Tell me. Is your business strategy crystal clear? Do you and your team have complete certainty over where you’re headed? And how to get there? Or does everything feel a bit like guess-work? You’re not alone. When I first start coaching clients, many of them are vague about their direction of travel. Caught up in the whirlwind of running a business, it’s hard to see the wood for the trees.
Apologies for the jargon, but that’s why you need a 3HAG (or 3 Year Highly Achievable Goal). This new acronym was coined by Shannon Susko, the result of her experience growing and then selling two SaaS companies in Canada. She’d used the usual range of Scaling Up tools but identified areas that, in her opinion, could be even slicker. Having read her book ‘The 3HAG Way’ (which I thoroughly recommend), I interviewed Shannon for my podcast and have since gained her 3HAG certification. For me, this has provided the missing pieces of the scaling up jigsaw, giving me a solid framework that I can share with clients.
So what’s so great about 3HAG? How exactly can it turbocharge your business growth?
Let’s assume you have your 15 to 25-year BHAG (Big Hairy Audacious Goal) as well as your purpose and core values worked out. What next? Traditionally, most companies tend to focus on five-year goals with annual horizons. So, they’ll know what they’re doing over the next year and where they want to be in five years. But there’s nothing in-between. Everything becomes a bit vague or, to use another of Shannon’s acronyms, a 5-WAG (meaning Wild Ass Guess!) She suggests ditching this completely and moving to a three-year horizon – so, where will your company be in terms of revenue, profit, cash and headcount in three years’ time?
Abandoning five years for three means that you’re focusing on something within touching distance and not random. It’s not too far away for you to feel little emotional pressure to deliver. Once you put the numbers in place, it's just 12 quarters in the future. It's tangible. This brings a sense of urgency and reality to it.
During the two-day kickoff, it’s great to see the executive team come together to agree on the right plan. I'm amazed by how far they move in such a short period of time. Often, when teams arrive, they tell me they already have a plan. Two days in, their thinking has altered dramatically.
A client said to me recently that his team left their kick-off spinning with ideas. Whereas before they’d thought they had three business units, now they have only two. Before they thought they were in verticals. Now they are selling solutions and everything has turned around 90 degrees.
For their follow-up, we went deeper still into the ways they were going to market. They began thinking about their customers differently as well as the problems they're solving for them. Their approach bears little resemblance to what they were doing only a few months ago. And they’ve identified a load of work that needs doing between now and January to realign the whole company.
The strategic framework provided by 3HAG enables rapid decision-making which is vital for growth. It may be that in three years’ time, you’ll need to hire another hundred people. Well, where will you put them? Should you do software development onshore, nearshore, offshore? Should you partner with somebody for software development? All of these are big decisions that need to be made in the right strategic context. When this isn’t present, they can drag because people feel they don't know enough to take decisive action.
It’s one of the reasons why companies grow fast initially and then plateau. They have no strategic framework and everyone’s on a different page. If there’s no unified picture, then the executive team start to second guess each other. They base their decisions on opinion rather than the same view of the facts.
A really useful aspect of 3HAG is attribution mapping. It’s brilliant for clarifying thinking amongst members of the executive team. Everyone decides on 10 attributes of their product or service to focus on over the next 36 months. This follows a brain-storming session to identify these attributes, ranking them against those of the company’s top five competitors.
Gaps in knowledge often appear and further homework is necessary. But, once completed, it will clarify your view of the marketplace and your position in it versus your competitors, bringing into focus the things you do way better than the competition. This might be customer service, so you decide that Net Promoter Score is your thing. One of my clients believes that recruitment is one of their key attributes so access to human capital is their biggest focus. Whatever they are, you’ll double down on these attributes over the next 36 months.
You can bet your competitors aren’t going through the same exercise and won’t notice what you're up to. This is what happened when I was running Peer 1 Hosting. We decided we wanted to be the number one hoster of Magento Enterprise in the UK and North America. Within two years, we were there. It became an obsession and we made it happen.
As well as attribution mapping, 3HAG takes you through a thorough analysis of your business environment. On one hand, you map out all the ways your company generates leads, the vertical markets you serve and the channels that you use to go to market. And on the other, you map your cost base and suppliers. This brings into focus the importance of certain groups of customers.
