Don Dodge has a nice description of how Google thinks about goals. I like their thinking a lot, as setting goals that seem hard to achieve sometimes spurs a level of creativity and new thinking that generates new insights and ideas for achieving the goals.
At OpenView, we work toward setting great S.M.A.R.T. goals for both ourselves and with our portfolio companies. The major idea behind this is that working toward very clear objective goals helps to gain clarity prior to execution, helps to track progress much more objectively, and also helps to simplify communication once the goals are set.
There is an ongoing issue as to whether the goals should be attainable (the “A” in SMART) or whether they should be stretch goals “that seem impossible to fully achieve them” as Don writes about his experience with Google. My view on this topic is that this is a somewhat advanced issue and in many ways situation specific. The most important issue is figuring out how to build and pull the management “levers” that will have the best impact on the results that you are trying to achieve, regardless of whether the goal is attainable or stretch…use the approach that stimulates the team to do this the best!