The Startup Strategy Mistake

'Strategy' has become a bit of a catch-all term, hasn’t it?

It’s become somewhat vague and elusive. With a lack of clarity on what strategy means, it's no surprise that we often find startups with a lack of clear direction or no solid game plan to follow.

Without a solid strategy, you're like a ship without a rudder. You might be moving, but you sure don't have a clue where you're going.

Strategy is a broad topic and it can be tricky. A good place to start is by learning a well-defined strategy framework and implementing it.  There are many such frameworks but you need to pick what you need for your business. I’d like to introduce a few.

👉 First Up: VRIO Analysis

VRIO stands for Valuable, Rare, Inimitable, and Organised. