Four approaches to creating a BHAG—what’s yours?

At a recent event held by Warwick Business School, Professor Mark Taylor, Dean of WBS, described an effective vision as needing to be:

Out of reach but not out of sight

In other words, you should be able to visualise your organisation achieving its vision but it should not be possible for your organisation to reach out and take hold of the vision straight away. True vision is a balance between these two ideas.

If you cannot picture or imagine your organisation achieving its vision, no matter how hard you try, it is likely that this ‘out of sight’ vision is either the wrong vision for your organisation—one that does not fit with your organisation’s passions, purpose, values and beliefs—or it is so over-ambitious as to be unachievable. Vision of this kind will help no one. It may lead you in entirely the wrong direction and it is unlikely to ever be achieved. It certainly will not benefit your organisation over the long-term.

On the other hand, a vision that is within reach and can easily be grasped tomorrow, within the next month, the next year, or even the next five years, is not really a vision. Vision should be a future-oriented goal that is exciting, inspiring, motivating and more than a little stretching. It should challenge you to achieve more and to push your organisation beyond its comfort zone. Without this kind of vision, you are merely dealing with the day-to-day, month-to-month and year-to-year—reacting to your future, rather than creating it.

Warwick Business School certainly stand by the Dean’s assertion. Their vision is:

To be the leading university-based business school in Europe

And they describe their mission as:

• To produce and disseminate world-class, cutting edge research that is capable of shaping the way organisations operate and businesses are led and managed.
• To produce world-class, socially responsible, creative leaders and managers who think on a global scale, regardless of the size of their organisation.
• To provide a return on investment for our students and alumni over their entire careers.

Hopefully they also have a vivid description of what it will look like for them to achieve their vision and measures of success that will enable them to know when they have become the leading university-based business school in Europe.

Out of reach but not out of sight is also a perfect description for an element of vision that Jim Collins and Jerry Porras coined BHAGs—”pronounced BEE-hags and shorthand for Big, Hairy, Audacious Goals.” Warwick Business School’s vision is certainly a big, hairy, audacious goal!

Four approaches to creating a BHAG

For those of you who read my earlier article that introduced the vision framework created by Collins and Porras, you will already be familiar with BHAGs. Something I chose to leave out of this article however was the fact that Collins and Porras also believe that there are four “approaches” or “broad categories” into which all BHAGs fall: target, common enemy, role model and internal transformation. As we shall see, Warwick Business School have chosen a target BHAG.

Targeting

Much as the word ‘target’ implies, a target BHAG involves “setting a clear, definable target and aiming for it,” in the same way as an archer or marksman would aim to hit their chosen target.

For Collins and Porras, a target BHAG can be either qualitative (such as Ford Motor Company’s vision to “democratize the automobile” in the early 1900s and the 1960s NASA moon mission) or quantitative (such as Walmart’s vision in 1990 to “become a $125 billion company by the year 2000—which, incidentally, it achieved and exceeded!)

Typically, quantitative targets are likely to be financial or may involve an increase in physical size. Qualitative targets, on the other hand, are typically “defined in terms of taking the company to an entirely new level of overall prestige, success, dominance, or industry position.” Warwick Business School’s BHAG would fall into this category. Whilst their undergraduate programme has already been ranked #1 in the UK in 2010, their vision is to become the leading university-based business school not only in the UK but also in Europe, and to lead in quality for their research, graduates and programmes—a new level of prestige, success, position and potentially dominance, all in one!

Common enemy

Common enemy BHAGs involve David versus Goliath motivation and “a goal focused on defeating a common enemy.” Collins and Porras cite the examples of Nike’s 1960s mission to “Crush Adidas” and Honda’s 1970s response of “Yamaha wo tsubusu! (We will crush, squash, slaughter Yamaha!)”. When interviewed by Collins and Porras in 1990, an anonymous board member of Nike even remarked: “Our idea of a perfect day is to get up in the morning and throw rocks at our competitors.”

Typically, common enemy BHAGs are set by companies striving to become number one and, as evidenced by the comments above, they tap into the motivation to fight and to win. Common enemy BHAGs can therefore also be useful if your organisation is struggling against the force of its competitors: “they can transform an organization whose back is against the wall and that is concerned about its very survival.” And, as “people don’t like to ‘just survive’, they like to win,” common enemy BHAGs can take your organisation beyond surviving to overcoming and to even coming out on top.

However, as Collins and Porras observe, common enemy BHAGs can have their drawbacks: “…it is difficult to spend your entire life ‘at war.’ And what do you do when you’ve defeated the enemy and become number one? What happens when you are no longer David, and have become Goliath?” Beware the “we’ve arrived syndrome” and ensure that you create another BHAG as soon as you’ve achieved your last!

