The Strategy Decisions
Last month in the August issue, we explored The People Decisions. This month, let’s explore how a Scaling Up Coach would help a local Edmond management team learn the 4 Decisions to Scaling Up their company, with The Strategy Decision.
There are more than 70,000 companies utilizing the 4 Decisions every company has to get right:
Their C-Suite level executives are determined to scale up their companies 10-times larger than they are today.
If you’d like an abbreviated version of the 4 Scaling Up chapters on People, Strategy, Execution, and Cash as a sneak peak, visit my website www.StacyEads.com to request a free copy. No strings attached, just an eight-page PDF. Remember, this Edmond Business column is my community give back to my hometown that has given me so much over my lifetime.
Strategic planning cannot be only an annual retreat endeavor where the notes get stuck in a drawer or an inbox, never to be seen again for 51 weeks the rest of the year.
Verne Harnish, the author of Scaling Up and co-founder of Entrepreneurs Organization is known worldwide for his novel approach to Business Strategy. His proprietary 7 Strata methodology has helped more than 70,000 companies grow their cash position over 20% higher year over year with consistent growth – the true mark of a great scale-up.
The two key questions covered within the Strategy Decision are:
- Can the whole company state your business strategy simply?
- Is your strategy driving sustainable growth?
The whole company . . . simply
The key to having a great business strategy isn’t just in how you create it, it’s in how you communicate it. No one can read your mind. As the owner or CEO, do you have a written, clear strategy that can quickly be communicated to new employees during the onboarding process?
After all, what good is a strategy at the top, if those on the front-lines who meet customers at your front desk, or greet customers on the phone, or deliver the final package to the customer doorstep don’t know your strategic key to making money? After all, they may be more “in touch” with your customer-base than you are in your high-rise corner office.
Southwest Airlines is a favorite example for many business books. Their One-Phrase Strategy of “Wheels Up” is well documented. When planes are on the ground, they aren’t making money. When wheels are up in the air, they are making money. That’s how a Scaling Up coach would help a company state their business strategy – as simply as one phrase. Repeatable, memorable, and worthy of decision-making.
Scaling Up doesn’t believe in just doing things bigger or better, but doing things uniquely different. Harnish often uses the phrase “Change to Strange” in reference to having a more unique blue ocean strategy to your sales, product, or service proposition. (The opposite is of course a Red Ocean of shark-infested waters filled with competitors all cannibalizing the marketplace to climb their way to bigger or better, rather than seeking a Blue Ocean where they can be more unique, than simply better. You can read more on this topic in Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne.)
Strategic 3-5 How’s
Wheels Up as a one-phrase strategy doesn’t just state the obvious that Southwest Airlines makes money when the plane is in the air. It under-girds every strategic decision they make in how they are different. They only fly 737s, which gives them a major strategic advantage for parts, pilots, and mechanics.
Need a part? Need a pilot? Need a mechanic? They all know the plane wing to wing like the back of their hands, while other airlines have a plane unprofitably on the tarmac waiting on a special part arrival at a certain hub, or a certified mechanic for a particular machine. Can you imagine at another airline when a pilot gets sick and causes a flight cancellation because the back-up pilot who’s available isn’t certified for that plane type?
The boarding process for Southwest Airlines gets customers to their seats faster for Wheels Up too. Their “Bags Fly Free” policy is another differentiating factor that gets you through the lines faster for Wheels Up. Even their strategy of Point to Point vs Hub Routes grabbed headline attention for their industry. Change to Strange – it can work wonders!
What words do you own?
Does the whole company know what words you want to own in the mindshare of your community, your clients, and your prospects? Southwest sub-branded their 3-5 differentiating ways they do business into a simple, repeatable phrase that could be taught to an any employee within 24 hours.
“The 3 LFs”: Low Fares, Lots of Flights, Lots of Fun. Now come on, don’t tell me you haven’t seen the fun come to life when a Southwest flight attendant takes the liberties with their safety announcements to become a YouTube sensation with rhymes, song, and dance. It’s great!
