The power of the BHAG: a vision that reaches beyond the horizon

The first time I heard the word BHAG, it sounded ridiculous. Big Hairy Audacious Goal. It sounded like something from an American self-help book you would be better off leaving closed.

But the moment I applied the concept at Glasnost, I understood why it is such a powerful instrument. We formulated our BHAG as follows: in ten years, become a worldwide one-stop shop for communications and PR. We hung it in the office, in a large format, in a place everyone walked past every day.

And something remarkable happened. Applicants came in and asked about it. Clients saw it and asked how we would do that for them. Internally it became the yardstick for what we picked up and what we did not. We suddenly started making decisions based on that goal, instead of based on what came in this week.

What a BHAG actually is

A BHAG is a long-term goal that lies so far in the future that you cannot really think past it biologically. Seven years, fifteen years, sometimes even thirty. It is a vision that makes the company larger than the people who build it, and that keeps that company relevant long after they leave.

The three elements are in the name.

Big. The goal is large and ambitious, and falls beyond everything you could currently achieve with the capabilities and resources you have.

Hairy. The goal is complex and a little intimidating. If you do not feel a slight shiver when saying it out loud, it is not hairy enough.

Audacious. The goal is bold. It requires innovation, creativity and a lot of nerve to work toward.

Four kinds of BHAG

There are roughly four categories a BHAG can fall into, depending on where your company stands and what you want to achieve.

Competitive. A goal where you want to outdo a specific competitor or capture a dominant market position. Honda's famous "Yamaha wo tsubusu" (we will crush Yamaha) is a classic example. Not modest, but motivating.

Role model. A goal where you want to become leader in a domain or industry, often by taking a successful company from another field as a reference. "We will become the Airbnb of boat rentals" is a current example.

Internal transformation. A goal centred on a radical change in the organisation itself. Kimberly-Clark selling its paper mills and reinventing itself as a consumer brands company is the textbook case.

Social impact. A goal that goes beyond profit or market share and focuses on a tangible contribution to society. Unilever's goal to help more than a billion people improve their health and hygiene is a good example. Goals like that lift an organisation beyond itself.

Ten striking examples of BHAGs

The beautiful thing about good BHAGs is that they look obvious in hindsight, but at the moment they were formulated they sounded absurdly ambitious. Here are ten examples from companies we all know.

1. Amazon: every book ever printed, in every language, deliverable within an hour. When they formulated that they had just become an online bookstore. Today they are a global retail giant overturning entire old industries.

2. SpaceX: enable people to live on other planets. Elon Musk's BHAG drove SpaceX to develop ground-breaking technology in space travel. NASA now prefers to use SpaceX's reusable rockets.

3. Ford: democratise the car so everyone can afford one. A car was something for the elite until Henry Ford had a vision in the early twentieth century of mass-produced cars that became affordable.

4. Microsoft: a computer on every desk and in every home. When I stood in the House of the Future in the eighties and saw a child with their own computer in their room, it looked like a far-off vision. For Microsoft it was the strategy on which the company was built.

5. Google: organise all the world's information and make it universally accessible. It started with a search engine. Then came Drive, Maps, Books, Cloud and all the other services building on the very same principle.

6. Volvo: in an agreed year, no one would be seriously injured or die in a new Volvo. They went so far as to hand out reflective paint at Swedish dealers, and had a dedicated team investigate every accident to learn from it.

7. Nike: crush Adidas. With Nike's current market dominance you can hardly imagine this was once a challenging goal. By the way, read Shoe Dog by Phil Knight, or watch the film AIR to see how Nike made its biggest breakthrough on this mission in the eighties.

8. Tesla: help the world transition to sustainable energy. Forget for a moment that you now see Teslas everywhere. When they started they had not even sold a thousand cars. Big and hairy was an understatement. That is also why Musk invested in solar panels and the Tesla Power Wall came to be.

9. Lemz (now Havas Lemz): win a Nobel Peace Prize. That is a BHAG for an advertising agency. In an era when commercial agencies mostly talked about conversion, Lemz chose to inspire commercial clients toward positive societal impact. Their Sweetie campaign against child abuse for Terre des Hommes made global news.

10. Apple: a computer in the hands of every person. That is what smartphones eventually became.

Why you need a BHAG

A good BHAG does three things at the same time.

It gives direction to your business, even when the daily noise pulls you in every direction. It motivates your team, because people would rather build something great than something average. And it sets you apart in the market, because clients and applicants want to attach a story to you.

Not every start-up has to become a unicorn. And that is not the ultimate goal of a BHAG either. The point is to have a vision that reaches beyond the horizon, attracts the right people, convinces the right clients and keeps inspiring your existing team to work toward something larger than the sum of your individual work.

A well-formulated BHAG is one of the most powerful instruments you have as a founder. Whether you are just starting out or have been at it for years.