Scaling Up: Formulating a Powerful 10-Year Goal with a BHAG

A BHAG, or Big Hairy Audacious Goal, is a 10-year goal that provides organizations with a clear and inspiring direction. Coined by Jim Collins in his book Built to Last, the term has become a common feature of many methodologies, including Scaling Up. Research has shown that companies that set a BHAG outperform those that don’t. In this blog, we’ll explore why a BHAG is crucial for your organisation, how to create one, and how to make it a reality.

Table of contents

1. Why Your Business Needs a BHAG: Benefits and Tips

Are you looking for a way to take your business to the next level? Consider setting a Big Hairy Audacious Goal (BHAG). According to Verne Harnish, the founder of Scaling Up, a BHAG is one of the most critical strategic decisions a business can make. Here’s why:

BHAGs Provide Direction and Focus

A BHAG is a long-term, ambitious goal that serves as a unifying force for your organisation. It’s a dream that inspires and motivates your team to work towards a common purpose. When you have a BHAG, every decision you make can be measured against it. This clarity of purpose helps your team stay focused on the long-term goal and avoid getting side-tracked by short-term distractions.

BHAGs Enable Backward Planning

In the Scaling Up method, BHAGs are used for backward planning. That means you start with your ultimate goal in mind and work backward to set 5-year, 1-year, and quarterly goals. This process helps you break down your BHAG into manageable pieces and creates a roadmap for achieving it.

BHAGs are Guidance for Making Choices

In any growing company, there are countless decisions to be made every day. With a BHAG, you can evaluate these decisions against your long-term goal. This approach helps you stay focused on what matters most and avoid getting side-tracked by short-term concerns. By challenging yourself and your team to align every choice with your BHAG, you create a culture of purpose and clarity.

BHAGs Inspire and Bind People

When your team is working towards a shared dream, they feel a sense of belonging and motivation. Setting a BHAG is an excellent way to involve and retain your employees, especially as more people look for meaning in their work. By creating a workplace culture centred around a BHAG, you empower your team to perform their duties with energy and purpose.

Watch Verne Harnish’s Video on BHAGs

To learn more about the power of BHAGs and how to set them for your business, check out this video from Verne Harnish, the founder of Scaling Up. In this video, Harnish shares his insights on why BHAGs are critical for any organization that wants to achieve long-term success.

You can watch the video HERE

2. The Three Conditions of a Good BHAG

As the image below shows, a good BHAG meets three important conditions:

  1. It reflects the why of your organisation
  2. It fits with your core competencies
  3. It satisfies your profit per/x.

If any of these conditions are not met, your BHAG won’t be effective. For instance, if it doesn’t fit your why, it won’t inspire your team. If it doesn’t match your core competencies, you won’t be able to achieve it. And if it doesn’t satisfy your profit per/x, it won’t have the right impact on your bottom line.

Inspire and Motivate Your Team

The BHAG is a powerful tool for inspiring and motivating your team. By setting a BHAG, you encourage big thinking and acting over a long period of time. This creates a culture of purpose and commitment that drives your organisation forward. To make sure your BHAG is effective, it should be easy to remember and measurable. This way, you can track your progress and stay on track towards your goal. Think of your BHAG as the rocket that propels your strategy forward.

Ready to Set Your BHAG?

If you’re ready to set a BHAG for your organisation, start by considering the three conditions outlined above. Think about your why, your core competencies, and your profit per/x, and use these as a guide for setting your BHAG. With the right BHAG in place, you can create a workplace culture that inspires and motivates your team to achieve great things.

3. How to Formulate a BHAG

To create a powerful and focused BHAG, start by defining your organisation’s WHY, core competencies, and profit per/x. Once you have a clear understanding of these elements, gather your leadership team for a brainstorming session. This is a creative and collaborative process, with the entrepreneur often serving as the source of inspiration.

