Big Hairy Audacious Goal (BHAG)

The term big hairy audacious goal was introduced by Jim Collins and Jerry Porras in their 1994 book Built to Last, which studied companies that had thrived over many decades. They found that many of these companies had, at important points in their history, committed to goals so ambitious that success seemed uncertain. Such goals were not reckless, but they required the organization to stretch far beyond its current capabilities. The authors called them big hairy audacious goals, a deliberately memorable phrase for a goal that is hard to ignore. The phrase has since become common in business language, often shortened to BHAG.

A BHAG differs from an annual target or a strategic objective. It is long-term, often a decade or more away, and it describes a destination that would transform the organization if reached. A well-known historical example is the United States goal, set in 1961, of landing a person on the moon within the decade. For strategy and planning teams, a BHAG can provide a north star for long-range planning, giving shorter-term objectives and initiatives a shared, ambitious direction.

Definition of a Big Hairy Audacious Goal

A big hairy audacious goal is a clear, compelling and highly ambitious long-term goal, with a defined finish line, that serves as a focal point for organizational effort and requires significant stretch to achieve.

It sits at the top of an organization's goal hierarchy, above strategic objectives and annual goals, and is related to the idea of a vision, often expressed in a vision statement.

Characteristics of a Good BHAG

It is long-term, usually set 10 to 30 years in the future, far enough away to require fundamental change but close enough to motivate.

It is clear and specific, with a finish line that makes it obvious when the goal has been achieved.

It is ambitious, with a meaningful chance of falling short, but not so unrealistic that people dismiss it. Collins suggested a goal with perhaps a 50% to 70% chance of success.

It is compelling, easy to understand and remember, and capable of energizing people across the organization.

It fits the organization's purpose and values, so that pursuing it reinforces rather than undermines what the organization stands for.

Types of BHAGs

Target BHAGs set a quantitative or qualitative target, such as reaching a certain size, customer base or impact.

Common-enemy BHAGs focus on overtaking a stronger competitor, giving the organization a clear rival to measure itself against. They can be highly motivating but risk focusing attention on a competitor rather than on customers.

Role-model BHAGs aim to become like a respected organization in another industry or market, adapting its success to a new context.

Internal transformation BHAGs aim to change the organization itself, such as reinventing an established business for a new era.

Importance of a BHAG in Strategic Planning

A BHAG provides long-term direction. It gives strategic plans, which usually cover three to five years, a larger destination to work toward.

It energizes people. An ambitious, clear goal can create a sense of shared purpose that routine targets rarely achieve. People can see how their work contributes to something larger than this year's numbers.

It also encourages bold thinking. When the goal is far beyond current capabilities, incremental improvements are not enough, which pushes the organization to consider new approaches.

BHAGs and Financial Management

A BHAG often implies significant long-term investment, since reaching it requires building new capabilities, entering new markets or transforming the business.

Long-range financial plans can be built backward from the BHAG, identifying the revenue, investment and capabilities needed at intermediate milestones.

Leaders must balance investment toward the BHAG with the need for near-term financial performance, often by allocating a defined share of investment to long-term goals.

Tracking progress toward intermediate milestones helps finance teams judge whether long-term investments are on course.

Common Challenges

A BHAG that is not connected to shorter-term objectives and plans can become a slogan that has little effect on daily decisions.

Goals that are too unrealistic can discourage people rather than motivate them. People need to believe that the goal, while hard, is achievable with sustained effort.

Leaders may set a BHAG and then change it frequently, which undermines its value as a long-term focal point.