We set a BHAG (Big Hairy Audacious Goal) for the business a year ago but have made no progress, why?

A year ago a medium-sized business, let’s call it Flamingo, held a strategy weekend and one of the outcomes was a new company BHAG. A BHAG, for those of you wondering what this strange acronym relates to, is a Big Hairy Audacious Goal; a concept created by the eminent Jim Collins of Good to Great fame and essentially it’s an “out there” goal the business sets for 10-plus years.

Recently, the CEO of Flamingo told me that he was having great trouble getting the business to move forward with their BHAG. He said that although the management team had been setting quarterly goals and planning quarterly tactics to keep the business on the path to BHAG, the goals simply weren’t being met and the tactical steps weren’t being taken.

It seems that each quarter, when the management team reflected on achievements to date, without fail the operational goals would be met but not those related to the BHAG because, per the management team, ‘there hadn’t been time”. The Flamingo CEO wondered what was going wrong.

For many businesses, falling short of achieving objectives is (unfortunately) a common problem, but not at Flamingo. In fact quite the opposite, the Flamingo culture is centred around delivering on promises – other goals are consistently met so what is so peculiar about the BHAG?

In turns out that there are two main problems:

1. The management team has set a BHAG which they consider to be very noble. Rather than being about hitting a big revenue the BHAG is actually about developing a state-of-the-art environmentally-friendly product; quite revolutionary in an industry that traditionally couldn’t give two hoots about “green”. The trouble with this noble BHAG though is that most of the Flamingo employees mirror the thoughts of their industry counterparts and they too couldn’t care less about environmentally-friendly. To be blunt there is no excitement about the BHAG, it doesn’t reflect the passion of the employees.

2. All employees, including the product design and development team, are rewarded on achieving KPI’s directly related to revenue and profitability. In essence this encourages the focus of the product team towards tweaking existing product for bespoke customers and working on new versions that will be quick to market. Simple as it is, the team aren’t rewarded for working on something as intangible as the initial steps toward a product that won’t get to market for many years.

The question for Flamingo then is: should the business be refocussed around the BHAG or should the BHAG be refocussed around the business?

The CEO of Flamingo quickly settled on the latter and made an interesting observation. He said he had chosen to take his team away to a remote rural location for the strategy day so that they would “open their minds and unleash their imagination” but he hadn’t expected them to get so carried away.

On reflection, he says, the team (himself included) forgot to keep their feet on the floor. Consequently they hadn’t based their BHAG on basic stuff: what they loved, what they were good at, and how they actually made money. Interesting.

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Julia Bickerstaff’s expertise is in helping businesses grow profitably. She runs two businesses: Butterfly Coaching, a small advisory firm with a unique approach to assisting SMEs with profitable growth; and The Business Bakery, which helps kitchen table tycoons build their best businesses. Julia is the author of “How to Bake a Business” and was previously a partner at Deloitte. She is a chartered accountant and has a degree in economics from The London School of Economics (London University).