In modern-day startup jargon, every startup needs to have a Big Hairy Audacious Goal (BHAG). Yes, this sounds like another Dilbert corporate word in the same light as “facilitate empowerment” or “implement visioning”, but that does not mean your startup shouldn’t have one.

Surely, every company has a purpose, even if it hasn’t been articulated yet. Purpose could be described as the heart and soul of your organization. Don’t confuse this with products, services, or customers. A good purpose motivates and inspires.

Coined by Jim Collins and Jerry Porras (Build to Last and Good to Great), the BHAG complements the purpose by adding a clear finish line. It should be easy to determine when the goal has been achieved. Set for roughly 10 years down the line, the goal should be audacious and hairy: require an extraordinary effort, and maybe have only a 50% chance of success. Your team should, however, be convinced the goal can be achieved. In Collins’ words: “Setting a BHAG requires a certain level of unreasonable self-confidence”.

People like to shoot for finish lines. But a BHAG brings much more. Ultimately, it drives every decision, and very importantly, it sets the culture as a catalyst for team spirit.

A BHAG should be worth waking up for in the morning and going the extra mile.

If you haven’t yet, see Daniel Pink’s priceless animated TED talk about how purpose (plus mastery and autonomy) makes people tick. Collins: “The essential point of a BHAG is best captured in such questions as: “Does it stimulate forward progress? Does it create momentum? Does it get people going? Does it get people’s juices flowing? Do they find it stimulating, exciting, adventurous? Are they willing to throw their creative talents and human energies into it?” Climbing Everest is one goal, but how would it really feel to look out across the mountain ranges below? Imagine what else would have already been achieved along the way.

Rafa Ortiz, a professional kayaker (yep that’s a profession) from Mexico set a BHAG to “Safely kayak down Niagara”. Unreasonable self-ambition at the very least. But with his BHAG, he managed to gather the world’s best to coach and train him for 3 years to take the plunge. Despite the high illegality of it all, he signed up big-name sponsors Teva, GoPro, and Redbull. Not bad.

JFK set a BHAG to “land a man on the moon by the end of this decade and return him safely”. This ignited team spirit and interest worldwide, to the extent that a BHAG is now commonly linked to a “moonshot”. Back to the 21st century, we ought to call it a “Mars-shot” I guess. The king of BHAGs, Elon Musk, set one for SpaceX to “Enable human exploration and settlement of Mars”.

Here are a few more down to earth ones:

• Amazon: Every book, ever printed, in any language, all available in less than 60 seconds.
• Google: Organize the world’s information and make it universally accessible and useful.
• Microsoft’s original BHAG: “A computer on every desk and in every home.”

“Big data” is not a clear goal

Many companies don’t really have a BHAG, or one that is simply too close by. I often hear complaints that Dutch entrepreneurs are not ambitious enough compared to their peers in the US, easily traced back to our Calvinistic roots. Basically, that means we are missing an opportunity to bring out the best in the team. But also an opportunity to tell a great story. Media loves ambitious stories and investors want to invest in the largest possible outcome.

A BHAG should give you a route to get a 10x to 100x advantage over competition. Does your BHAG stand up to this test?

“Most people overestimate what they can do in one year and underestimate what they can do in ten years.” —Bill Gates.

In the high-tech space, I see many startups with some form of (often wearable) sensor connected to a mobile app and a cloud-based database. Mostly, their story focuses on a niche market and the benefits of using the mobile app. When asked, the founders recognize that there are opportunities in the data they collect. Yet most fail to set a clear BHAG for how this big-data play will give them a real edge in the market. Just saying you collect measurements and so you can do “big data” is nowhere near a hairy goal with a clear finish line. You want to shoot for Mount Everest; if you end up climbing your neighborhood hill, who will care? In big data, it also holds that just capturing large amounts of data to decide later what to do with it is not a valid approach. You need to strip the data to the essence needed for its analysis and hence store only the core elements.

If you don’t have a BHAG, your business boils down to a mom and pop shop or simply won’t last. You can’t attract a strong investor with a niche play. But a BHAG by itself is not good enough either. If you only have a moonshot but no plans to hit the market soon, you may find some friends and fools to invest but don’t have a viable business.

Defining your BHAG

The strongest way to define your BHAG is from a deep understanding of your customers. In proper Lean Startup style, learn about their jobs, pains, and opportunities. And then extrapolate. Your customer will typically not directly tell you what your BHAG should be. That innovation and disruption is up to you. Nobody in their right mind would tell a kayaker to seriously consider hucking Niagara.

Collins and Porras provide some help. They define four broad categories into which all BHAGs fall:

• Target. Put a man on Mars in 10 years from now;
• Common enemy. In the moon mission that actually was a very strong incentive: get a man on the moon before the Russians do;
• Role model. Use examples from another industry to drive innovation in yours, e.g., have the same attention to design and user experience as Apple does;
• Internal transformation. This one is for the big companies, e.g., we need to act and think like a startup.

Most of today’s hairy goals were published decades ago in science fiction stories. Self-driving cars, drones, artificial intelligence, wrist comms. How did the authors come up with these? One way to think big, is to brainstorm about the impact of one single technology once you extrapolate far enough. Drones that remove land mines and make wastelands livable again? Sure.

What delineates a BHAG from science fiction? Two things:

1. You commit to reaching the goal. The Manhattan project had a BHAG to make a bomb so scary it would end the war. If not audacious, surely a hairy goal to strive for. By committing enough brilliant scientists to it, they made it happen. And changed the world, albeit not in the most positive sense.
2. You break it down into manageable steps, like this:

A BHAG requires a vivid description, a single sentence that stirs the imagination and passion to pursue it long after the founders are gone. One way that Collins and Porras advocate is to write an article that you would love to see published about your business in say 10 years from now. What would the headliner be?

Aim for the stars, but don’t forget to clear the fence

SpaceX set a BHAG to live on Mars, yet their short-term goal is to make rapidly reusable rocket that, ultimately, will slash space travel costs 100-fold. So they set their goal to have the rocket land right back on the platform and focus the whole company on reaching that goal, but always with the road to Mars on their mind. In the words of Mark Watney with his goal to simply stay alive until he got picked up from Mars:

At some point, everything’s gonna go south on you… everything’s going to go south and you’re going to say, this is it. This is how I end. Now you can either accept that, or you can get to work. That’s all it is. You just begin. You do the math. You solve one problem… and you solve the next one… and then the next. And If you solve enough problems, you get to come home.

Following the Rockefeller Habits (Verne Harnish’ bible for scaling up), you break down your BHAG into a 3-5 year priority , 1 year priority, and quarterly priorities and themes. By repeating and reviewing where you are with respect to these goals every week, you give your business the focus and alignment needed to ultimately reach the BHAG. Mountaineers that aim to climb Mount Everest break the journey down into reaching progressive base camps. During their climb, they dream of the summit, but all focus is only on reaching the next base camp.

How will you change the world?