The 7 levels of creating a winning business strategy

Without an effective, powerful, industry-dominating strategy, you might find yourself spending the next few years creating very little traction in the marketplace leading to a lot of wasted effort, time and resources. To address this challenge, we have integrated some of the best-known strategic concepts into a single comprehensive strategy framework — called ‘The 7 levels of Strategy’ — to help you scale up your business. 

The ‘7 Levels of Strategy’ defines the complete brand — and guides everything you do in your organisation to align with this. It sets the agenda for your strategic thinking team to create and maintain a differentiated, competition-crushing approach to a specific market. There are a few recommended resources to strengthen your team’s understanding of each level. Before you embark on it, understand that it will take a lot of hard work. Which is why we suggest you assign this task to more than one leader in your organisation.

 

What are the three tests of a winning strategy?

A winning strategy has three important characteristics:

1. It can be communicated easily. 

If you can’t articulate your strategy in a simple way, then it will be very difficult for you to explain it. This means your team and potential customers will have a difficult time understanding it. 

When Dominos entered the market, they had a simple strategy based on their product delivery “30 minutes or it’s free”. All they had to focus on was executing that strategy, and it led to their tremendous success.

 

2. It is clearly differentiated.

You can’t just say that you are different. You must aim to truly be different. 

If you’re doing the same thing that everybody else is doing, then you’re not different. That sounds like a pretty obvious statement, but it highlights a fundamental point that many organisations overlook.

Toyota offers an example of differentiation through one of its hiring practices. When they realised that the automotive industry usually hires from the same pool of talent, they decided that they would go in a different direction.

Toyota decided that one of the hiring requirements for every new factory it opened would be that the applicants must not have any prior experience in the auto industry. The reasoning behind this: it might not be easy for experienced staff to replace the prior knowledge attained from former jobs with new knowledge.

 

3. It is integrated in everything you do.

3M, with over 100 years of history , keeps itself on its toes and ahead of its competitors by incorporating innovation across all their ideas and execution. They define Innovation as one of their core values, their purpose, their number one brand promise, and it’s also their most important KPI.

By ensuring that everything they do spins around the strategy of innovation, 3M achieves more than 30% of its revenue from products that are less than four years old.

The point is, you need a strategy that can be easily communicated, is clearly differentiated and is integrated in everything you do. It’s even better if you can simplify your strategy down to a few words.

So how does your company create a winning strategy that incorporates these three characteristics? This is where the 7 levels of Strategy tool comes in. 

Let’s explore the decisions you need to focus on to create the ‘7 levels of Strategy’.

1. Own a Word or Phrase in the marketplace
2. Declare and build on your Brand Promise
3. Establish a Catalytic Mechanism (Brand Promise Guarantee)
4. Create your One-Phrase Strategy
5. Outline 3-5 activities that differentiate you.
6. Discover your Cutting Edge: The “X Factor”
7. Measure Your Profit per X against your 10- to 25-year goal.

 

1. Own a Word or Phrase in the marketplace

Owning a phrase or word in the marketplace is not about having a catchy slogan for customers to remember you by. Instead, it’s about how this word or phrase guides your organisation to create a unique experience for your customers. 

Here is how  a few companies do it with the words they own:

• Ikea: Flat-packed
• Dell: Be direct
• BMW: Driving Experience
• Southwest Airlines: Wheels Up
• Volvo: Safety
• Toyota: Reliability

If we study three of these examples, you’ll see that at the heart of each one, is a clever strategy of overcoming the constraints faced in their industry. 

For Southwest Airlines, they understood that airlines make money every time they are in flight. So they aligned their execution and strategy to get their “Wheels Up” quicker and more often than any of their competitors in the marketplace.

In the furniture business, one huge challenge most companies face is the storing and shipping of irregular shaped objects which leaves a whole lot of air in packages that costs the companies a lot of money. Ikea’s simple solution: Make everything Flat-Packed. By switching to making furniture that was flat-packed, they were able to save a lot in storage and delivery costs. With this approach, IKEA’s profitability is a staggering 13% compared to the 2% industry average. 