Everyone on the front-line knows the one-phrase strategy of Wheels Up is the key to making money for the company. And everyone is aware of the words they want to own in the industry so they can step up to the plate and make Low Fares, Lots of Flights, and Lots of Fun happen each and every day.
The second driving question in Scaling Up strategy to ask your executive leadership team, “Is your strategy driving sustainable growth?”
This is where most very small businesses fail. The owner was a great mechanic, so he opens a service shop of his own. It’s a success! But as it grows, he needs to hire more people; he needs to develop processes to ensure what he does well, everyone does well.
His tightly knit machine of one, grows to 10, and now he feels chaos has overtaken his dream.
- Growth sucks cash.
- Growth can cause chaos.
- You don’t have systems and processes in place to ensure your growth is sustainable. You need to ensure the products and services you sell are profitable.
Income is merely vanity
Saying you’re a $1 million-dollar firm (in revenue), when you only retain $1 at the end of the year in your bank account certainly illustrates that point.
Profit is sanity. The faster a business owner and CEO can focus on sustainable profit, the faster they can grow their cash flow.
Cash is truly king
Having a strategy to selectively stockpile for downturns in the market, slow seasonality, or slumps in your industry can only be enhanced from a strategy that focuses on profitability. The bottom-line profit is much more important than the top line revenue/sales figures.
Rather than the typical S.W.O.T. (Strengths, Weaknesses, Opportunities, and Threats), Harnish bridges a new exercise for S.W.T (Strengths, Weaknesses, and Trends). These principles work anywhere in the world to take a look at outer efforts, rather than inner efforts. Knowing the overall strengths of your marketplace, as well as weaknesses that are not likely to change in the coming months, can position your firm to be the “Disruptor” (rather than the Disrupted).
When we look at the trends within our region or industry at least once a year, it becomes a habit for the executive leadership team to not just be on top of the emerging trends, but fully ahead of the curve, pulling away from the lagging competition into a league of their own.
Recently, I was coaching EO (Entrepreneurs Organization) and YPO (Young President’s Organization) community members from Sri Lanka, Kenya, Los Angeles, Philadelphia, Manhattan, Kansas, and Orange County as they explored how the pandemic has impacted their industry Strengths, Weaknesses, and created new Trend-lines that weren’t previously there at the start of 2020.
The truths have remained constant and the principles are even universal to a variety of industries. I often facilitate long-range strategic planning retreats each year throughout North America teaching executive leadership teams all 4 Scaling Up Decisions in both the United States and Canada.
The Strategy Decision’s proprietary “7 Strata” worksheet truly sets these executives head and shoulders above their competition, because while others are busy working down in the engine room of the company, these executives are on the bridge of the ship looking ahead at their one-year, three-year, and 15-year horizon. They know their Profit per X and have identified which X Factor is key to their long-term growth.
Originally, I deployed best-selling author Verne Harnish’s Scaling Up book and toolsets when I ran a metro-area software firm over the last decade, including the Scaling Up One Page Strategic Plan, and 10 Rockefeller Habits checklist. I don’t just teach the Strategy Decision – I’ve lived it, day in and day out while I was a software CEO.
I became a Certified International Coach because I loved the idea of sharing the tools with other CEOs, like I do in this monthly Edmond Business column. In the coming months, we’ll explore each of the other Scaling Up Decisions.
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About Stacy Eads
Edmond native & UCO Alumna, Stacy Eads, is an award-winning “Most Admired CEO” who scaled her company as a Woman in Tech before becoming an International Scaling Up Business Coach. She now empowers other CEOs from $2M to $200M to embrace their leadership potential through quarterly strategic planning. Her talent is in high demand to CEO Coach, Train Teams, and Speak at Events in both the U.S.A. and Canada.
Stacy Eads’ career affiliations include 50 Women Making a Difference award, Circle of Excellence award, Torch Ethics award, Most Admired CEO award, Edmond Chamber & UCO Mentor, Better Business Bureau of Central Oklahoma Board of Directors, TEDx OKC Speaker Coach, and Ambassador Chairwoman for the Greater OKC Chamber of Commerce.