Goal setting is something that is often tossed around every 6 months, with the start of a new year and new financial year, as a starting point for major organizational success in the period ahead.

Many of us are familiar with this goal-setting process, but goal-setting should focus on more than just the short term, on more than just the next year or so. If you want to set your business up for success and major growth in the long-term, then what you need is to nail down your strategy and set a Big, Hairy, Audacious Goal!

I know what you are probably thinking, “what is a Big, Hairy, Audacious Goal (BHAG)?”

Coined by Jim Collins and Jerry Porras in their book ‘Built to Last: Successful Habits of Visionary Companies’, a BHAG (pronounced “bee-hag”) is a long-term, 10-to-25-year goal, guided by your organization’s core values and purpose, that is clear and compelling, and that everyone in the organization can rally behind. But it is more than just a goal! It is an out-of-the-box, audacious, yet doable challenge that you set for your organization that gets everyone looking forward.

4 Types of BHAG

There are four board categories that a BHAG can fall under:

1. Target Oriented: a clearly defined qualitative or quantitative goal.
   (Example: “a computer on every desk and in every home.” – Microsoft)
   
2. Competitive or Common Enemy: having a focus on competing with/overtaking a competitor.
   (Example: “Crush Adidas.” – Nike, 1960)
   
3. Role Model: seeking to mimic the traits and success of a well-known company.
   (Example: “Become the Nike of the cycling industry.” – Giro Sport Design, 1986)
   
4. Internal Transformation: focused on an internal transformational change.
   (Example: Netflix’s transformation from mailing DVDs to becoming the world’s first streaming service)

Why your organization needs a BHAG

One of the biggest values having a BHAG has for your organization, is that it gets you thinking outside the box and big-picture. It breaks you out of the narrowmindedness of short-term goals. It forces an organization to create a strategy for long-term success based on a big goal that can drive progress forward, define the organization’s vision, and gets everyone in sync to achieve it.

In his book, Jim Collins says, “The power of the BHAG is that it gets you out of thinking too small. A great BHAG changes the time frame and simultaneously creates a sense of urgency.”

It might sound funny that setting a big, audacious long-term goal can create a sense of urgency, right? But it’s true. Your BHAG is the one clear purpose and vision that your whole team is on side with. It influences the actions and direction taken by your organization starting from day one.  

How to craft your own BHAG

As the name suggests, a BHAG must be:

• Big: Something that your organization can’t accomplish in a year, or three, or five. Think longer-term.
  
• Hairy: Something that you have never done before. It may seem crazy, but that’s only because it is an out-of-the-box, forward-thinking goal.
  
• Audacious: Should be something that you prick up your ears at and makes you think ‘yes!’; and a
  
• Goal: It must be connected to your organization’s strategy and be able to be measured so that its success can be defined and awarded.

For a BHAG to be fully accepted and embraced, it needs to speak to what your organization is passionate about. If your team can’t relate to or understand the goal, their dedication to it will be limited.

It is also important to consider the competitors in your field. What does your organization have the potential to be doing better than everyone else? This is a long-term commitment, so it is important to aim high.

The economic factor of the goal should also play a part in your goal-setting process. Consider which economic factor within your organization would have the greatest impact on the success of your organization if it were to be improved.

Definition and clarity are crucial here. Not only defining your BHAG so that it can be easily understood by everyone on the team but also defining what your organization would look like if your BHAG is achieved many years down the road. This can be done by creating a strategy and concrete measures for its success. Without this, you’ll have questions and actions flying left and right, with no focused direction.

The final step is to commit to achieving the BHAG. While it is a long-term goal, it requires immediate focus and full attention as it will become the driving influence in your annual shorter-term goal setting practices.