Michael Dell, the founder of Dell, brought in an advisor, Tom Meredith to help him scale his business. Tom advised Michael that his biggest challenge was sitting on about 2 months’ worth of inventory and parts, with the value of the inventories continually dropping weekly. 

He helped Dell describe a guiding strategy in two simple words: Be Direct. As a result, they started building a computer only after it had been ordered, hence reducing  the time a component sits in inventory from 63 days to just 4 days. With this business strategy, Dell scaled up into the billion-dollar company you know today.

Think of globally known brands and your competition and try to see the words they own. It will help you find your own words that you would like to be known for. In the end, owning a piece of the mind-space within your target market, whether it’s the local neighbourhood, an industry segment, or even the world, is what branding is all about. If you want to hurt a competitor, steal its word, just like Google did with Yahoo, becoming the “search” engine of choice.

Since more than 80% of all customers search the Internet to find the best options for purchasing services and products, you need to dominate these search engines for the words you want to be known for. The important thing is owning words that matter — the ones that people think about and use while searching for your products and services. 

Next, follow the advice of author David Meerman Scott, who in his book,  ‘The New Rules of Marketing & PR: How to Use Social Media, Online Video, Mobile Applications, Blogs, News Releases, and Viral Marketing to Reach Buyers Directly’ argues that,“You are what you publish.”

Hire videographers and writers on your team to help videos, create case studies and white papers that organically catch the attention of the media and search engines. These should aim to educate the customers about the words you want to own. Images and videos have dominated over text ever since Google made its $1.65 billion purchase of YouTube.

If you can only focus on one of the 7 levels, then choose this one. It’s the most important in driving up your revenue. The other levels help you to defend your niche, simplify and automate execution, and turn your revenue into a huge profit.

 

2. Declare and build on your Brand Promise

There are 4 important questions to focus on in Level 2 of your strategy:

1. Who and Where are your core customers? 
2. What (product or service) are you selling to them?
3. What are your 3 Brand Promises?
4. What methods do you have in place to measure whether you’re keeping those promises (Kept Promise Indicators)?

 

A. Who and Where are your core customers? 

Dave Conti and Robert Bloom, in their book ‘The Inside Advantage: The Strategy That Unlocks the Hidden Growth in Your Business’, call on companies to get crystal clear about Who and Where their core customer is. They define this as ‘the customer from whom your business can get the most profit over the longest time’.

David Calhoun and Rick Kash, authors of ‘How Companies Win: Profiting From Demand-Driven Business Models No Matter What Business You’re In’, also argue that that there is a niche within any given industry which represents less than 10% of the total customers but holds a disproportionate percentage of the profit — what they term ‘profit pools’.

The fundamental idea behind this approach is that by going after these niche ‘profit pools’ you get to dominate profit share, rather than market share. If you can get a few customers from the market who are willing to pay the margins, then you’ll end up owning more profit share than your competitors. 

To understand this, let’s take a look at Ikea. They only have 7% of the global market share in the furniture industry, yet this small group represents about 30 billion dollars of profits per year. 

Once you know more specifically who your customers are, it’s much easier to know where to find them. 

An example is the online business BuildDirect.com, an innovative marketplace for selling and purchasing and home improvement & flooring materials that defines their core customer as ‘Debby the Do-It-Yourselfer’. They do not simply generalise to women aged between 35 to 55. For them, Debby represents a very specific persona whose habits can then be predicted to find where she can be reached. What publications does she read, in what sites does she shop and what specific products is she searching for?

B. What (product or service) are you really selling them?

Conti and Bloom further suggest that the primary mistake that organizations make in describing what they sell is to focus on the features and benefits. What you need to remember is that all sales are emotional, first initiated through feelings and then justified logically by the head. That is the reason why established brands often play on people’s fear of buying from new entrants in the marketplace.

