The Battle of Execution vs. Strategy – Revenue Science™ & Leverage

How many times have you heard or read the following?

“The perfect strategy, poorly executed, will fail.  A lousy plan or strategy, well executed, is often successful.”

Those of us who like to deploy and execute love to use this line.  We want the world to leave us alone and let us just go do what we do very well.  Let us build houses, sell software, design products, run a store or whatever we are good at – let us go do it better and better.

Those of us who like to deploy don’t want to take days or weeks out of a year to review data, consider options, listen to the market, do simulations, run the numbers, or build engagement models.  We don’t believe strategies work anyway after all:

“No plan survives first contact with the enemy”, from the nineteenth-century Prussian military

Translated to the business world that means someone makes a strategy that we know is not going to work in the market so, how about letting us just go do what we are good at – that has been working for over twenty years?

Revenue Science™ tells us that – “letting me just go do what we are really good at” – is what the science calls “dumb stuff” and it increases the (already high) “Cost of Chaos” while decreasing both top and bottom line opportunities.

Today’s military knows the power and operational benefit of a strategy.  Without a strategy, no one on the deployment team knows what their True North (mission) is.  When resources are being deployed it is not possible to deploy those resources to create the great leverage necessary to achieve the purpose because no one sees a single purpose, and everyone does what is best for them – what they are good at.

This means the resources deployed are lucky to get any positive leverage. Simply said there are a bunch of people doing their own thing with no coordination or alignment.  Each may execute beautifully and still be subtracting from the overall results of every other person or unit.

Revenue Science™ tells you to first have a very specific Revenue Strategy.  Specific means to answer these 5 questions:

1. What is our brand promise?
2. What’s the customer “problem” that we solve that no one else solves?
3. What niche/s do, or will we dominate?
4. Who is our ideal customer?
5. Which are our key offers for dominating the niche?

These questions give every member of the team a specific True North to align with.  Even as the Prussians suggest when the market changes we still have a direction and the road has white lines to stay between.  Without a Strategic True North, ANY direct can be well executed without positive leverage outcomes.

So, if execution without a specific strategy seldom leads to long-term survival how do we make those decisions required after contact with the market?

In business, there is a formula to support the best decisions to keep between the white lines and headed to True North.

Net Profit        =          (Execution X Brand)
Brand               =          (Strategy X Alignment)
Execution        =          (Structure X Leverage)

When there is contact with the market and the original strategy is being challenged new decisions need to be made to assure survival.  When this happens use the formula to make decisions.

Net Profit is your metric for both survival and success, and since Net Profit is the result of how well you Execute times the value your Brand has earned in the market, the goal is to manage Brand and Execution.

To manage Brand is to manage the experience the market has when doing or trying to do business with you.

Controlling Brand is the result of answering those five Revenue Strategy questions (which define what you want your Brand to be) and the Alignment of your organization to that Strategy(if there is no intentional alignment, everything is random – meaning the Brand is random and out of control – if there is zero strategy there can only be zero alignment).

Controlling Execution is the result of intentional Structure (the resources invested determine the structure and they should be supporting aligned deployment) and the Leverage earned by every resource invested in Structure.  Leverage can be positive or negative.  Leverage can be considered in advance of investment, measured after, or never considered.  (There is always some Structure if just the founders time.  If the Leverage from the deployed Structure is Zero or less than the investment in Structure, then Structure x Leverage is Zero or less than one).

So, if the purpose of Strategy and Execution is Net Profit and Net Profit is the result of Execution X Brand then success after contact with the market where there is no Strategy is random (the result of luck good or bad) or Zero.  When the result is random or Zero and those investments in Structure are aligned to nothing the leverage will always Zero.

Revenue Science™ tells us that “The perfect strategy, poorly executed, will fail.

A lousy plan or strategy, well executed, is often successful” is a nonsensical conversation.  Both Strategy and Execution are required elements to get positive Net Profit for more than a short-term bubble.

The absence of applying the formula:

Net Profit        =          (Execution X Brand)
Brand               =          (Strategy X Alignment)
Execution        =          (Structure X Leverage)

is to intentionally bet on luck.  If the market is hot and your offer to the market fits into the bubble, short-term survival may follow.  Most of the time there is no bubble and not applying the formula is the same as stepping up to the dice table and putting everything on the next roll – sometimes you win and most of the time you just go home.

Answer the five Revenue Science™ questions, follow the formula and you will have a very good chance to not go home with empty pockets for a very long time – if ever.

Buyer-Focused Revenue Strategy

Your Revenue Strategy outcome is the result of buyer-focused offers. When organizations create a company strategy they often omit two key things:

1. The company strategy does not monetize (the Revenue Strategy monetizes).

2. Offers must be created to provide the most value possible based on the buyer’s frame of reference including the engagement process.

