What 'The Oregon Trail' Can Teach You About Building a $1 Billion Business
I was nine years old when I first made my attempt to ford rivers playing "The Oregon Trail." Like other Gen Xers and millennials, I had no idea the farmer and the banker still would be part of my life as an adult. The computer game's Big Hairy Audacious Goal (BHAG) was child’s play, or so I thought. With the right supplies in place, my oxen would float across rivers and I would continue driving my wagon toward Oregon's Willamette Valley.
The farmer remains my favorite character. The banker is rich, but he can't fix a wagon wheel and his family gets sick easily. Meanwhile, the farmer isn’t rich but he is industrious. He can fix a wagon wheel, and his kids are healthy. I have two children, so I can relate.
Today, entrepreneurs who co-opt the goal-setting methodology from "The Oregon Trail" are far more successful than those who attempt to re-create the "Monopoly" style of building a business.
Zillow and Expedia cofounder Rich Barton swears by maintaining the BHAG mentality first coined by Jim Collins and Jerry Porras in their 1994 book, "Build to Last: Successful Habits of Visionary Companies." It made sense that such an organized motivational technique would lead to my own company’s success. In another resource, "What They Don't Teach You in the Harvard Business School," author Mark McCormack notes 3 percent of Harvard MBAs make 10 times as much as the other 97 percent combined. Why? They set clear, written goals for their futures and make plans to accomplish them.
I decided to try my own hand at the BHAG mentality in March 2014, when I organized a weekend retreat for my leadership team at a yoga center in rural Oklahoma. There, the Chief Operating Officer (COO), Director of Special Projects and I spent nearly three days not doing yoga. Instead, we envisioned our company's future, set a BHAG and charted a realistic path to reach it. We set a simple goal: We wanted to become a billion-dollar company and a household name.
We used worksheets from Cameron Herold’s book to create a detailed step-by-step plan, culminating in a longer-form document that contains some 15 slides known as our Painted Picture. Like a compass, the BHAG produced a dot on the map -- our Willamette Valley -- to give us direction.
The Painted Picture worksheets helped us visualize how our company would look in 36 months. We included details on how ConsumerAffairs would improve its company culture and change its revenue model to scale and reach our BHAG.
To my amazement, our Painted Picture solidly has set our BHAG in motion. We understood two key successes would confirm we were on the right path: Hiring the right people and growing our revenue streams.
We wanted to employ people who make data-driven decisions, crave success and put the company's best interests first. To do this, we needed to implement a hiring plan to better vet candidates who exemplify our company culture and have a proven track record. With our hiring rate around 3 to 4 percent, it sometimes takes longer to bring on new employees. We've learned the wait pays off consistently: Our all-time employee retention rate is greater than 90 percent. In fact, on an annualized basis, it looks more like 98 percent.
Our second measure, profit change, determined a tenfold revenue growth since we launched our BHAG and Painted Picture intiative. Visualizing, reviewing, discussing, writing and planning as a team paid off.
Experience teaches us that even the most carefully thought-out plan is not without a few bumps in the road. When unexpected things happened along the way, we used the occurrences as an opportunity to review our progress. At every monthly company-wide meeting, we trotted out the BHAG and Painted Picture. Because we remained committed to the process, ConsumerAffairs never veered from our planned track. The mere act of re-reading the documents as a group helped our team refocus on the company BHAG.
Creating these tools requires a significant amount of forethought and planning, but it works. If it were easy, every CEO would do it. To get you oriented on your own Oregon Trail, here are five tips to make the most of your BHAG and Painted Picture.
1. Prepare in advance.
Preparing is important to understand your company’s attributes and provisions. It took us a couple of weeks to gather the necessary documents before we took time off to brainstorm. We needed to review the state of the union before we could begin formulating our BHAG and Painted Picture.
2. Understand your baseline.
Evaluate all the groups that exist in your company’s income statement and assign them a line item. Just as the Banker takes stock of his children to determine if they are hardy and have fortitude of personality, our leadership team issues a report on each of our company's 10 divisions. These include sales, marketing, product engineering, moderation, customer success, call center, finance team and human resources talent team.
3. No company is too big or too small, too old or too new.
An existing company that creates a BHAG and Painted Picture will get back on the rails. New companies will benefit by establishing goal posts to aspire to. Our product was only six months old when we created our first BHAG and Painted Picture three years ago, so we didn’t have many information resources. Established companies have the advantage of more data.
4. Plan a BHAG and Painted Picture retreat every three years.
Setting up a retreat every three years will allow you and your leadership team to tweak your BHAG and Painted Picture. It also acts to reconfirm your commitment. If needed, you can use this time to update new or incoming leadership on the previous BHAG’s success.
5. Get out of the office.
Assemble your brain trust and plan a retreat for your functional leadership. This pared-down group meeting has a specific purpose: Each manager should create a baseline of his or her divisions. Only three of our top leaders attended in 2014, but as many as seven leaders will participate in our December 2016 retreat.
While anxieties still sometimes bubble up when we must overcome obstacles to reach our BHAG, the ability to keep an entire company focused on the same destination has proved a valuable asset. Even through rapid scaling, our BHAG and Painted Picture remain at the center of our planning, orientation curriculum and quarterly company meetings. The results speak for themselves.