The Five Types Of BHAG’s
The Five Types Of BHAG’s
During my learning events this week, we discussed the five types of BHAG, which I thought you’d be interested in.
But first, remember that The Real Value of a BHAG is in the Hedgehog because a BHAG without the depth of thinking is a garbage goal.
BHAG (pronounced bee-hag) stands for Big Hairy Audacious Goals. The term was first coined in 1994 by Jim Collins and Jerry Porras in their book “Built to Last: Successful Habits of Visionary Companies.” BHAGs are long-term goals that focus the entire organisation for a 10-30-year period. BHAGs are not 3 or 5 years. Importantly, if your entire career is only 30 or 40 years, it answers the question: do I really want to dedicate a large chunk of my career to this goal?
All Big Hairy Audacious Goals (BHAGs) have one common feature: they are ambitious, long-term objectives. BHAGs come in various forms, and we’ll explore five distinct types:
Target-oriented BHAGs
These are the most conventional and prevalent types of BHAGs set by organisations. Target-oriented BHAGs focus on achieving a specific target within a defined time frame. These objectives are often quantifiable, such as reaching a particular revenue milestone by a specific year. However, they can also be qualitative. For example, landing a human on the moon by a designated date is a qualitative target-oriented BHAG.
How to establish target-oriented BHAGs:
Ensure that the chosen target is both sufficiently inspiring to motivate your organisation and distant enough to require at least a decade to accomplish. Target-oriented BHAGs are not short-term goals; they should encompass your organisation’s broader objectives.
Examples of target-oriented BHAGs:
Microsoft’s renowned goal of placing “a computer on every desk and in every home.”
Walmart’s 1990s goal of achieving $125 billion in sales by the year 2000.
Potential pitfalls and how to avoid them:
While setting a single target, make sure it is something inspiring, even if it seems nearly impossible to achieve. Ensure that the goal resonates with all team members, not just a select few. If your target is qualitative, establish a clear means of measuring success.
Competitive BHAGs
Competitive BHAGs serve to unite a team against a formidable competitor. Embracing the underdog status and striving to outperform rivals can be a potent motivator for a team. Competitive BHAGs also foster team spirit and create a sense of urgency to surpass competitors, potentially transforming a good company into a great one.
How to establish competitive BHAGs:
Identify the entity or adversary your team competes against and expects to compete with for an extended period. Determine whether you want to outperform them in a specific domain or across all aspects. Share this goal with your team to ignite their competitive spirit.
Examples of competitive BHAGs:
NASA’s objective to land a man on the moon before 1970, a competitive BHAG due to the rivalry with the Soviet Union.
Nike’s original goal in the 1960s was to “Crush Adidas.”
Potential pitfalls and how to avoid them:
Ensure that there is a clear category leader or competitor; ambiguity can make this BHAG confusing. Only employ this BHAG if you are the underdog, as it is less inspiring if you are a close second. Alternatively, you can be creative and set a competitive BHAG by aiming to dominate a category and capture a specific market share percentage against all competitors.
Role model BHAGs
You don’t always need to be an innovator to formulate an effective BHAG. Achieving excellence within your field can be challenging enough, and this is where role model BHAGs come into play. To set these goals, pinpoint something that impresses you and set a goal to emulate that success. This type of BHAG is particularly effective for emerging companies.
How to set role model BHAGs:
Identify something you admire or a goal someone else has achieved that is a BHAG in its own right. These BHAGs work best for up-and-coming organisations.
Examples of role model BHAGs:
Stanford University informally dubbed itself the “Harvard of the West,” even though it was founded 249 years after Harvard.
Potential pitfalls and how to avoid them:
Before establishing this BHAG, identify what makes your role model successful. Avoid copying the role model entirely; instead, focus on one aspect of their success. This BHAG style is best suited for up-and-coming organisations.
Internal transformation BHAGs
Internal transformation BHAGs differ from the other BHAG types as they signify a substantial change in your business model. If you are pivoting your business strategy, you can employ a BHAG to represent this transformation and the desired outcomes.
How to set internal transformation BHAGs:
Identify a significant, organisation-wide change that you need to implement, such as shifting your market focus, altering your business strategy, or restructuring your organisation. Use a BHAG to symbolise your new business objectives and the purpose behind the change.
Examples of internal transformation BHAGs:
Netflix’s transition from mailing DVDs to becoming the world’s first streaming service.
Best Buy’s evolution from an exclusively in-person shopping experience to becoming a digital leader in technology.
Potential pitfalls and how to avoid them:
Implementing internal transformation is challenging. Before proceeding, ensure it’s the best course of action for your company, as frequent changes can reduce team morale. When you are ready for an internal transformation, establish a change management process to make the transition as smooth as possible.
Twinning (combination BHAGs)
Twinning BHAGs are our favourite. We find that they capture the optimist and pessimists, and the more (and less) detailed people in the organisation, and provide more clarity and confidence.
A twinning BHAG might look like this:
To become the leading provider of fishing equipment in Australia and NZ.
This means:
- 250 retail outlets
- An average profit of $250k at each outlet
- An online store with $50m revenue
To learn more about setting BHAG’s in your organisation, contact us for a chat with one of our Leadership Coaches.
