Strategy; do you need one?

Many start-ups are successful without a coherent strategy. Most either don’t have one, or have the semblance of one deep in the mind of the founder(s); few, in our experience, have a documented strategy. 

In the early days when the business is just a side-hustle turned into a fully fledged commitment or it’s a handful of the first employees it makes sense not to have one in some aspects. Everything is reactive and tactical, responding to client and market needs. If a client is paying you to do something, the good start-ups will deliver even if it might not be in their sweet spot. A business strategy isn’t really a necessity.  

But as revenues become consistent and the business becomes more tangible we would argue that not having a strategy is often the missing link between success and failure, or breaching the £1m ARR mark which is a much sought after milestone. And as businesses grow into mature scale-ups their operations inevitably become convoluted, meaning a coherent strategy is often difficult to achieve. 

At this stage there are a number of common pitfalls we see. 

Mistaking Mission and Vision for a strategy.

Yes it’s important to have these as north star aims for your business, but a strategy should almost be a framework of how you are going to achieve your Mission and Vision. It’s not either/or, it’s both and more often than not a proper strategy is missing. 

We don’t need a strategy.

Often when founders or startups do well in the initial period they believe what worked for them to get to this stage will work for them going forwards i.e. being reactive and tactical. But a fundamental principle we believe in is what gets you to where you are as a business, won’t get you to where you want to be. Being more intentional in what your strategy is could separate you from your competitors and help you kick on to the next level. 

Budget is a strategy.

Another core principle we believe in is having strategic finance support early on in a businesses lifecycle is crucial to success. Inherent with that, if done well, will be a strong budgeting and forecasting process. But time and time again we see setting an annual budget being viewed as the strategic process. It is part of it, but the best businesses proactively come up with their strategy and then translate it into a financial budget. 

Goals and tasks seen as a strategy.

Often businesses will set lofty goals, or have a laundry list of tasks and pass them off as strategy. Examples of this could be hit £1m revenue, or a list of things to do around your marketing content. Again this is part of your strategy but they are the what, not the how or more importantly the why.

But, on the flip side, having a complex strategy or strategic process isn’t ideal either. Nor do startups need the Mckinseys or BCG’s of the world to help on this front, even if they could afford them! 

Richard Rumelt’s, Good Strategy, Bad Strategy is a great place to start in this area. In his book he talks about what good and bad strategy looks like and gives great examples and practical advice. 

Below we’ve given our thoughts on what founders and startups could take away from this: 

1. Defining your challenge. Diagnosis is a key part of Rumelts book and diagnosing what challenge you are trying to solve on a strategic level is something that should be at the forefront of any founders or senior managers mind. Simplification is key here - what is the simplest form of your challenge. 

   
   

2. Creating a guiding framework to specifically address the challenge. Having guardrails around how you are going to solve this problem is key. Choice is ultimately the main point here - there will inevitably be a number of solutions and knowing which is the right one often is impossible. But being clear on which choice and direction you have headed in, and then regularly reviewing progress is key to successful strategy. 

   
   

3. Having a coherent set of objectives and goals based on the first two points. Ensuring that most if not all strategic actions are based around your framework so that you are focused and heading in the direction you have set. 

Getting this right is not easy, made even more difficult by the fact that it should be a fluid and continuous process. With that said there are two key aspects of succeeding here in our opinion. 

Firstly, having the right structure in place be it a management team with clear responsibilities, external support, or even an advisory board. And secondly, the easier of the two, is being intentional about your strategy - ensuring you carve out time to reflect, develop and review your strategy. 

Ultimately the aim here is to be working on your business, not in it. To be more strategic and less tactical as that will drive growth and hopefully success.