A strategy is not a plan, it’s a theory on how you’re going to win.
For instance, Southwest Airlines’ winning aspiration was to become the more convenient substitute for Greyhound.
They had a theory they could win a substantial part of the market by offering the lowest-cost tickets while also maintaining the lowest costs to run their airline business.
To do that, they made key strategic choices to make it a reality:
- Fly point-to-point routes so the aircraft can be utilized more than the typical hub-and-spoke model.
- Not offer meals on flights because we specialize in short flights.
- Only fly Boeing 737s, so their gates, training, and maintenance costs were simple and saved costs.
- Prioritize online ticket sales vs booking through travel agents to increase their margin.
Because of this business strategy, Southwest Airlines was able to get bigger. Now, it flies the most passenger seat miles in America.
At the core of building a winning business strategy is the simple reality that you must choose to do some things and not others.
Southwest Airlines wouldn’t have been able to make their theory a reality if they did what other airlines were doing. They had to say no to long-distance flights. They had to say no to partnering with travel agents. They had to say no to flying different aircraft.
A winning business strategy makes it easier for your team to say no to initiatives and projects that don’t align with your theory of how you’re going to win.
Yet, it’s not easy.
When a strong bias for action is present in a company, it’s easy to fall into the “action trap” of just trying to do everything and not being intentional about what things you’re not going to pursue as a business.
A good strategy helps the entire company know what is and isn’t important to do. This creates an unstoppable focus that intentionally directs everyone’s energy.
A company with a bad or unclear business strategy will waste countless resources and energy.
This concept is well described in Essentialism, where Greg McKeown smartly points out that if we have 10 units of energy, we could broadcast it out in 10 different directions and ultimately make one inch of progress in those 10 directions. Or we could put all that energy into one direction and make 10 inches of progress in one direction.
A great strategy helps unite your team and make massive progress in one direction by giving everyone a decision-making framework for what the company’s focus is.
Now, I know what some of you reading this are already thinking…
We already have a strategy.
Short answer: no.
Not because I said so, but because by going through this section and applying it to your business, you’re going to gain so much clarity. When you build a well-crafted business strategy, decision-making becomes so much easier.
Your entire team can make decisions faster.
Your customers understand what you do better.
Your business becomes harder to copy.
All of this is possible with a good strategy.
As you go through this section, please take the time to craft your winning business strategy. This is one of the highest-leverage activities you can do as a founder or CEO.
I would know, but not for the reasons you might think.
For the first five years of running ProductLed, I didn’t have a great strategy.
Our target market was vague.
We didn’t have a distinct advantage to winning.
We weren’t building a moat.
My bias for action was running the day-to-day.
We got a lot done, but most things we launched didn’t have a big impact.
Until we started to build a strategy.
At this point, we started being more intentional about where we directed our energy as a company. We said no to exciting opportunities so that we could pursue opportunities that aligned with our strengths.
It wasn’t immediate, but over time we started to streamline the business, and growth picked up. All because we started making massive progress in one direction and not spreading ourselves thin in so many different directions.
Your strategy has the ability to compound the efforts of everyone in your organization.
Yet, building your strategy doesn’t have to be overly complicated.
You can craft a winning business strategy by answering these five questions:
- What is our winning aspiration?
- Where will we play?
- How will we win?
- What capabilities must we have?
- What management systems do we need?
Combined, these five questions form the basis of your high-level strategy.
What I love about these five questions is that you’ll unlock clarity quickly.
You can use this template to build out your strategy.
Let’s dig in!
1. What is our winning aspiration?
The goal of a strategy is to help you win at something.
Is your goal to…
- Dominate your market?
- Build a $5-10M lifestyle business while working three days a week?
- Build a billion-dollar business in your category?
- Be a 7-figure+ solopreneur?
- Be the #1 solution for your industry?
What does winning look like for your company in 10 years?
If you’re struggling to come up with what your winning aspiration is, write down 20+ different options.
This simple activity helps you generate ideas and stop worrying about what the “right” one is.
More importantly, though, give yourself permission to dream. Think big.
“Most people overestimate what they can achieve in a year and underestimate what they can achieve in ten years.”Bill Gates
A mentor of mine once gave me some great advice when it came to setting a compelling vision. I had spent hours setting my vision, and I wasn’t sure if it was “right,” so I asked him how I could know.
