Every founder knows they need a startup strategy. It’s not possible to do it without one. But did you every really think about it? Here’s why you should!
Can you explain your startup strategy in a few words? It is a surprising fact that many executives cannot say what their objectives and advantages are in a simple statement. If they can’t articulate their strategy, then neither can their colleagues, investors and end consumers. Sometimes the problem is that the strategy is buried in voluminous documents presented at the early stages, but it is never implemented. This happens when entrepreneurs fail to have a simple and clear strategy statement that everyone can understand, implement and internalize.
One of the biggest problems I encounter at my firm are entrepreneurs seeking to grow through marketing and advertising, but they are not able to articulate their strategy. There seems to be a generalized problem where entrepreneurs create strategies in silos, without having a concise strategy or a strong base to grow from.
Different Strategy Schools
One school of thought drives strategy around production and products, success is measured in terms of units moved, and organizational hopes are pinned on product pipelines. These types of organizations know what it takes to make and move stuff. The problem is, so does everybody else. Therefore, there is no strategic advantage. Another school of thought dreams a really cool brand, with a trendy product, fun taglines and splashy design. As attractive as they may seem this organizations do not really know who they are selling to, and what exactly their competitive advantage is. The result is an organization that lacks a strong foundation to grow from and fails to generate customer loyalty.
The Strategic Question Today
The strategic question that drives business today is not “What else can we make?” or “How cool can we be” but “What else can we do for our customers?” At the core of a business are the customer and the market. The center of gravity is on the needs of customers and the organization’s position relative to their purchase criteria. The high failure rates for new ventures and products suggest that companies are continuing to invest heavily in product innovation but are unable to move customers’ purchase criteria.
The key to building a successful advantage is to shape customers criteria of purchase. When asked about the market research that went into the development of the iPad, Steve Jobs famously replied, “None. It’s not the consumers’ job to know what they want.” Consumers increasingly use company-defined criteria not just to choose a brand, but to make sense of and connect with the marketplace. This does not mean that market research is not necessary, quite the opposite, market research is fundamental to finding the sweet spot where consumer needs are not being met by competitors and can be executed within the company’s capabilities. However, it is the entrepreneur’s responsibility to determine how their product or service will be positioned relative to the consumers need. For example Volvo sets the bar on safety while BMW focuses on the fun of driving, they both meet the same basic needs but are positioned differently. The purchase criteria for Volvo is safety, while BMW’s is the thrill of driving.
It is very important for entrepreneurs to make sure that their strategy is centered around consumer needs, and that they know how they will shape the purchase criteria. Then the strategy should be articulated in 35 words or less. The value of a clear strategy should not be underestimated because words do lead to action.
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