Actually, it’s exactly the other way around. A startup, any startup, has too many opportunities and paths it can take. Business opportunities, technology opportunities, in marketing and of course with its product. So obviously, a startup must constantly give up on opportunities and possible paths.
At times – scratch that – most times and most startups, end up eventually pivoting their company to a different direction. So why do we expect every entrepreneur to look us in the eyes with the most determined face and say that they’ll never give up?
We expect them to be smarter than that. To have a firm grasp on their company, market, technology and situation. We expect them to have an eagle’s eye view on their path and direction. And when the path is blocked to quickly realized it and change course to a better suited path. That is a good thing. But if that’s not ‘giving up’ than what is?
As optimistic and motivated as entrepreneurs are, fortunately for us, in most cases they do eventually realise that giving up on a path isn’t an admit of defeat. But rather a late chance get out of a deadspin. Yet, for the exact same reasons above, in most cases they’ll do it too late.
What is your startup’s strategy?
Funny, but we don’t hear entrepreneurs being asked that too often. When they do, too often they mistake Strategy for their list of goals and objectives. “To grow 200% based on our superior product” is NOT a strategy. “To always provide the best possible service” is also NOT a strategy. Those are nothing but vague words, that might be hard to disagree with, and on some level ,might be motivating. Yet, that’s not path.
“A good strategy does more than urge us forward toward a goal or vision. A good strategy honestly acknowledges the challenges being faced and provides an approach to overcoming them.”
― Richard P. Rumelt, Good Strategy/Bad Strategy
For a startup, a strategy is as important in what you decide NOT TO DO, as it is in what TO DO. Too many opportunities being approached all at once often marks the coming downfall…
Great, you got funded! Now there’s only an 81% chance you’ll fail
Those of the chances of a seed funded startup to not able to raise an additional funding within 3 years. Yet, both founders and investors, tend to celebrate the investment milestone as a great sign of achievement. Founders get their initial external validation for their idea. Investors, celebrate choosing the best opportunity they had based on team, market and concept/tech.
From here, all that stands in the way of success is execution. That’s exactly where strategy needs to be your plan and map. Yet in practice that too often translates to “let’s get as much sh*t done as possible in the quickest amount of time”. Focusing on speed and not velocity, output as opposed to outcomes. And that is terribly wrong! Without a clear strategy your up-hill chase is a big waste of energy.
Strategy is not the solution, it’s the path to maximizing our chances
Strategy is exactly the opposite of playing fair. It is by definition the shortcuts and trickery used to give ourselves an advantage and improve our position. It dictates where and how we can leverage our advantages to bypass the most challenging barriers. With the purpose of placing our products in a much better position to succeed (PMF anyone?). But for that to happen effectively, we must identify not only our strengths and weaknesses, but more importantly, which of them and where they be leveraged to gain that needed edge.
Strategy is our ‘witty’ plan to most effectively utilize our weapons. “Go out there and give it your all” is plain-out bad strategy, as it has no leverage or synergy involved.
It’s time to update S.W.O.T.
S.W.O.T. (Strengths, Weaknesses, Opportunities, Threats) analysis, as some of us have been taught in business school, is not relevant for the majority of startups. Reason being, it was mainly used to assess a ‘competitive strategy’. Today, we’ve come to realize that rarely are startups beat by competition. We’re now well aware that the main goal for most startups is reaching Product-Market-Fit before time/money runs out. Thus, a correct strategic plan, when it comes to product-oriented startups, should prioritize W.LS.LO:
Identify our weaknesses (W)
Focus on utilizing on the strengths you can leverage (Leverageable Strengths – LS)
And only the opportunities that can be leveraged (Leverageable Opportunities – LO)
“A talented leader identifies the one or two critical issues in the situation—the pivot points that can multiply the effectiveness of effort—and then focuses and concentrates action and resources on them.”
― Richard P. Rumelt
The forbidden low hanging fruits
Bad strategy or not having one at all, can both be equally damaging. A common example are ‘low hanging fruits’. Startup CEOs are many times mesmerized by ‘low hanging fruits’, short term gains that can be seen as achievements, acquired for minimal effort or cost. It’s very easy to see how this happens and how hard it would be for a young CEO to pass on an opportunity that looks to be so easily obtained and is in front of their eyes. But that happens when we forget that our time/money is much more limited than it seems. Focus is the most critical name of the game. Not being focused on the right path and sidetracking to reap short-term gains might seem like a harmless sin. But too often we miss judge and forget where things can go wrong and how much maintenance will be required.
One of the most crucial parts of good strategy is choosing what not to do. That in turn, means that deciding on a strategy will likely present losers. You need not try to avoid it. If your strategy pleases everyone, it’s probably a bad one. Strategy must state what needs to be sacrificed, and that would often mean frustration by some of your people who will feel their work is no longer in the organizational focus of attention. Not much that should do here, as that’s probably true.
Product strategy is beyond just a plan
It is an ongoing process of evaluation and assessment of processes and situations. Our strategy needs to be intertwined in our organizational culture. Constant debriefing to learn from our mistakes, changing perspective to catch the ‘obvious’ that everyone but us sees, and the courage to step outside of our comfort zone and test our riskiest assumptions first (although it might result in a ‘premature disaster of a result’), all need to be part of our strategy. This is one of the most effective ways to leverage or strengths.
How should I take it from here?
We have a blindspot for our own bad actions and ‘wrong way’ paths. It’s simply too hard for us humans to identify them in time. That’s why it takes us so long to admit we’re lost. Our optimism and eagerness, especially as entrepreneurs, to not give up, often hurts us. Yet when it comes to observing others we’re much quicker to spot mistakes.
So based on that, here’s my assignment for you: choose a startup you’re familiar with. Now analyse through your eyes their product strategy, can you describe it? is it focused? Is it exclusive (of low hanging fruits) and is it being overseed by an external observer? Now with each conclusion you draw, consider if you, on your startup, are not making these exact same mistakes…
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