His answer was so simple – if your vision is directional and scary, that’s good enough.
You can always update it as you get closer to completing your winning aspiration.
The whole point is to set a direction for your business.
And if your vision feels a bit audacious and scary, that’s actually a good sign. It means you’re going to need to grow to accomplish it.
So now my question for you is…
What is your company’s winning aspiration for the next 10 years?
Once you’re clear on that, let’s dig into where to play.
2. Where will we play?
Where you play is as much an art as it is a science.
I wish I could say it’s as simple as picking a target market and a marketing channel, and then you’re off to the races.
But, if I’m being honest, no matter how you approach it, there’s going to be a good amount of trial and error until you hone in on the areas where you play best.
To answer where you will play, you need to answer 5 questions:
- Who’s your ideal customer?
- What problem do you solve?
- What’s your core product?
- What are your primary marketing channels?
- What geography are you going to target?
Here’s an example of our old where-to-play strategy at ProductLed:
- Customer: Anyone leading the PLG initiative at their company.
- Problem: Learning about product-led growth.
- Product: ProductLed Accelerator.
- Channels: Organic search.
- Geography: Global.
After going through this activity, we simplified our where-to-play strategy to:
- Customer: 7-figure product-led founders
- Problem: Scaling a product-led business past 7-figures and beyond
- Product: ProductLed Academy - a coaching program specifically designed for founders to implement the ProductLed Method
- Channel: Acquire users through low-cost channels that compound in growth (Youtube & Organic)
- Geography: North America first, Europe second
Now you might be thinking our first strategy was rather undirected compared to the second one, and that’s the point.
As you go through this activity, I encourage you to list your current where-to-play strategy and compare it to your new one.
I hope you come to the same conclusion we did.
When you’re not intentional about where you play, it’s too easy to spread yourself too thin.
Which then makes it hard for you to win.
It’s the equivalent of one army trying to fight multiple battles at once.
It will always get destroyed by an army that is focused on one beachhead and directs all its energy and efforts to one key area.
If you’re unclear on what marketing channels to pursue as a business, would highly recommend reading Traction: How Any Startup Can Achieve Explosive Growth. This book is one of the best at outlining what marketing channels will make the most sense for your business.
- List out your current where-to-play strategy
- Craft your future where-to-play strategy
- Note the differences between the two – if it feels more focused, you’re on the right track
Once you know where to play as a business, it’s time to create a game plan to win.
3. How will we win?
Before we dig into how you can win as a business, let’s zoom out and go through the main ways businesses win in general. Although there are countless ways your business can win in any market, I focused on 14 moats that make what you do as a business hard to copy and provide a long-term competitive advantage.
As you go through this list, I want you to consider which moat would help your business win.
- Differentiation Moat: Set your business apart from competitors by offering a unique product or service that fulfills customer needs in a distinctive and valuable way. This could involve innovative features, superior quality, exceptional customer service, or a combination of factors that make your offering stand out.
- Cost Leadership Moat: Become the low-cost provider in your industry while maintaining acceptable quality standards. Achieve cost advantages through economies of scale and efficient operations can create barriers for competitors. This advantage allows a company to offer products or services at a lower cost, making it challenging for others to compete.
- User & Customer Experience Moat: Create a seamless and intuitive user experience (UX) that can differentiate your solution from competitors. But extending that same level of thought and care throughout the entire customer’s journey creates an outstanding customer experience. By understanding your customer’s needs and preferences, you can design seamless and personalized interactions, provide convenience, and exceptional service, and build long-term loyalty.
- Network Effects Moat: Network effects occur when the value of a product or service increases as more people use it. Examples include social media platforms like Meta, where the more users there are, the more valuable the platform becomes for each user. You can see network effects at play all the time when you look at companies like Webflow, WordPress, Miro, and Canva. They have an army of users that create templates for other users to use. As the platforms grow, the platform becomes more valuable over time and is hard to copy.
- Operational Efficiency Moat: Streamline your internal processes and optimize resource allocation to improve productivity and reduce costs. Efficient operations can lead to better profitability, faster delivery times, and improved customer satisfaction, giving you a competitive advantage.
