Welcome to the Dare to Scale show with me Warsha
and me, Evan.
So, what is Dare to Scale? Over the years that we've been coaching founders and business owners, much like yourselves, we work through a framework called Dare to Scale
Dare to scale. Indeed, that framework has helped loads of business owners. And that is what this show is all about. So put on your big picture, thinking hat.
Oh, and your headphones, and come join us and enjoy the ride.
Hello, everyone. And welcome to the Dare to Scale show with me Warsha.
And Evan. Hi
Hey, today, we're going to talk about strategy.
Yes. And particularly about simplifying strategy.
Why would you want to simplify?
Oh, because strategy doesn't have to be 100 page document that is drawn up by a consultant, which is too complicated for words, strategy needs to be simple.
Agree. Absolutely agree. Good.
So, the model that we're going to talk about today is the strategy cascade. This is from a book called Playing to Win by Roger Martin and AG Lafley.
Before we do that, can I just take a step back. So, in my corporate life, I spent a lot of time in hospitality in private equity. And then later on in theme parks. But in the hospitality game, it's actually quite interesting. Every year you do a business plan. Really, that's just simply a budget. There's a marketing plan that goes with it, and maybe some small aspects of strategy. But the point there is every year, it really is just about the numbers.
That six months into the plan. And all you really focus on is are you meeting your numbers or not?
Oh, interesting. Okay.
So, the market does move, obviously, depending on what otherwise happens, you know, your focus can change. But the strategy or strategic part of the document goes in the drawer. Right?
Now, when I got to the private equity space, let's assume that it's an investment into a hotel. When you bought the property, right, there was a series of justifications for why you want to spend the equity and raise the debt and all that sort of thing to actually invest in that piece of real estate. So that investment document actually is a strategy for that asset. Again, every year you do your business plan, you get the numbers, all the bits and pieces. And at the end of the year, very rarely do people over to do some firms actually go back and look at the individual strategic document or that investment document and compare back to where you are now compared to where you thought you would be.
Right. So, it's kind of interesting. And what I have come across, particularly now with coaching, is a lot of businesses are in the same sort of boat, they feel strategy is a very big, mammoth task. Why would I want to do this anymore than I really have to? So, let me ask this. When you did your business plan or your budget for the coming year, whenever that was, did you actually look at your strategy and updated? And the correct answer was yes. And if you did that, how frequently before the annual business plan? timeframe? Did you actually look at your strategy during the year? And for most? It's not very much, if at all.
No. And do that actually want to say, is there a routine for the year when you sit down like Vern Harnish, the author of the best selling book scaling up says, sit down with your strategic counsel regularly, at least once a quarter? Talk about what's going to happen over the next 12 to 18 months down the line?
So, this is to ensure that you stay on top of the trends within your industry. And so, you track where do you as a business sit within your industry? And how can you stay ahead of the game?
And that's the point. So, the regular strategic thinking time is what we are essentially putting on the table.
And to do that strategy really does need to be a bit more simple.
Absolutely simple enough also to be cascaded. Because in a lot of cases, founders get swept away in the day to day firefighting it because the strategy is unclear.
And the team doesn't know the strategy either.
And the team doesn't know.
He also made about cascading.
It's like it's cascading within the building blocks of your business plan, but it's also cascading within.
Within the team because your team needs to know where you're headed. Everybody needs to know what role they play in the journey that you're setting up for.
Exactly. So Exactly.
Is your strategy simple. How alive Is your strategic document?
Exactly. So, enter the strategic or the strategy cascade.
The strategy cascade. So, where does the strategy cascade start from Evan?
Well, that's your dream. Really? What is your summit? What is your mountain? What is it that you're going for? What is your winning aspiration?
So, when you say, what is your dream or your big summit? What are you saying over there? Evan? This is your goal, isn't it? What is your big goal that you're setting a target.
Yes like in huge in holistic term is like your reason to be like, what is it that you're actually shooting for?
If you're going to climb that mountain, you must have some reason to get to the top.
Yeah. Like Jim Collins says, Be hag, which is your big, hairy, audacious goals.
So what is that big goal? So, what are some of the targets that you're setting for that goal? Is there a role model?
Has somebody done this before.
Has somebody done this before? What sort of internal transformation that needs to happen within your company for that? So, what is your winning aspiration?
It starts with that. And again, I keep saying it starts with that, because a cascade starts with that at the same time, I want to make one thing very, very clear. For those who have studied this strategy cascade, and newer students of that is, it's important to understand that all these pieces, all these building blocks, all these arenas that we are going to be talking about within the strategy cascade. Everything is linked to the next box, both ways. There is no standalone piece, everything works in conjunction with the other.
Absolutely. It's all symbiotic.
It's all symbiotic, it is not sequential. And what happens after that. So, once you know what your winning aspiration is, what happens after that?
