Hello, I'm delighted to see you in class. Thank you very much for taking our course. My name is Maxim Sytch and I'm a faculty member in the management and organizations group at the Ross School of Business at the University of Michigan. I’ll be your guide through this week, where we talk about setting effective goals and expectations. I would like for us to get started by talking a little bit about how goals can impact our performance on a variety of tasks. To begin with, think of a goal that you had in the past month. Write it down, it could be a goal that you set for yourself, or it could be a goal that somebody else set for you and then think about, was this goal effective? If it was effective, why was it effective? If it was ineffective, why was it ineffective? Think about it for a few minutes. Now as you reflect on this goal, was this goal clear? Was it easy to understand? Was it meaningful enough so you cared about this goal? Was this goal challenging? If so, how challenging was it? We'll come back to some of these other intuitions about goals later as we progress with the content of the course but I'd like for us to talk first a little bit about goal difficulty, and how goal difficulty can translate into performance. In this empty two dimensional graph, I have performance on the vertical axis and I have goal difficulty on the horizontal axis. Think about the goals you've had over the past year and think about your performance that was associated with these goals. How do you perform in those tasks? Based on these goals over the past year, draw your predicted association between goal difficulty and performance. Now, what did your graphs look like? If you're like Reed Hastings, the CEO and co-founder of Netflix who is known to say that adequate performance gets you a generous severance package, you probably drew something closer to a linear trend. Or perhaps you believe that at some point goal difficulty loses its effectiveness and performance can taper off. Or perhaps you even think that when goals are extremely challenging our performance can decline. In this case, you would draw probably something closer to curvilinear relationship. Now in reality, the association between goal difficulty and performance is a bit more complex. It turns out that it critically depends on whether the goal is accepted by the person who is trying to accomplish that goal. If the goal is accepted, the association between goal difficulty and performance is linear and a positive one. However, if the goal is rejected, then that association turns negative, and turns negative pretty quickly. You can see that there's a pretty precipitous decline in performance with respect to goal difficulty. By now, I'm sure you've developed some intuitions about why certain goals can be accepted or rejected. We accept goals that we understand, that are clear that make sense to us, that we find meaningful. We accept goals that are aligned with our ability. By the same token, we reject goals that we find unattainable, unreasonable, that we don't understand, that don't align with our ability. We're also greatly influenced by those around us. If approaching a particular goal individually, I find it reasonable but those around me reject that goal, I'm much more likely to do so myself. Same applies to acceptance, if people around me tend to accept and embrace difficult goals, I'm much more likely to do so myself. One of the reasons Reed Hastings, the CEO of Netflix can afford to continuously set challenging goals is because he created a culture of high performance of Netflix, where most employees, on average, accept and embrace very difficult, challenging goals. Goals can drive our performance for four key reasons. Number one is they can direct our effort and attention toward activities that support a particular goal and what's also more important, away from activities that don't support a particular goal. For example, if my goal is to cut costs, I'll be spending most of my effort and attention on those activities that support cost cutting. And not necessarily in those activities that support say, increases in sales or customer satisfaction. Goals can also energize and motivate, and increase persistence of effort. When you walk into a gym, and a trainer approaches you and asks what's your personal goal? The motivation behind that question is exactly this, that goals can help us maintain high levels of energy, high levels of motivation, and help us persevere on the way to a particular goal. Finally, goals help us learn. They help us acquire new strategies, new techniques that help us obtain a particular objective. At this point, I would like for us to pause and reflect on the central insight from this introductory discussion. That is that goals, especially, if these goals are accepted by people who are accomplishing these goals, goals, in this case, can drive performance and stretch goals, challenging goals can drive performance. But that said, there are significant risks associated with setting challenging goals or stretch goals and that is what I would like for us to talk in the next lesson. I will see you then. [SILENCE]
