(0:00) When you can define your initiatives, outline your actions that you'll take to advance those initiatives, and then measure your initiatives through key results, everything changes.

(0:10) Welcome to Business Strategy, where we are documenting the best strategies and valuable lessons learned to build more profitable and iconic companies. Please share and enjoy.

(0:21) I've spent my entire career turning around and growing companies, generating over a billion dollars in value in the process by following this one framework, which I've coined IARs, which stands for Initiatives, Actions, and Results. I wrote about this years ago in my second book called Outsizing, and today I'm going to explain exactly how you can use initiatives in your organization to successfully execute your strategy. But before we get into all that, there are two phases of strategy that you should be aware of.

First is the design phase, and second is the execution phase.

(0:54) In this episode, we're going to be talking about the execution phase, but before we get into that, let me walk you through what's involved with the design phase. So in this phase, this is where you build a strategy blueprint.

(1:09) At Coltivar, we help companies do this by following our process and our framework, which involves first defining the company's purpose, why it exists. Number two is outlining the principles or the behaviors that the company wants to see exhibited in order to fulfill its purpose.

(1:26) Then we get into the strategic problem, defining what's the number one obstacle or constraint that's preventing the company from growing and achieving its full potential.

(1:35) We next move on to defining the shared aspiration of the business, meaning what does winning look like, not just for the company, but for all stakeholders, including customers, employees, investors, vendors, and everybody else who interacts with the business.

(1:52) We then move on to defining the market focus and position of the company, and then outline the competitive behavior of the business and the resources and returns that will be required in order to make this strategy viable. Once we go through all of these components, we bring it all together with a strategic narrative.

(2:15) This is where the company puts together this narrative to communicate effectively its strategy to its customers, to its employees, to its vendors, and investors, and all other stakeholders of the company.

(2:26) All right, so that's the strategy blueprint from a high level, and this is the fun phase. This is where a lot of business leaders enjoy working because you get a dream. You get to explore all different possibilities and think about the potential of the business.

(2:43) It's fun formulating strategy, but then guess what? Bad news. You have to actually execute this strategy, and this is where a lot of leaders fall short, not because they're not smart or equipped with resources or lack certain skills.

(2:56) Rather, it's because they don't have a framework to follow, and that's what I'm going to be explaining today is the initiatives part of the IAR framework.

(3:09) Now, when it comes to IARs, I'm just going to touch on this really quickly, and then we're going to just focus in on initiatives because if you can define your initiatives and get this right, then you'll be very successful with executing the rest of your strategy.

(3:24) So when it comes to IARs, this is how it works. You have your strategy blueprint. Then you define the initiatives that you'll pursue in order to advance your strategy. Then you'll also define what are the actions or the baby steps that you'll take in order to advance your initiatives, and then the R, which stands for results or key results, will help you to measure the effectiveness of your initiatives.

(3:48) So that's how IARs work, but let's narrow in on initiatives.

(3:54) When it comes to setting initiatives, the first thing you have to do before you start defining your initiatives, obviously you have to have your whole strategy blueprint, but you have to nail your strategic problem.

(4:06) I emphasize this because oftentimes companies, they just want to skip over this part or they just want to breeze past it because who likes to talk about problems, but burying your head in the sand or hiding underneath the covers isn't going to make your problems go away.

(4:21) And guess what? If you don't solve the number one constraint your business is facing, you're going to spend a lot of time and a lot of money until you do so because your company is going to keep bumping up against that constraint.

(4:31) Trust me, I've done this before many times in my career and I had to learn it the hard way by spending a ton of money and wasting a ton of energy by not focusing on the main constraint. But the constraint is going to be there. It's not going to go away just by ignoring it.

(4:46) So this is where defining the strategic problem is super critical. So let's just say a company has a strategic problem where its revenue is declining, it's losing market share to competitors, and therefore it's impacting their cash flow.

(5:02) And if they don't solve this problem, then they're not going to be viable. They're going to be out of business.

(5:07) All right. When it comes to initiatives, the first thing that an initiative does is it helps you to overcome your strategic problem. This is the one of four that I'm going to be explaining here.

(5:19) So going back to my example of the strategic problem, let's say a company is struggling with its top line declining, right? Revenue is shrinking. It's not getting the sales it needs in order to profit the company.

(5:30) Well, if this business is pursuing other initiatives that are not focused on helping the company to overcome a strategic problem, guess what? It's going to be completely off track.

(5:41) And even worse, if the business can't even define what its strategic problem is, how the heck is it going to set initiatives which will help it to successfully make progress?

(5:51) All right. So that's where defining a strategic problem is super critical and will help you to put in place initiatives that really matter and that will contribute to the biggest upside for your organization.

(6:02) All right. So that's the first thing that an initiative does is it helps you to overcome your strategic problem.

(6:09) Number two, initiatives help you to enhance the customer experience.