We're very simply, where do we play? Where is our playing field? Right? So, there are several arenas out there. So where is it that we show up?
So, to begin with, to very, very simply, what is the geographical location that you are operating in? And if you already are established in a geographical location, and you are putting this strategy cascade together for a brand-new market that you're looking to enter? It the same thing applies?
What is your new playing field?
And within there, there's like who's your demographic, your targeting all that kind of stuff?
Right? So, there's, we started getting into a little bit of compelling proposition and your business model.
That thing is, where are we actually playing?
Yeah. So basically, who is your core customer?
Absolutely. And that the next box with that is, what do you stand by? Now, what's also interesting is, as we start cascading down, where you start doesn't change very much.
Generally speaking, you have. It's referred to by many things, but your summit, your true north, all those kind of things.
That's what I'm shooting for.
That doesn't change. If that changes every other time.
Then that is not big enough.
No, it's not big enough. And that's not your true north.
That is not your true north. And it's not big enough.
So, where do we play generally is not going to change all that much.
Yeah. So, where we play as we were talking about, it's a where we play includes your customer segment? How are you getting the product to your customers? So, your logistics or your distribution channels?
Where are you producing this? So, if your business is about a actual physical product that you manufacture, where are you going to be manufacturing? What are the products and services that you're looking to offer? Within that specific geographical area?
Because you may not want to offer everything that you do in every single market. So, if we are talking about a specific market, does that mean, Evan, that there can be a winning aspiration specifically for that new market that you're entering?
It can be for division? Yes.
Because, and it's one of the things that I'm reminded about. GE, Jack Welch used to say, Oh, God, in those days, the GS motto, if you will, was the number one or two in a new market or you're out?
That's it. Exactly. And what are you measuring? To know?
What are you measuring to know that? And so, what is the goal in entering so know what you want out of something before you go into it?
It's like the real estate game. You know, you're making money when you buy not when you sell.
Not, when you sell So what comes after that?
It's what you stand by. So, you've got your customers and your segments and your products. What do you stand by? What do you stand for? You know, what are you guaranteeing to your customers? so that is how will we win?
How will we win? So, what do you need to do over there to win?
Exactly, and that's a lot about your, your business proposition itself?
So, whether you're in the low cost or somewhat differentiated market, or even a simple focus market.
Yeah. And also to look at it the other way, whether it is a low cost volume based product that you're offering that you need to offer in a particular market? Or is it a premium level of service? Or a product that you're going in with?
And how are you differentiating between the other players in your industry? And yourself? So, what are some of the differentiating things that you're going to be doing?
As part of how you will win in that market.
And so what is your core focus going to be?
Provides we also have in the construction game? So, when I was in the theme park industry, we were actually constructing building.
The actual theme parks themselves. So, it was quite interesting. When you're building, you can have time, quality or money.
Right so, it's like a triangle. The thing is, you can only pick two.
So, if you're going to do a cheaply, either quality or the time to deliver whatever it is, needs to change.
You know, so it definitely is that that very interesting mix.
And how will we win is very crucial to understand exactly what that is.
Yeah and again, I will keep blinking it back to the arena before that, or the block before that is, when you are talking about where will we play? It is most important also at the same time to have a current discussion about how will we win over there?
So it's not, as you said, it's not sequential. It's symbiotic. So, when you are talking about where will we play? These two arenas go together?
Exactly so, this is it works perfectly in Europe.
May not work quite the same in the Middle East.
That is true.
Probably definitely wouldn't work quite the same in India or either.
You know, it depends on the market you're in.
Something has changed. So how will we win?
How will we win?
And in order to do that, you also need some core competencies.
So what core capabilities?
Must we have the next building block or the next arena.
So, if you come from an English-speaking market, and you go into, I said India before, let's say India, at some point, you will need language?
And an understanding of the culture as well.
Definitely the language. Right. So that becomes one of your core needs and competencies.
Yeah. And that's an interesting market, you're brought up, we went from Europe to India, my God, the two worlds apart.
Of course they are.
In terms of the size of the market, in terms of how the buying power of people, language, culture, when people buy everything is so so different over there. So, this is great. So as a strategy cascade, it's wonderful to work through to different markets like that. I love it.
Indeed, because it just gets you thinking about something different.
Yeah. And one of the things that we talked about during the gazelles training as well is when you talk about what capabilities must we have? What are those core competencies are that you must build within, or you must build internally to support the differentiators, which are hard to copy, particularly in a market like India, where you have masses of competition? Because it's, it's a very entrepreneurial society anyway. So, something that is hard to copy something that is truly you. How do you differentiate? So what capabilities are you going in with?
And that, again, links back to how will we win?
Precisely. So those first four boxes, which is your dream, your playing field, the what what do you stand by? Like, how will we win? And your core competencies may not change all that much. But that needs to be reviewed? quarterly?
