Here is an excerpt from an article written by Matthew E. May for Harvard Business Review and the HBR Blog Network. To read the complete article, check out the wealth of free resources, and sign up for a subscription to HBR email alerts, please click here.

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I’ve written before about the science that helps explain why and how constraints and limits, often in the form of intelligent, well-set stretch goals, result in more creative solutions.

Too often, though, managers set what appears to be a good stretch goal, only to discover that it did not produce the hoped-for innovative thinking. One common reason for this is that the goal was in fact not “stretch” enough. When I ask executives what they consider “stretch,” I commonly hear about 5% to 10% increments in improvement.

That’s not stretch enough, because a 5%-10% improvement often translates to people working harder and longer. A 25% improvement, though, while audacious and arduous, can rarely be met simply by sweating more. It demands innovative thinking.

Many executives are afraid to set such a high bar, however, for fear that some other area of the business will be compromised. That’s a very real danger. But there’s a technique that prevents compromise: intentional goal conflict.

To illustrate how intentional goal conflict can product breakthroughs, consider [the first of two] examples of innovation — one product, one process — drawn from the annals of innovation at Toyota:

1. Product Innovation: The Lexus

When Toyota’s Ichiro Suzuki, chief engineer for the secret project that would become the first Lexus, issued the challenge to produce a luxury performance sedan that would beat the best luxury sedans — BMW 735i and Mercedes 420SEL — across the board in comfort, styling, performance, handling, cabin noise, aerodynamics, weight, fuel efficiency, and cost, the reaction from 1,400 engineers and 3,700 designers was unanimous: Impossible!

Suzuki’s goals included a top speed of 155 miles per hour (735i and 420SEL topped out at under 140), 22.5 miles per gallon (735i and 420SEL got less than 20), a cabin noise level of 58 decibels at 60 mph (735i and 420SEL were over 60), and an aerodynamic drag of 0.29 or less (735i and 420SEL were over 0.32), all in a vehicle weighing 80 pounds less than the 3,880-pound 735i.

Not only were the goals impossibly high; they all conflicted. For example, greater speed and acceleration conflicts directly with fuel efficiency, noise, and weight, because higher speed and acceleration require a more powerful engine. A more powerful engine is a bigger and heavier engine, and so it makes more noise and consumes more fuel.

But Ichiro Suzuki’s war cry was naukatsu, Japanese for “never compromise.”

The project demanded rethinking the entire concept of what automotive luxury performance meant. And one by one, the innovations came. Many mechanical components were completely redesigned. For example, the propeller shaft, originally in two parts connected by an angled knuckle, was replaced by a perfectly straight one, enabling a nearly silent cabin.

Contradictions began to be reframed as complementary. For example, aesthetics and aerodynamics could complement each other, by fitting window glass and door handles into the metal itself, producing a cleaner look and better airflow.

When the Lexus LS400 made its debut in 1989, it trumped the BMW 735i and Mercedes 420SEL in every category rated by Car and Driver. And for $30,000 less.

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To read the complete article, please click here.

Matthew E. May is the author of The Laws of Subtraction: 6 Simple Rules for Winning in the Age of Excess Everything. He is a speaker and advisor to companies such as Toyota, Edmunds.com, Intuit and ADP. To read his other HBR articles, please click here.