- Branding and Reputation Moat: Build a strong brand that resonates with your target audience. Cultivate a positive reputation by consistently delivering on your promises, providing exceptional products or services, and actively engaging with your customers. A reputable brand can command customer loyalty, trust, and premium pricing.
- Distribution Moat: Having an extensive distribution network or exclusive access to key channels, strategic partnerships, and alliances can create barriers for competitors. It allows businesses to reach customers more effectively and control the availability of their products or services. Collaborating with strategic partners, suppliers, or complementary businesses can strengthen a company's position. Partnerships can provide access to new markets, distribution channels, technologies, or resources that would be challenging to obtain independently. Another great example of having a distribution moat is when your app is one of the first on the Shopify or iTunes app stores. You get a lion's share of the downloads because it’s a new platform, and over time your app gains the most reviews and attention that is hard to replicate. We also benefitted from this in the early days of PLG. We were the pioneers in PLG and wrote a lot of great content on PLG before people were talking about it. Over time we gained a ton of backlinks and authority around the topic that generates a good amount of traffic that is hard for new entrants to copy.
- Speed & Innovation Moat: Being fast at innovation is one of the most underrated moats. It’s not the big that eat the small… it’s the fast that eats the slow. If you break into a stagnant industry with speed and innovation, you’ll be able to stand out quickly.
- Pricing Moat: Having a unique approach to monetization that aligns with your customer’s success could be a powerful way for your business to win. For instance, giving away your product for free but subsidizing your costs through sponsorships. Or only getting paid when your users get value by charging a % of each transaction. Whether it’s usage-based pricing or some other form of pricing that aligns with how customers gain value from your product. This can be hard to copy if paired with a customer success moat.
- Free Moat: Just having a free product experience for your users is a start in this direction, but you can take this even further by creating more free products that are subsidized by your core product(s). This can allow you to expand into adjacent markets and disrupt them by promoting your product completely for free so that you can capture more potential users and demand for your other products. For example, ConvertKit, an email marketing tool, created a free landing page tool to make it easier for creators to capture signups.
- Switching Cost Moat: If a business can create high switching costs for customers, it becomes more challenging for them to switch to a competitor's product or service. This could be achieved through contractual obligations, integration with other systems, or data lock-in. Designing your software in a way that creates switching costs for customers, such as data migration or integration efforts, can reduce the likelihood of churn and make it harder for users to switch to competing solutions.
- Proprietary Process or IP Moat: Patents, trademarks, copyrights, and trade secrets can protect a company's intellectual property and provide a competitive advantage by preventing others from replicating or using proprietary technologies or brands. For instance, we developed the ProductLed Method™ which is our proprietary process to help SaaS founders scale their self-serve revenue faster.
- Community and User Engagement Moat: Building a vibrant brand community and fostering active user engagement can create a loyal customer base and generate word-of-mouth marketing. Businesses that create a sense of belonging, encourage user-generated content and facilitate community interaction can develop a strong moat.
- Expansion Moat: "The business that can spend the most to acquire a customer wins.” - Peter Thiel. The main way to ensure you can spend the most to acquire a customer is by making the most per customer in your industry. This could be because each customer you have eventually buys more than one product from you, or you have a revenue model and high customer loyalty that grows your customer’s lifetime value over time. HubSpot is a great example of winning with expansion. You can start with their free CRM and sales tools if you’re just getting your first few customers. Then when you have a good amount of contacts, you can start paying for their Marketing hub, and then when you have a Sales team you can upgrade to their Sales hub. And then, when you have too many customers to deal with, you can upgrade to their Service hub. One small $50/month customer can eventually turn into one big $5,000/month customer over time.
It’s important to note that you can and should build more than one of these moats over time. Each of them creates a barrier to entry that makes it harder for competitors to copy what you do.
And most importantly…
Creates a competitive advantage for you to win as a business.
Yet, you don’t want to focus on building too many moats all at once.
I recommend starting with building one moat at a time, and once you’ve built it up, consider adding another.
One thing to point out here that is important is a moat is something you regularly need to maintain. It’s not something you set and forget. For instance, if your current moat is differentiated and you have a couple of unique features but a competitor just copies them, it’s only a matter of time before your differentiation moat shrinks as customers see fewer differences between your offering compared to the competition.