An example which Conti and Bloom use in their book is Summit Business Media (now Summit Professional Networks). They say that they offer “the indispensable source of authoritative information, data and analysis for the well-informed financial professional.” The idea that the company helps its clients stay well-informed and is irreplaceable, plays to the emotional needs of the financial professional as much as it does to their business needs. 

Calhoun and Kash add that the What must include a 100% solution. Many business leaders are easily distracted by the next new thing or shiny objects; quickly moving on to another niche, product line or distribution model before fully locking down the existing one with an offering that completely does the job a customer needs to accomplish.

C. What are your 3 Brand Promises?

For you to niche down on your ideal customer, who will in turn be your die-hard fan, you need to offer them a unique brand promise and aim to be so good at it, that they will not care if you’re terrible at everything else.

It’s about using what we can call trade-offs. Here is a breakdown of how this works.

First, get your team to list down about 10 to 15 things that your marketplace wants from your business. Then select a maximum of 3 things that you will aim to excel at. These, and only these, 3 become your brand promises. The other items on the list then  become your ‘anti-brand’ promises- what you decide that you will not focus on at all.

McDonald’s defines its 3 measurable brand promises as speed, consistency, and fun for kids. Over time, this has become the 3 things you are certain you will get in any McDonald’s establishment worldwide. For this reason, it would be an easy pick at noon on Saturday for a family who are looking for a place where they can grab something to eat with their 3 children without standing in a long line, and also get a few minutes of peace while their youngest two play in the indoor playground. 

However, for someone looking for a place to go on a date night or a proposal, McDonald’s may not offer much value. 

Another example is FastCat, which is a ferry service company in the Philippines that focuses on being safe, fast, and convenient. They even express these brand promises in their brilliantly coined slogan, “FerrySafe, FerryFast, FerryConvenient”.

Whenever you get on a FastCat, you are certain you will not get gourmet food or first-class seating but that’s okay. By simply delivering on just these 3 promises, FastCat is  today one of the fastest growing transportation companies in Southeast Asia.

 

D. What methods do you have in place to measure whether you’re keeping those promises (Kept Promise Indicators)?

Any promise is worth nothing if you don’t keep it. And we all know that broken promises lead to negative word-of-mouth publicity and subsequently, lost customers. Therefore, it’s vital that you have a daily measure of whether you’re keeping your promises or not. 

Rackspace Technology, a company offering cloud-based hosting, is one company that has mastered the art of keeping their Brand Promise. Over time, they have built their brand around one main promise of “fanatical support.” This phrase guides everything they do and is proudly displayed right in the middle of its website stating: “Fanatical Support: Over 1,400 trained cloud specialists, ready to help.”

The founders decided on this after determining that the biggest frustrations for their core customers were: 

• Constant system downtimes and outages.
• Inability to get someone quickly on the phone to help with the situation.
• A bad experience of being transferred to a more qualified service technician because the person who picked the call could often not answer their questions 

The company measures its success in meeting their Brand Promise in 3 ways. 

1. Optimising client’s site uptime. The company offers a money-back guarantee if there’s any system outage.. 
2. Every customer call should be answered in three rings. If there is a problem, and a customer calls in, that call should be answered in three rings or less. To help in this, Rackspace instals red lights in its call centres that start to spin if a call is getting ready to go to a fourth ring. 
3. No call transfers. Any call is answered by a level two tech so that the customer doesn’t get transferred.

That’s exactly what the customers want. 

By focusing on keeping their brand promises, they grew their market cap to more than 6 billion dollars in about a decade and were bought by Apollo for 4.3 Billion dollars in August of 2016 .

 

3. Establish a Catalytic Mechanism (Brand Promise Guarantee)

Once you are clear on your brand promise and have announced it, you then need to establish a catalytic mechanism that costs you if you break your promise. Think of this as your brand promise guarantee.

