There are three key questions every leader needs to ask in the quest to scale up their business :
- Do we have a winning strategy?
- Can all the employees state the company’s strategy in a simple and clear manner?
- More importantly, is the strategy we have driving sustainable growth in total revenue and gross margins?
When Domino’s Pizza was founded, about half a century ago, it had one simple strategy that worked for them making them billions. The strategy: Get your Pizza in 30 minutes or less; or it’s absolutely free. That was in the age of fast food; in the new age quality comes first and now the maxim is food first.
To reflect this change, they recently adjusted their strategy to focus more on the quality therefore slowing down their delivery time. There was backlash at first but soon enough, this new shift brought new growth and their stock price tripled in just 3 years since implementing the change.
For any company that wants to scale up, the key lies in its ability to articulate its differentiated strategy in a clear and concise manner. This should then be supported by a strong culture that will help them to deliver on the brand’s promise.
As a leader, how do you know whether you’ve got a winning, competitor-crushing, industry-dominating strategy? We have found that it boils down to 3 indicators:
- Having sustainable top-line revenue growth and an increasing gross margin are the key financial indicators.
- Repeat customers constantly knocking at your door as they drag along everyone they know is the second indicator.
- Finally, If you are saying ‘NO’ at least 20 times more than you are saying ‘YES’ you are on the right track.(No to the wrong customers for your business model, no to the increasing number of opportunities that are coming your way, no to 19 out 0f 20 people who want to work with you.)
We understand that in the beginning, you might have to say YES to everything and everyone, but you only say YES until you have the luxury to say NO. That is important for every leader to remember. If you have a well- refined strategy, you will know when to say YES but more importantly, you will know when to say NO.
Deep strategy work can be time consuming especially as the marketplace changes constantly. As one great Prussian General Carl Von Clausewitz stated, “Your strategy is only as good as your next encounter with the enemy” (In this case, your competition).For this reason, it’s critical for the senior leaders to work on the strategy of the organisation every week, free from the day-to-day firefighting that is commonplace in growing companies.
Becoming a Grandmaster of strategy
The top strategists are often likened to chess grandmasters. However, there is a common misconception among many that these grandmasters are always thinking 10 moves ahead of the novices and mere masters. The truth is, quoting the great Garry Kasparov, “Normally I would calculate three to five moves ahead,” he said. “You don’t need more…. But I can go much deeper if it is required.”
Their greatest advantage lies in having 10 times the ‘next moves’ in their arsenal depending on the latest move by their opponent. The key is not in thinking steps ahead but in having options.
If business leaders are to develop such an advantage, they need to get different perspectives from advisors, mentors, coaches and consultants, especially those who bring a different view from the one they hold true. This in turn will give them more ‘next move’ options to deal with what might arise in an ever changing business landscape.
Components of a winning strategy
To understand how to formulate a winning strategy, in the subsequent 3 articles, we will look at the components that support its creation and implementation. These components are:
The core of the organisation bridges Strategy with the people involved in its implementation and examines the values, purpose and competencies of an organisation. You will get to understand specific approaches to use to discover each element and leverage the core to create a strong culture though people’s (Human Resource) systems. You will also understand how to prevent a culture drift as the company scales up.
2.THE 7 LAYERS OF STRATEGY
This will provide a guiding framework for putting together a winning strategy by amalgamating some of the best known components of strategy from thinkers like Bob Bloom, Jim Collins, Michael Porter, Frances Frei among others- into a single powerful framework.
3.THE STRATEGIC PLAN
Here we give you a step by step guide to use the above alongside the new SWT (Strengths, Weaknesses and Trends) Tool- augmented from the standard SWOT analysis- to help you prepare your strategic plan.
As you set your strategy, it’s important to remember what the reputable business strategists, Gary Hamel says, “For you to pass the real strategy test in business, two things must happen: One, what you are planning to do must really matter to enough customers and secondly, it differentiates you significantly from the competition.”
If you do this and apply the components above, you will have yourself a winning business strategy.