Let me share four common scenarios to give you an idea of how you can craft your “how to win” strategy.
We’re going to be the low-cost leader in our market
Back to our Southwest Airlines example, they decided how they were going to win was through a Cost Leadership and Operational Efficiency moat. These two moats complement each other perfectly as they reinforce each other when it comes to lowering costs while still making a profit because of your efficient operations.
We’re going upmarket
Consider making Differentiation, Customer Experience, and High Switching Costs your strengths. With these three, you’ll be able to serve enterprise customers better with your unique, differentiated solution and keep them as customers for a long time with an exceptional customer experience and high switching costs.
We want to become the dominant market leader
Consider building moats around Cost Leadership, Operational Efficiency, and User Experience. Each of these three moats reinforces each other. Because you have a great user experience, it drives operational efficiency (i.e. less support tickets and demos) and enables you to sell your product at a lower price while still keeping healthy margins. To keep the dominant market leadership position, your product needs to be the best product for the best price. These three moats help you accomplish that.
We’re going to disrupt a stagnant industry
Consider winning with a Free moat, Speed, and Cost Leadership. These three moats create a vacuum for unsatisfied customers that are typically over served by the current enterprise solutions. Hello, Canva versus Photoshop. And when you enter into a stagnant industry with speed, incumbents won’t be able to keep up.
Now before you craft your unique “how to win” strategy, take a second to reflect on your winning aspiration.
How will you win?
As you think about that question, I’ll share ProductLed’s old and new strategy to give you one more example.
ProductLed’s Old “How to Win” Strategy
In 2016, ProductLed was one of the first pioneers in the product-led growth space. As such, we needed to win with speed and innovation to maintain our thought leadership status. We were the first to launch our book on Product-Led Growth. We also knew that if we invested heavily in organic content, we’d get the long-tail advantage of owning some competitive keywords, so we focused on SEO as our distribution strategy. To help us out with user-generated content and gain rapid user feedback to innovate quickly, we created a free community.
Without knowing it, our unique way to win was through developing these three moats:
- Speed & Innovation
- Community and User Engagement
However, as the saying goes, “what got you here, won’t get you there.” We needed to design a new “how to win” strategy to help us build the #1 academy for product-led founders.
ProductLed’s New “How to Win” Strategy
By 2023, product-led growth had become mainstream. We needed a new strategy to win. It was no longer about being the first to write content on a topic around PLG. It was about how to stand out in a sea of noise. PLG content had exploded. To win, we decided to focus on founders versus anyone implementing PLG in our where-to-play strategy. This meant putting several of our customer segments on life support while we doubled down on founders.
Our unique way to win is to build moats around:
- Free Moat
- Our Proprietary Process
- Revenue Model
Combined, these three moats will allow us to attract the best founders through network effects, help these founders see incredible results through the ProductLed Method, and align our founder’s success with our success as a company through a unique revenue model.
One of the most fun parts about building your “how to win” strategy is that it should feel like each moat is complimentary with the other ones.
It’s all about creating unstoppable synergy.
A competitor might be able to easily copy one moat, but copying all three and knowing which ones to copy is what creates your competitive advantage.
As you map out which moats make sense for your business to win, this is nothing more than a theory. The goal is to be confident about your theory on how you’re going to win.
Now, it’s time for you to roll up your sleeves and take action.
Here are your action items:
- List out what your current “how to win” strategy is.
- List out what your future “how to win” strategy could be.
- Note the differences between the two — if you feel more confident in your future strategy you’re on the right track.
Once you’re clear on “how to win,” you need to make sure you have the right capabilities in your company to win.
4. What capabilities must we have?
First off, what’s a capability?
A capability directly supports your ability to win.
Let’s say your winning aspiration is to be an Olympic runner.
You need capabilities around:
- Exceptional Speed: Olympic runners possess extraordinary speed. They must have the ability to sprint at high velocities, covering short to medium distances in the shortest possible time.
- Strength and Power: Runners need strong leg muscles to generate powerful strides and maintain a fast pace. This includes developing strength in the quadriceps, hamstrings, glutes, and calf muscles.
