Small-to-Medium Business Owners & Leaders, Is Your BHAG Bullshit? Ambition Without Environmental Reality, Strategic Assets and GAP Analysis Is Just Wishful Thinking (Strategic Planning Perth)

I have long believed in setting ambitious goals.

A compelling vision can energise people, create focus, encourage innovation and push an organisation beyond what it previously thought possible. Jim Collins and Jerry Porras popularised the concept of the BHAG, Big Hairy Audacious Goal, as a clear, compelling and often highly ambitious long-term goal capable of stimulating organisational progress. Collins emphasises that a genuine BHAG should provide a clear finish line and become a unifying focal point for effort.

But there is a problem.

In Strategic Planning Perth, I regularly encounter ambitious statements that sound impressive but have little connection to strategic reality:

“We’re going to double revenue in three years.”

“We’ll become the market leader.”

“We’re going national.”

“We’ll grow from $20 million to $100 million.”

“We’re going to disrupt the industry.”

My immediate reaction is not necessarily:

“Fantastic.”

It is:

Based on what?

What is happening in your external environment?

How attractive is the market?

What is the realistic size of the opportunity?

What are competitors doing?

What strategic assets do you possess?

What critical capabilities can you reliably deploy?

What is missing?

How large is the GAP between where you are today and where your BHAG says you intend to be?

And, most importantly:

What credible strategic pathway connects the two?

Because a BHAG without environmental understanding, strategic assets, critical capabilities, financial capacity and a realistic GAP analysis may not be strategy at all.

It may simply be bullshit dressed up as ambition.

Throughout almost four decades of big corporate, being a start-up entrepreneur, and advising businesses across Australia and internationally, I have learnt that ambition matters enormously, but ambition must ultimately collide with reality.

Great strategy sits at that intersection.

Table of Contents

• What Is a BHAG, and When Does It Become Bullshit?
• Strategic Planning Perth: Ambition Must Be Grounded in Reality
• Start with the Environment: What World Are You Actually Competing In?
• Your Environment Creates Opportunities, and Imposes Constraints
• Strategic Planning Perth: Know Your Strategic Assets Before Setting the Destination
• Critical Capabilities: Can Your Organisation Actually Do What the Strategy Requires?
• The Environment–Assets–Capabilities–GAP Framework
• Strategic Planning Perth: GAP Analysis Turns Ambition into Strategic Reality
• The Three Vehicles for Closing the Strategic GAP
• Organic Growth: Can You Build Your Way There?
• Acquisition: Can You Buy What You Lack?
• Alliances and Joint Ventures: Can You Access Rather Than Own?
• What My Own Experience Has Taught Me About Strategic Reality
• When a BHAG Becomes Dangerous
• How to Stress-Test Your BHAG
• Practical Recommendations for SME Owners and Leaders
• Key Takeaways
• Frequently Asked Questions
• Conclusion: Dream Big, but Earn the Right to Believe Your Own BHAG

What Is a BHAG, and When Does It Become Bullshit? (Strategic Planning Perth)

A BHAG is not supposed to be a random number plucked from the air.

Collins describes a true BHAG as clear, compelling, tangible, energising and highly focused. It should create a finish line people understand immediately. Importantly, Collins has also described audacious aspirations as ultimately achievable, a qualification that is sometimes forgotten when organisations enthusiastically adopt the terminology.

That distinction matters.

There is a fundamental difference between:

ambitious

and

delusional.

Suppose an SME currently generates:

$10 million revenue and $500,000 EBIT.

Its owners announce:

“Our BHAG is to become a $100 million business within five years.”

Wonderful.

Now explain how.

Is the addressable market large enough?

Can existing customers support that growth?

What market share would $100 million represent?

What competitors stand in the way?

Does the company have enough capital?

Does it have the leadership?

Technology?

People?

Systems?

Distribution?

Brand?

Sales capability?

Operational capacity?

Governance?

Acquisition capability?

If these questions have never been properly examined, $100 million is not yet a strategy.

It is a number.

The more important question is:

What would have to be true for this BHAG to become realistically achievable?

That question transforms aspiration into strategic thinking.

Ambition Must Be Grounded in Reality (Strategic Planning Perth)

Strategy requires two fundamentally different perspectives.

You must look outside the organisation.

