Defined and Differentiated Strategy

In Scaling Up, the book’s author explains that a company doesn’t have a real strategy if it doesn’t pass two tests: “First, what you’re planning to do really matters to enough customers; and second, it differentiates you from your competition.”

An Integrated Business should implement strategic thinking. This way of thinking requires senior leaders to meet once a week to discuss big strategic issues like Core Values, Purpose, Brand Promise, and Strategic Priorities. Meeting once a quarter or once a year isn’t nearly enough to adequately deal with a company’s strategy.

Once a strategy is defined, the entire leadership team should come together (from frontline managers to the CEO) and plan how to implement the broader strategy. The group will collaborate to create the company’s

Flywheel⁠

and set specific quarterly and annual priorities, outcomes, and KPIs.

Look for your hidden advantages–what makes the company special and different. These advantages could relate to your company culture, the breadth of experience of your workforce, or your high standard of and speed, or that you never miss the schedule. They are the things that set you apart from the competition.

Next, you should design certain constraints. These are the things you will say no to. For example, if you have a roofing company you may only do a certain type of roof because it matches your hidden advantage (you offer the highest quality and you’re the fastest). Or perhaps you won’t bid on any job under a certain amount of money. Maybe you won’t hire a technician without a certain number of years of experience. Each of these are constraints that allow you to quickly say no to certain things.

Whatever the constraints are, they should always be based around targeting a gross profit margin that is at least double that of the industry average.

These hidden advantages and designed constraints help create a box. Once the box is created, everyone in the company knows that they only say yes to things that fit into the box.

This process works best if middle management and frontline employees are involved, according to Scaling Up. After all, those individuals are closer to the day-to-day operational issues of the company. Moreover, their participation in setting the plan creates better buy-in, according to Harnish.

Tracking Your Strategy

Your strategy should be tied to trackable metrics such as milestones or quantifiable performance measurements. Some of these metrics may be financial (ie: profit, revenue, or cashflow), while others could be related to marketing or sales goals (ie: repeat customers, conversions), safety (ie: hours lost to injury), environmental impact, or community engagement.

The metrics you choose should be tied to the company’s strategic objectives so that your employees can track their progress and move toward the collective goal.

We’ll discuss how to track those metrics in the next section.

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