This is an excerpt from The Muppets on Puppets. It's a first-person documentary that Jim Henson made in Pennsylvania in 1968. Keep in mind that this was several years before The Muppet Show existed and a little before his work could even be seen on Sesame Street
In itself, seeing Frank Oz with a full head of hair is almost worth the price of admission. But seeing them turn that baaic puppet into a handful of completely different characters just by rearranging the features? Priceless.
A crucial part of the creative process is fluidity: the ability to change in midcourse and find something better, or more fitting. Henson had it in spades.