And you must look inside it.

Outside tells you:

What opportunities and threats exist?

Inside tells you:

What are we actually capable of exploiting or overcoming?

Strategy connects the two.

This principle is consistent with longstanding strategic-management thinking. The resource-based view emphasises that competitive advantage depends substantially upon resources and capabilities, while external strategic analysis examines the competitive and environmental conditions in which those resources must be deployed. Research associated with the resource-based view has highlighted valuable, rare, difficult-to-imitate and non-substitutable resources as potential foundations of sustained competitive advantage.

For an SME, I would make this much more practical.

Before declaring where you intend to go, understand:

Where are we now?

What environment are we operating in?

What do we possess?

What can we reliably do?

What will we need in the future?

What is missing?

How will we close the GAP?

That is the foundation of credible strategic planning.

Start with the Environment: What World Are You Actually Competing In? (Strategic Planning Perth)

I am continually surprised when businesses establish ambitious growth targets without conducting a serious environmental analysis.

Your business does not operate in a vacuum.

It operates within an ecosystem of:

customers;

competitors;

suppliers;

technology;

regulation;

capital markets;

labour markets;

economic conditions;

social change;

industry structures;

substitutes;

new entrants.

A strong strategic review therefore starts externally.

Examine the macro environment

Consider:

• economic growth;
• inflation;
• interest rates;
• exchange rates;
• regulation;
• government policy;
• demographic change;
• technological disruption;
• environmental pressures;
• geopolitical developments.

A business planning aggressive expansion when interest rates are low, labour is readily available and capital is inexpensive faces a very different environment when those conditions reverse.

Examine your industry

Ask:

Is the market growing?

Contracting?

Consolidating?

Fragmenting?

What are industry margins doing?

Where is bargaining power shifting?

Are barriers to entry rising or falling?

Are substitutes emerging?

Is technology changing the basis of competition?

Examine competitors

Who are they?

What do they do better?

What strategic assets do they possess that you do not?

Where are they vulnerable?

What would happen if they copied your strategy?

Examine customers

What do customers actually value?

Are their needs changing?

Are they becoming more price-sensitive?

Are purchasing behaviours shifting?

Are your largest customers becoming dangerously powerful?

You cannot set a credible destination without understanding the terrain.

Your Environment Creates Opportunities, and Imposes Constraints

This is where entrepreneurial enthusiasm sometimes becomes dangerous.

Owners naturally see opportunity.

That optimism is often precisely what allowed them to build the business in the first place.

But opportunity must be distinguished from accessible opportunity.

Suppose the Australian market is worth $2 billion.

That does not mean your SME has a $2 billion opportunity.

Perhaps only $500 million relates to your segment.

Perhaps only $150 million is geographically accessible.

Perhaps incumbent competitors control 80%.

Perhaps customers have long-term contracts.

Perhaps regulatory approvals take three years.

Your realistically accessible market might therefore be dramatically smaller.

This is why strategy requires intellectual discipline.

The question is not:

“How big is the market?”

It is:

“What portion of this market can we realistically access, serve, compete for and capture profitably given our strategic assets and capabilities?”

That is a much harder question.

It is also a far more useful one.

Know Your Strategic Assets Before Setting the Destination (Strategic Planning Perth)

Once you understand the external environment, turn inward.

What strategic assets do you possess?

Strategic assets may include:

Tangible assets

• cash;
• property;
• plant;
• equipment;
• fleet;
• infrastructure;
• technology.

Intangible assets

• brand;
• reputation;
• intellectual property;
• licences;
• contracts;
• proprietary data;
• customer relationships;
• supplier relationships;
• distribution agreements.

Human assets

• experienced leaders;
• specialist technical knowledge;
• sales talent;
• industry relationships;
• organisational knowledge.

Structural assets

• systems;
• processes;
• governance;
• distribution networks;
• operating platforms;
• organisational structures.

But not every asset is strategically important.

Owning 50 trucks does not automatically create competitive advantage if competitors can readily buy 50 equivalent trucks.

Owning a building is not necessarily strategic.

Having employees is not necessarily strategic.

Research into the resource-based view distinguishes resources capable of supporting sustained advantage by characteristics such as value, rarity, difficulty of imitation and substitutability.

