7-Strata Strategy Framework:
A Step-by-Step Tutorial on the Art of Scaling Up
- The 7-Strata tool fosters organizational alignment, ensuring everyone from leadership to frontline employees understands and works towards the shared vision and strategic objectives.
- Through defining a clear BHAG, brand promises, and a unique X-Factor, the 7-Strata tool helps to differentiate your business in a competitive market and creates a compelling value proposition for your customers."
- The 7-Strata approach to strategic planning is dynamic and flexible, allowing businesses to adapt and evolve their strategy in response to changes in the market, thereby fostering sustainable growth and resilience.
It's no secret that a strategic plan forms the backbone of any successful enterprise. This roadmap provides direction and ensures a common understanding among all stakeholders regarding the company's purpose, vision, and mission. One of the most robust frameworks for crafting this strategic plan is the 7-Strata tool, as taught by Verne Harnish, author of the bestselling book, "Scaling Up."
So why would a company use the 7-Strata tool? This tool provides a company with a concise, clear, and compelling strategy that is easily communicated and understood by everyone involved – from the boardroom to the breakroom.
Why Use the 7-Strata Tool?
Clarity of Strategy
The 7-Strata tool provides a simplified and comprehensive roadmap for your organization's strategic intent. It breaks down your strategy into seven layers or strata, each addressing a critical aspect of your business. From defining your core values and purpose to understanding your brand promises, this tool ensures that your entire team is aligned and working towards the same objectives.
For example, a company like Apple uses clear strategies that everyone easily understands. They are known for their emphasis on innovation, attention to design details, and providing top-tier consumer experience. These fundamental aspects, undoubtedly a part of their strategic plan, align all their efforts, allowing them to maintain their industry-leading position.
The 7-Strata tool ensures that the strategy is easily communicated across all levels of your organization. It allows you to articulate your strategy so that everyone can understand, believe in, and execute it. It brings everyone on the same page and fosters a sense of unity and purpose within the organization.
As an example, Southwest Airlines has a well-defined strategy that is communicated and understood across all levels – "Wheels Up." They understood that they make money for every time the wheels of their aircraft go up. Therefore they aligned their strategy and execution to get their "Wheels Up" quicker than their competition.
Consistent and Coherent Decision Making
Companies can ensure consistent and coherent decision-making with a clear strategy in place through the 7-Strata tool. It provides a solid reference point, helping leaders make decisions that align with the company's long-term goals. It minimizes reactive decision-making and reduces strategic drift, allowing companies to maintain their focus and drive.
Amazon is a great example in this context. Their strategy, focused on customer obsession, low prices, and vast selection, guides decision-making, allowing them to maintain their status as a dominant player.
Now, let's walk through a tutorial on implementing the 7-Strata tool in your company.
How to Implement the 7-Strata Tool: A Step-by-Step Guide
1. Define your Core Values
Your core values are the bedrock upon which your company is built. These aren't just words on a wall but fundamental principles that inform every aspect of your business - from strategic decisions to daily operations. Defining these values involves introspection and honesty about what truly drives your organization's actions and decisions.
Think about what values are utterly non-negotiable. What principles guide your company's actions even in the face of adversity? These values could range from 'integrity' to 'innovation,' 'customer-centricity,' or 'sustainability.' But remember, these aren't aspirational values of what you want to be but a clear reflection of who you already are at your core.
2. Identify your Core Purpose
The core purpose goes beyond the pursuit of financial gain. It answers the existential question: "Why does our organization exist?" It's the heart and soul of your organization, infusing meaning and passion into your work.
To identify your core purpose, ask yourself why your company was founded, what problems you're solving, and how you make a difference in your customers' lives. This purpose isn't about being the biggest or the best; it's about the impact and the difference you aim to make. Your core purpose should inspire and motivate your team and resonate with your customers.
Google's core purpose is "to organize the world's information and make it universally accessible and useful." This purpose is evident in their vast range of products and services, from their search engine to Google Drive, Google Workplace, and Google Bard. They all aim to make information more accessible and usable.
3. Determine your BHAG (Big Hairy Audacious Goal)
The BHAG is your north star, a long-term, audacious goal that provides clear and compelling direction. It should stretch your company beyond its comfort zone and require extraordinary effort to achieve.
Your BHAG should be so bold and ambitious that it feels a little uncomfortable. But at the same time, it should be realistic enough that your team believes it's achievable. This delicate balance creates a powerful driving force that motivates your team to push beyond their limits. Your BHAG could be anything from reaching a certain revenue threshold, serving a particular number of customers, or achieving a notable market position.
4. Define your Sandbox
The sandbox defines your playing field. It outlines the products or services you will focus on and the markets you will serve over the next 3-5 years.
Defining your sandbox is about striking a balance between focus and flexibility. You need to be focused enough to leverage your strengths and resources effectively but also flexible enough to pivot in response to emerging opportunities or threats. Consider what products or services align with your core purpose and values, have the potential for profitability, and leverage your unique capabilities.
5. Establish your Brand Promises
Brand promises are your commitments to your customers that set you apart from the competition. These promises articulate your unique value and why customers should choose you over others.
To establish your brand promises, identify the most crucial aspects of your offering from your customers' perspective. What do they value the most? What are their pain points? And how does your product or service address these? Your brand promises should be distinctive, measurable, and, most importantly, consistently delivered.
FedEx has a clear brand promise: "When it absolutely, positively has to be there overnight." This promise underlines their commitment to fast and reliable delivery and sets the expectations of their customers, making FedEx a preferred choice for express shipping for many people and businesses.
6. Develop your One-Phrase Strategy
The one-phrase strategy is a simple, memorable phrase that encapsulates your key strategy. This is not a slogan or a tagline; it's an internal mantra that guides decision-making and helps everyone in your organization understand and align with your strategic direction.
Crafting your one-phrase strategy requires clarity and simplicity. It needs to capture the essence of your strategic approach and be easily understood by everyone - from your senior leadership to frontline employees. A great one-phrase strategy is not only descriptive but also inspiring and motivating.
7. Define your X-Factor
Your X-Factor is the secret sauce that gives you a competitive edge, something unique that sets you apart and makes you stand out in a crowded market.
Defining your X-Factor requires a deep understanding of your business, your competition, and your industry. What can your company do better than anyone else? Where do you excel? This could be a unique process, an innovative product feature, a business model, or even your company culture. Your X-Factor should be difficult for competitors to imitate and have a significant influence on your success.
Apple's X-Factor is its unparalleled commitment to design and user experience. This focus is evident in every product they release, from the intuitive interface of the iPhone to the sleek design of the MacBook. Their focus on design and user experience has set them apart in a highly competitive tech industry.
Scaling up a business is often paved with challenges, complexities, and uncertainties. However, the 7-Strata tool presents an engaging, streamlined, and practical approach to strategy development that addresses these challenges and aligns the entire organization toward a shared vision of success. By adopting this tool, you're not just building a roadmap for your business but creating an environment where everyone understands, believes in, and works towards your strategic goals, giving your company the competitive edge it needs.
Remember, strategy isn't a one-time exercise but a living, evolving process that requires ongoing communication, adaptation, and alignment. So, whether you're an emerging startup or an established corporation, take the time to define your core values, identify your purpose, set a BHAG, define your sandbox, establish brand promises, craft your one-phrase strategy, and determine your X-Factor. Use the 7-Strata tool, and let it guide you towards sustainable growth, compelling value proposition, and, ultimately, a lasting legacy.