Meg Whitman – Be Brave. Most things worth doing are hard
In September 2000, eBay CEO Meg Whitman told analysts that eBay would hit $3 billion dollars in revenue in 5 years. At the time, eBay’s revenue was $430 million. In response, Morgan Stanley Analyst Mary Meker told Whitman: “This is the stupidest thing I’ve ever seen a CEO do. It’s reckless and irresponsible. If you miss, you are a dead woman.”
The above story is from Meg Whitman’s new book:
The Power of Many: Values for Success in Business and in Life
In the chapter Be brave. Most things worth doing are hard, Whitman talks about BHAGS.
So, what are BHAGs?
BHAGS are Big Hairy Audacious Goals. Without a BHAG, or a “stretch goal”, companies risk not reaching their full potential. The goal can’t be too much of a stretch that it is impossible to achieve and demotivates people; nor can it be too small that it fails to energize people to their full capacity and capability. Whitman uses the analogy of fly fishing:
When you are trying to catch them [trout], it’s important to place the fly right in front of their path. Not too far in front, not to the left of right, not right on top of them, but directly in the feeding path, motivating them to speed up and take it.
Did eBay make the goal of $3 billion in revenue by 2005? No, they did $4.5 billion in revenue.
The gravitational pull of mediocrity is strong. There is always a reason why you should go slow, wait for anther quarter, hedge your bets. I like taking bold steps, and I am not afraid of making significant changes. That is the way you achieve things worth doing. If I had set a goal of $2 billion, would we still have hit $4.5 billion? We will never know. I think probably not.
It’s fine to set these goals but it is really about alignment and execution
That goal rallied the troops in a remarkable way. We looked across the entire company and broke down what had to happen: essentially 50 percent annual revenue growth per year for the next four years. We figured out the larger number, the gross merchandise volume that we had to meet, and we broke it down for every country and for every product category in every country. Suddenly, a big company goal looks a lot more manageable…
We challenged every manager to understand his or her team’s responsibility to support our larger goal. It was a rallying cry, and it worked. You can make a big goal feel small by breaking it down, but you can’t make a small goal big.
Many corporations never reach their full potential. Why?
Here are a few reasons:
- Lack of BHAGS and stretch goals at the executive level (wrong CEO; wrong executive management team ( Assumption: that the BHAGs are the right strategic fit for the environment, competitor analysis, markets, products, customer segments and so on. BHAGs down the wrong path is clearly a corporate death march. The Strategy Paradox apropos “… commitment-based strategy with the inescapable need for flexibility”)
- Lack of alignment of goals and the ability of a corporation to cascade BHAGS and associated strategic initiatives and programs down into the divisions, business units, departments, and so on down to the individual contributor level.
- Lack of process maturity and the enablers (collaboration, communication, measurement dashboards) that facilitate cascading these goals throughout the organizations and measuring and reporting on progress to goals in a timely manner
- Failure to hold people accountable for results – at all levels. Not providing individuals with career paths and their own “stretch goals” aligned to strategic initiatives and programs. Wrong person in the job role. Not linking compensation systems and career advancement directly to measurable outcomes and results.
- Complacency and mediocrity infused throughout the organization. That is, not managing the corporate culture to a high performance organization and not managing & developing leadership talent at all levels of the organization.
All of the above is why Boards of Directors (accountable to the shareholders) bring in new leadership who have the courage to do what Meg Whitman cites “I like taking bold steps, and I am not afraid of making significant changes”. Without the above, corporations fall into a spiral of mediocrity and eventual death in a competitive environment. (See Too Big To Fail )
It’s really about courage – at all levels of the organization.
Where to next for Whitman? On September 22, 2009, Whitman announced she would run for governor of California in the 2010 election. It would be interesting to see what a person with a solid track record of business success can do for the financially ailing state of California as governor.
She began her career in 1979 as a brand manager at Procter & Gamble in Cincinnati, Ohio, before moving on to work as a consultant at Bain & Company’s San Francisco office, where she worked her way through the ranks to achieve a senior Vice President position.
In 1989 she became vice president of strategic planning at The Walt Disney Company and in 1991 she joined Stride Rite Corporation before becoming president and CEO of Florists’ Transworld Delivery in 1995.
In January 1997, Ms. Whitman joined Hasbro’s Playskool Division as a General Manager, overseeing global management and marketing of two of the world’s best-known children’s brands, Playskool and Mr. Potato Head.
Whitman joined the fledgling start-up eBay in March 1998, when it had 30 employees and revenues of approximately $4 million; she grew the company to approximately 15,000 employees and $8 billion in annual revenue by 2008.
Fortune Magazine repeatedly named her one of the top 5 most powerful women for her success at eBay.