The practical question is:

Which assets genuinely improve our ability to compete and achieve our strategic objectives?

Critical Capabilities: Can Your Organisation Actually Do What the Strategy Requires?

This distinction is crucial.

As I have written previously:

Strategic assets are what an organisation owns, controls or can access.

Critical capabilities are what an organisation can reliably do.

You may own:

a fleet;

a recognised brand;

technology;

customer relationships;

capital.

But can you:

sell?

market?

innovate?

lead?

govern?

integrate acquisitions?

manage complex projects?

enter new markets?

develop products?

execute strategy?

The resource-based literature similarly recognises that competitive performance depends not merely on possessing resources but on organisational capabilities and processes that deploy those resources effectively.

This is where many BHAGs collapse.

The organisation has identified the destination.

But nobody has asked whether the organisation possesses the vehicle required to get there.

The Environment–Assets–Capabilities–GAP Framework

When I think about ambitious strategic objectives, I prefer a logical sequence:

ENVIRONMENT → STRATEGIC ASSETS → CRITICAL CAPABILITIES → FUTURE REQUIREMENTS → GAP → STRATEGIC RESPONSE

1. Environment

What opportunities and threats exist?

2. Strategic assets

What valuable resources do we own, control or access?

3. Critical capabilities

What can we reliably do well?

4. Future requirements

What assets and capabilities will the BHAG require?

5. GAP

What is missing?

6. Strategic response

How will we close those gaps?

This is where a BHAG becomes useful.

It creates a future destination against which you can work backwards.

The mistake is starting with the BHAG, and then jumping immediately into execution.

There is an entire strategic bridge that must first be designed.

GAP Analysis Turns Ambition into Strategic Reality (Strategic Planning Perth)

A GAP analysis asks:

What separates our current state from our desired future state?

Imagine a Perth-based SME with:

• $25 million revenue;
• operations entirely in WA;
• founder-led management;
• limited middle management;
• basic systems;
• strong customer relationships;
• limited marketing capability;
• no acquisition experience.

Its BHAG:

$100 million national business within five years.

Now conduct the GAP analysis.

Geographic GAP

Today: WA.

Future: National.

Required:

new locations;

distribution;

local leadership;

market knowledge.

Revenue GAP

Today: $25 million.

Target: $100 million.

Gap: $75 million.

Where precisely will it come from?

Organic growth?

Acquisitions?

New products?

New geographies?

Leadership GAP

Can today’s leadership team run a business four times larger?

If not:

Who is missing?

Capital GAP

How much capital will growth require?

Working capital?

Equipment?

Acquisitions?

Technology?

Systems GAP

Can current systems handle four times the transaction volume?

Governance GAP

Does founder-centric decision-making scale nationally?

People GAP

What skills will be required?

Brand GAP

Is the brand known outside WA?

Capability GAP

Can the organisation integrate acquisitions, enter new markets or manage dispersed operations?

Now the BHAG begins to mean something.

The Three Vehicles for Closing the Strategic GAP

Once the gap is understood, leadership must decide how to close it.

In broad terms, there are three primary strategic vehicles:

Organic growth

Build what you need internally.

Acquisition

Buy businesses, assets, capabilities, customers or market access.

Alliances and joint ventures

Access complementary assets and capabilities through others.

Most ambitious strategies ultimately use some combination.

The correct choice depends on:

time;

capital;

risk;

existing assets;

capabilities;

market structure;

strategic urgency.

Organic Growth: Can You Build Your Way There?

Organic growth may involve:

new customers;

new products;

higher prices;

new markets;

increased capacity;

better sales conversion;

improved distribution.

It often provides greater control and can carry lower integration risk.

But it takes time.

During my period leading Standard Bank Retail Collective Investments, we pursued aggressive organic growth supported by significant strategic assets: a major banking brand, financial strength, national distribution, people, systems and product-development capability.

We were not simply announcing ambitious numbers.

We had assets capable of supporting the strategy.

During my tenure, Assets Under Management and revenue increased by ~ 7-fold, while market share increased from approximately 5% to 12.8%.

The lesson is important:

Ambition was supported by strategic capacity.

Acquisition: Can You Buy What You Lack?

Sometimes organic growth is too slow.

Acquisition can close strategic gaps quickly.