Jim Collins, in his  Harvard Business Review article titled, “Turning Goals Into Results: The Power of Catalytic Mechanisms”, describes how you can go about setting up your Catalytic mechanism. 

According to him, You need to feel the pain of breaking a promise; otherwise, it will be too easy to let the moment pass since there are no consequences. This is why he labelled what we normally call a Brand Promise Guarantee  as “a catalytic mechanism.” 

A catalytic mechanism has the following characteristics:

• It produces the desired results in unpredictable ways. 
• It distributes power for the benefit of the overall system. This often happens at great discomfort to those who have traditionally held power.
• It has teeth.
• It ejects viruses from the system
• It produces an ongoing effect.

The Brand Promise Guarantee also reduces the fear that some customers might have of buying from you. 

When it was just starting out, Oracle took out full-page ads on the back of Fortune magazine promising its customers that enterprise software would run twice as fast on its database software as on competitors. If it didn’t, Oracle would pay the customer $1 million. It later upped the ante offering a similar guarantee on its Exadata servers, with a higher reward of $10 million.

For Dominos, their customer getting a free pizza is the guarantee behind their promise of delivering your pizza in 30 minutes or less. 

You might not have the budget to pay such a high cost but you can still offer a guarantee.  For professional service firms a sustainable but still painful route might be offering “short pay” guarantees. This involves giving your client the option to pay whatever they think is reasonable if there are any issues with the delivery of your service. Although 99% of clients will not send less, the existence of the guarantee will give them confidence to do business with your firm and encourage them to share their concerns freely.

Jim Collins’ article gives many more examples,  as does the marketplace, especially  when you are attentive to what other companies are doing to guarantee their brand promises.

 

4.Create your One-Phrase Strategy

Once you’ve established your 3 brand promises, the next step is to amalgamate them with a one-phrase strategy. 

Anne Morriss and Frances Frei in their book, ‘Uncommon Service: How to Win by Putting Customers at the Core of Your Business’ argue that for your company to be successful and highly profitable, you must be willing to dare to be bad. To do this, you need to risk upsetting or alienating a large segment of potential customers.

The first 3 levels of strategy we mentioned— Owning mindshare in your industry, Declaring and building on your Brand Promise, backing up your promise with a guarantee — are all expensive to accomplish. The ever-increasing customer demands as well as  competitors chipping away at your margins through the “Added services and feature set” wars, do not make things any easier 

This is why it’s vital for every company to identify its One-Phrase Strategy. This is a phrase that acts as the key lever in your business model and drives profitability while helping you decide on which customer preferences to meet and which ones to ignore.

To elaborate, let’s look at Apple, whose One-Phrase Strategy has been having a “closed architecture,” This is what brings them their phenomenal profitability and although heavily criticised in their industry, it also serves as one of their most powerful blocking strategies. The other tech-giants Microsoft and Google are beyond the point of no return in terms of their systems and to close their open systems now might be catastrophic to their survival. 

Just to note, most of the consumers do not find the trade-offs worth it, but it hasn’t stopped Apple from being the most valuable tech-company in the world.

Another example is IKEA’s business model that is based on “flat packed furniture.” Because IKEA does not have to ship or store air, as happens when you warehouse and transport irregular shaped parcels, this reduces its costs considerably more than its competitors’, therefore giving them a huge advantage in terms of price advantage; which is their leading brand promise. When you add in well designed products and the best Swedish meatballs on the planet, you get 3 Brand Promises that outweigh the many things people hate about IKEA — and it’s a long list!

Why would you make your customers drive out of their way to visit a labyrinth-like warehouse, only to have a lengthy shopping experience. Add the need for self-assembly after the purchase, and it’s crazy to imagine anyone would shop at IKEA; and there are many people who don’t. 

Yet, these specific trade-offs powering IKEA’s success also serve as a blocking strategy to their competitors. With less than 7% global market share, IKEA sits pretty as the largest and most profitable global furniture chain.

