3HAG WAY

1. Define Your 3 Year Highly Achievable Goal (3HAG) to Drive Growth

The 3HAG framework became our guide. It was the tool we used to help us define our unique and valuable market position.

The 3HAG concept is a strategic planning tool that bridges the gap between short-term goals and long-term vision. It provides a clear, actionable roadmap for the next three years, aligning daily actions with the company's ultimate objectives.

Key components of a 3HAG:

• Fiscal measures (e.g., revenue, profit, cash)
• Key performance indicators (e.g., number of customers, product launches)
• Qualitative goals (e.g., market position, brand recognition)

By focusing on a three-year horizon, companies can create goals that are both ambitious and achievable, fostering team confidence and driving strategic execution. The 3HAG approach encourages regular review and adjustment, ensuring that the strategy remains relevant and responsive to market changes.

2. Establish Your Foundation for Growth: Core Purpose, Values, and BHAG

Foundation for Growth is the key to being able to decide on your 3HAG and execute it.

A solid foundation is crucial for sustainable growth and effective strategy execution. This foundation consists of three key elements:

1. Core Purpose: The fundamental reason for the company's existence
2. Core Values: The guiding principles that shape company culture and decision-making
3. Big Hairy Audacious Goal (BHAG): A 10-30 year visionary goal that inspires and drives the organization

These elements provide a stable framework for developing and executing the 3HAG. They ensure that short-term actions align with long-term vision and company values, creating a cohesive and motivated team. Regular review and reinforcement of these foundational elements help maintain focus and drive strategic decisions throughout the organization.

3. Map Your Market and Internal Processes to Gain Strategic Clarity

The Market Map shows how you go to market (how you're making money) on the left side, while the right side will show your supply chain (where you're spending money).

Strategic mapping tools provide invaluable insights into both external market dynamics and internal operational processes. Two key tools:

1. Market Map: Visualizes the company's position in the market ecosystem

   • Customers and channels
   • Competitors and their relationships
   • Suppliers and industry associations
   • Revenue flows and market power dynamics

2. Key Process Flow Map (KPFM): Outlines critical internal processes

   • 3-6 key functional areas that drive revenue
   • Process owners and interdependencies
   • Bottlenecks and improvement opportunities

These visual tools foster team alignment, highlight strategic opportunities, and identify potential risks. Regular review and updating of these maps ensure that the company's strategy remains responsive to both internal capabilities and external market forces.

4. Identify Your Core Customer and Unique Value Proposition

Knowing your Core Customer, right down to the individual, is not about marketing, per se. It's about strategy.

Core Customer identification is a critical strategic exercise that goes beyond traditional market segmentation. It involves creating a detailed profile of the individual person who will generate optimal profit for your company.

Steps to identify your Core Customer:

1. Analyze current customer base for profitability and growth potential
2. Create a detailed persona, including demographics, psychographics, and behaviors
3. Understand their key needs, pain points, and decision-making process

Once identified, the Core Customer becomes the focal point for strategic decisions, product development, and resource allocation. This laser focus on serving the needs of the most valuable customers drives profitability and sustainable growth.

5. Develop 3-5 Differentiating Actions to Create a Unique Market Position

Strategy is how a company creates a unique and valuable position through a set of differentiating actions.

Differentiating actions are the key activities that set a company apart from its competitors and create unique value for its Core Customer. These actions should be:

• Interdependent: Reinforcing each other to create a strong competitive advantage
• Aligned with Core Customer needs: Addressing key pain points or desires
• Difficult to replicate: Creating barriers to entry for competitors

Tools for identifying differentiating actions:

1. Attribution Framework: Map market attributes and competitor positioning
2. Activity Fit Map: Visualize how key activities reinforce each other

By focusing on 3-5 key differentiating actions, companies can create a unique and valuable market position that is difficult for competitors to replicate. This strategic focus drives resource allocation and decision-making throughout the organization.

6. Create Swimlanes to Map Your 12-Quarter Plan

The purpose of the 3HAG framework is not only to get you to define a unique and differentiated position for your company but also to foster the confidence that goes along with such a rock-solid plan.

Swimlanes provide a visual roadmap for executing the 3HAG over 12 quarters. This tool breaks down high-level goals into actionable milestones and helps teams:

• Align activities across departments
• Identify dependencies and potential bottlenecks
• Track progress and make necessary adjustments

Key components of Swimlanes:

• 3-5 horizontal lanes, each representing a key differentiating action
• 12 vertical columns, one for each quarter
• Milestones and key activities plotted in each cell

Regular review and updating of Swimlanes during team meetings ensure that everyone remains focused on executing the 3HAG and can quickly respond to changes in the market or internal capabilities.

7. Implement a 36-Month Rolling Forecast for Financial Clarity

Your 36 Month, month-over-month Rolling Forecast is a leadership team tool—not a finance team tool. DO NOT pass this on to your CFO and forget about it.

The Rolling Forecast replaces traditional budgeting with a dynamic, forward-looking financial planning tool. Key features:

• 36-month horizon, updated monthly
• Includes revenue, expenses, profit, and cash projections
• Aligns with Swimlanes and strategic milestones

Benefits of the Rolling Forecast:

1. Increased financial agility and responsiveness to market changes
2. Better alignment between financial resources and strategic priorities
3. Improved decision-making through regular review and adjustment

The Rolling Forecast should be a collaborative effort involving the entire leadership team, not just finance. Regular review and discussion of the forecast foster strategic thinking and ensure that financial decisions support the execution of the 3HAG.

8. Craft a Brand Promise with Guarantee and Discover Your Secret Sauce

A unique brand promise addresses what you and your team believe is the greatest need your customers have and assures those customers that you can solve that problem better than any of your competitors.

Brand Promise with Guarantee is a powerful tool for differentiating your company and building customer trust. It should:

• Address a critical customer need
• Be unique in the market
• Include a meaningful guarantee or "hurt" if not delivered

The Secret Sauce is the company's unique solution to an industry problem that competitors can't or won't solve. It provides a tenfold advantage in the marketplace.

Both the Brand Promise and Secret Sauce should:

• Align with the Core Customer's needs
• Reinforce the company's differentiating actions
• Be continually evolved to maintain competitive advantage

Regular review and refinement of these elements ensure that the company maintains its unique market position and continues to deliver superior value to its Core Customers.

9. Evolve Your Strategy Through Regular Team Meetings and Visual Tools

Strategy is not static, so the pictures are not, either.

Regular strategy meetings and visual tools are crucial for keeping the 3HAG framework alive and relevant. Key elements:

1. Meeting Rhythm:

   • Daily huddles for tactical alignment
   • Weekly meetings for operational issues
   • Monthly reviews of key metrics and Rolling Forecast
   • Quarterly strategy sessions to review and adjust the 3HAG
   • Annual planning to set the next year's goals and review long-term vision

2. Strategic Pictures:

   • Visual representations of key strategic elements (Market Map, KPFM, Swimlanes, etc.)
   • Displayed prominently in meeting rooms and work areas
   • Regularly updated to reflect changes in strategy or market conditions

By maintaining a consistent meeting rhythm and using visual tools, teams can stay aligned on strategic priorities, quickly identify and respond to changes, and maintain momentum towards achieving the 3HAG and long-term vision.

Last updated: April 22, 2025