• Neil Ide

Unleash the Kraken

Mega-engineering is awesome. Larger than life achievements are exciting, stimulating, and inspiring. A Big Hairy Audacious Goal (BHAG) is a thrill to participate in and orgasmic when brought to completion.

However a BHAG needs to be balanced against some kind of reality. In business a BHAG must also demonstrate a viable commercial future and be able to fit inside existing infrastructure though it may severely stretch its limits.

If you are designing a BHAG, design carefully, there is a balance between fiction-made-real and Commercial Possibility Realized.

Fiction Made Real(FMR) - The Apollo Program

  • Motivation: military supremacy

  • Financial backing: USA

  • Who to beat: Russia

Commercial Possibility Realized(CPR) - 707 the first passenger jet plane

  • Motivation: Commercial air travel is the future of travel

  • Financial Backing: Boeing

  • Who to beat: McDonnel-Douglass (who? EXACTLY.)

The feasibility test

The feasibility test applies only to the PR category of a BHAG. A FMR BHAG never has a viable financial argument that can be made before the project starts.

The test:

  • Can you serve an existing market in a new category?

  • Upon success will the ROI be <5 years?

  • Does infrastructure support the existence of the thing?

To pass the test a perfect score is required. If any of the answers is no then its likely a FMR BHAG and not for private capital. FMR is not bad, it has its place in the universe and performs an extremely valuable function of broadening our horizons (most of the time).

Failing the test

A fail grade happens all the time and these projects don't make it past paper. A hilarious example of a fail grade: a very large semiconductor equipment company for a short time was threatening all of its 316L SS suppliers that they would have to switch to Inconel 625 to continue to serve the company. This was led by a dweeb with the pedigree and personality of the CFO of Enron. For those that don't know it, a 625 part is 20x to 40x more money than a 316L SS part. Semi companies have supply chains that z-pinch pennies, and stomp on dollars to pick up dimes. The 625 switchover, to the surprise of no one ever, died.

Has a fail grade ever been passed anyway?

Yes, and its hilarious every time it happens. I mean, not to the parties involved but from a historical analytical point of view yes.

Ladies and Gentleman, BEHOLD! I give you the Great Eastern!

The SS Great Eastern was an economic shit-show from the day it was conceptualized to the day of its scrapping.

Notice it has over 5x the passenger capacity of the ship that it aimed to beat. The builder of this albatross wanted one thing: to build the biggest cruise ship ever. In that goal they were successful. The project bankrupted everyone.

The maiden voyage of the ship carried 35 passengers from Britain to the US! 35 passengers out of a 4000 capacity! The vessel cost $6,000,000 in 1850 dollars and right off the bat sold for like half that after the shipyard bankrupted.

The vessel was too large for any existing infrastructure and couldn't port; no existing dock could hold it. It took months to even launch this monster because the harbor wasn't dredged properly for it.

The passenger market wasn't even ready for a ship this big and it ultimately lived out its final years as a cable laying vessel. Every time the ship changed hands it sold for <1/2 of the purchased price had a new victim to bankrupt.

Every time there was damage to the ship the repairs were ghastly expensive because no shipyard was setup to work on vessels this big.

The final dagger to the heart of this beast was that when the Suez canal came into existence it was too wide to fit through the canal!

The Lesson

Because you can doesn't mean you should. The builder of the Great Eastern held the largest ship record for 4 decades. But that came at the expense of their entire career. It was their undoing. If you're the big boss of your company or group I also strongly caution you to run the feasibility test yourself. Do not trust this responsibility with anyone that works for you as there is a good chance they will engineer the outcome to be a pass. Why? Most people have been wired to only deliver "yes" answers. This is mostly due to parenting issues.

If you desire FMR BHAGs then you had better go into government service. Otherwise save it for your dreams.

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