When you add percentage of leads and cash, you start to identify the really important relationships. Executive teams often think that their marketing or sales team are already doing this work. But when they look into it, they can see they're not thinking this strategically. They’ve been given a plan and are implementing it in a highly tactical way. But it’s the wrong plan, with the wrong customers and the wrong messaging.
Even clients who are on the ball and growing fast have huge gaps in their market knowledge or their plan. When something has worked in the past, they’ve doubled down on it even though it may not take them in the right direction.
Rhythms are everything in business – I’ve written about them time and time again. Daily, weekly, monthly and quarterly, a constant drum-beat will take your business forward. It’s like losing weight on a diet or building up compound interest. Consistent, regular application and practice will reap rewards.
Shannon’s view is that you may not get it right all the time, but that’s less relevant than plugging away and doing the work in a consistent rhythm. 3HAG is based on the view that lots of smaller bits of work are better than one big push.
One of the beauties of 3HAG is it’s really defined and detailed, prescribing an exact way of executing on strategy. If you follow it to the letter, you really can’t fail.
As I said earlier, it takes elements of the Scaling Up toolkit and strengthens them still further. A good example is Shannon’s treatment of the functional accountability chart – a key component of Scaling Up. This is where, rather than thinking of your business along traditional, organisational lines, you think of it as cross-functional and assign responsibilities accordingly.
3HAG takes this to the next level with a process flow map. This provides a detailed picture of the customer’s journey through the company alongside key metrics that tie in closely. It clearly shows who’s responsible at each stage and allows you to rate each of the elements red, amber and green, showing where you are at with each of the processes.
Basically, it’s a strategic picture of how you make money and who’s responsible. It’s a great way to zoom in on the areas that need attention and ensure that customer satisfaction is retained at every touch-point.
Oh yes – concentrating on the numbers that really matter. I go into so many companies that give me statistics but they’re not necessarily measuring the right things. What gets measured gets managed, so it’s important to get this right.
Often, companies are good at measuring lagging indicators like sales order intake but they haven’t thought about a leading indicator for the next quarter. So, Shannon creates a dashboard that provides a new way of thinking about the data needed to set goals. It tracks how you make money so you can review, every day, whether you’re on target and take steps if needed.
Metronome Growth Software is the tool Shannon suggests for 3HAG and I provide this to all my clients. Having identified a need for a central place to capture all the tracking data, she built this system with the Dev team from her last business. It’s your very own, virtual war room where you can put all the pictures, flip charts and data generated as part of 3HAG and track it in real-time.
The aim of this project management tool is to ensure all areas of the company move together through execution of the strategy. So, for each of the attributes, there will be a swim lane laying out three to five milestones over the next 12 quarters. The beauty of this is when you’re doing your annual or quarterly objective setting, you can reference progress through the swim lanes. Rather than sales just focusing on selling more or marketing on generating more leads, there's a longer-term plan around the attributes. Delivering on the attributes is often multi-functional.
This helps to make execution more than a 12-month window. Planning longer term, you can include product innovation, service definition or recruitment goals. A good example is a client who knows they’re going to need a hundred new team leaders or managers over the next three years. They don't want to hire them all from outside, so they’ve prioritised building a management training system in their business. They also need someone to run this and the resulting skills gap at senior level is now an urgent priority. As they worked through this, I could see reality dawning on their faces. This is what I love about my job!
3HAG is a beautiful thing. It simplifies strategy and execution like nothing else, providing a clear picture so that everyone in your team can see where your company will end up in three years’ time. If you’d like to explore using it in your company, get in touch. It would be great to hear from you.
Dominic Monkhouse is a proven architect of business growth with a demonstrable track record. As managing director, he scaled two UK technology companies from zero revenue to £30 million in five years. Since 2014, Dominic has worked as a CEO and executive team coach, helping ambitious CEOs and their leadership teams reach their full potential and achieve sustainable growth. He is the host of “The Melting Pot with Dominic Monkhouse” where he talks with some extraordinary thought leaders, fellow business authors, and CEOs to absorb their wisdom. Dominic is the author of F**K PLAN B: How to scale your technology business faster and achieve plan A, an exciting blueprint for cultural change and business transformation.