The overarching point that Morriss’ and Frei make in their book is that great brands do not try to please everyone. Instead, they focus on being the absolute best at meeting the desires/ needs of a small but fanatical group of customers, and then dare to be the absolute worst at everything else. In turn, their competitors, while striving to be the best at everything for everyone, actually achieve greatness in nothing — and end up as being average players, just like everyone else in the industry.

The book ‘Uncommon Service’ offers more examples and walks you through how to both “be great” and “be bad” the right and highly profitable way. It takes nerves of steel to alienate or ignore 90% of your customers and focus instead on the 10% who are fanatical about you and are willing to put up with your crazy trade-offs.

 

5.Outline 3-5 activities that differentiate you.

Nothing stops your competitors from pursuing and owning the same words in your industry, or from making the same Brand Promises, or even offering the same guarantees as you do. What differentiates you from them, according to strategist Michael Porter, in his Harvard Business Review article titled “What Is Strategy?”, are the activities you do.

What reinforces the One-Phrase Strategy is the unique set of actions that guide how you execute your business in a different way from your competition. 

Kevin Daum, the author of ‘ROAR! Get Heard in the Sales and Marketing Jungle: A Business Fable’, adds that, “An activity can only be considered as a true differentiator if it’s something that your competitor can’t or won’t do without great expense or effort. Often, these activities can take many years to develop, reinforce and be fully incorporated in your operations. If it can be done easily, cheaply and quickly, then the activity provides very little or no competitive advantage.”

For this reason, we recommend you zero in on 3-5 activities that you are willing to do for at least 3-5 years that align with your 3 Brand promises and One- Phrase strategy until they are part of your culture.

As a guide, let’s look at Southwest Airlines again, with their underlying strategy of “Wheels Up”, which means ensuring that once their planes land, they are back flying quicker and more often than their competitors’. In line with their strategy, they set 3 brand promises to help them to achieve this by offering lower fares, more flights, and being more fun. 

It’s good to note that any other airline could have copied these brand promises, but the real differentiation can only occur in the activities and how you make it happen. So let’s look at the differentiating activities that Southwest Airlines executed in order to meet their brand promises. 

So as to differentiate their prices and offer low fares, Southwest Airlines waived the baggage fees which every other airline charged. They also decided to use only one type of aircraft, the Boeing 737, for their fleet. This meant that they could reduce the number of repair parts needed for maintenance and also gave them more flexibility to swap pilots when they needed to, allowing them to get the plane back in the air as efficiently as possible..

They also decided to scrap “advance reservation” for passenger seating. This in turn resulted in the passengers rushing to board the plane so they could secure the best seats. The result? The airline could now load and unload their planes 15 minutes faster than other airlines, which allowed them to fit more flights in one day. 

In-flight meals were also scrapped, which meant saving on the additional time that would have been spent loading food trays before every flight as well as having extra cleaning to do. 

Finally, they abandoned the common hub-and-spoke transit model and opted to operate on a point-to-point transit model instead. This meant that they did not have to invest in expensive infrastructure to support the hub-and-spoke model, allowing them to reinforce the low-cost advantage they have in the marketplace.

As a guide to establishing your differentiating set of activities read Anne Morriss and Frances Frei’s book, ‘Uncommon Service: How to Win by Putting Customers at the Core of Your Business as well as Michael Porter’s article,  this will help ensure that ‘HOW’  you run your business is different from the industry norms, helps drive tour profitability, and blocks out the competition. 

It will certainly be a lot of work to selecto and work on the activities to accomplish, but ultimately, it’s your only source of differentiation. Do the work!

As Porter well puts it, “Any organisation can outperform its rivals only if it establishes a difference that it can preserve for a long time.”

 

6.Discover your Cutting Edge: The “X Factor”- Your 10x-100x Underlying Advantage.

