Chapter 10

Key Work feature: The role of BHAGs in stimulating change

A BHAG is a Big Hairy Audacious Goal. It is something that an organization aspires to but with its existing resources and capabilities may seem impossible. It is a stretch of an organization's existing resources and capabilities and often involves the development of new resources and capabilities. For example, Henry Ford’s assertion that he wanted to democratize the automobile industry so that all workers on reasonable wages could afford a car. Or President John F. Kennedy’s desire that by the end of the decade America would have put a man on the moon. A BHAG is easy to communicate and understand, and by placing seemingly impossible goals before individuals it calls forth the best they have to offer. In this respect it can be catalyst for change. Collins and Porras (1994) state that a BHAG needs to be continually updated as organizations come close to reaching their goal. If not, there is a danger -as happened with the Ford Motor Company – that an organization will become complacent and allow competitors to displace its dominant position.

Hamel and Prahalad (1989) use the term strategic intent to define how organizations with limited resources and capabilities can leverage these capabilities and increase the rate of organizational learning to achieve seemingly impossible goals. One reason postulated for the success of Japanese firms was that unlike western firms they do not simply focus on attaining a strategic fit between their existing resources and the opportunities in the marketplace. Instead Japanese firms continually reinvent their market position with innovative competitiveness; and this innovative competitiveness is driven by their strategic intent. In the case of Japanese organizations their strategic intent was to become a global leader. They had what Hamel and Prahalad refer to as "an obsession with winning at all levels of the organization and then sustained that obsession over long-term." Their strategic intent is comparable to Collins and Porras’ big hairy audacious goal. It is an aspiration that informs strategic thinking and motivates all levels of the organization as to what the company believes is important, and highlights where their efforts should be invested. It is a strategic vision par excellence.

Why many large Japanese corporations have been so successful is that they have been prepared to forfeit short-term rewards in pursuit of a greater goal. In doing so they have stated that the future does not have to replicate the past or even the present but it can be shaped, rather than simply accepted. In effect, companies like Komatsu of Japan, and Samsung Electronic Company (SEC) of Korea have thrown down a gauntlet which is their strategic intent of addressing tomorrow's opportunities today.

Japan's global competitiveness can be attributed to its understanding of the strategic intent of its customers, suppliers, partners, regulators, competitors; in fact, all its major stakeholders. This understanding of strategic intent allows Japanese corporations such as Komatsu, Honda and Toyota to compete not by the existing rules of the game but to fundamentally alter these rules to their advantage. This is accomplished by consciously avoiding competitor imitations and instead producing competitive innovation. In assessing the global expansion plans of Japanese companies Hamel and Prahalad articulate four approaches to competitive innovation: (1) Building layers of advantage. (2) Searching for loose bricks. (3) Changing the terms of engagement. (4) Competing through collaboration. By avoiding static analyses of competitors and industry structure and allowing the future to unfold into the present strategic intent has been a guiding force in the attainment of global leadership by Japanese corporations and a force for change.

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Oxford University Press, Online Resource Centre, Chapter 10.

Chapter 10