During the session, make sure to keep the WHY, core competencies, and profit per/x at the forefront of everyone’s minds. This will help ensure that the ideas generated align with the organisation’s strategic vision. To guide your brainstorming, research BHAGs from other companies beforehand and use them as examples.

After collecting a range of ideas, evaluate them based on how well they align with the three key elements of the BHAG model. Select the Big Hairy Audacious Goal that best embodies your organisation’s WHY, core competencies, and profit per/x. This will serve as the guiding star for your organization’s long-term strategy and help focus efforts towards achieving a common goal.

4. Examples of Powerful BHAGs

A BHAG is a powerful tool that can help companies achieve their long-term goals. Here are four types of BHAGs, along with some inspiring examples:

Purpose (quantitative or qualitative) BHAG

This type of BHAG involves setting a big, ambitious goal that reflects the organisation’s purpose or values. Some examples are:

  • Subway: 100,000 locations worldwide by 2025.
  • Tover: 1 million moments of happiness in 2030.
  • Dyflexis: At the end of 2028, a 12-year-old child will be able to carry out the planning and time registration of our most complex customer.

Competitive BHAG

This type of BHAG challenges the organisation to be better than the competition. It could involve fighting for the number one position in market share or in turnover. An example is:

  • Nike: We will crush Adidas.

Role model BHAG

With this type of BHAG, the organisation has a role model of what it wants to be or become. It could be another company, even from a different industry, that the organisation looks up to and wishes to emulate. An example is:

  • Stanford: The Harvard of the west.

Transformational BHAG

This type of BHAG is often used by established brands that need to transform to keep up with changing times. The transformational BHAG sets out to change people’s perception of the company or the products it offers. An example:

  • Sony: Changing people’s view of Japanese products.

By setting a BHAG that fits with the organisation’s WHY, core competencies, and profit per/x, and making sure it’s measurable and easy to remember, companies can motivate and inspire their stakeholders to achieve big things over a long period of time

5. Bringing the BHAG to Life in the Organisation

After formulating a BHAG with the leadership team, it is essential to bring it to life in the organisation. One way to do this is by using the Scaling Up method, which involves placing the BHAG on the One-Page Strategic Plan (OPSP).

From there, it’s crucial to communicate the BHAG to all employees. Presentations and office displays are excellent ways to keep the BHAG top-of-mind. Furthermore, the BHAG should be at the center of all plans made during annual and quarterly meetings. Additionally, it’s important to identify key performance indicators (KPIs) that align with the BHAG. Tracking these KPIs daily can help measure progress towards achieving the goal. It’s important to remember that the execution of the BHAG should start today, with every employee contributing towards achieving it. Creating a BHAG is only the first step, bringing it to life and making it a part of the organisation’s culture is what will make it successful.

6. Pitfalls in Creating a Good BHAG

Creating a Big Hairy Audacious Goal (BHAG) can be an exciting process for any organisation. However, there are three pitfalls to avoid when formulating and implementing a BHAG.

  1. One common pitfall is failing to communicate the BHAG to employees. If the BHAG is not known throughout the organisation, it cannot become a driving force for change and innovation.
  2. Another pitfall is creating a BHAG that is not inspiring or lacks energy. A BHAG should be a dream or ambition that motivates everyone to strive towards a common goal.
  3. Additionally, a BHAG that is planned too close in time can become too practical, leading to a lack of motivation and enthusiasm.

It is important to remember that a good BHAG should be challenging and require sustained effort over a long period of time. By avoiding these pitfalls, organisations can successfully bring their BHAG to life and achieve their long-term aspirations.

7. Need help formulating the BHAG?

Are you struggling to formulate a Big Hairy Audacious Goal for your organisation? Look no further than ScaleUp Company, the trusted growth partner for scale-ups. Our experienced team can guide you through the Scaling Up method, including the crucial step of crafting an effective BHAG. With over 2500 successful growth implementations under our belt, we have the expertise to help your organisation achieve its full potential. Contact us today to learn more about how we can help you turn your ambitious vision into a reality.