In The BHAG

Your own BHAG need not be as dramatic as a moon landing, Collins says, but it should have the same traits characterized by Kennedy's vision. Aside from audacity, a good BHAG should meet three criteria:

1. It should have an extensive time frame, ranging from 10 to 30 years. "Doubling sales in five years is too short a goal," says Collins. "For an entrepreneur, 10 years is a nice time frame."

2. It should be clear, compelling and easily expressed in plain English. "If you need a wordsmith [to read the] statement, it isn't a BHAG," Collins says. Examples of clear BHAGs are General Electric's corporate goal of being first or second in every market it serves. To test your BHAG's clarity, Collins suggests you try saying it using different words but without changing the meaning.

3. The BHAG should be consistent with your company's values and purpose. When Henry Ford set the BHAG of democratizing the automobile, it was perfectly in keeping with the Ford Motor Co.'s reason for being, Collins says. Should Ford have chosen to, say, revolutionize the railroad industry, it would have been a poor BHAG.

Just how big should a BHAG be? It depends. City Bank, the precursor to Citigroup, set a BHAG in 1915 to become the preeminent financial institution in the world. Because it then consisted of just one bank, that ambition was undoubtedly a BHAG.

Sam Walton had a more modest initial goal of making his first small store into the most profitable five-and-dime in Arkansas. Later, Walton gradually expanded Wal-Mart's BHAGs until in 1990, he set the goal of reaching $125 billion in sales by 2000--which the company exceeded in 1998.

You can decide what your BHAG ought to be by talking over company goals with your managers and employees, Collins suggests. But be patient, listen to all suggestions and wait for the right idea to surface. "The way a good BHAG usually happens," he says, "is when somebody states it, and everybody says, `That's a great idea; let's do it.' "

This article was originally published in the August 1999 print edition of Entrepreneur with the headline: In The BHAG.