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Big Hairy Audacious Goals – And How they Hurt Your Incentive Program Design

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Bigfoot BHAG – many of you may remember that terminology.  It was originally defined by Jim Collins and Jerry Porras in a 1996 article “Building Your Company’s Vision” and was highlighted in their book “Built to Last.”  Collins and Porras defined a BHAG as… 

“a form of vision statement …an audacious 10-to-30-year goal to progress towards an envisioned future."

I worked at a company where we had an “all hands” meeting and the leadership, obviously smitten by the book, announced our “BHAG” and then spent a day talking about why we needed it and what we would all reap from achieving it.

It went nowhere.  Don’t get me wrong.  It was a good BHAG (as BHAGs go.)  

It was specific.  It was BIG.  It was visionary.  It was a failure.

At the time I thought the reason the company didn’t achieve the BHAG was a fault of our leadership, our company politics, and even to a degree my ability.  What I didn’t know is that the BHAG our leaders laid out in front of us had little chance of success from the get-go because it wasn't based on any previous experience.  

It was, for all intents and purposes – a fantasy.  A wonderful, great, big, fun, fantasy. 

Some folks will tell you that you need to “envision the future” and have a “law of attraction mindset” – but what they don’t tell you is that any future scenario you envision that doesn’t have some connection to past success is a fantasy.

At least that’s what I gleaned from this article on Psyblog"Success! Why Expectations Beat Fantasies.”

 

Setting Goals Based in Reality

The article discusses 2002 research on the difference between fantasizing about future outcomes and expecting future outcomes.  Pulling from the article:

"They measured how much they fantasized about a positive outcome and how much they expected a positive outcome.

The difference might sound relatively trivial, but it's not. Expectations are based on past experiences. You expect to do well in an exam because you've done well in previous exams, you expect to meet another partner because you managed to meet your last partner, and so on.

Fantasies, though, involve imagining something you hope will happen in the future, but experiencing it right now. This turns out to be problematic."

What I read into that is any incentive and reward program that has a goal based on what you “hope” will happen is less effective overall than a program with a goal that has some historical validity.  In other words – it might be nice to say you want your sales team to do 50% more than last quarter (a somewhat BHAG no?) and you may even provide a reward associated with it.  However, if your company or your sales team has never seen a 50% increase or seen anyone even come close to a 50% increase – it might be more of a fantasy than an expectation.

 

Setting goals based on history is a better way.  

To their credit, Collins and Parros did outline the need to connect a BHAG to your company's core values and core competencies.  But I've seen a number of incentive programs where the goals are just plain fantasies.  The thinking is that if we put it out there the team will rally around the sheer audaciousness of it.  But that is a plan for failure.

Instead, find what has been accomplished before.  What were some big successes?  Add a little to that.  Use that as your benchmark.  Setting appropriate goals in your incentive program will change the mindset and the discussion from envisioning a fantasy – to figuring out how to achieve the goal based on previous successes.

Don’t go BHAG – go MSAG – Medium Scruffy Aggressive Goal – you’ll have a much better shot at achieving it!

 

Originally posted on on Incentive Intelligence

  • http://www.linkedin.com/in/adamsearcy Adam Searcy

    Paul –
    No doubt, let’s keep this grounded in some region of reality. But where is the foundation for real change underlying goal setting? Real process change designed to modify the outcome beyond just the psychological boost of stating a goal. This may be in Collins and Porras’s writing, but aren’t ALL goals achievable given the appropriate time scale if one can properly format the program for success? We need a BHA process modification to go along with the BHAG’s.
    Thanks for the blog! Great stuff!

  • Xuan Luo

    I totally agree that a goal should be based on past success and reality, otherwise it would degrade to some wishful thinking of a teenager. I think the author of “Building Your Company’s Vision” misused the example of Henry Ford. When Ford brought out the goal of democratizing automobile in 1908, he had almost known for sure that he would realize this goal through his development activity beginning from 1906. Besides, I do not think every company should set a BHAG just because those successful companies did that.

  • http://brandonwjones.wordpress.com/ Brandon W. Jones

    Paul,
    I agree with you that you must set realistic goals. There are many times where people will set goals with no basis. One very important aspect of any goal whether it is a BHAG or MSAG is that it must be a goal that everyone believes in and is committed to. What is a completely realistic for a supervisor may not be realistic for the manager and visa versa based on their specific knowledge of priorities or money available. The goal must have buy-in from all parties involved. Thanks, Brandon

  • William Wheeler

    My company recently rolled out a new performance evaluation system for their employees. the good news is that the system allows for employees to have input and say into what their goals and objectives should be. The issue is that the managers and people involved have to approve them, based on their company and team business models. I see how this can be good though, because it allows employees to have a direct impact on how their goals are shaped, and what kinds of things they want to work on (cross training and such). I also know what it’s like to have a BHAD goal set on you that is way too high. Their goals were set so high, that it actually discouraged the team to perform to those atronomical standard. “You want it at what percent? Is that even possible?” Those were the kinds of questions that we were asking, but they insisted that it was “for the good of the team”. To this day, I don’t know if they ever surpassed that goal…

  • Sarah

    I definitely see where you are coming from (love the new acronym, by the way). My only concern is that someone setting only history-based goals may find themselves in a bit of a rut. If all you do is try to improve upon the same things you have already done, you will get better at that one skill, but never branch out into new horizons. So yes, absolutely use realistic, short-term goals to keep moving. But I think it’s okay to have one shining, far-off dream that you take baby steps toward achieving every day. Continuous progress toward our goals- that’s the whole point, isn’t it? A goal is nothing without a plan to achieve it.

  • http://profile.typepad.com/2of6 Paul Hebert

    I think the difference, like you mentioned is one of scale and previous history. If there is no history of achievement or capability in a realm then the objective is less likely(not impossible) to be achieved. What I take from this is to make sure you look at where you’ve been successful in the past and take off from there. Apple wouldn’t set out to create a CRM – even if they know how to program well.

  • http://profile.typepad.com/2of6 Paul Hebert

    I love the fact that we shouldn’t do something “just because they did…” That is one of the biggest problems with best practices in my opinion. Thanks for commenting.

  • http://profile.typepad.com/2of6 Paul Hebert

    Thank you Brandon – you’re right on – buy in is critical. And you bring up the point I didn’t – all audiences have to have similar beliefs in the goal if they have any chance of hitting the target.

  • http://profile.typepad.com/2of6 Paul Hebert

    Thanks William for commenting. There is evidence that there can be counterproductive behavior in place when the managers and the employees have negative reciprocal agreement in place – this sounds like that. When employees feel they are being taken advantage of they find ways to “even the score” by not performing.

  • http://profile.typepad.com/2of6 Paul Hebert

    Thanks Sarah for weighing in. I don’t think it’s an issue of not setting big enough goals or different goals – I see it more about setting goals with no basis in any historic reference. When we set out to put a man on the moon we had some idea of what it might take – the technology and the resources. We had a similar issue gearing up for WWII. The issue is one of goals within a realm of possibility. That’s where many BHAGs go wrong – and then we all wonder what happened.

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