- Technical Skills: Runners need to master proper running techniques, including stride length, arm swing, foot strike, and breathing patterns. An efficient running form helps maximize speed and reduce the risk of injury.
There are more capabilities you need to become an Olympic runner, but alas, I’ll limit it to three.
Capabilities are what differentiate a want-to-be Olympian from a professional Olympian.
Take two people with the same winning aspiration and “how to win” strategy, and the person who developed the right capabilities will always win.
The same applies to business.
When deciding what capabilities you must have to win as a business, there are two things I encourage you to consider:
- Develop the right capabilities you need to win. For instance, if an Olympic runner develops a great capability around incredible upper body strength where they can outlift Arnold Schwarzenegger in his prime. Let’s be honest, they’re going to be top-heavy and have to lug around that extra muscle each step. If you look at photos of Olympic marathon runners, their arms are almost always super lean. Developing the right capabilities is hard because you have to admit that you can’t be great at everything. An Olympic marathon runner won’t win the arm wrestling or bodybuilding competition. They consciously make a tradeoff to train their legs seven days a week. We’ll go into how you decide what the right capabilities are for you shortly, but I want to warn you less is more.
- Decide on the level you’re going to develop your core capabilities. This all comes down to your winning aspiration. If your aspiration is to be a solopreneur and build a 7-figure business, you can get away with just developing okay capabilities and outsourcing the rest. However, if you want to become the dominant player in your market, that’s not going to cut it. You need to aspire to become the best in the world at your core capabilities.
Before we dig into what your current and future capabilities are as a business, let’s walk through some popular business examples of capabilities.
Southwest Airlines winning aspiration is to be the #1 low-cost airline in America.
Southwest Airlines is able to deliver on its mission by developing capabilities such as:
- Selling directly to consumers online.
- Efficient scheduling to keep planes in the air.
- Identifying popular short-haul flight routes to dominate.
Google Search’s mission is to make the world’s information universally accessible and useful.
Google Search is able to deliver on its mission by developing capabilities such as:
- Search algorithms to organize the world’s information.
- Artificial intelligence to surface the best answers.
- Accessible design for anybody to search.
Zoom’s mission is to make communication frictionless.
To support its mission, Zoom has built these core capabilities:
- Simple to use.
- Easy to share and join.
Canva’s mission is to empower everyone in the world to design anything and publish anywhere.
Canva has developed several core capabilities that support its mission:
- Simple to design.
- Easy to get started (i.e. templates).
- Publish anywhere.
Now back to you, what are your capabilities?
Defining what the “right” capabilities are for your business
There are some capabilities that will get you much closer to winning and others that won’t.
After analyzing hundreds of companies, I believe the majority of capabilities can be boiled down into three main buckets:
- Our “what we do” capability.
- Our “how we do it” capability.
- Our “unique” capability.
Let's break these down.
Our “what we do” capability
This could be your core technology and how you help people.
Our “how we do it” capability
For most product-led companies, this capability comes down to making it effortless for users to experience the value of your product.
For 99% of the leaders at companies reading this, I want you to focus on making delivering a quick time-to-value your “how we do it” capability.
As we mentioned in the beginning, a focus on creating an engaging experience before monetizing users is pivotal to making this whole strategy work.
If your users don’t get value quickly from your product experience, it’s game over. There won’t be a second chance.
Our “unique” capability.
This one is truly unique to your business – what one thing can your business do better than anyone else? If someone copied what you do and how you do it, why would they choose to pick you?
The first time you go through this, I encourage you to apply it to your current capabilities.
Here’s an example from us at ProductLed:
- Our “what we do” capability: Live cohorts on product-led growth.
- Our “how we do it” capability: Engaging live sessions led by experienced PLG operators.
- Our “unique” capability: Focused on implementing PLG.
And then apply it to what future capabilities you need to win.
Here are our future capabilities at ProductLed:
- Our “what we do” capability: Coaching to help founders scale self-serve revenue.
- Our “how we do it” capability: By following a method that consistently improves every time a founder goes through the process.
- Our “unique” capability: Results in 30 days.
Now that you’re familiar with what company capabilities are, it’s time to identify yours.
Here are your action items:
- Identify your top three current capabilities as a business.
- Identify your top three capabilities that will help you win.