Role model

Role model BHAGs do what they say on the tin: they involve selecting a role model (usually another business, organisation or person) and seeking to emulate their traits and success. Although less common than target or common enemy BHAGs, Collins and Porras believe that role model BHAGs suit up-and-coming organisations and they found that they were “usually set by promising small to mid-sized companies with bright prospects in their industries.”

Examples of role model BHAGs include that of Giro Sport Design, which as a young company in the early 1990s sought to “be to the cyclying industry what Nike is to athletic shoes and Apple is to computers.” In the 1940s, Stanford University similarly desired to “become the Harvard of the West.”

Collins and Porras are quick to point out however that role model BHAGs are only effective to the degree that the role model you select “generates powerful images for [your] company members. Sometimes, the images generated may be so complex that they do not mean the same thing to all members and, as such, don’t provide the integrative force required of an effective mission.” To this end, be sure to select an identifiable and easily understood role model for this type of BHAG.

Internal transformation

Last but not least, internal transformation BHAGs differ somewhat from common enemy, role model and, to a degree, target BHAGs, in that they are focused internally rather than externally. Internal transformation BHAGs seek to transform your company from within. Such transformation could, in turn, lead to increased sales and external success but it is not the focus.

For this reason, Collins and Porras suggest that internal transformation BHAGs are suited to “large, established organizations” or “old organizations that need to dramatically change themselves in order to remain competitive and healthy (or, sometimes, to regain their health).” They cite the example of General Electric which, in 1986 and to cope with the inefficiencies of its size, stated that: “In addition to the strength, resources and reach of a big company, which we have already built, we are committed to developing the sensitivity, the leanness, the simplicity and the agility of a small company. We want the best of both…[a] big-company/small-company hybrid.” If your organisation could benefit from radical revitalisation, an internal transformation BHAG may be for you.

What’s your big, hairy, audacious goal?

We’ve already seen that…

• Warwick Business School want to become the leading university-based business school in Europe.
• Walmart exceeded their goal for the year 2000 and just keep growing—in their last fiscal year, they reported net sales of $443.9 billion, an increase of 5.9% over the previous year.
• NASA achieved their vision of “landing a man on the moon and returning him safely to earth.”
• The year after they established their vision, Honda “so thoroughly defeated Yamaha that Yamaha later publicly apologized to Honda for having claimed that it would dominate Honda.”
• Giro Sport Design (now known as Giro) have grown from creating the first ventilated, lightweight cycling helmet in 1985 to now being a world leader in equipment for cycling, skiing and snowboarding with goods that “are worn by millions of riders around the world” and showcased at events such as the Tour de France.
• And time will tell for General Electric. Having taken a thorough beating in the financial crisis as General Electric’s financial services division plunged the company into the red, we will now find out whether the giant really does have the agility of a small company as it seeks to return to what it knows best (making stuff) and turning its fortunes around.

So, following that inspiration, what is your big, hairy, audacious goal for the future of your organisation?

Although many of the examples above involve corporate giants, BHAGs are in fact for everyone. In its early days, Giro was a single product start-up in which the founder, Jim Gentes, “stocked inventory in his bedroom, used his garage as a manufacturing plant, and expanded by trading a helmet with his neighbour for use of his garage.” From such humble beginnings has come great success!

And even if world domination is not your thing, BHAGs can be a powerful motivator for the goals that you do wish to achieve. Collins and Porras even note that there is a special case for BHAGs in start-up companies in which it is more than enough to set the big, hairy, audacious goal of “reach[ing] a point where survival is no longer in question.”

Whether you need to take on your competitors, emulate an organisation that you admire, strive for an out of reach target or transform your company from within, BHAGs can be incredibly powerful motivators. Their success does not even have to be measured by whether or not you achieve the BHAG itself because you will accomplish so much more along the way.

One of my favourite quotes comes from Louise Keeney, Director of Bondeye Optical, who when we were working with them described this perspective on vision as, “Aim for the stars and clear the fence.” Setting a BHAG is very definitely aiming for the stars but, whether you reach the stars or not, you will certainly clear a fence or three along the way—fences that you may not otherwise have cleared had you not created a vision in the first place.

And, as the examples above show and research has continually supported, those companies who set themselves big, hairy, audacious, out of reach but not out of sight goals do in fact achieve them on a surprisingly consistent basis.

So, what are you waiting for? Set a big, hairy, audacious goal today and find out what your organisation really could achieve in the next 10 to 30 years!

And for those of you who like the research…

Collins, J.C. & Porras, J.I. (1991). Organizational vision and visionary organizations. California Management Review. 30-52.

Collins, J.C. & Porras, J.I. (1996). Building your company’s vision. Harvard Business Review