Guided by a set of Core Values and a purpose, it chooses a Big Hairy Audacious Goal (BHAG®)* to achieve in the next 10 to 25 years. To break up the journey, the leadership team sets a series of three- to ve-year targets divided up into annual goals. These are further broken down into specific actionable steps the business takes over the next few weeks or months, adjusting tactics as the market conditions dictate.

BHAG is a registered trademark of Jim Collins and Jerry Porras.*

The 7 Strata of Strategy: is tool represents the seven components (stratum) of a robust, yet simply stated, strategy. It’s designed to provide the kind of differentiation and barriers that allow you to dominate your niche in the marketplace.

The seven components:

1. What word(s) do you own in the minds of your targeted customers (e.g., Google owns “search”)?

1. Who are your core customers, what three Brand Promises are you making them (e.g., Southwest Airlines promises Low Fares, Lots of Flights, Lots of Fun), and how do you know you’re keeping these promises (Kept Promise Indicators, a play on KPIs)?

1. What is your Brand Promise Guarantee (e.g., Oracle has been advertising the chance to win $10 million if its Exadata servers don’t outperform the competition by a factor of five)?

1. What is your One-PHRASE Strategy that likely upsets customers (Apple’s “closed system”) but is key to making a ton of money and blocking your competition?

1. What are the three to five Activities that fit Harvard strategist Michael Porter’s definition of the essence of differentiation (e.g., IKEA’s furniture needs assembly)?

1. What is your X-Factor — a 10 times to 100 times underlying advantage over the competition — that completely wipes out any and all rivals?

1. What are your Profit per X (economic driver) and BHAG® for the company? These come straight from Jim Collins.

Employees can articulate the following key components of the company’s strategy accurately. You want all employees to align their actions with the strategy of the company. To do this, they need to know and understand the company’s 10- to 25-year goal (BHAG®); who the core customers are; the three Brand Promises everyone needs to keep; and what the company does — and be able to explain it when asked (the elevator pitch).

1. Core Values: the handful of rules defining the culture, which are reinforced through your People (HR) systems on a daily basis.

1. Core Purpose: the top leader’s regular stump speech to keep everyone’s heart engaged in the business.

3. Big Hairy Audacious Goal (BHAG®): the 10- to 25-year goal that provides constant context for all of the decisions made throughout the organization.

1. Priorities/Themes: a handful of three- to five-year, one-year, and quarterly priorities, which require repeated review on a daily and weekly basis to keep them top-of-mind.

WHAT you sell to WHOM and WHERE), Brand Promises, and the Profit per X and Big Hairy

Audacious Goal (BHAG®)