Does your who do what? It sounds somewhat funny, but this is really a serious question. Many people know what these terms are, but for those that do not, here is a brief refresher. These terms come from author and management consultant Jim Collins. You can find some great BHAG examples on our middle market CEO blog.
A Hedgehog looks like this pictorially:
The first circle is comprised of what you and your company are passionate about. We often refer to this as your Purpose/Passion. It is a proven fact that if you and your people are doing the work that they are passionate about and have a higher purpose other than just making things or money, they are going to be very good at it and give it their best effort.
The next circle is what you have the potential to be the best at in the world. This may be something you are not the best at today, but it is something you believe you have the potential to become the best at. This may come from a core competency or something else that can set you apart in the market you serve.
The third circle is your Profit/X, which is your number one economic indicator that helps guide your decisions for profitable growth. It is a strategic decision that will cause you to think differently about your business.
It is the intersection of these three circles that make up the Hedgehog. The term comes from an old fable and describes the fact that the hedgehog does one thing day in and day out and does it very well. Too many companies try to be all things to all customers and end up doing a lot of average activities rather than excelling with a more focused offering. Research has shown that companies that spend the time figuring out and refining their Hedgehog outperform their market rivals ten fold. It takes time to get it right, but the payoff is huge.
A BHAG is the Big Hairy Audacious Goal you set for the company 10 to 25 years out. It’s your Mount Everest to climb that inspires and motivates your team to achieve great things.
So back to the original question in the title of this blog, does your Hedgehog support your BHAG? It should because it is the culminations of these three items that will help and enable you to achieve your BHAG.
Let us look at an example I helped one of our clients develop. We have been massaging this for the past year, and I think we just about have it. Jim Collins states it may take upwards of three years to nail your Hedgehog. In addition, you just might be lucky and get it right sooner. I have changed a few of the words to protect the innocent (and the client, of course) but I think you will get the gist of it.
Purpose/Passion: To envision, design & manufacture innovative products that make the job safer, easier and faster for the workingman.
Best in the World At: We see what others overlook to design & manufacture superior XXXX products.
Profit/X: % Gross Profit/Product
This Hedgehog supports this BHAG: To grow a global organization of XXXX companies that manufacture innovative products to solve unique customer needs that grows us to $50M by 2025 with a GP >XX%.
Notice how the Hedgehog supports the BHAG. There are so many elements at work here that hit the mark. Let us look at a few.
Purpose/Passion – Appeals to a higher meaning by making innovative products that make work safer and easier for the workingman. This is something people can get their heads around everyday they come to work. It will attract individuals who have a desire to do this and retain those that believe it is important.
Best in the World At – I think the key here is this team sees “what others overlook and take an innovative approach to design and manufacturing.” There is an engineering curiosity and interest in understanding the true work that takes place so that a unique solution can be developed.
Profit/X – Understanding what the percent gross profit on each new product is will help determine if they move forward with a product or into a new market space. This is the type of guiding economic indicator we want when making these growth decisions.
All this leads up to a BHAG that builds on these concepts, has a defined date and a numerical component that lets us know when we get there.
So, look at your Hedgehog and see if it is going to help your company achieve its BHAG (includes infographic.) If not, keep working at it until you get it perfected.
Good luck and execute well, Alan
Looking for some more information on BHAG to help get you started? Check out our additional Big Hairy Audacious Goal resources:
How To Create Your BHAG: 3 steps to create your BHAG.