In this episode: When did you last check your big, hairy, audacious goal? Jon Peyton explains where the BHAG came from, how a far-reaching goal rallies people, and how objectives and key results (OKRs) break it into steps you can track every quarter, with someone accountable for keeping the company on course.
Key insights
- A BHAG is a long-term goal big enough to rally everyone in the same direction over 5, 10 or 20 years.
- Big goals grow. As you hit milestones, the goal often needs to stretch further.
- OKRs, objectives and key results, break the BHAG into quarterly and annual steps.
- Your goal should be large enough to hold your leaders’ goals, or you’ll fight over where resources go.
- Someone has to own accountability and course-correct, or a year can slip by heading the wrong way.
Episode timeline
- 0:00 What’s a big, hairy, audacious goal?
- 0:39 Where the BHAG comes from
- 2:10 An example: Tesla and SpaceX
- 4:26 BHAGs versus OKRs
- 5:05 Breaking a big goal into problems
- 6:57 Two problems, many teams
- 7:48 A goal big enough for your market
- 8:21 A goal big enough for your leaders
- 11:46 Why even great goals derail
- 12:36 Who’s keeping everyone accountable?
- 15:41 Define, track, hold accountable
- 16:11 Coming up: an accountability coach
The episode in brief
What a BHAG is. The term comes from Jim Collins and Jerry Porras’s 1994 book, Built to Last: Successful Habits of Visionary Companies. A big, hairy, audacious goal is meant to energize people around a big-picture plan so everyone rows in the same direction for years. It’s how you tell the world what you want to fix, change or improve.
Goals that grow. Jon uses Elon Musk as an illustration. The goal of changing how the world uses energy started with electric cars. As milestones were hit, the goal kept expanding, into energy storage and solar with the SolarCity purchase, and, in Jon’s view, it supports SpaceX’s ambitions too. A goal that once drew laughs grew as progress was made. Whether every part comes true is beside the point. The goal kept people moving.
From BHAG to OKRs. A big goal alone won’t get you there. Objectives and key results are the steps you take each quarter and year that build toward it. Jon’s example: an electric car can’t simply use the parts of a gas car. It needs a battery big enough for long range, and it needs to be as efficient as possible, which means reducing aerodynamic drag. Those became separate problems for separate teams, each moving the company closer to the larger goal.
Big enough for everyone. Your BHAG should solve a significant problem your customers have lived with for a long time. It also has to be big enough to hold the goals of the leaders you hire. If a department head’s vision is bigger than yours, you’ll clash over where resources go. With a goal that’s large enough, each leader can set their own goals inside it during strategic planning. Engineering, marketing and finance each pursue different objectives, all pointing the same way.
Someone has to steer. Even the best goal can fail without the right objectives and matching key results, and without someone watching them. The OKR cycle gives you a quarterly system, but someone, whether you or a leader you choose, has to notice when the company drifts and pivot it back. Otherwise a year can pass heading in the wrong direction, with warning signs such as falling sales, the wrong clients or a rudderless team going unnoticed. Shrugging and saying “we’ll do it next time” wastes time, energy and money.
Coming up. How do you build accountability? In the next episode, Jon talks with an executive accountability coach.
Key action items
- Write down your BHAG. Describe in one sentence the big problem your company is trying to solve over the next 5 to 10 years.
- Break it down. List the two or three biggest problems standing between you and that goal.
- Set quarterly OKRs. Give each team one objective and a few measurable key results tied to the BHAG.
- Assign an owner. Decide who reviews progress each quarter and has the authority to course-correct.
- Tie goals to your numbers. Founder’s Accounting™ can help connect your goals to the financial metrics that show whether you’re on track.
Listen next: Episode 44: The Entrepreneur’s Accountability Plan
Value Creation Consultancy™ has since merged into Founder’s Accounting™.
This episode is educational and isn’t legal, tax or financial advice. Speak with your own attorney and advisers about your situation.