Why you should squish
the strategy bug on pavement
I ADMIT IT. After more than a decade of starting companies and advising startups, Iíve become so curmudgeonly about the word ‘strategy’ that I cringe when I hear it. Why? Because I believe that most companies’ quest for pre-launch strategy enlightenment delays or even destroys the chances for company success.
One of the smartest people I’ve known was Paul Amos, who helped create CNN Headline News with Ted Turner. Paul told me his favorite business book was Unleashing the Killer App (Havard Business Press, 1998; www.killer-apps.com), in particular for its blasts on strategy consulting and development for startups. Now, I am paraphrasing liberally here, but the passage of the book that speaks loudest for me goes something like this:
The dirty little secret of the strategy industry is that there is no theory of strategy creation. The vast majority of winning strategies in the new economy emerge from companies started without business plans or market research. They always emerge from lucky foresight.
The best approach is to put yourself in position for lucky foresight to occur. That means getting out in the marketplace from the beginning and talking to customers, distributors, experts, employees and competitors. Then launch your product or service based on your gut instincts from this exercise and tune your strategy and tactics to the reaction of the marketplace.
I call it ìswimming in the pool of possibilities.î I tell entrepreneurs to just jump into the niche they want to occupy and see what happens. Discover where are the sharks, the fertile fishing grounds, the new lure design that will work.
Consider the October 15, 2002, Inc. 500 issue. The magazine found that of the winners, only 40 percent started with a business plan that laid out strategy, and within this group, 65 percent said they strayed significantly from their original plan. That means that of 500 companies honored for success, only 70 stuck to a pre-launch business plan about their strategy. Similarly, only 12 percent of the 500 companies did market research to nail strategy prior to company launch.
Also in October, the cover blurb for Business 2.0 magazine proclaims: ìScience is starting to understand why the best decisions come from the gut.î
For example, did eBay develop from strategy consulting, a business plan, market research and other efforts of big consulting firms and agencies? No. The founders thought the Internet might facilitate better connections between collectors and trader of Pez candy dispensers, but they didnít know until they tried it. Jeff and MacKenzie Bezos did much the same thing. I always challenge entrepreneurs coming out of big companies with big-company processes applied to small companies to bring me winning examples of start-ups that spent a lot of upfront time and money on strategy. Iím still waiting to be swayed the other way.
Strategy boogie
I admit that strategy consulting and development has its place in large corporations. With the number of interrelated departments and divisions and all the people within them, good strategy development solicits the best ideas and practices from the diverse participants and then communicates the finished strategy back to the groups. Itís as if the internal groups were the ìpool of possibilitiesî that a start-up needs to navigate. And often, outside consultants need to do this work to avoid the biases and other shortcomings of colleagues telling colleagues what to do.
Where I get bothered is when startups within big corporations get the full-tilt strategy boogie of the mothership. Consider Deluxeís PaperMoon foray. This might have been a good idea ó easier, faster access to more and better personalized merchandise ó but from my perspective, it looked like all the futzing by the company and the consultants pre-launch buried it from the beginning.
Hereís another danger of pre-launch strategy development: Itís a convenient crutch for the internal ó and often unrecognized or unacknowledged ó emotional struggle of the entrepreneur. Most Iíve met exhibit this struggle, a ping-ponging of self-doubts between ìI know my product has to be perfect before launch because I have only one shot at it, so I need strategy helpî and ìMy product will be so amazingly successful at launch that I merely have to get verification of my strategic brilliance to satisfy investors.
Just go to market
Hiring strategy consultants to set strategy is a convenient way to give entrepreneurs the excuse to keep doing what they love best: inventing and tweaking. Similarly, spending time and money to seek strategic verification of brilliance is a convenient way to avoid facing real customers with real selling.
I believe the Minnesota entrepreneurial community also benefits in encouraging startups to just go to market. While it may sound cruel, this tactic should flush out the bad ideas quicker, so the capital in this state can be better distributed to winners.
So, do I think that just leaping solo into the pool of possibilities buoyed only by blind passion for an idea is the best strategy? No. Recall the quote above about putting yourself in the best position to have lucky foresight? I believe you canít do this alone. My favorite tactic is to form an advisory board, and I donít mean a group of friends. I mean seeking the best Rolodexes in your niche. People whoíve been competitors in the past, or would be customers or distributors of your product or service, or know many similar folks.
Develop your elevator sales pitch and ask advisers to simply make a few calls and run your concept by others. But donít try enticing these advisers with stock options. People have too much worthless paper in their shoeboxes. Find the folks whoíll give you a few hours here and there merely because they have the time and want to help. Yes, this will be tough to do, but you need this S.W.A.T. team as an alternative to watching the strategy bug do its slow, hypnotic dance.
Contact
Kim Garretson is a Twin Cities executive who has founded and consulted with a variety of small companies: kimg@livinghome.com