- Review the differences between the two.
Once you’ve completed this activity, you might come to the conclusion that you need to start developing a completely new capability, or maybe you need to deprioritize an existing capability.
Deciding your capabilities is fun, yet developing your capabilities can be painful as you may decide to shrink some teams that support old capabilities as you reallocate resources to fully support capabilities that will help you win as a business.
Yet, if you don’t develop these capabilities, you’ll risk being mediocre.
The whole point of developing capabilities is choosing a few things to become exceptional at and then deprioritizing and/or outsourcing the things that you just need to be okay at.
Now that you know which capabilities to develop, let’s dig into the management systems you need to win.
5. What management systems do we need?
"Strategy without execution is merely a wish; execution without strategy is aimless. Success lies in the seamless integration of both.”
Strategy requires systems to execute.
Strategy can still fail — spectacularly — when you fail to establish management systems that support those choices and capabilities.
Without supporting structures, systems, and measures, strategy remains a wish list, a set of goals that may or may not ever be achieved.
Management systems are the glue between execution and strategy.
Once most companies develop their business strategy, they just try to implement it the same way they’ve done in the past.
This generates mixed results depending on how good your management systems are.
Yet, most people don’t understand what management systems are.
A management system refers to a framework that organizations use to effectively and efficiently manage their operations, processes, and resources to achieve their objectives.
Here’s an example of 3 management systems:
- Agile Development Management System: A system that supports the implementation and management of agile development methodologies, such as Scrum or Kanban, to enable efficient software development and iterative delivery.
- Quality Management System (QMS): A QMS is a comprehensive framework of processes, procedures, and policies that ensure the company consistently delivers high-quality products or services. It includes various tools and techniques for quality control, quality assurance, and continuous improvement, which help minimize errors and defects.
- Project Management System (PMS): A system that provides tools, methodologies, and processes to plan, execute, and monitor projects, ensuring they are completed successfully and within budget and schedule.
Take the agile development system as an example, if part of how you’re going to win is the speed of innovation, you need to use a system that helps you develop solutions quickly.
However, if you sell solutions to the banking industry, you might opt more for choosing a Quality Management System so that bugs are almost nonexistent that would support your security and reliability capabilities.
Before we dive into deciding what your management systems are, let’s take a step back and identify the three main categories of management systems.
The Three Core Management Systems
There are many management systems you can adopt to run your business more effectively.
However, they all support the three core pillars of achieving synergy:
Company systems are what your business needs to execute the strategy. This includes everything from people to resource management to how your team greenlights projects. We’ll unpack the four main management systems you need to consider to execute your strategy.
Company systems are typically decided and owned by the CEO and/or COO.
Customer systems help you stay in tune with your customers and get to know them better over time and enable them to be successful. This represents your go-to-market motion. We’ll unpack the main management systems you need to capture more effortless customers.
Customer systems are typically decided and owned by the VP GTM.
Product systems help you build an empowering product that delivers enormous value to your customers. We’ll unpack the main management systems you need to consider to do that.
Product systems are typically decided and owned by the VP of Product.
Your management systems must build and maintain the distinctive capabilities that underpin your how-to-win and where-to-play choices in order to achieve your winning aspiration.
Let’s start with your Company systems.
There are four main company systems that every business needs to start off with to make any meaningful progress. I’ll walk through each at a high level. Let’s start with the Audit System.
An audit system helps you understand what’s going on in your business. This often involves reviewing the data, asking questions, and unpacking what’s holding your business back from hitting its goals. I’ll typically do a light audit every week to see what worked and what didn’t and a deeper dive monthly audit on the business to help me understand what’s going on and what we should do differently for the next month.
One of my favorite ways to audit a business is to start with these questions:
- What are the main issues in the business?
- What is the #1 bottleneck in the business?
- What is working really well in our business?
- If we were to stop doing 80% of the activities we do currently and only focus on the 20% of activities that drive 80% of the results, what would we do?
- What might get in the way of executing our strategy?
- SWOT Analysis
- What are our businesses’ strengths?
- What are our businesses’ weaknesses?
- What are our businesses’ opportunities?
- What threatens our business?
And then, I’ll ask the team these three questions from Scaling Up:
- What should we start doing?