You can acquire:

customers;

revenue;

geography;

people;

technology;

distribution;

capabilities;

market share.

When establishing my third business, we recognised that financial services was a mature, highly populated and competitive market and that organic growth alone was unlikely to achieve our ambitions quickly enough.

We therefore pursued acquisition-led growth.

Over time, we successfully negotiated four acquisitions and grew from a small initial client base into a diversified financial-services organisation with approximately 1,500 client accounts.

But acquisition is not a magic wand.

Buying revenue without the capability to integrate it can destroy value.

The BHAG must therefore be matched by M&A capability.

Alliances and Joint Ventures: Can You Access Rather Than Own?

This may be one of the most underutilised strategic options available to SMEs.

When I co-founded Blue Horizon Global Asset Management, we faced an obvious problem.

We wanted to compete against major established investment groups.

They possessed strategic assets we did not:

brand awareness;

financial strength;

technology;

large client bases;

established distribution.

Trying to recreate all those assets organically would have taken years and enormous capital.

Our solution was an alliance-led strategy.

We partnered with organisations that possessed complementary strategic assets and capabilities, including the 3rd largest global investment management group, and major South African financial institutions, and combined what each party did well.

The result was access to brands, products, capital, systems and extensive distribution that a start-up could never realistically have built quickly on its own. Within approximately 3-4 years, the business had raised around A$200 million in investment funds.

The lesson:

You do not necessarily need to own everything required to achieve your BHAG, but you must know what you lack and how you will access it.

What My Own Experience Has Taught Me About Strategic Reality

Across banking, investment management, property development, financial services, M&A and SME advisory, I have experienced ambitious strategies pursued through all three growth vehicles.

And one lesson repeatedly emerges:

Strategy is about fit.

Fit between:

ambition;

environment;

opportunity;

strategic assets;

capabilities;

capital;

leadership;

execution.

At Kenton Eco Estate, for example, our extraordinarily ambitious 380-hectare, 330-home beachfront development required far more than a compelling vision.

It required:

capital raising;

bank funding;

rezoning;

environmental approvals;

civil engineering;

government negotiation;

infrastructure;

water solutions;

legal defence;

marketing;

sales.

Approximately A$17.5 million in seed equity was raised, followed by the complex work required to progress the project through approvals, infrastructure and commercialisation.

The vision mattered.

But the vision alone achieved nothing.

The strategic assets, capabilities, relationships, capital and execution mechanisms made the vision possible.

When a BHAG Becomes Dangerous

A badly conceived BHAG is not harmless motivational fluff.

It can damage a business.

It can drive reckless capital allocation

Management invests ahead of realistic demand.

It can encourage excessive debt

The balance sheet is stretched to fund an aspiration unsupported by cash flow.

It can create bad acquisitions

Leaders chase revenue simply to hit a headline target.

It can distort incentives

Employees pursue volume rather than profitable value creation.

It can exhaust people

Teams are continually told to achieve impossible targets without sufficient resources.

It can destroy credibility

If leadership repeatedly announces grand ambitions that are never achieved, employees stop believing.

It can create strategic blindness

Leaders become emotionally attached to the destination and ignore evidence that assumptions have changed.

There is a crucial distinction:

A BHAG should stretch reality, not deny reality.

How to Stress-Test Your BHAG

Before approving an ambitious long-term goal, I would ask the leadership team and board to answer the following questions.

Environmental reality

Is the market sufficiently large?

Is it growing?

What external trends support or threaten the goal?

What regulatory, economic or technological changes matter?

Competitive reality

What market share would achievement require?

How will competitors respond?

Why should customers choose us?

Strategic asset reality

What assets do we already possess?

Which genuinely provide advantage?

What must we acquire?

Capability reality

What must we be exceptionally good at?

Can we do those things today?

If not, how will we develop or access those capabilities?

Financial reality

How much capital is required?

What happens to cash flow?

Working capital?

Debt?

Returns?

Leadership reality

Does today’s leadership team have the experience to lead tomorrow’s organisation?

Execution reality

What milestones must be achieved in:

Year 1?

Year 2?

Year 3?

Downside reality

What if:

revenue grows half as quickly?

costs rise 20%?

capital becomes expensive?

a major customer leaves?

an acquisition fails?

