This is part five of a five part series. If you haven’t already, start with the Introduction to Priority Mapping.
It’s easier to go faster when your team’s rowing the same direction. Squares give you the foundation to get your team on the same page with your strategy today, tomorrow and in the future.
Now you want to look at the Habits for each Square to align your team on what to do more often, where to get better and when to build something new.
What Habits do you have that already work?
A Square works, when you can make money in a repeatable way. Making money works, when you can win customers and deliver value in a repeatable way. And doing more of the tactics that are already working is your fastest path to a larger market share.
There’s two ways to approach your core Habits. If they already work, you want to do them more often. Otherwise you’re trying to build solutions, systems or skills to get better at them. That’s the foundation to your execution plan.
Doing is always a better return on investment than building. So if you have something that already works, start there first.
How do you know when a Habit’s working?
It’s simple, a Habit works when it’s repeatable. So it’s based on the number of times you’ve done it successfully. Every company goes through the same stages.
First, you need to successfully do the Habit once. Then you’ll do it three times, then ten times, thirty times and a hundred times. Once you’ve done something a hundred times, it means you’re doing it ten times a month. Then you’re targeting ten times a week and so on.
You can think of repeatability at both a company and at each Square level. First you want to get your company to 100 times. Then a 100 times for each Square. Your first 100 can be focused in a few Squares (narrow) or scattered across different Squares (wide).
If you’re not sure what’s working, your goal is to start wide and then narrow down as quickly as possible once you start seeing signals from the market. Those signals are the success rates of your core Habits. My minimums are at least 10 successes for working and at least 3 for kind of working.
Making money works, when you can win customers and deliver value so let’s look at how you’ll know when each of those core Habits are repeatable.
How do you know when you can win customers in a repeatable way?
Money and time are the signals that tell you how successful you are at winning customers. If you can get more than 10 customers to give you their money or time, you can start considering your Habit repeatable.
On top of money and time, you’ll also want to consider the time it takes you to win customers, the costs to acquire customers and any quality related metrics like the prospect-to-customer win rates of your tactics.
How do you know when you can deliver value in a repeatable way?
The frequency of money and time are the signals that tell you how successful you are at delivering value. It’s possible that you win customers initially, only to have them churn out later.
If you can get more than ten customers to pay or engage more than 10 times each, you can start considering your Habit repeatable. If your customers have different stakeholders, you’ll want to see an engagement rate of more than 10 times for each stakeholder as well.
On top of the ongoing money and time, you’ll also want to consider the time it takes your customers to see the value, the costs to deliver value and any other quality related metrics for that tactic like a customer satisfaction score.
How do you do your Habits more often?
Once your Habit is repeatable, you want to scale and ratchet up how often you win customers, deliver value and make money. First at a company level, then for each Square. With nothing more to build, all that’s left is adding time, money and people to turn the crank faster.
You can find the resources needed by prioritizing what you already have or adding more. It’s always cheaper to prioritize than to add more.
So you want to prioritize your Squares that work (with highest ROI) first, then those that kind of work and finally the Squares that don’t work yet (those with lowest ROI today, but will increase your average ROI in the future).
Baselining your Habits
To do your Habits more often, you first want to understand how often are you doing it today? Consider the rate of your Habit at a company level and then at a Square level. Like with Filters, when looking at Squares it’s easier to start with where are you doing it most often? and least often?
When baselining your Habits, you want to track the rate of repeatability, not the total number. The total number will always go up and give you a false sense of progress. So the rate of winning customers, not the total number of customers won.
Increasing the Rate of your Habits
Next, choose the time period that gives you stability. I like to see at minimum ten successes for something to work, so that might be ten per month, ten per quarter or ten per year. And finally, set your target as the exit rate, not the average rate over the period of time.
If you need to increase your rate of winning customers to hit your goals, then you’re guaranteed to miss if you’re only aiming for the average over the period of time.
I like rates better than absolute numbers because they won’t change unless you do something. You either need to add more resources or you have to improve your solutions, systems and skills.
How do you keep getting better at your Habits?
If you haven’t baselined any of your rates, your Habit isn’t repeatable yet. You’re kind of repeatable if you’ve baselined your rates, but you’re still not happy with them. For most, happy is defined as breakeven or better. For others, happy may be a reasonable loss.
