Many companies build decent success based solely on executing good tactics. They manage the day-to-day profitably and can solve problems as they happen. But eventually, they stall. Their competition catches up, they don't have clear differentiation, and no one is able to sell like the original entrepreneur. Simply put, they lack strategy.
A competitive long-term strategy is required to grow and compete in a larger market. You may have all the right people on board, but if they manage only the day-to-day without a greater vision, your competitors will eat you for lunch.
Happily, growth guru Verne Harnish helps entrepreneurs and managers address the strategy issue in his excellent new book, Scaling Up (Gazelles Inc.,2015). Harnish provides a brand new comprehensive tool called the 7 Strata of Strategy that helps you define a framework to dominate your industry. Here are the key insights.
1. What are your Key Words?
Your potential customers need to know who you are and what you're about without a lengthy dissertation. Harnish suggests you have one or two key words you own. His is growth. Mine is awesome experience. Google owns search. FedEx owns overnight delivery. What word(s) do you own in the minds of your targeted customers?
2. Who are your Core Customers?
Hard to believe, but not everyone is the right customer for your product or service. Your core customers are the ones who get the most value from your offering while giving you the most profit. All other prospects waste your time and resources.
3. What is your Brand Promise Guarantee?
FedEx promises to deliver absolutely overnight or your money back. Harnish emphasizes that you must stand behind your offering in a meaningful way to your customers. Experience alone is not good enough.
4. What is your One-PHRASE Strategy?
This mostly secret approach likely upsets customers but is key to making a ton of money and blocking your competition. Harnish lays out Apple's closed-architecture approach as an example. Customers may get frustrated, but it allows Apple to charge premiums while Google and Microsoft play the commodity game.
5. What are your Key Differentiators?
It's hard to be unique, but you can identify rare and valuable traits about your company that matter to your customers. What are the three things that your competitors can't do or won't do without great effort or expense? Hint: Customer Service is not a differentiator.
6. What is your X-Factor?
Harnish believes long-term success requires a 10- to 100-fold underlying advantage over the competition that completely wipes out any and all rivals. What have you figured out that no one else has?
7. What is your Economic Driver?
Harnish references Jim Collins when he talks about figuring out your Profit per X as an economic driver. Once you understand how you best make money, you can align that process with your Big Hairy Audacious Goal (BHAG) and be off to the races.