I am always surprised by how much the day-to-day makes you blind and narrows the thinking. It’s so bad that most startups will die if they do not accept to take a step back and think strategically.
I would argue that strategic thinking is the one single thing that could change a startup path.
Easier said than done, right?
Let’s look at the way an entrepreneur usually thinks about building a successful startup.
It starts with an idea and building a team around it. Then it’s often all about proving execution, delivering on the idea by producing a product, and getting market validation that the product is right.
So, in essence, the psychology is as follow:
The team loves the idea and believes in it.
The team believes in it so much that they build a mental conviction that only if they had built the product, the market would see how fantastic this is.
So the only barrier to success is to build the product.
The team will spend 90% of the time building, refining, testing, debugging the product.
It’s often the case (always?) that version 1 of the product won’t blow away the market. That should be the first signaling that there could be something wrong.
Hell no, most entrepreneurs have so much faith in what they do (no blame here) that they think they understand why the market does not react positively and believe that the next version will fix it.
Guess what, it does not. It’s time to change the software.
A startup is not a product. A startup is a vision enforced by a team. Think about it; if you find a great team with an inspiring vision, there is little doubt that they could build something meaningful with time and money. Anyone can make a product with time and money. The product is often no longer the barrier to entry. However, money can’t buy a great team with a vision.
Strategic thinking starts with spending less time, much less, on the product.
Strategy and Tactic
Let me share a picture that I have used countless times, and that should be an eye-opener.
The tactic is when you have flawless execution, a fantastic sales/product team, and so on.
The strategy is when you are doing what matters.
So if you have an A+ team executing the wrong strategy, you cannot win. The better the execution, the faster you die!
So what matters is not to build a stable product with a friendly UX and the perfect onboarding. What matters is to build the right thing.
1-Becoming Strategic: Holistic view
To be strategic, you need to construct a holistic understanding of the startup.
Let me begin by saying that every startup is broken. No shame here, it’s the precise nature of a startup. According to Steve Blank, a startup is a “temporary organization designed to search for a repeatable and scalable business model.”
The issue is to understand how to go about improving/fixing the startup. The approach cannot be to fix what is broken, there is too much to do. The challenge is to understand the startup holistically.
Holistic means understanding the big picture. As the entrepreneur identifies an obstacle, the only way to improve is to take a step back and put the issue in the startup context.
Let’s say the obstacle is that the users’ churn is quite high. One could think the product does not show enough value early on, and users quit. Now, if you take a step back and look at it from the startup angle, churn could come from multiple sources; not enough value early on, product too expensive, not solving the issue, not different enough from the current solution, lousy branding, not ambitious enough, poor marketing, clumsy UX, you get the idea.
So the only way to fix churn is through strategic thinking and the big picture.
2-Being Strategic: Continuous refining
Understanding the big picture is not a one-shot and done.
During the first 4 years of a startup, a lot can change as everything around is dynamic. Without the proper understanding, it could render the startup obsolete. So building an analysis of the dynamics and monitoring it every day seems right.
Every founder should design the startup strategy the way they create products. It’s alive and changing based upon market feedback. It necessitates spending time daily to revisit and refine it.
Market, customers, competition, technologies, team, everything can change. That is why startups often pivot (more than once) to achieve success. After 4 years the startup is too structured to pivot easily. The cards are on the table, time will tell.
So during the early stage of the startup, the question should not be what to build but rather what to change.
3-Acting strategically: The framework
My take is that a startup is a puzzle that needs to be assembled in the right order. If you start with the wrong elements and try to fix them, it won’t work. I am not saying that there is a recipe, and with the right sequence, things can work. Success cannot be programmed.
CB Insights surveyed why startups fail (here). The number one reason (42%) is that they built something no-one cares about, there is no market need. Don’t you think that they are building the startup in the wrong sequence? Stunning, isn’t it? Back to the product tunnel vision…
The first thing to do is to understand what a startup is. We have great collective intelligence about it, but never has it been assembled into one piece. If you look for “intelligence” on growth, adoption, or market sizing, you’ll find everything you need from brilliant people. However, the pieces are not connected, it is not holistic.
When should I worry about market sizing? When should I think about company culture? When should I build a go-to-market strategy?
When I try to help a startup, I first want to get my arms around the vision and founders’ fit. In other words, what is your purpose, and why are you the right team to succeed. Simple right? You would be surprised by how often founders don’t have a crisp answer, sometimes any answer. It starts here, without a north star, without knowing where you want to go, chances are you won’t get there. So why tackle the adoption problem if you do not have a clear purpose?
Never try to go right at a problem and solve it. Try to understand the big picture first, and from here, answers or problems causes become obvious.
I am absolutely convinced that being strategic is what separates potential success from guaranteed failures. I am so confident that I will soon launch live masterclasses on it and a digital companion to help founders spend the necessary time on strategic thinking.
Can't wait to try your product, Pierre.