If you’re not happy with your rates, start with your end goal and work backwards. So if your goal is to make money, then you need to win customers and deliver value. And if you’re not happy with how often you win customers (or deliver value), you need to consider what drives your Habit?
Tactics drive your Habits
The success of your Habits is based on the Tactics that drive that Habit forward. Tactics are your solutions, systems and skills that influence your Habit. You’ll have Tactics that directly influence your Habit and Tactics that indirectly influence them.
Your inbound, outbound and referral efforts are your direct Tactics to win customers. And your information, services and products are your direct Tactics to deliver value. But you can also get more specific. Your ad campaigns and product features are also direct Tactics that drive your Habits.
You also have indirect Tactics. The simplest is Learning. But you also have yearly strategy meetings, quarterly planning sessions, monthly roundtables, sprints, 1-on-1s, daily check ins and any other solutions, systems or skills that support your company or individual teams.
Tactics are just like Habits with one key difference
Your core Habits never change. You’ll always need to make money, win customers, deliver value and learn (included as the fourth core Habit).
But your Tactics on the other hand can change. The channels you use to win customers, the products you use to deliver value and your internal systems should be under constant evaluation. Tactics that work today can stop working tomorrow.
Like with Habits, you can have Tactics that you’re happy with, Tactics that you kind of happy with and Tactics you’re not happy with, yet.
If you’re not happy with your Habits, then you’re not happy with one or more of your Tactics.
Indicators, Levers and Conversions drive your Tactics
If you’re not happy with a Tactic, start by baselining your rates just as you would with Habits. First company wide, then for each Square. Next you need to look at the indicators, levers and conversions numbers that define your Tactics.
Indicators are something you want, the end results or the steps along the way that show you’re on the right track. Levers are something you do and conversions are the averages between the two.
Levers define your resources requirements
Levers are the inputs and actions that drive the indicators you’re looking for. Adding time, money and people lets you turn your levers faster and ratchet up the rates of your Tactics. First consider company wide, then for each Square.
Tactics are levers themselves. Your inbound, outbound and referral channels drive the customers you win. Your information, services and products drive the value you deliver. And the input actions like running ads, doing product demos and writing content are also levers.
Conversion numbers are the engine that defines your Tactics
Translating between your levers and your indicators are your conversion numbers. The average money, time, rate or percentages that tell you when you’re ready to ratchet up your Tactics and scale.
Think of UberX as a Tactic. The average number of active users, the average rate of rides per user, the average money made per ride and the average costs paid per ride. UberX is ready to scale once those numbers are repeatable and Uber is happy with them. You can also look at UberX as a Tactic that is only a percent of Uber’s total revenue.
So you can have conversion numbers that are repeatable, some that are kind of and others that aren’t yet. Repeatable conversion numbers leads to a repeatable Tactic, which leads to a repeatable Habit, which ultimately leads to a repeatable Business Model.
On the flipside, before you can scale you need to figure out if you’re happy with the repeatable numbers. So depending on your tolerance of breakeven, profit or a reasonable loss you’re either happy with the numbers, kind of happy or not happy, yet.
If you’re not happy with a conversion number, then you need to improve your solutions, your systems or your skills. That’s your backlog. With each feature, process step or skill being an assumption until your conversion numbers are repeatable and you’re happy with them.
If you’re not happy with a number company wide, chances are you’re happy with the number in at least one Square. You might not be happy with the overall rate you’re winning customers or the overall engagement frequency, but you have a segment of the market that works. Focus your efforts there first, then find more.
Putting it all together and building your Plan
Now you know which Habits (and Tactics) to do more often and which ones need to get better. That’s the foundation for putting your strategy together into an execution plan and finally brings us back to Part 1 – How to Build your Strategy with Squares.
So to recap, how to build your plan in 6 simple steps:
- Define your Market using Lenses & Filters
- Find your Squares that already work (or depending on stage, Squares that kind of work or don’t work, yet).
- Agree on your resource allocations for revenue today, revenue tomorrow and revenue in the future by looking at far away Squares.
- Figure out your nearby Squares for your short term goals.
- Start building your plan for the Squares that give you the highest return on investment.
- Keep including more Squares until you run out of resources.
Remember to find something that works, do it more often and keep getting better. Then find more. Good luck!