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Hardcore Strategy without “Pomp and Slideware”

New York and Oslo.  A startup can provide for strategy lessons unimaginable in a classroom setting or in most big company meeting rooms.

How often corporate managers get to work the whole company strategy from scratch and pivot the company onto a completely new trajectory the following week?

Our observations stem from organizing top-class advisory boards for number of startups. Instead of regular executive training, these brave managers sign up to help startup entrepreneurs with a real case at hand.

This creates an excellent mutual learning ground, in the very frontline of our economy. First, these are the entrepreneurs seeking solutions and business models at the (bleeding) edge of emerging technologies.

strategy lessons unimaginable in a classroom

Second, most of the corporate participants are the very people who in their respective organizations lead the development of new products and services, manage innovation initiatives, plan and establish new units, negotiate joint ventures.

Together these two groups are the forerunners of our economy. In the startup advisory board meetings they do a lot of practical strategy work, but curiously, often without using the word “strategy”. Instead of power point slides we see lots of very practical discussions about priorities and roadmaps over different time horizons.

Although in a large organization the absolute stakes are higher, in a startup strategy is far more personal and often ”all-in”. Hence, although lacking corporate "pomp and circumstance", startups’ strategy work is actually tougher. Here are few further notions on differences:

►  The situation is always on. Startup entrepreneurs must always be on high alert, both for opportunities and threats (cf. peacetime ceo vs. wartime ceo).

►  The time-to-bankruptcy, running out of cash is usually just around the corner. Hence, pressure is very real.

►  Limited data but life-and-death decisions. Most often there is no time and resources to conduct thorough analyses, get all the data and help from consultants - entrepreneurs must decide on basis of limited information and sometimes based on pure intuition. However, many of the decisions are decisive, a wrong decision can kill the company instantaneously.

►  No legacy. There is no legacy to guide, no "going concern" to support leisurely strategy work in nice retreat, no big machine that supplies steady cash flow and firm base to move from, also half a year from now.

►  Big decisions and must moves. Entrepreneurs cannot  strategize “at the margin”, fiddle with marginal adjustments. They must always be ready to challenge the whole model and pivot the whole company into completely new direction next week, if necessary.

Many of the small, seemingly tactical, decisions become big and all-important when counting for the available resources. Startup strategist may not have the luxury of waiting and trying something else next quarter.

However, startups have couple of things going for them, and some of the above make the situation if not easier, at least manageable.

Most important is the freedom to change direction and do probes, to test different solutions and courses of action. This, of course, is the whole ”job” of the startup. (Note Steve Blank’s definition of startup, “a temporary organization searching for scalable business model”)

These, however, raise couple of further challenges for the strategy work, typical to startups:

►  ”Second-order” decision-making. Because there is often a need to decide fast, based on limited information, but the implications of the decisions can be big, a startup strategist should take time to think how to decide. In absence of ready templates this means figuring out simple decisions rules, reduce number of variables etc. to limit cognitive overload. Furthermore, it’s very important to understand what cannot be decided and when to decide.

►  Right probes. How to find the right direction, how to devise right probes, what to test and what to not test, given strictly limited resources. No multiple parallel projects for “must win battles”!  (Going back to Blank’s definition, all startup’s strategies are tentative until the scalable business model is found.)

►  Implementation. Yet another challenge involves implementation. For startup implementing strategies (or even tentative probes) is not necessarily easy or possible. In a big corporation, extra resources are usually attainable for all important enough and compact enough initiatives. In contrast, a startup must constantly iterate between what should be done and what can be done with available resources.

fitting large square peg into small hole of unknown shape

For me, a large part of entrepreneurship is to understand how to find and recruit the resources necessary to get things done, to get on the next stage. Think about fitting large square peg into small hole of unknown shape.

Word of caution here: not everybody needs to be "entpreneurial" and every company "like a startup". Nor corporations should try to hire all top entrepreneurs they can find. A great startup strategist would not be all that great in a large organization. Most likely there would be frustration on both sides.

Nevertheless, we believe in mutually beneficial exchange and work on the premise that both startup entrepreneurs and corporate leaders have lot to give to each other. Not least because in order to be successful their organizations will have to learn to work with each other. This can be achieved only through people capable working with other people with different dynamics and culture.

#EEXJourney  #CollaborateForGrowth  #LittleLessConversation…

Thanks to all our participants and alumni for their insightful comments on the subject. The phenomenon of “strategy work without the word ‘strategy’” was first noted by Reetta Koivuniemi through her interviews of the EEX Exchange participants for her Master’s thesis.

In the next blogs we will discuss, inter alia, the related subject how open-ended work on a startup’s case in a diverse group of advisors, out of your box and comfort zone, facilitates peer learning and joint reflection.

Tapio Peltonen

Founder

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