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Hello, I'm delighted to see you in class.

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Thank you very much for taking our course.

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My name is Maxim Sytch and
I'm a faculty member in the management and

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organizations group at the Ross School of
Business at the University of Michigan.

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I’ll be your guide through this week,

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where we talk about setting
effective goals and expectations.

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I would like for us to get started by
talking a little bit about how goals

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can impact our performance
on a variety of tasks.

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To begin with, think of a goal
that you had in the past month.

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Write it down, it could be a goal that you
set for yourself, or it could be a goal

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that somebody else set for you and
then think about, was this goal effective?

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If it was effective, why was it effective?

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If it was ineffective,
why was it ineffective?

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Think about it for a few minutes.

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Now as you reflect on this goal,
was this goal clear?

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Was it easy to understand?

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Was it meaningful enough so
you cared about this goal?

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Was this goal challenging?

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If so, how challenging was it?

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We'll come back to some of these
other intuitions about goals later as

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we progress with the content of the course
but I'd like for us to talk first a little

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bit about goal difficulty, and how goal
difficulty can translate into performance.

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In this empty two dimensional graph, I
have performance on the vertical axis and

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I have goal difficulty
on the horizontal axis.

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Think about the goals you've
had over the past year and

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think about your performance that
was associated with these goals.

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How do you perform in those tasks?

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Based on these goals over the past year,

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draw your predicted association between
goal difficulty and performance.

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Now, what did your graphs look like?

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If you're like Reed Hastings,
the CEO and co-founder of Netflix who

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is known to say that adequate performance
gets you a generous severance package,

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you probably drew something
closer to a linear trend.

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Or perhaps you believe that at some
point goal difficulty loses its

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effectiveness and
performance can taper off.

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Or perhaps you even think that when
goals are extremely challenging

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our performance can decline.

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In this case,

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you would draw probably something
closer to curvilinear relationship.

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Now in reality, the association
between goal difficulty and

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performance is a bit more complex.

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It turns out that it critically depends on

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whether the goal is accepted by the person
who is trying to accomplish that goal.

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If the goal is accepted, the association
between goal difficulty and

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performance is linear and a positive one.

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However, if the goal is rejected,

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then that association turns negative,
and turns negative pretty quickly.

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You can see that there's a pretty
precipitous decline in performance

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with respect to goal difficulty.

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By now, I'm sure you've
developed some intuitions about

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why certain goals can be accepted or
rejected.

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We accept goals that we understand,

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that are clear that make sense to us,
that we find meaningful.

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We accept goals that
are aligned with our ability.

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By the same token,
we reject goals that we find unattainable,

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unreasonable, that we don't understand,
that don't align with our ability.

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We're also greatly influenced
by those around us.

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If approaching a particular goal
individually, I find it reasonable but

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those around me reject that goal,
I'm much more likely to do so myself.

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Same applies to acceptance,
if people around me tend to accept and

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embrace difficult goals,
I'm much more likely to do so myself.

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One of the reasons Reed Hastings, the CEO
of Netflix can afford to continuously set

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challenging goals is because he created
a culture of high performance of Netflix,

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where most employees,
on average, accept and

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embrace very difficult, challenging goals.

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Goals can drive our performance for
four key reasons.

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Number one is they can
direct our effort and

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attention toward activities that
support a particular goal and what's

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also more important, away from activities
that don't support a particular goal.

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For example, if my goal is to cut costs,
I'll be spending most of my effort and

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attention on those activities
that support cost cutting.

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And not necessarily in those
activities that support say,

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increases in sales or
customer satisfaction.

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Goals can also energize and motivate,
and increase persistence of effort.

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When you walk into a gym, and
a trainer approaches you and

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asks what's your personal goal?

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The motivation behind that
question is exactly this,

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that goals can help us maintain
high levels of energy,

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high levels of motivation, and help us
persevere on the way to a particular goal.

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Finally, goals help us learn.

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They help us acquire new strategies,

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new techniques that help us
obtain a particular objective.

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At this point, I would like for
us to pause and

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reflect on the central insight
from this introductory discussion.

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That is that goals, especially,
if these goals are accepted

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by people who are accomplishing
these goals, goals, in this case,

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can drive performance and stretch goals,
challenging goals can drive performance.

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But that said, there are significant risks
associated with setting challenging goals

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or stretch goals and that is what I would
like for us to talk in the next lesson.

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I will see you then.

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[SILENCE]