At least. Has anything changed here that we need to be aware of? Is there anything in the trends that we should be aware of? If we look for 12 18 months? Is there something that we need to take into consideration now? And how quickly can we address that?
Yep, very true!
So, with those sorts of in place, then it starts to become a little bit more operational, and it will ties into the overall strategy.
And while the next two boxes are very operational, as you said, it definitely needs to still form part of the strategy.
Of course, because if anything changes upfront, how you deliver what you start measuring might change.
Might change. So, what is the next arena?
What's your economic model? So, what is it?
What is your our economic model?
What we like to work with is Ottm.
That's the one thing that matters. It's a key KPI. It's a metric that you should be on top of pretty much on a daily basis.
In the hotel game, it's a revenue per available room or total revenue per available room.
Because when you're looking at your business plan or where you'll be actual budget, right, you have a set of numbers and you want to know how you're tracking against that.
And if there's anything you need to be paying attention to, I mean, look, it could be profit per product, it could be revenue per headcount, it whatever your thing is, I mean, for goodness sakes, it could even be footfall per store.
Whatever it is that if you know, there's been a big change in that number in that metric, you know, to be watching out for it.
So, definitely keep an eye on those KPIs. And the rest of everything else should fall into place. But what is the one thing you keeping your eye on?
And that's a good thing, keep your eye on it? Again, I will keep quoting Vern quite a bit, because I have learned a lot during my time as a Gazelles coach, or a four decisions coach during my time as a Gazelles coach. So that's something else that he used to say is, remember to keep the main thing, the main thing.
Because a lot of founders again, I go back to that firefighting is because a lot of founders get carried away with too many details. And we somehow tend to sidetrack or put on the backburner what the main thing is, because something else takes precedence, something else calls for our attention, something else screams for our attention. So, we naturally tend to put the strategic one thing, that main thing aside, and somehow along the line, forget that. So, do we keep the main thing, the main thing.
So, also consider that the one thing might be in front of you. And yet, it may not be happening. So as an owner, you start putting the one thing to one side, and start interfering, so to speak in the operation right. Now, it's interesting, it might be a symptom of something, and the cause might be something completely different. It might be that you have the wrong people.
In a job somewhere.
Within the hierarchy, or one person covering two jobs when you really that that's.
Oh we will definitely talk about the first shot. Yeah, very much so.
But in terms of then, so the one thing is not being met. And then as the only go, You know what? I need the one thing. All right, and then you start jumping in and start firefighting.
As opposed to a getting the right people in the right seats, and letting them do their job.
Yeah. So, coming back to what is our economic model? And what are we tracking? So, what is that profit per piece?
And what is that piece in your business?
And if you don't know, get one?
Yeah. If you don't know, then start again.
And there's a possibility you're looking at the wrong one. Yeah. So, once you know what your business model actually is, then it's a matter of execution or your operation. And they are now setting your priorities and really digging out your metrics. But the thing is, what management systems do you need?
What reporting systems?
What excitement systems do you need?
So, you must be able to get the information?
And to make a decision, you need information to make a good decision. Normally, it's about timely information.
He can't be looking over your shoulder when the month end reports come in, because that's not quite right. And again, that's a topic for another discussion.
Yeah. So, over here in the management says, what management systems do you need in your job? So now we are into the operations piece? what we were talking about earlier, in the economic model actually becomes even more relevant over here. What is that metric that you are tracking in your business? How are you tracking the metrics? How are you setting priorities? And how are you meeting? And how are you ensuring communication happens smoothly within your company? How does communication cascade? So, what we are talking about here is smooth operations, operations, which run like a well-oiled machine, and what management systems do you have in place? So, Evan, according to you? Are management systems? Can you define that a little bit please?
Management systems is more than just your accounting system?
But you definitely need an accounting system. Look, your ultimate truth is based on your financials. And what you want is all of your data to essentially reside in the same place. The thing is, you have, for example, point of sale systems.
Those needs to talk seamlessly.
To your financial system. But equally to do the right analysis on your point of sale. You need the right, non-financial metrics as well. What was your footfall?
How many people came into the store? How many guests did you serve in a restaurant for example?
Speaking of customers, how are you tracking your customers? Do you have a CRM
That's a secondary piece as well, right, because there you've got your customer satisfaction and and all the other bits and pieces that go with that. And that's a non-financial metric.
Right so, how many customers on your loyalty program, how many people walked in? and that sort of thing?
Who are your repeat customers?
Exactly. And you want to know, a bunch of stuff that is not just financial?
Because a metric, essentially, by definition, is it is a financial metric divided by or at least per a non-financial metric. I mean, like an operating profit is just financial, financial, but everything else, like your profit per product.
How many products did you sell?
How many are you making?
If you don't make enough, that means your profit per goes down?
If you make too many, right, you might have oversupply, but your profit actually goes up if you're selling them all.