A credible BHAG should survive intelligent challenge.

If nobody is allowed to challenge it, you do not have strategy.

You have dogma.

Practical Recommendations for SME Owners and Leaders

1. Keep the ambition

Do not abandon bold goals merely because they are difficult.

Ambition stimulates progress.

2. Separate aspiration from strategy

Your BHAG is the destination.

It is not the roadmap.

3. Conduct rigorous environmental analysis

Understand:

market;

customers;

competitors;

technology;

regulation;

economics.

4. Inventory your strategic assets

Identify what genuinely creates advantage.

5. Assess critical capabilities separately

Ask what the organisation can reliably do, not merely what it owns.

6. Define the future-state requirements

If the BHAG were achieved, what would the organisation need to look like?

7. Conduct a rigorous GAP analysis

Compare current state against required future state.

8. Choose the correct growth vehicle

Organic?

Acquisition?

Alliance/JV?

Or a combination?

9. Build a three-year strategic roadmap

Translate ambition into milestones.

10. Distil it into a 12-month business plan

Assign:

priorities;

ownership;

KPIs;

budgets;

deadlines.

11. Stress-test the financial model

Use sensitivity analysis.

What happens under downside scenarios?

12. Review the BHAG periodically

The environment changes.

Strategy must adapt.

Key Takeaways

• A BHAG should be bold, clear and compelling, but ultimately grounded in strategic reality.
• Ambition without analysis is not strategy.
• Start by understanding the external environment before setting aggressive growth targets.
• Distinguish the total market opportunity from the portion your organisation can realistically access.
• Strategic assets are what you own, control or access; critical capabilities are what you can reliably do.
• Competitive advantage depends on how effectively relevant resources and capabilities are deployed.
• GAP analysis identifies what separates today’s organisation from the organisation required to achieve tomorrow’s ambition.
• Strategic gaps can generally be closed through organic development, acquisition, alliances, or combinations of all three.
• Every BHAG should be tested against financial, leadership, operational and execution reality.
• A BHAG should stretch reality—not deny it.

Frequently Asked Questions

What does BHAG mean?

BHAG stands for Big Hairy Audacious Goal, a concept popularised by Jim Collins and Jerry Porras in Built to Last. It describes a bold, compelling long-term goal intended to stimulate progress.

Is a BHAG supposed to be realistic?

It should be highly ambitious and stretch the organisation significantly, but Collins has also described audacious aspirations as ultimately achievable. Ambition should not be confused with fantasy.

What makes a bad BHAG?

A bad BHAG is unsupported by credible environmental analysis, strategic assets, capabilities, capital or an executable pathway.

What is environmental analysis?

It examines external factors affecting strategy, including markets, customers, competitors, economics, regulation, technology and broader social or political trends.

What are strategic assets?

They are valuable tangible or intangible resources an organisation owns, controls or can access that contribute materially to strategic objectives or competitive positioning.

What are critical capabilities?

Critical capabilities are things the organisation must be able to do reliably and effectively to execute its strategy.

What is the difference between strategic assets and capabilities?

Assets concern what you have or can access. Capabilities concern what you can reliably do with them.

What is strategic GAP analysis?

It compares the organisation’s current state with the future state required to achieve its strategic objectives and identifies what is missing.

How can an SME close strategic gaps?

Primarily through internal or organic development, acquisition, strategic alliances and joint ventures—or a combination.

Why is financial modelling important when setting a BHAG?

Because growth requires resources. Financial modelling tests capital requirements, profitability, cash flow, debt capacity, working capital and downside risk.

Should SMEs use BHAGs?

Yes, where they create focus and ambition and are supported by rigorous strategic thinking.

How often should a BHAG be reviewed?

The long-term aspiration may remain relatively stable, but its assumptions and strategic pathway should be reviewed at least annually and whenever major environmental changes occur.

Can acquisitions help achieve a BHAG?

Yes. Acquisitions can accelerate access to revenue, customers, geography, people, technology and capabilities—but require strong acquisition and integration capabilities.

Can strategic alliances substitute for acquisitions?

Sometimes. Alliances can provide access to assets and capabilities without requiring ownership, reducing capital requirements while potentially accelerating market entry.

What role should a board play?

The board should challenge assumptions, test strategic feasibility, assess risk, monitor execution and ensure ambition remains connected to reality.