(6:16) So going back to the strategy blueprint, at the very core of the strategy blueprint is the customer, at least that Coltivar. That's our framework. We put the customer at the very center of the strategy.

(6:27) I've seen so many strategy frameworks that exist out there that are just all focused on the company. They're not focused on the customer.

(6:37) So when it comes to initiatives, the second thing that they do is they help you to enhance the customer experience because guess what? The customer is at the center of the strategy and you want to enhance the customer experience and you want to make it personalized. You want to make it relevant. You want to make it unique to the customer because if they have a great customer experience, guess what? They're going to continue to buy your products and services.

(6:56) It's going to enable you to scale your organization successfully because if your churn is really high and you're losing a bunch of customers, it's going to be really expensive to sustain growth because you're losing customers faster than you're bringing customers on and all that's going to do is it's going to increase your customer acquisition cost. That's why it's so critical to enhance the customer experience.

(7:18) When I go into organizations, since I have such a strong background in finance, oftentimes leaders mistakenly believe that I'm all about profit and just cutting costs and just doing whatever it takes to maximize profitability and that is not true.

(7:36) That's a giant myth. In fact, I'm a growth guy more than a cut guy and I'm more about enhancing the customer experience even if it means costs have to go up because I can tell you if the customer experience is enhanced and customers really love your products and services, they're going to spread the word and your business is going to naturally grow and since I'm a growth guy, that's going to contribute to more growth and less cutting in the long run.

(8:02) That's the second thing an initiative should do. It should help you to enhance your customer experience. Number one, what is it? Say it out loud. It's to overcome your strategic problem and number two, initiatives help you to enhance the customer experience.

(8:20) All right, you got this. Let's move on to number three. Initiatives help you to foster innovation.

(8:25) Now, innovation isn't about making things more complicated. Oftentimes, innovation is all about simplification.

(8:31) When I was a CFO of a large billion-dollar company, one of the first things I did to turn around the company is I changed the mindset of my department, which trickled down throughout the rest of the organization. I wrote on a whiteboard, simplify.

(8:41) That was the first thing that I did when I took my spot in the office. I wrote on this whiteboard that was in the shared common space. I wrote simplify and that was the whole mantra that I followed.

(8:50) It's just eliminate waste, cut complexity, just simplify everything.

(8:56) So when it comes to innovation in your business, how can you simplify things? How do you eliminate friction, not just for your company, for your employees, but also for your customers and for your vendors?

(9:08) So perhaps there's a technology that you can implement in order to streamline things or maybe certain technologies are complicating the process and you need to go in a different direction.

(9:19) So whatever it may be, it's all about streamlining your operating model, improving your products and services in a way that drives greater value to your customers and just making everything frictionless, all right, as frictionless as possible.

(9:34) That's innovation. So that's number three. Initiatives should help you to foster innovation in your organization.

(9:40) And number four, the last thing initiatives should do is they should help you to build competitive advantages, whether those are positional advantages, asset-based advantages, capability-based advantages.

(9:51) The key here is that you should be building advantages that your customers care about.

(9:56) I was working with a company recently and they believe that their product and service had the secret sauce that was going to make them all this money and differentiate themselves in the marketplace.

(10:05) Well, guess what? The market turned and the economics of the industry went down the toilet and customers, they just defaulted back to cost.

(10:15) So the whole time, this company was building this perceived differentiation strategy, but the customers didn't care about that. They really cared more about cost.

(10:25) And more importantly, they cared more about value, the value they were getting, and they just didn't see the value in all this other hoopla that the company was trying to promote out there.

(10:35) So when you're building competitive advantages, just make sure they're advantages that your customers actually care about, and that will drive value to your customers.

(10:45) And when you do this, you're ultimately going to drive value to your organization as well.

(10:52) So those are the four things initiatives should do. When you have your initiative set, you should go through this checklist and ask yourself, okay, number one, is this initiative helping us to overcome our strategic problem, or is it helping us to enhance our customer experience, to foster innovation, or to build competitive advantages?

(11:07) And if the answer is no to all four of those, guess what? It's probably the wrong initiative, and maybe you focus elsewhere.

(11:19) It doesn't mean that every single initiative should hit on all four points, but if the initiative doesn't touch on any of them, it's probably the wrong initiative.

(11:24) This is the framework that I followed over and over again to turn around and grow companies, and I could tell you it works. It works.

(11:34) When you can define your initiatives, outline your actions that you'll take to advance those initiatives, and then measure your initiatives through key results, everything changes, and performance improves in your organization, morale improves, and there's just so much upside, not just for your company, but also for your customers.

(11:52) I wish you the very best as you take this and apply it to your company. If you need any help along the way, remember you can always reach out and connect with me at Coltivar.com. I would love to help you and your business to achieve high levels of success.

(12:09) Thanks for tuning in. Until next time, take care of yourself. Cheers.