Setting a BHAG

BUSINESS GOALS ARE LIKE CLIMBING A MOUNTAIN, AND ARE EASIER TO ACHIEVE WHEN YOU INVOLVE YOUR TEAM.

This article is part of our series to help you create a robust company strategic plan:

Business goals are a lot like climbing mountains: If you want to get to the top, you need to plan and marshal your resources. You need to develop skills and habits, and practice the basics of climbing diligently. The thing that separates great mountain climbers from average mountain climbers – and great companies from the merely good – are the mountains they choose to climb.

I love the term “Big Hairy Audacious Goals,” coined by Jerry Porras and Jim Collins in their book, Built to Last. Porras and Collins abbreviate that to BHAG (pronounced “bee-hag”). They don’t ever give us a narrow definition of a BHAG, but they give us many examples. Probably the best known is President John F. Kennedy’s “man on the moon” goal.

You have to remember that things didn’t look bright for the USA at the time. The Russians seemed to be beating the USA to every space milestone. Americans were worried and not very confident about how they would fare in the “space race.” That’s why many commentators thought the president was crazy when he suggested this BHAG to a Joint Session of Congress on May 26, 1961:

“I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth. No single space project in this period will be more impressive to mankind or more important for the long-range exploration of space; and none will be so difficult or expensive to accomplish.”

The goal was huge and – even more important – no one, including President Kennedy, had any idea of all the things that had to be done for the country to reach it. I think of setting a BHAG as being like throwing your hat over a huge wall and then figuring out how you’re going to get it back. So you begin this process by throwing your hat over the wall and thinking, “I want my hat back. Now I need to figure out how to get over this wall and get it.”

BIG HAIRY AUDACIOUS GOALS HAVE FOUR CHARACTERISTICS:

  • They’re very, very, very big.

  • They will take several years to achieve.

  • You won’t yet know the details of how to accomplish the goal when you set it.

  • The goal is specific enough that everyone will know if you achieve it.

THREE IMPORTANT POINTS REGARDING YOUR BHAG:

  1. First, a BHAG doesn’t have to be about growth. Walt Disney used BHAGs related to products. In 1934, he set the goal of creating the first animated feature-length film. Industry pundits called it “Disney’s Folly.” After all, they said, animation might be fine for short films, but no one will sit in a theater and watch over an hour of animation. When Snow White and the Seven Dwarfs was released in 1938, people flocked to the movie houses. The film earned more than 100 times what it cost to make.

  2. Second, BHAGs are audacious, which means they’re risky. Boeing had great success with its BHAGs of building the 707 and 747 aircraft. With the 747, though, that success came only after slow sales for the airplane nearly killed the company. And their BHAGs to build other airplanes more recently have not worked out as well.

  3. And third, there’s always a risk when you set a BHAG, but you can improve your odds of success with a disciplined process of goal setting and business execution.

Let’s take a look at the first step of your company’s strategic plan: setting a Big Hairy Audacious Goal. According to Jim Collins, that involves answering three important questions in no particular order:

  • What can you be the best in the world at?

  • What are you passionate about?

  • What will drive your economic engine?

WHAT CAN YOU BE THE BEST IN THE WORLD AT?

Now, that’s the best in your world, however you define your world. Your world might be your suburb, it might be your town, it might be your state, it might be your country, it might be the whole world, or it might be the whole universe. It might be your industry or a small part of your industry.

In what category can your company be perceived as a leader or as being meaningfully different from your competitors? This concept is often represented with your Strategic Positioning statement, which we will refine later.

WHAT ARE YOU PASSIONATE ABOUT?

Passion defines your Core Purpose, which we’ll refine later. Passion is what drives great companies, because people want to work for something beyond the numbers.

So what is it that really gets you out of bed in the morning, beyond earning a paycheck, beyond making money, beyond showing profits? What is the difference you want to make in the lives of your customers?

WHAT DRIVES YOUR ECONOMIC ENGINE?

What is your business model going to be? How will you make money? Where will you get your revenue and profits from in the future?

You can find more information on creating business models and on understanding how your business makes money in the book Business Model Generation by Osterwalder and Pigneur. They do a great job of helping you visualize how your business works.

Whilst these are good questions, in my experience they do not go far enough in terms of helping you refine your answers. I have taken this framework as a start point and modified it with additional questions below to make it more practical for the business leaders we work with and help you refine your BHAG.

This is where I want you to throw your hat way, way over the wall. Think five or ten years into the future and ask how your company will look when you achieve your BHAG.

WHAT WILL YOUR OPERATIONS LOOK LIKE?

That might be the number of stores, or it might be the number of factories, the number of customers, the number of just about anything that you can think of.

WHAT PRODUCTS OR SERVICES WILL YOU OFFER?

They may be something completely different than what you are offering now, or they may be the same. Think about the mix, too.

WHAT GEOGRAPHIC LOCATIONS WILL YOU SERVE?

Don’t worry about how to reach them now; we’ll figure out how later.

WHAT’S IT GOING TO BE LIKE TO WORK FOR YOUR COMPANY IN THE FUTURE?

Describe what it will be like when you come to work.

HOW WILL YOU MEASURE SUCCESS?

Revenue and profits are important, but so are other measures. Perhaps you’ll win some awards or some form of recognition. How will you measure your success along the way?

There’s one more thing: Some people describe a goal as “a dream with a deadline.” BHAGs have the emotional power of a dream, but that definition is incomplete. To be a good business goal, it needs to be a dream with a deadline and numbers.

What’s your BHAG? Remember, it should be exciting, but it should be a little scary, too. If you are thinking to yourself, “Yes, well, if we do that, and we do that, and if we keep growing at X percent per annum, and keep putting one foot in front of the other, we’ll reach this point by year 2020,” that’s not a BHAG.

A BHAG is not a linear path. A BHAG is something you should stare at and think, “How the heck are we going to do that?” You don’t know how yet, but you like the sound of it, and you’re going to figure out how.

Here’s the thing: When President Kennedy set the “man on the moon” goal, no one knew how the USA was going to achieve it. The whole idea of a BHAG is that it’s an exciting goal that inspires you to figure out how to achieve it.

WHAT’S YOUR BHAG?

By now you have probably come up with a long list of things that describe what you want your business to become at some point far into the future, and that’s great. Some companies create walls full of words or collages full of pictures to describe their ideal future, and that’s a great exercise, too, but now I want to force you to crystallize your dream into a clear, concise statement using what I call my “Twitter Rule”; that is, if you can’t communicate a concept within the length of a Twitter post, then it is too long.

See if you can state your BHAG in a short, concise statement of 140 characters or less…”