspired.
I might also set an annual target for a 50% reduction in harm, but I’m going to work WITH people to improve the system and I’m not going to blame, fire, or punish anybody for us not hitting that goal for the year.
Mark, your comment caught me by surprise, but I don’t think you’re suggesting setting unreasonable goals is a good idea. I’m thinking of the typical sort of unreasonable goals that are set by higher ups who have to hit their numbers, but lack direct experience in the process, don’t engage or listen to those with experience, and then hand the goals over to people at the front lines who know better, which isn’t respectful and sets up confrontation and hurts morale. Achievable doesn’t mean easy, or sandbagging, or not challenging. We’ve used SMART here recently to improve the setting of operational goals.
Hi Tom –
I’m just questioning what words like “achievable” or “unreasonable” mean. Those words are very vague and tend to be opinions.
Of course, I’m not suggesting that an out-of-touch executive team should just throw goals downward at people.
What matters is leadership and collaboration. If a leader sets a challenging patient-centered goal that seems “not achievable” to some, the role of a leader is to help people believe and to help them accomplish that goal.
Mark
I agree 100%
What strikes me is that, having worked at Toyota, he does not mention the “catchball” process at all. If I’m correct, in this process the targets go to-and-fro several times through the different departments, becoming negotiated and better defined in each pass, and getting everybody’s buy-in (you’ll feel more responsible for a goal you’ve contributed to define).
In contrast, his description of the process for goal approval in the new company (“I looked over(…) asked questions (…) then submitted…”) looks more like a one-way street kind of thing. Maybe in Toyota they skip less targets because they take longer to discuss and define them before committing to them? From what I’ve read, they are notorious for taking a very long time for the P of de PDCA cycle…
Having worked at Toyota, I can confirm the catchball process was used in my department, although interestingly it did not always cascade down to the level of individual contributors. The leadership used catchball during their intensive hoshin planning sessions, but when the goals were communicated to the engineers, the use of catchball seemed to depend on each manager’s individual approach. I wonder if this was because of the complexity and time that would have been involved in obtaining everyone’s input on the goals all the way down the organizational chain.
Your comment about potential lack of robustness in vetting the initial goals in this particular situation is valid. If the goals were not discussed in detail and challenged by leadership in a back-and-forth process, this could have indirectly resulted in a lack of accountability to the goals that the plants had set. If they weren’t challenged, perhaps they thought that leadership was not really invested in the plants’ achievement in the goals, and so therefore they felt they had the freedom to change them without being accountable to the original targets. We talk often of the ineffectiveness of a top-down approach to setting goals, but perhaps a primarily ‘bottom-up’ approach is also a failure mode.