„The first and fundamental question in strategy is Why? Why should anyone anywhere be remotely interested in what you are doing?” – says Richard Lucas. Let’s read our special advice column.
I need to plan everything regarding the strategy for a little company we are going to set up with my friends (it will be an app supporting the existing tools for brand popularity monitoring). What to take into consideration when preparing a strategy? How to start? How to put it in practise in the end?
Dear little company founder,
We used to say in one of my businesses, “if our clients/staff are happy and we are making a profit – who cares about the strategy”. It was a mistake but it felt clever at the time. A start up needs a strategy so it is good you are asking about this.
When I was working for a small PA Consulting Group joint venture in 1989-91 I was told “strategy is what happens” and to ask three questions:
1. Where are you now ?
2. Where do you want to be ?
3. How are you going to get there?
You need a sense of where your business is going. But your question is very worrying. There are three problems. You are focussing on:
1. The scale, (little)
2. The “who” (my friends), and
3. The “what” (an app supporting brand popularity monitoring)?
The first and fundamental question in strategy is Why? Why should anyone anywhere be remotely interested in what you are doing? What is the point? Why should they care? Why are we doing it? What is the benefit? What is better and different about your project? What unsolved problem are you solving? Guy Kawasaki calls it the search for meaning, in The Art of the Start. If you cannot answer these questions you cannot really have a strategy.
The second problem with your question is the lack of ambition. You make your business sound like a hobby. Why should anyone talented who could get a job with McKinsey, Goldman Sachs, The Economist, or Facebook consider working for you instead? If you can say, “we are going to be big, we want to be big” you may get the best most talented and ambitious people on the planet interested in working for you. If your ambition is to be a little company, then you need something else (cutting edge technology, super high wages, fabulous people) or you will probably be a struggling little company for ever. You need to be able to offer the money or careers that make you interesting to smarter people.
If a startup is not ambitious you will probably fail. If all you want is to make a living then good luck, but you may be better off getting a regular job with a normal company instead. You will not survive in business if you are not hyper-motivated, and if you care that much you can aim far higher than a regular job in a large corporation. Of course there are companies with great opportunities for the very ambitious but this article is not aimed at describing them.
Having been negative about your question, here are some positive ideas. How to make a strategy? Spend time with clients and potential clients. Let’s assume that you have something really good and different. You have done your competition analysis in English, French, German and Spanish and you know that you have something special. You can ask me for advice on business models but it’s the wrong moment. Spend the next 6 months with clients and potential clients, and if you don’t have the money to do that, sell 25% of your business to someone smart (or stupid enough) to pay for your bus/flights and hostel (not hotel) bills. Talk to your potential customers about what your tools can do, ask them about whether they are interested and what they would be interested in, and make sure that you take their feedback into account. Make sure they commit to trying and testing your product once you have taken their feedback into account. If you cannot get that commitment you have failed but at least you tried. If you understand why they rejected you, you can do better in your next conversation. If you start getting commitment then you are in a position to write the strategy. Each step of the strategy road needs a reality check. If you can say “We have talked to 100 potential channel partners for our solution (here is a list) and 25% are ready to pay (here is a list). This is why they are interested, and how we can help them.
There are 12,150 more companies like this globally, and we are going after them, in the following ways (telesales, face to face, fairs, visiting them, google adwords, whatever)” then you begin to show strategy execution capability. An OK strategy implemented by a workhorse is better than a brilliant strategy on paper where the authors don’t have the organisation and drive. To be great in business you have to turn rejection into opportunities.
We can talk about business model strategy and many more things once we have a sense of why you are offering what you are offering and more importantly why anyone should buy it. As an angel investor I can tell you I am far more interested in investing in businesses that already have happy clients.
It is very easy to build a product if you don’t have to deal with all those annoying clients, but completely pointless. In summary what should you do to develop your strategy ? Have a clear sense of:
• whose problem your product or service is going to solve and why they are going to choose you;
• how you can make money out of this, and how much, in other words your costs and pricing;
• how you are differentiated from current and future competitors. What will stop others entering your market and copying you if you start to succeed and how will you compete with those who copy you anyway;
• who are you going to have in your team? What sort of people do you have and need;
• set long term goals and have an implementation plan. Whatever you do good luck. It is smart to ask for advice.
RICHARD LUCAS (Richardlucas.com)
Angel investor, entrepreneur. 6 companies, 400 employees, 20 years in Poland, Cambridge University, Economics, TEDxKrakow speaker, and supporter. Interested in getting involved in startups as coach, mentor, minority investor, in business projects that are: better, cheaper, faster and more fun that the existing way of doing things. Active in supporting the pro enterprise culture in Poland in schools and universities. Notably through znaniabsolwenci.pl and Global Entrepreneurship Week. And the Krakow Network. Awarded a Pro Memoria medal for his work promoting projects associated with Wojtek the Soldier Bear tiny.cc/Wojtek.