Or you don't want to think so. It's really interesting.
Yeah. And also, speaking of if you sell more than what you accounted for more than what you set a goal for, how are your operations, maintaining that balancing act? Are you producing fast enough to sell?
Again, going back to capabilities? Do you have the capabilities built in for that?
Absolutely. And it's very interesting. So that, like Warsha was saying, each of these these elements, moves forward, and then relies on the previous step as well, they work in unison. It's definitely not sequential. And that's why sometimes you go back to boxes just to make sure you've got the right capability. So, the thing is, how you know, some of these things are maybe not working well, is through your KPIs, your one thing that matters. And based on that, you can then backtrack up the strategy cascade to the next available piece that you can then modify, or at least find a lever in there that you can actually work with.
Yeah. So, when we're finished talking about the execution or the operator, now that we've just talked about the operations, or the what management systems do we need for smooth operations. And we talked about that one metric that we're tracking, I want to go all the way back to block number one, arena one, which talks about what is our winning aspiration? And over there, we said, what is that target? What is that winning aspiration? That also could be and tell me what you think, Ivan? Can that also be that number? How many units of whatever are we selling? How many?
I think it could be. I would also add to that, the normally you want an end goal, not a means. And a number of products. To me sounds short term. And it will be difficult to work, you know, when you've arrived, I guess. But then what's the purpose? Just to sell? I don't think so you wouldn't have gone to all this trouble. If it was just to say.
No, it's not just to sell to me it is, when you successfully set and save, one of the dream aspirations is to sell half a million pieces of x, whatever that x is, or 2 million pieces of that product.
Because over the lifetime of the company.
Not so much of the lifetime of the company, it could be anything, it could be this water bottle that we're selling 2 million of those water bottles is not over the lifetime of the company. This could be the next five year go.
Okay, so there's levels to your strategy,
There are levels to the strategy. Of course, there are levels to the strategy. So, the winning aspiration is not for the life of the company. The winning aspiration to me is for every growth stage, so winning aspiration to me is your next three to five years big goal.
Okay, well, that makes a bit more sense, fine.
So, when you say you want to sell 2 million pieces of this water bottle, everything that needs to happen to sell those 2 million pieces of water bottles is part of your strategy proposal, what manpower do you need? How do you need your operations to work? How does your marketing need to work? What capabilities Do you need to build in to achieve that number, when we get closer to the number is when we begin thinking about? So, what is the next step? What is that next big mountain? Because we know now we are hitting that winning aspiration. In that time?
Let me ask you something.
Other than I suppose a fixed number, like you said, 2 million water bottles. How do you know when you've arrived? Is your dream? Is your target articulated enough? So that you can measure when you have arrived?
And by the way, that's a trick question. Because when you have actually arrived, ordinarily, you would have reset and found a bigger amount.
Nice, very nice. That is true and then.
In life, you never actually arrived.
It's a journey.
It's a journey.
So that, dear listeners, so that was a discussion on the strategy cascade, again, as we normally do, here's a question for you listeners. So, here's a takeaway. Or a here's a tasking.
Before we end So, now you're looking for the next mountain. How quickly can you articulate that to your team?
The thing is, we've gone through six boxes here.
Or six steps with the strategy cascade. How simple is that to communicate? Do you have a way to put it in front of your team very quickly?
So, what you're saying is almost like an elevator pitch.
Almost like that.
Can you almost strategy simply.
And that's what makes it a live document.
And that was the point of opening up this discussion in the first place.
I know, in scaling up, for example, they talk about a one-page strategic plan.
Yes, at some point in one of the episodes, we would love to talk about that.
Because it's so powerful.
And you have a focus for a quarter, you have a focus for the year, the focus of all this stuff. So, everybody, and you pick this up everywhere.
It's like a snapshot.
It's a snapshot.
Of your company.
And your team can readily address so that they can access it can see it.
Because it can't be a secret.
No, no, in fact, it needs to be displayed.
Where everybody can actually see be part of because only then they will feel a little bit more engaged into this, isn't it?
So, once you have your strategy available.
In a timely manner, it then becomes possible to review on a quarterly basis.
So, by the time you get to do your budget for the next year, you actually have already done part of the heavy lifting, you know where you're headed. It then is a matter of, if there are new projects, finding it, we might need to know how to finance them, all those sorts of things, but at least you've got an idea based on the strategy that you have in front of you.
Fantastic. That's the one. Okay, so there you have it, the strategy cascade, based on the book, based on playing to win by Roger Martin, and AK Lafley. As we normally do, at the end of each of our episodes, here is an actionable item for you tell us which of these arenas did you find the most challenging to work with in your business?
Was it your dream? Was it your playing field? How you will win? So, what do you stand by your core competencies? Your one thing that matters, one measurement that matters? Where your operations? So, what management systems do you need?
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