At the start of the year, everybody ought to have a BHAG.\u00a0 For the uninitiated, that\u2019s a Big, Hairy, Audacious Goal or bee-hag.\u00a0 And why does everyone need a BHAG?\u00a0 Well, if you\u2019re one of those rare businesses that blew the doors off last year and all you want to do is let the good times continue to roll, maybe you don\u2019t need a BHAG.\u00a0 But if you\u2019re like most of us and want something better than last year, you can\u2019t just keep doing what you\u2019re doing.\u00a0 As the saying goes, \u201cIf you just keep doing what you\u2019re doing, you\u2019re gonna get what you got.\u201d\u00a0 So if you want a different outcome than the one you got last year, you need to do something different.\u00a0 That\u2019s where the BHAG comes in.\u00a0 But here\u2019s the problem: the survivors of the recent Great Recession have gotten a little more risk averse than they used to be, and their bankers (or more precisely, the bank regulators) have made investing in BHAGs significantly more difficult than it was pre-recession.\u00a0 So how do you carry out a legitimate BHAG with minimal risk and investment?\u00a0 That\u2019s a tough assignment, but for a few thoughts on how to do it, please read below.<\/p>\n
What\u2019s your New Year\u2019s BHAG?<\/strong><\/p>\n So called \u201corganic growth\u201d is generally considered to be a relatively safe strategy.\u00a0\u00a0 That is, you fundamentally continue to do what you\u2019ve always done, tweeking operational efficiencies here and there while picking up a few new customers along the way.\u00a0 It\u2019s the slow-but-sure, don\u2019t rock the boat strategy.\u00a0 It\u2019s certainly not a strategy that would embrace a BHAG.\u00a0 Of course, there is a risk that a more nimble, aggressive competitor will take market share from you, but still, compared to a \u201clet\u2019s put the pedal to the metal and go for broke\u201d strategy, organic growth is fairly low risk.\u00a0 It can also be fairly boring.<\/p>\n Let\u2019s be clear.\u00a0 We can\u2019t eliminate risk from business.\u00a0 Business is<\/em><\/span> risk.\u00a0 The real question is, can we mitigate that risk to an acceptable level while still introducing the fun and excitement of a legitimate BHAG?\u00a0 I believe we can.\u00a0 Here\u2019s how.<\/p>\n In general, most businesses have under-performing or under-utilized resources . . . people (knowledge, experience, unique talents), equipment and technology, intellectual property (patents, copyrights, etc.), inventory, office space, cash . . . all of it.\u00a0 I\u2019m not suggesting you look for simple cost-cutting opportunities, although that could be part of it.\u00a0 I\u2019m talking about looking at every resource available to your business and figuring out creative ways to use those resources more efficiently and effectively. \u2022\u00a0With the help of a \u201clean manufacturing\u201d expert, a machine tool company eliminates over 30% of its Cost of Goods Sold.\u00a0 To be sure, part of that is cost-cutting, but most of it is creatively thinking about different, more effective ways to utilize the people, equipment, and material on the manufacturing floor.\u00a0 Does reducing your Cost of Goods Sold by 30% constitute a BHAG?\u00a0 You bet, and without a lot of risk or a big investment.<\/p>\n \u2022\u00a0With the creative help of a professional space planner, a company is able to give their offices a more open, spacious feel, and yet reduce their space by 20%.\u00a0 They sublet that saved space thereby changing a cost center into a revenue center.\u00a0 Worthy of BHAG status?\u00a0 Absolutely!<\/p>\n \u2022\u00a0A distributor of auto parts completed a long overdue upgrade to its inventory control system.\u00a0 The system works so well that the distributor now offers inventory management services to its customers, again transforming a cost center into a revenue center.<\/p>\n \u2022\u00a0A CPA firm had max\u2019d out the billable hours of its professional staff, but was balking at putting another expensive accountant onto its already large payroll.\u00a0 Instead, it did a detailed analysis of the work being done by its professional staff, looking for work that could really be done by others at lower levels.\u00a0 As a result, they were able to free up enough billable time to delay adding another staff accountant for at least a year.<\/p>\n For a company that manages its resources well, t<\/span>hink about Southwest Airlines.\u00a0 They know that next to their people, their #1 resource is their fleet of airplanes.\u00a0 Those planes only make money when they\u2019re in the air, not a dime when they\u2019re sitting on the ground.\u00a0 So everything Southwest does . . . from the way they get people and luggage on and off an airplane to the way they prep that plane for its next flight . . . is aimed at getting an arriving flight turned around and back in the air as a departing flight just as quickly as they can.\u00a0 And they do it better than anyone in the industry.<\/p>\n Most small business owners don\u2019t pay as much attention as they should to maximizing the value of their critical resources . . . it\u2019s backroom, low profile, not-very-sexy stuff.\u00a0 They would much rather focus on top line sales growth because, after all, that\u2019s where the real action and excitement is.\u00a0 But the smart operators know, all the BHAGs aren\u2019t in sales . . . they\u2019re in resource management too.\u00a0 And the better they are at the unsexy business of resource management, the more of those very sexy top line sales dollars will make it all the way to the bottom line.<\/p>\n","protected":false},"excerpt":{"rendered":" At the start of the year, everybody ought to have a BHAG.\u00a0 For the uninitiated, that\u2019s a Big, Hairy, Audacious Goal or bee-hag.\u00a0 And why does everyone need a BHAG?\u00a0 Well, if you\u2019re one of those rare businesses that blew the doors off last year and all you want to do is let the good<\/p>\n
\nConsider some examples:<\/p>\n