The Real Meaning of Strategy in Startups
While setting a strategy and aligning a team to execute that strategy are critical to growing a business, strategy is a word often used in business that means a lot of different things to different people. I was once doing a strategy workshop with a company and we asked several leaders the question: what is your strategy? Some defined strategy as a company presentation/process, others a list of goals/metrics, while others described strategy like an action plan of initiatives. While those are all important, the best company strategies I have heard are simple and focused. In a startup environment with limited time and resources, initial focus is paramount. Ultimately, a focused business strategy has two key components: where to play and how to win.
Where to play
Putting together an analysis of a huge addressable market may look good on paper, but is that really actionable? What is the right niche/customer segment that would truly be delighted by your products? It may vary by customer need, size, geography, product, etc. Properly doing research and testing to define your true target market is critical to ensuring you are focusing your efforts in a specific area versus boiling the ocean of trying to meet all needs of all customers in the entire market. This is also especially important in a startup, where you need to quickly test ideas and achieve scale with minimal resources. Have you properly defined your target market?
How to win
Too often companies get caught in a “me too” game and try to win by having more feature/functions. In the long run, truly successful companies have a unique competitive advantage that earns them the right to win. This could be a unique cost position, proprietary data or analytics, customer support, company culture, etc. Having that true differentiation that your target market values not only helps you stand out from competitors, but truly makes your sales process easier and aligns your internal team on why you win. Have you properly focused on what differentiates you in the market and proven that differentiation is valued by your target market?
These two components go hand-in-hand and often require multiple iterations to get the right fit. Do not be surprised if your initial path requires pivots or changes over time to get right. The benefit is once you have these tuned, you are in a position to delight customers and fend off competitors. Once this is defined, you can go further into aligning the organization and executing the strategic plan, but we’ll save that part of the discussion for another day.
As I joined Atlanta Ventures, we spent time talking through both of these. For us, “where to play” is focusing on SaaS entrepreneurs in the Southeast. “How to win”, is truly serving entrepreneurs, providing more options to earlier stage startups, our unique partnership with the Atlanta Tech Village, and our experienced team.
Strategy is defined by the Oxford dictionary as “A plan of action designed to achieve a long-term or overall aim.” Hopefully your team has a clear view of that aim, and an actionable plan of where to play and how to win to get there.