BHAG Best Practices

BHAG Best Practices

I’ve had the privilege of working with hundreds of client firms to help them create and execute their strategic plans. The first step in our work together is typically to create a BHAG or “Big Hairy Audacious Goal”, a term coined by business author Jim Collins. Here are some of the best practices I have learned over the years:

It’s not about being “big”, it’s about being “great”.

Before we start the process of strategic planning, we need a goal. A meaningful and compelling goal. To me, setting a long-term business goal is a lot like being a mountain climber: You pick a worthy mountain you want to climb. The thing that separates great mountain climbers from average mountain climbers – and great companies from average companies – are the mountains they choose to climb.

Whilst Jim Collins’ BHAG acronym contains the word “big”, just setting a lofty growth target 5+ years into the future is not necessarily going to inspire your team. Not everyone wants to be “big”. It’s about being “great”, however you choose to define greatness.

Jim Collins says BHAGs can be 10 to 25 years into the future. But I disagree with that. In my experience, most people struggle with that timeframe. 3 to 10 years is easier for most people to grasp. It needs to be far enough into the future that you can’t accurately forecast it though.

I encourage my clients to imagine it is 5 years into the future. What great achievement, if your organization was able to achieve it, would make you think that you spent those 5 years of your life wisely?

No fluff.

Some companies come up with vague, waffly BHAGs implying they want to be, “The most respected company in the XYZ industry” etc. That’s not a BHAG. That’s just a nice, fluffy wish.

Your BHAG needs to be easy to understand and quantify. A BHAG is a goal, so it must always include an easy to understand measure with a due date, a number that represents a great achievement for your organization, a number we can count and track our progress toward on a monthly basis. Every quarter as part of your quarterly strategic planning rhythm you should ask yourself, “What progress have we made toward our BHAG this quarter?”

Some companies use revenue as their BHAG, and that’s fine, but most employees understand visible, concrete things, things they could count if they chose to. Just like my guidelines for setting Numerical Targets, I strongly urge clients to use the format: “The number of …”

Here is a format that works well for many clients I work with: 

“The world’s #1 brand for house cleaning robots (expression of category leadership), with annual sales of 15,000,000 units by Dec 2030” (tangible measure with a due date you can use to track your progress every month) 

It’s not a linear path.

Your BHAG needs to be beyond the current capabilities of the organization, but still within the bounds of believable reality. You may not know exactly “how” you will get there, but you back yourselves to figure out the answers along the way.

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

Inspires all your people, not just the management team.

If you really want to inspire your people, your BHAG can’t be just something the management team aspires to. Everyone in the organization (and those you want to attract to your organization in the future), should look at your BHAG, and think, “Wow! I like where this company is going, and I want to be a part of it.”

Here’s the thing through. Leaders must lead. Your BHAG can’t just be words on a wall. Your people will believe in your BHAG to the extent they can see the leader passionately believes that you are going to achieve this goal matter what – you will figure it out somehow.

Your first job as a leader is to paint a picture of the better future you are working toward.  You need to get people excited about reaching the top of your Mt Everest. 

Your second job is to give your people clarity and certainty around the strategic projects or “big rocks” that need to be implemented right now. In essence, “Here’s where we want to be, and here’s what we need to do next to ensure we get there.” 

Does your strategy stink? Use this test to find out.

Make it visible.

Post your BHAG and your current “score” on your dashboard where everyone can see it every day. Sure, it might take you many years to achieve the goal, but keeping it visible reminds you of what you are working toward, and serves as motivational fuel to keep you going through the tough times.

It also serves as a filter to help with strategic decision-making. For every major strategic move you are contemplating ask, “How will this help us achieve our BHAG?”

The BHAG is one metric when it’s OK to stretch.

As you know, when it comes to color-coding performance using the traffic light concept, I am a strong advocate for NOT setting your Metrics (Key Performance Indicators) performance thresholds too high. Metrics/KPIs are the numbers you track on a daily/weekly/monthly basis to drive “business as usual”, your operating model.

My rule of thumb is: “A good person, doing a good job, should achieve the green level of performance 90% of the time”.

In essence, a competent person, with the right tools and training, doing an honest week’s work (i.e. they are not a slacker), should achieve the “green” performance standard 9 times out of 10 ( i.e. 9 days out of 10 for daily metrics, or 9 weeks out of 10 for weekly metrics).

If not, the green performance threshold is too high.

However, when it comes to a BHAG, this is one instance where I think “stretch goals” are a good thing. We want our BHAG to stretch our thinking and capabilities, and to imagine what we might achieve if we really put our minds to it.

How does your BHAG stack up?

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Until next time…
Stephen