In Brief

The Research

Only a small percentage of companies that adopt ambitious stretch goals succeed in meeting them.

The Conundrum

The companies that try—and fail—are usually in trouble already. Whereas the companies that could benefit from pushing themselves—those with strong recent performance records and resources to spare—avoid stretch goals, because success has made them risk-averse.

When Marissa Mayer was named CEO of Yahoo, in July 2012, the media couldn’t get enough of her candid assessments of the ailing company’s strengths and weaknesses—and her ambitious goals to put the internet giant back on track. Can Marissa Mayer save Yahoo? wondered the New Yorker, the Guardian, and Fortune. Yahoo’s annual revenues had dropped from $7.2 billion to $4.9 billion in the previous four years, employees were demoralized, and the culture was far from vibrant. In short, Yahoo had been on an extended losing streak. Mayer’s answer to this checkered performance was to bullishly proclaim that her goal was to return Yahoo to the level of the Big Four—“to bring an iconic company back to greatness.” She articulated the exceptionally difficult aim of achieving double-digit annual growth in five years and eight additional highly challenging targets.

A version of this article appeared in the January–February 2017 issue (pp.92–99) of Harvard Business Review.