In The BHAG Plan to stay small forever? We didn't think so. One way to shoot for the big leagues is to think big--Big, Hairy, Audacious Goals, that is.

Right now, Don Speer runs a company that providesgaming-operations consulting to American Indian casinos and runs ahandful of budding online gaming sites. In five years, however, hehopes to be somewhere very different. "Our goal," saysthe chairman, president and CEO of Inland Entertainment Corporationin San Diego, "is to be the most successful casino in theworld."

That's a grand objective, but what might sound likebraggadocio to some, is clearly recognizable to others as a BHAG.The acronym stands for "Big, Hairy, Audacious Goal" andis pronounced "bee-hag." It's a concept popularizedin the 1995 business bestseller Built to Last: Successful Habits ofVisionary Companies (Harper Business) by Jim Collins and JerryPorras.

In their book, Collins and Porras examined a group of large,successful companies and found one of the things that distinguishedthem from similar but less successful competitors was that the moresuccessful companies had one or more very ambitious, clear andinspiring long-term objectives. They dubbed these goals"BHAGs" and claimed that having a good BHAG was one ofthe best ways a company could improve its chances for long-termprosperity.

Boeing, which bet its future on the 747 jetliner in the 1960s,and IBM, which made a similarly sizable gamble on the 360 mainframecomputer around the same time, based their long-term success onBHAGs. Similar BHAGs propelled the likes of Citicorp, GeneralElectric and Wal-Mart, says Collins, a business researcher andwriter in Boulder, Colorado. "We're reading about thosecompanies today," he says, "because they achieved theirBHAGs."

Mark Henricks is an Austin, Texas, writer who specializes inbusiness topics and has written for Entrepreneur for nineyears.

Where It All Began

BHAGs came out of Collins' classes at Stanford University inthe late 1980s. Collins, a professor of entrepreneurship and smallbusiness, often presented Apple Computer as an entrepreneurialsuccess story for students to study. But soon he began wonderingwhat, exactly, made Apple successful and whether those elementscould be singled out by looking at other prosperous companies. Theresearch he undertook to answer that question spawned Built ToLast--and the concept of BHAGs.

Since then, this unlikely phrase has entered the businesslexicon. Articles in The New York Times and Harvard Business Reviewhave examined BHAGs as serious tools for businesses. Today, Collinsadmits he never envisioned the term BHAG taking its place alongsideempowerment, reengineering and other buzzwords of modernmanagement, but he feels the concept has intrinsic value.

The main benefit of a BHAG, according to Collins, is to inspireand focus organizations on achieving long-term objectives that areconsistent with its purpose. One of the most famous BHAGs was thegoal of landing a man on the moon before 1970. This BHAG, which wasset by President John F. Kennedy in 1961, energized NASA, capturedthe attention of the American public, and resulted in one of themost impressive accomplishments by any organization.

Goals of Scale

Your own BHAG need not be as dramatic as a moon landing, Collinssays, but it should have the same traits characterized byKennedy's vision. Aside from audacity, a good BHAG should meetthree criteria:

1. It should have an extensive time frame, ranging from 10 to30 years. "Doubling sales in five years is too short agoal," says Collins. "For an entrepreneur, 10 years is anice time frame."

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

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

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

Sam Walton had a more modest initial goal of making his firstsmall store into the most profitable five-and-dime in Arkansas.Later, Walton gradually expanded Wal-Mart's BHAGs until in1990, he set the goal of reaching $125 billion in sales by2000--which the company exceeded in 1998.

You can decide what your BHAG ought to be by talking overcompany goals with your managers and employees, Collins suggests.But be patient, listen to all suggestions and wait for the rightidea 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.' "

Overcoming Obstacles

The beauty of BHAGs is they don't require consultants,training, management retreats or costly new technology. They do,however, carry risks. In fact, significant risk is almost anessential element of a good BHAG.

Many companies whose BHAGs are cited as major reasons for theirprominence basically bet everything on achieving their BHAG. Forexample, IBM invested $5 billion--a huge amount three decadesago--to develop its 360 computers and, in the process, outmodedmost of its existing machines. Had the product failed, the companywould likely have failed as well, Collins says.

You don't have to bet the farm on a BHAG, however. CityBank, for instance, wasn't placing itself at any special riskby setting its BHAG of being a dominant financial institution. ButCollins says riskier BHAGs tend to be better because they engageand excite the people in the organizations that adopt them. "Ilike the ones that if you don't achieve them, you die, becausethat stimulates creativity," he says.

No matter what the stakes, your BHAG should be something of agamble. Ideally, it will be a goal you know your organization canachieve but that appears unlikely to others--even possibly your ownemployees. As a guideline, Collins suggests you set your sights onachieving a BHAG with no more than a 50 to 70 percent likelihood ofsuccess.

Not Just For The Big Guys

One of the most intriguing results of the Collins and PorrasBHAG study was the finding that in order to be effective, companieshave to put BHAGs in place while they are infant enterprises. Onlyone of the 18 firms the authors studied set up a BHAG afterreaching a mature size. "It turns out," Collins says,"that the real key is to give your company goodparenting."

What if you don't have a BHAG now? Not to worry, saysCollins. Not every company, nor even every great company, has aBHAG. Big, hairy, audacious goals focus companies on specificobjectives. As long as a company is doing what it takes to bebetter, it doesn't really matter why it's doing it, saysCollins. "The key is to stimulate progress," he says."A BHAG helps you do that."

Contact Source

Inland Entertainment Corp., (800) 721-2076, http://www.inld.com