The Revenue Science™ context lays out exactly what is required to monetize a Revenue Strategy, what things will enhance or inhibit the deployment of that strategy in the real world and then how to continuously improve the outcomes for the long-term.

Take the time to develop the buyer-focused Revenue Strategy, design the offers for maximum flow across the “Revenue RoadMap” context, apply the science and continuously improve it all.

Watch the video below to learn more for your business.

Two “Cost of Chaos” Examples of the Lack of Revenue Principles

Who is in a hurry?   Who wants to get more done today then yesterday?  Who wants a fast answer and if they don’t get one, will wait until later (hoping later never comes), and who do we know, that is in such a hurry they take short cuts, and hope for the best?

We all know there are times when “good enough” is GOOD enough and we don’t need to spend more time or money.

The world is so full of chaos, complexity and high-speed change, we just hope we can keep up, but there is one rule we should pay attention to.

That rule is “take care of what you can control.”  There are so many things going on that are out of our control and those things we can control should get our full attention, since they provide us the greatest safety and leverage to have control over everything else.

One thing every person and every leader does control, is the principles they live by.  Individuals should have their set of personal principles and every business should have a set for everyone taking income from the business.

It is the business principles we will cover here, but the extension to individuals is easy to draw.  At The Revenue Game®, these are our principles, which we will use as an example for this conversation:

The power of principles comes from empowering every member of the company team to know when they can, should and must act, the boundaries to act within and when they can or must say NO.

If before being hired everyone sees the principles before they complete the interview process and again with their signature at the moment of being hired, they will get the feeling you are serious.

To examine the power of principles on the “Cost of Chaos” we will assume everyone in our stories has signed the principles at hire and knows they are expected to live these.

Real Life Situation 1

You have a strategic company that produces high value products and services for corresponding levels of fees.  One of your sales persons spends all their time with the tactical level staff on customers or leads.  The sales person’s focus is on product detail and trying to do whatever the customer asks.  When the customer says can you get me two of these, the sales person drops everything and runs back to engineering for help to create those two for a test.

Which Revenue Game® principles apply?

1.  Alignment is required to win the Revenue Game®

The sales person has been trained to start with the unique problem the customer has – unless the sales person understands the problem these two tests solve and it is part of our strategy, there is no alignment.

2.  Focused execution is required for strategic alignment

There is no focused execution, just doing what the customer wants and no linkage to our unique strategy.

3.  Success requires identifying, challenging and testing all critical assumptions

There are no shared assumptions between buyer and seller, so there can be no testing and no continuous improvement.

4.  Be proactive, not reactive

The sales person is totally reactive and brings no value – he is an errand boy.

5.  Winning requires Integrity

Integrity demands telling the customer these running errands is not a win for you or for us – we are a partner and not a vendor who does anything for money.

Real Life Situation 2

You have a strategic company that produces high value products and services for corresponding levels of fees.  Your sales team has worked with the buyer’s team for two months and gone through a very valuable Joint SOW (Scope of Work) process.  The buyer’s team has shared exactly what they need to achieve, how they will measure achievement and their resources to support attaining the goal.  Your selling team has brought corresponding business and operational resources to the Joint SOW. With the result being your previewing for the buyers a compelling “Ideal Future State”.

Based on the buying team’s excitement and confirmation of your preview, your team has developed a proposal to be signed and then contracted.  The presentation to the buyer team goes great and the buyer is ready.  Then they ask for a discount and your sales person says, “let me check with my boss.”

How do the principles apply?

Several principles apply here, but one alone dominates.

• Winning requires Integrity

The selling team has invested two months in the Joint SOW.  They have shared everything with you.  They are giving you the opportunity to be their strategic partner.  They are counting on you to deliver on your preview and if you can really do this they expect you to be part of their world for as far as they can see.

When they ask you for a discount they do that because procurement told them to and they want to test your integrity.  When your team responded with “let me check with my boss” your team failed the test.  You are NOT a partner but just another slick vendor who wants as much wallet share as you can get.  The buying team hoped you had set a fair fee for fair value.  You just told the buying team that you want as much as you can get and marked the deal up hoping they would not ask.  The buyer hoped your answer would have been more like “if you don’t have the resources for this SOW, what would you like to take out?”  This is the answer of someone you can keep on trusting.

Both real-life situations are warnings.  Both need to be addressed not only with these individuals but their boss and every person in the organization.

When principles are not followed our internal team becomes unengaged and the best people leave.  The brand goes from a high value partner worthy of corresponding fees to just another vendor and the “Cost of Chaos” explodes.

You have complete control over principles and how well your team lives those.  Principles are one of your most important assets and only you control how much that asset is worth.