Question

From Book Good to Great by Jim Collins. What is our BHAG and how well aligned is it with our Hedgehog Concept?

Answer 1

A brief introduction to the book Good to Great by Jim Collins

Jim Collins, an American business management consultant, author and lecturer wrote the book Good to Great which aws published in the year 2001.

It is a management book that helps to understand how some good companies transform themselves to become greats in their own fields while some others fail to achieve the same.

Here, the term Greatness denotes the financial performance of the super successful companies. He & his team used some difficult yardsticks to measure the financial performance of these cos. over several years.it shows how some cos. generated cumulative stock returns that are 7 times higher than the general stock market index and even sustained that trend for than 15 years. As per the Collins findings, the cos. become great by employing their entire resources on their key competencies. Some example of these great cos. are Abott laboratories, Proctor & Gamble, Phillip Morris, Wells Fargo etc.

A brief description of BHAG

BHAG is an acronym for Big Hairy Audacious Goal. This concept is developed by Jim Collins in his book Built to Last.

This concept is used to describe the mindset of some big trendsetter cos. in the world who strives to  excel, who actually made themselves great by dreaming of something big, innovative, out of the box & path breaking goals which are otherwise thought to be impossible and irrational to achieve.

For example, Boeing aircraft manufacturing co. which was initially catering only to the military needs of the American air force. But they dreamt of introducing jet aircrafts in the commercial market, employed their entire resources on it & finally 707 was created which revolutionized the world's commercial aviation industry.

Similarly, was the NASA's moon mission in the 1960's.They did the unthinkable.

Hence, BHAG is about doing the unimaginable, a powerful way to stimulate progress.

It is about presenting a clear, compelling and easily grasping mission statement in front of the co. employees. It is about generating passion among the employees to go beyond the traditional risk free attitude and achieve something extraordinary. These visionary goals are long term may be 15 to 20 years.

There are 4 types of BHAG s. :

1) Target oriented BHAG - the co. can set quantitative or qualitative visionary goals to achieve. E.g. - Walmart to become no. 1 retailer, Boeing etc.

2) Competitive BHAG - to beat the biggest rival in the industry, example - Nike crush adidas, Yamaha vs. Honda.

3) Role model BHAG - to aspire to be like a great co. of some other industry in its own specific niche. e.g. TCS becoming Microsoft of the Indian IT market.

4) Internal Transformation - a small division of a very large MNC dreaming to transform the entire company to be a trendsetter.

Hedgehog Concept:

It is about gaining the competitive advantage.

3 steps to become hedgehog :

1) to identify what you are deeply passionate about

2) what is your key competency  

3)in what you are best at generating profits

It is about simplifying all the the complexities of the world focussing just on the achieving a simple, clear all embracing vision.

Alignment of BHAG with the Hedgehog Concept:

To establish BHAG it is important to identify your hedgehog. That is what it is best at doing, simplify all the complex equations of the business and then establishing an audacious goal to make the co. beat in its field.

1) Identify core competencies of the co.

2) Identify the key competency area that helps to earn profit growth in its business

3) The management should ask the employees what they are passionate about and what they dream to achieve.

Once the co. identifies its key potential or hedgehog it can establish its BHAG. If the BHAG does'nt connect to hedgehog it won't sustain. It is important to pusue many strategies and finalizing the successful one to achieve the BHAG. For