Unwrapping the 4 Types of BHAGs (and how they help you to scale)

Every business needs a BHAG*, a good BHAG is inspiring and exciting. A good BHAG can be the driving force of a business and its employees. A well thought up BHAG will inspire your team, and the team after that, and maybe even the one after that. A BHAG should be the north star of your business, a BHAG should inspire you and your team. You are limiting your potential without a BHAG!

BHAG, BHAG, BHAG. What on earth is a BHAG?

Now, don't worry, I've not gone mad. I know how I sound...

Well, listen closely, as we unwrap what one is, the 4 types of BHAG and why having one is an important part of your scaling journey.

A BHAG is many things, but most importantly BHAG stands for a Big. Hairy. Audacious. Goal.

The idea of a BHAG is that helps you set a waypoint out in the future on the way to fulfiling your puporse and potential. It helps to create directional motivation. It represents major progress and should rally energy and enthusiasm from your team (and perhaps even customers) towards something that's meaningful in you fulfilling your "why".

I Still Don't Quite Get it... What is a BHAG and How is it Useful??

For our visual readers - imagine for a moment that your BHAG represents the moon, and your biggest goal in 3 years time represents a lamp-post between you and the moon. Your BHAG should take time and energy to achieve. Perhaps 10 years. Perhaps 20 years, maybe even more!

In short.. it creates motivation, guides strategy, creates belonging, inspires innovation, forces you to be visionary and creates urgency. Good reasons to have one!

The Problem with most BHAGs

Most Founders default to setting something like a revenue target. Let's be clear. No-one cares, except you, about your revenue. Your team don't. Your customers don't. It's not representative of something that shows that you're making progress towards fulfiling your purpose, the impact you want to have in the world, creating value for others. It doesn't rally energy, engagement or anything.. it just represents money. People need more than that if it's going create motivation, they have to see it as valuable and meaningful!

The Four Types of BHAG

So let's look at the 4 primary types of BHAG to stimulate your thinking about yours.

Role Model BHAG

Who do you admire in your organisation? It could be a company, a visionary leader, or a bold vision that your company wants to emulate. For example, Stanford University originally went after becoming the "Harvard of the West" while Giro Sport Design wanted to become the "Nike of the Cycling Industry." Now remember... you're not trying to become a carbon copy of someone else's business, instead look at your role model as someone who's set a high watermark that you can learn from and strive to achieve.

Common Enemy BHAG

This kind of BHAG creates growth by rallying competitive spirit. The goal is to beat your competitor in one specific area or in all areas. For example, Nike's original goal was to "Crush Adidas" while Honda's early BHAG was to "Destroy Yamaha." You want to be the underdog, pick an organisation bigger than you, that you know you are capable of beating and that will fire your team up.

Targeted BHAG

This type of BHAG is focused on a long-term goal with a timeline of perhaps 10-30 years. This goal should feel near impossible, but still be achievable if you set your sights on innovation and fresh thinking to help you get there. Just look at Microsoft, their goal was to "Put a computer on every desk and in every home." Big goal! Targeting a specific outcome like Microsoft did can be game-changing for your team's motivation.

Transformative BHAG

This kind of BHAG is perfect if you need to make a significant organisation-wide shift in your strategy, market or business model. It should result in a complete transformation for your business or industry. Netflix's switch from DVD mailing to digital subscriptions was a full business model shift that required full organisational alignment and commitment. Tesla's goal is to "accelerate the world's transition to sustainable energy" is both a purpose and a transformative BHAG. You want to keep a lid on how often you use these, as constant transformation is tiring for teams. Evolution and change are good (and necessary), but transformation requires something extra.

What's My BHAG?

I'm on a mission to help the Founders create $1 billion dollars of extra value in the world by 2030.

It's not about the revenue the Founders achieve, it's about how much additional value is created which is measured by how much they grow which directly correlates to how much value they create for others.

Ambitious BHAG? Yes. Crazy? Probably.

Motivating for me, my team, the Founders I and we support? Absolutely.

What You Need in Your BHAG

When developing a BHAG, there are six key elements you should consider to maximise its impact and effectiveness:

1. Clear: It should be clear, compelling, and easy to grasp
2. Engaging: It should be something that people are proud to participate in and excited to tell their friends about
3. Aligned: It should be aligned with the company's purpose and values
4. Long-term: Probably 10 to 30 years (unless it's transformation focused - then likely much shorter)
5. Uncomfortable: You're usually not sure how, or perhaps even if, you'll get there... but what if you did? It should feel exciting but uncomfortable.
6. Trackable: How will you know if you've got there? You may not want to tell external customers if you don't want, but internally your team need to if you and they are making progress towards it regularly