Milestones throughout the year give us an opportunity to recalibrate and look at areas that need improvement. For the crowds at the gym in January, it’s the New Year’s Resolution to get in shape or lose some weight. For students, it’s the school supply sale in August, a fresh bag of school supplies and possibilities for a great year ahead.
For businesses, when do you stop and recalibrate, beyond your own quarterly and annual meetings to check progress on your long term goal? What’s next? Do you have a goal in mind that makes you take a big gulp if you even dare to say it out loud? If so, you’ve got the beginnings of a Big Hairy Audacious Goal or BHAG (pronounced bee-hag.) Congratulations! You’re getting ready to push your company forward in a big way, but in order to do that, you need to give yourself some time to plan and strategize.
How To Determine The Right BHAG
Jim Collins and Jerry Porras introduced the concept of the Big Hairy Audacious Goal (BHAG) in their 1994 book Built to Last: Successful Habits of Visionary Companies. A BHAG is a 10-25 year goal that stretches your company to achieve greatness and becomes a unifying focal point of effort.
Henry Ford had a goal to provide affordable mobility to the masses and to build a vehicle from scratch without using foreign-made parts. President Kennedy wanted to put a man on the moon by the end of the decade (the timeline created a sense of urgency and a clear finish line) with his moon mission speech on May 25, 1961. These sound like good Big Hairy Audacious Goal examples to me. It’s also interesting to note that Ford didn’t succeed until his third try at creating an automobile company, and there were lots of setbacks on the mission to the moon.
If your company is cruising along and doing well, but not yet moving to that next level, it’s time to recalibrate and think big. Start with one simple question — what is one thing you know really well and can simplify for others? Henry Ford made cars. Steve Jobs made technology that fit in the palms of our hands. Google made it possible to search for literally ANYTHING. Start with being grounded in the fundamentals of your business and what you do really well, or what they coined the Hedgehog.
The Hedgehog Concept can help determine the right BHAG by considering the intersection of the answers to three questions. The first of which basically asks - can you be the best in the world at this? The term comes from the famous essay by Isaiah Berlin titled “The Hedgehog and the Fox.” The crux of the story is that the fox is cunning and knows many things while seeing the world in all of its complexity, but the hedgehog knows one big thing and simplifies a complex world into a single organizing idea.
Next, you need to think about economics. Henry Ford wanted to offer affordable mobility and to help farmers. His development of an assembly line to produce cars faster and for less money changed the way we work today. How many steps does it take to get your product out the door? Ford figured out that in 1913, there were 84 steps to building a Model T. What causes you to make money more than any other ratio or denominator in your business? This is called your profit/x or profit per x and we have a large collection of profit per x examples to help you create your BHAG.
Connect Your BHAG to Your Passion
Then, you need to consider your passion. If you are the company’s founder, what was the fire in the belly that drove you to set up that first meeting or to make that first ask for investment? Companies that are passionate are profitable. For example, in 2004, Subaru committed to sending zero waste to a landfill from its manufacturing facilities. Subaru sales have grown by 72.5% since 2010. Engage your heart with your head and that will engage others in your passion. You need to connect both the head and the heart of the entire team to achieve your BHAG.
Great companies are able to come up with BHAGs that are inspirational to their teams and their prospects that closely aligns with their mission statement. A true BHAG will seem overly audacious when you first hear it. If you can easily figure out the steps to get there it isn’t audacious enough! Go back and try again (and use our PDF BHAG guide to help you step by step) to come up with a more powerful mechanism to drive your team and its choices.
Make Your BHAG Clear
You know what you’re good at, what causes you to make money more than anything else, and what your passion is. For your BHAG to resonate, you need to set the right mark. A clear BHAG will be easy to understand, serve as a focal point for unifying the team, and will guide your decisions on a daily basis, so this step deserves some focus and attention. For example, Walgreens decided their financial engine was profit per customer visit, rather than the industry standard of profit per store and were able to grow well above the industry average as a result.
When you visualize what you want for your company, what would be the ultimate picture of success? That picture should include a clear cut benefit to not only your customer but your employees and your stakeholders. When that vision becomes a reality, what is a clear, compelling and measurable goal? Pull your key team members together and brainstorm. When you get your ideas out, which ones convey the spirit and the feeling of the vision? Do they align with your future plans?
Test Your BHAG
Now, it’s time to test. When you have narrowed down those brainstorms into a succinct BHAG that matches the vision, your passion, and aligns with your future plans as a company, it’s time to test it with others beyond your executive team. If the goal isn’t exciting, easy to understand, connected to the core purpose, applicable to more than just the executive team, or doesn't seem achievable (even if it’s challenging), then you need to back up and revisit. Once that mark has been set, you plant the seed and start to watch it grow and stimulate progress to achieve the goal.
Communicating a BHAG to your team is more than just putting a new poster up on the wall. Employees need to not only be able to recite it, but more importantly, understand the role that they play in how they impact that goal. Does sharing the BHAG solicit the “I’ve decided to climb Mount Everest” type of gulp? When the seed is planted and those plans start to grow, the BHAG is a catalyst for team spirit and drives every major decision moving forward.
Integrating a Big Hairy Audacious Goal should be a part of your 3-5 year strategic plans and you need to use your annual plans to make progress. As with any goal, milestones and annual initiatives need to correlate to the BHAG. They need to stay relevant and important to the company’s passion, overall strategic vision and direction. When you’re presented with that next business opportunity, ask yourself if that opportunity aligns with your profit (what you’re good at making money doing), your capabilities, your company’s passion, and whether or not it moves you closer to achieving that big, hairy, audacious goal.
Everyone in your company should be encouraged to ask and answer the question, “How can we…?” Those ideas and the plans that come from them might just be your next big, hairy, audacious goal. Henry Ford saw a way to make mobility affordable and accessible and created a method that benefited industry along with thousands of workers to be able to afford their own Model T’s. Steve Jobs put the world in the palm of our hands and vaulted Apple into the stratosphere with product innovation and technology. Microsoft wanted a computer on every desk to bring desktop computing to the masses.
Your BHAG is out there, waiting for you to say it out loud!
Check out our additional BHAG Big Hairy Audacious Goal resources:
How To Create Your BHAG: 3 Steps to Discovering, Creating and Putting Your BHAG to Work
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