- What should we stop doing?
- What should we keep doing?
What should we start doing tells you the new stuff your team is eager to test out.
What should we stop doing tells you what’s probably not worth doing anymore.
What should we keep doing tells you the things that are working that you should continue to do.
Once you’ve completed your audit, you should know what the bottleneck is in your business. You may not know the root cause of it, but either way, you have a direction.
A good goal system breaks down your strategy and aligns the entire team on what the priority is and who does what. Objective and key results (OKRs) are one of the most popular goal systems out there. In Measure What Matters by John Doerr, he outlines how to think about OKRs and use them in your business. However, depending on the size of your business, you may need a different goal system. Most startups I’ve talked to personally find OKRs a bit too clunky with rapidly changing priorities, whereas something more lightweight like the Rock System outlined in Traction by Gino Wickman is a bit simplistic, yet gets the job done if your Rocks help you get closer to your vision.
Whatever goal system you decide to use, it’s important you have a daily, weekly, monthly, quarterly, and annual goal-setting system. That way, your team has a long-term perspective on the business and knows what to do in the short term.
Regardless of which goal system you currently use, your goal system must check the boxes on these criteria:
- Our entire team knows what the number one objective is.
- You have a daily, weekly, monthly, quarterly, and annual goal-setting system.
- Everyone can see how their efforts contribute to the main objective.
- Everyone has a project and/or number that they’re accountable to hit in a given time period.
Once you know what your goals are, you need a solid project system.
A sound project system breaks down your goals even further and helps you invest your time and resources in the projects that have the highest likelihood of success. Without a good project system, you will be shooting from the hip and potentially launching many projects that just don’t move the needle or align with your strategy.
If you have a good project system, you’ll be able to check the boxes on these statements:
- All our projects have a clearly defined scope and everyone knows what success looks like for that project.
- There is a clear owner of the project.
- The project is broken down into tasks.
- You have the right resources, team, and bandwidth to complete the project by the deadline.
However, even if you have identified the bottleneck in the business, set the right goals, and greenlighted the right projects, all can still fail if you don’t have a good people system.
A good people system ensures you have the right capabilities in your company to win, everyone is aligned on the core values, and you have a way to measure performance. One of the best people systems out there is called the Entrepreneurial Operating System that Gino Wickman outlined in Traction. There’s a lot of overlap between that system and what we cover here, but what you will love in Traction is the methodical approach to using your core values throughout your entire organization.
If you have a good people system, you’ll be able to check the boxes on these statements:
- We have the right capabilities in our company to win.
- Everyone embodies our core values.
- We have a way to measure and review performance with each team member.
- Each team member is accountable for an outcome and has a standard to uphold to.
What I love about these four company-level systems is that it helps you understand what the bottleneck is in your business. For instance, if you’re consistently not hitting your goals, projects aren’t making a difference, and you’re questioning if you have the right people on the boat, you probably need to spend a lot more time auditing the business to understand what’s going on.
If you are crystal clear on what the issue is in your business but don’t have goals tied to it, start there.
If you have the right bottleneck outlined, goals tied to it, and projects scoped out, yet your team isn’t able to make a dent, then maybe you don’t have the right team.
Either way, I hope that by going through this section, you’re able to see how good management systems can help you turn your strategy into execution.
- Identity which company-level system is holding you back from growing faster
- Are there any missing company-level systems?
Now that you’ve outlined your company systems, let’s dig into your customer systems.
Customer systems are anything that touches your growth engine and helps you provide value to customers
Good customer systems help you clarify, create, and capture value.
The three most common customer systems are your:
- Acquisition System
- Engagement System
- Monetize System
Collectively, these three systems help you generate value for your customers and company.
Let’s dig into each of the systems.
A good acquisition system helps you clarify what your value is, who your ideal customers are, what your value proposition is, what marketing channels you use, and what an irresistible offer is for your users.
Over time, your acquisition system should help you build a repeatable acquisition process that you can scale up over time.
A good engagement system helps you create incredible value for your users. It’s more than just good onboarding, it’s the entire experience around delivering value to your users and making it effortless for them to accomplish their goals in your product.
We’ll be diving more into each of these systems in the Growth Engine section but for now, just know that you’ll want to build a system for each of these areas and consistently optimize it over time.