Building a highly scalable business is not just about getting ahead of your competition, more importantly, it’s about staying ahead too. The key to staying ahead is by digging deep to discover your edge- your company’s X factor. 

This is what has allowed companies such as Starbucks, Apple, Tesla and Outback Steakhouse to dominate their industries. By finding that elusive X factor, i.e an exponential advantage that put them at least 2 times ahead of competitors in a key area such as employee retention or pricing, they were able to leap so far ahead that they left their competition gasping for breath, unable to catch up.

If you want the same level of success, finding your company’s X factor and putting it to work for you should be your top priority. (Keeping it as quiet as possible to avoid your competitors catching on should be the obvious next step).

Let’s look at Outback Steakhouse, an American chain of Australian-themed dining restaurants, that now has over a thousand locations in 23 countries throughout Australia, Asia, North and South America, and see what they did differently to set themselves apart. 

When they were starting out, Chris Sullivan, the founder of Outback Steakhouse, set the company on an exponential growth trajectory by focusing on one powerful X-Factor that he discovered. 

He had worked extensively in the restaurant industry and from his experience, he knew the main challenge faced by large restaurant chains was maintaining consistency in the food service and quality. This knowledge led him to a deeper search to find out why this happens. In his search and discovery, he concluded that this mainly occurred due to the large restaurant industry having an average turnover of six months for the general managers in stores.  

This statistic was at that time considered to be “the norm in the restaurant business.” The good managers would typically be moved around to other departments or outlets to take over for bad managers, and great managers would ultimately leave to start their own restaurants.

As he recognized the manager turnover as the choke point in the industry, Sullivan brought his team together and they asked themselves a key question: “What if we could find a way to keep a good or great restaurant manager in the same restaurant for 5 to 10 years?” If they managed to do it, it would represent a 10 or 20 times improvement over the other restaurants in the industry.

The solution Sullivan thought of was to institute a differentiated compensation plan for the managers. Anyone interested in becoming a manager would be asked to first “invest” $25,000 in an Outback restaurant!

Let’s step back for a minute. 

Imagine that one of your children comes home and shares with you that he has found a job managing a restaurant. Soon after expressing your initial excitement or skepticism, you then ask the all-important question: “So what does this job pay?” Upon which he explains that, well, it’s he that actually needs to pay the company a whooping $25,000 to get the job! 

What would your reaction be? (That’s what I thought)

This was the deal that Sullivan pioneered: Each new manager would invest $25,000 and commit to staying in the restaurant for at least 5 years. Outback Steakhouse would then take the first 3 years to train them on how to run a restaurant and pay them a competitive wage. In the last two years, the managers would then get to run a restaurant on their own. If they hit certain performance targets by the end of the 5th year, they would then get a $100,000 bonus, a 4 times return on their investment, which would be paid out over the next four years. 

However, if they chose to sign on to stay at the same restaurant for another five years, they would receive the $100,000 bonus in one lump sum, and get an additional $500,000 in stock which would vest over the next 5years.

As a result, the company turned a bunch of people, many who joined as 20 year olds, into millionaires since 90 percent of the managers stayed in the same restaurant for at least 5 years, while 80 percent stayed on for over 10 years. 

Most importantly, Sullivan’s theory proved correct. The longevity of the management led to having consistency in service and the food, which helped Outback Steakhouse become the 3rd largest restaurant chain in America and the most profitable with over  3 billion dollars in annual revenue.

So how do you figure out an X-Factor for your company? One you can start with is by asking this yourself and your team a version of these 3 questions: 

• What is the one thing I detest the most about my industry? 
• What drives me nuts about how things are done? 
• What choke point is slowing down the company’s growth? 

You might find the answer to be a massive time factor or a cost factor or something along those lines. The biggest challenge you might face in this exercise is that when you are too close to the situation you might have become as blind as everyone else to the real problems which you too have accepted as the industry norms.