Conclusion: Dream Big—but Earn the Right to Believe Your Own BHAG (Strategic Planning Perth)

I like ambitious people.

I like ambitious businesses.

I like leaders who refuse to accept mediocrity.

Some of the most rewarding experiences of my career have involved pursuing objectives that, at first glance, appeared extraordinarily difficult.

Transforming an investment business.

Building an asset-management company from scratch.

Competing against enormous global organisations.

Raising millions in capital.

Developing a 380-hectare property project.

Building businesses through acquisitions.

None started with small thinking.

But here is the distinction I have learnt over almost four decades:

Bold ambition becomes strategy only when you understand what must be true to make it achievable.

A BHAG cannot exist intelligently in isolation.

It must sit within a chain of strategic logic:

ENVIRONMENT

↓

OPPORTUNITY

↓

STRATEGIC ASSETS

↓

CRITICAL CAPABILITIES

↓

DESIRED FUTURE STATE

↓

GAP ANALYSIS

↓

STRATEGIC CHOICES

↓

RESOURCES & CAPITAL

↓

EXECUTION

↓

RESULTS

Miss several links in that chain and your BHAG may simply become an expensive fantasy.

I have seen business owners decide they want to double, triple or quadruple revenue because the number sounds exciting.

But ask:

Why $100 million?

Silence.

What is the addressable market?

Unclear.

What market share does that imply?

Unknown.

What strategic assets support it?

Not considered.

What capabilities are missing?

Not assessed.

How much capital is required?

Not modelled.

Who will lead the organisation at that scale?

“We’ll work that out.”

That is precisely when I start wondering:

Is your BHAG bullshit?

Not because the ambition is too large.

But because the thinking underneath it is too shallow.

A genuine strategic ambition should become stronger under scrutiny—not collapse under questioning.

One of the most important roles I play when working with SME owners, leadership teams and boards is not to suppress ambition.

It is to pressure-test it.

To ask:

What evidence supports this?

What assumptions are we making?

What would have to be true?

What do we have?

What do we lack?

Can we build it?

Can we buy it?

Can we partner for it?

Can we finance it?

Can we execute it?

And what happens if our assumptions are wrong?

This is particularly important for SMEs because resources are finite.

A global corporation may survive a billion-dollar strategic mistake.

A privately owned $20 million business may not survive one badly conceived acquisition.

A family business may have the family home, retirement savings and decades of accumulated wealth tied to the organisation.

Being realistic is therefore not the opposite of being ambitious.

It is what makes responsible ambition possible.

The resource-based view of strategy reinforces the importance of resources and capabilities in creating sustainable competitive advantage, while strategic fit requires leadership to consider those internal strengths in the context of the external environment.

That leads to what I believe is one of the most useful questions a leadership team can ask:

Given the environment we expect to face, the strategic assets we possess, the capabilities we can reliably deploy and the gaps we can realistically close—what should we aspire to become?

Notice the sequence.

Not:

“What huge number would look impressive on a PowerPoint slide?”

But:

“What can we credibly build—and what extraordinary things might become possible if we deliberately close the gaps?”

That is strategic ambition.

Set the BHAG.

Make it bold.

Make it uncomfortable.

Make it exciting.

But then interrogate it relentlessly.

Understand your environment.

Know your strategic assets.

Assess your critical capabilities.

Define the future state.

Identify every major GAP.

Choose how you will close each one.

Build the financial model.

Stress-test the assumptions.

Assign responsibility.

Create milestones.

Measure progress.

Correct course.

And remain realistic enough to change when reality changes.

Because there is nothing wrong with dreaming extraordinarily big.

But if you cannot explain how your environment, strategic assets, critical capabilities, capital and execution pathway make that dream plausibly achievable, you may not have a BHAG.

You may simply have bullshit with a number attached to it.

For SME owners and leadership teams in Perth and across Western Australia, an experienced Business Advisor, Fractional CEO or Non-Executive Chairman can provide the independent challenge required to test ambitious goals, conduct strategic and GAP analysis, identify capability deficiencies and translate aspiration into an executable strategic plan.

The goal should never be to make your BHAG smaller simply because it is difficult.

The goal is to make your strategy strong enough to justify the ambition.