A good monetization system aligns your company’s success with your user’s success and prompts users to upgrade at the right time.
Having a good monetization system will mean your free-to-paid conversion rate is consistently improving, short-term churn is low, and you’re growing customer value over time.
From a metrics perspective, that typically looks like your ARPU and LTV are consistently growing over time.
When you have your acquisition, engagement, and monetization system dialed in, what you’ll notice is that your business starts growing faster.
You’ve created a product that sells itself.
Yet, if you don’t have the right product management systems, you can have the most effective go-to-market motion but a product that nobody likes.
Product systems cover anything that’s required to create an empowering product.
There are many potential systems that you’ll want, like:
- User system
- Roadmap system
- Data system
- Experience system
However, I encourage you to take a step back and really question what are the core systems you need to build the capabilities in your product.
I’ll give you a few scenarios to get the wheels turning.
Scenario 1: Commoditized Market
If you’re in a highly competitive market where the solutions are commoditized, and consumers are price sensitive, your how-to-win strategy is to win through customer experience. So you need to build a system around how to deliver world-class customer experience quickly. That would be a management system you’d need to have.
Scenario 2: Differentiated Product
Let’s say part of your how-to-win strategy is to build a highly differentiated product. That sounds great on paper, but what systems would you need in order to make it work? A competitor could always copy your solution, and your differentiation moat is reduced. To keep differentiation as a long-term core capability, you need systems around customer research to understand what they value and systems around building quickly so you can always stay one step ahead of the competition. While they’re copying your latest features you are already building the next one.
Scenario 3: Low-Cost Product
Let’s say part of your how-to-win strategy is to sell a low-cost product. You are up against competitors with deep pockets and can’t compete with them on features, so you decide to be the low-cost alternative. To be a low-cost competitor and remain profitable, you no doubt need operational efficiency as a capability, yet what are the management systems that would support that? You’d need an onboarding system to help users experience value in your product without reaching out. You’d need a lean management system so that you have fewer people on the team and don’t have to pass as much cost onto the customers.
These are just examples. Remember, the management systems you choose must maintain the distinctive capabilities that help you win as a business.
I hope by now that you’re able to see how management systems are the glue between execution and strategy.
With that said, you may feel overwhelmed with all the different systems you need to put in place. For now, just focus on writing down the potential systems you need to support your strategy. Then, just focus on building out one system at a time.
- Identify your current management systems
- Identify company, customer, and product management systems that you need to build out and/or update to better deliver on your strategy
Putting It All Together
By now, you’ve built out your winning business strategy or at least know how to build out your strategy.
The next step is to put it all together so that you can easily reference your strategy and communicate it to the rest of the organization.
You can download a template of our ProductLed Strategy Canvas so you can fill out each piece of your strategy (be sure to duplicate it).
Strategy is formulated at all levels of the organization, and to be successful, it needs to be clearly communicated at all levels as well.Roger Martin
The purpose of communicating your strategy is to create a shared understanding of the strategy, explain how and why we arrived at it, and discuss implications for the organization.
You should share your strategy with everyone who:
- Has to act on it.
- Will be affected by the changes implicit in the strategy.
- Has insights into possible challenges and could offer valuable feedback.
The key message you want to convey when communicating your strategy is:
- A high-level overview of the process you used to arrive at the strategy.
- The heart of your strategy – where we will play and how we will win.
- How our business will change when the new strategy is in place.
- How we measure the success of the strategy.
- The next steps in making the new strategy work.
With your strategy defined, it's crucial to share it throughout the organization. You can do this by filling out your ProductLed Strategic Canvas that outlines the key goals and initiatives derived from your strategy.
Once you’ve communicated your strategy with your team, make sure you review it frequently.
You can do this by:
- Review your strategy every week in a leadership meeting.
- Re-evaluating your strategy on a monthly, quarterly, or annual basis – depends on how much your business is changing.
- Leaning into your strategy in your marketing messaging. If you have a solid strategy, your marketing messaging should remind customers and your team what your strategy is.
To recap, strategy is about making choices.
To win, a company must choose to do some things and not others.
By going through this activity, I hope I’ve challenged you to create a winning business strategy.