One clue to finding the X-Factor can be found by going back to your last 10 association or industry expos and meetings and collating the titles of different breakout sessions. Put them up on a spreadsheet, and try to see if there is an emerging pattern of the challenges your industry has faced over the past decade. 

Once you focus on these challenges, and figuring out a 10 times or even a 100 times advantage, you’ll have found yourself the X- factor and with it have the upper hand on your competition.

 

7. Measure Your Profit per X (Economic Engine) against your 10- to 25-year goal. 

Once you’ve figured out what your underlying advantage is, you can use it to scale up massively.  

For the final level of Strategy, we have taken a page from Jerry I. Porras’ and Jim Collins’ book ‘Built to Last: Successful Habits of Visionary Companies’, and combined 2 important final decisions. Once the 6 levels are done, you should focus on having: 

1. A single overarching measurable KPI which Collins and Jerry label “Profit per X” and, 
2. A measurable 10 to 25-year goal.

 

A. Your “Profit per X”. 

The numerator in the ‘Profit per X’ (profit part) equation isn’t just limited to profit; it could also be revenue, gross margin, factories, pilots, engineers, nurses etc. What is more important is determining what the denominator will be. The denominator (The X part) is fixed and represents your company’s unique focus to scaling the business while tying back to your One-PHRASE Strategy .

NOTE: This ‘X’ here, (which should not to be confused with the X-Factor in the previous level), represents your unique lens into a market space. 

Let’s get back to Southwest Airlines to understand this better. 

While all the other airline companies were focusing on profit per mile, profit per passenger, or profit per seat, Southwest Airline took a different path. They decided that they would measure profit per plane, which directly tied up to their One-phrase Strategy of “Wheels Up” i.e. trying to get every single plane in the air as soon and as frequently as possible (all of this stuff links together). 

Perceptionist, a small-businesses call centre solutions company, took a similar approach in their business. While everyone else in their industry was focused on profit per minute and revenue per minute, they looked at the industry through a different lens and focused on maximising profit per booked appointment. 

The result: There was a complete turnaround. Whereas Perceptionist had previously been struggling and failing to compete with overseas rivals who offered rates lower than 50 cents a minute, by shifting their focus to this new metric and a few targeted industries (their core customers) who needed their appointments booked,  the company was able to bring in revenue averaging $5 a minute. This was more than 4 times the industry average.

B.Your 10 to 25-year goal.

For most leaders when setting the ultimate long-term, 10- to 25-year goal for their organisation, more often than not, the work that goes into it is very sloppy — resulting in a random statement of aspiration or number that has no real connection to the company’s underlying strategy.

Jim Collins calls this 10 to 25-year goal your BHAG®- Big Hairy Audacious Goal. He places it at the centre of his Hedgehog Concept in the book ‘Good to Great: Why Some Companies Make the Leap… And Others Don’t’, highlighting that it must be fully aligned with every component of your strategy. This is precisely why we’ve made it the seventh and final level. 

The best unit to measure for the BHAG®,  your  10 to 25-year goal,  is the X from the ‘Profit per X’ equation. 

Because Southwest Airlines were focusing on profit per plane, it only made sense for them to set a long-term goal to have X number of planes in the air. Their BHAG was to have 346 planes flying by 2010. Once they knew what their goal was, they could then work out everything else backwards. Not only were they able to achieve their BHAG, they were able to surpass it and now have over 700 planes in their fleet ultimately becoming the most profitable airline.  

 

Putting It All Together

The ‘7 Levels of Strategy’ gives you an effective guiding framework to help you create a differentiated winning strategy that gets you ahead – and keeps you ahead of the competition.

Salim Ismail, the author of Exponential Organizations, whenever he introduces his Exponential Organizations methodology, likes to open by saying , “Anyone can come up with a great idea. The key is in the execution.” 

The same applies here. Anyone can learn a great methodology — the key to success lies in executing it.

Now that you’ve learned the 7 levels that make a powerful growth strategy, the ball is in your court. It’s up to you to get together with your team and make it happen.