KEY QUESTION: Can you state your firm’s strategy simply — and is it driving sustainable growth in revenue and gross margins?
Pizza delivered in 30 minutes or less, or it’s free. That simply stated strategy made Tom Monaghan, founder of Domino’s Pizza, a billionaire. (He is now in the process of giving it all away.) A half-century later, Domino’s adjusted its strategy to focus more on quality and slowed service slightly — and growth returned, with the stock tripling in price in just 36 months since the change.
Articulating a similarly clear and differentiated strategy, supported by a strong core culture that can deliver on the brand’s promises, is the key for any company wanting to scale up.
So how do you know when you have an industry-dominating, competitor-crushing strategy? Sustainable top-line revenue growth and increasing gross margin dollars (the true top line for many firms, as we’ll discuss in “The Accounting” chapter) are the two key financial indicators. Customers beating a path to your door, dragging along everyone they know, is another! In turn, if you don’t have a killer strategy, your company will face continuous price pressures as the market commoditizes your products and services.
The other way to know if you have a strategy? Do you say “no” 20 times more than you say “yes” — no to the increasing number of opportunities coming your way; no to the wrong customers for your business model; no to nineteen of the twenty people wanting to work with you (because marketing is getting you a steady stream of applicants!); etc.? We recognize that in the beginning you have to say yes to everyone and everything. But you say yes only until you have the luxury to say no (read that sentence again). Those with a well-honed strategy know when to say yes and more importantly, when to say no.
Deep strategy work is time-consuming, as the marketplace constantly changes. To paraphrase the great Prussian General Carl von Clausewitz, strategy is only as good as your next encounter with the enemy (or decision of your competitor). Therefore, it’s critical that the senior leadership team work on it each week, free from day-to-day firefighting. The tools and routines in the “Execution” section will set you free to do this.
Top strategists are often compared to grandmaster chess players. However, there is a misconception that these players are thinking more moves ahead of mere masters or novices. They are not. Their advantage is in having 10 times the NEXT moves in their repertoire, depending on the latest gambit of their opponent. Therefore, get help from mentors, advisors, and consultants who have developed strategies for hundreds of companies — they’ll have more “next moves” in their bag of tricks.
Keys to Dominating Your Market
Verne’s mentor Hermann Simon wrote the definitive book on privately held growth firms called Hidden Champions of the 21st Century. For an excellent summary of the seven lessons he discerned from studying thousands of mid-market firms that dominate their niches globally, go to http://www.whiteboardmag.com/hidden-champions-1-what-german-companies-can-teach-you-about-innovation/ — it details a key formula for crushing your competition and is worth the 7 minutes to review Simon’s 7 lessons.
In addition, Salim Ismail’s breakthrough book Exponential Organizations: Why new organizations are ten times better, faster, and cheaper than yours (and what to do about it) is a must read if you want to 10x your organization using the same strategies Silicon Valley’s “unicorns” (startups that zoom to $1 billion in valuation) have used to scaleup. For a comprehensive online course by Ismail go to www.growthinstitute.com.
The first chapter, The Core, bridges the People and Strategy decisions and examines the Core of the organization: its Values, Purpose, and Competencies. A strong Core is the foundation for an effective strategy. We’ll share specific approaches for discovering each element, and discuss how to leverage this Core to drive a strong culture through the people (HR) systems — and prevent culture drift as the organization scales. A weakened culture will torpedo any strategy.
The second chapter, The 7 Strata of Strategy, guides you through a framework for constructing an industry-dominating plan. It integrates several of the best-known components of strategy — from Michael Porter, Jim Collins, Frances Frei, and Bob Bloom — into a single framework. The accompanying one-page 7 Strata of Strategy worksheet will help you do the strategic thinking for the One-Page Strategic Plan (OPSP) and determine your company’s Brand Promises, Big Hairy Audacious Goal (BHAG®), and other components.
The third chapter, The One-Page Strategic Plan, introduces the new SWT (strengths, weaknesses, and trends) tool, which augments the standard SWOT (strengths, weaknesses, opportunities, and threats) analysis in preparing your strategic plan. We will guide you through the OPSP and a new one-page Vision Summary, which provides a more visually pleasing and simpler way to communicate your strategic plan.
Four one-page Strategy tools will be covered in this section:
1. 7 Strata of Strategy: a framework for integrating several important strategic components into one coherent plan
2. Vision Summary: a simplified OPSP, useful for sharing your vision with employees, customers, shareholders, etc.
3. SWT: a new strategic-planning preparation tool that augments the SWOT
4. OPSP: a one-page worksheet for capturing the company’s vision, from the Core Values to the Quarterly Theme, and everything else in between
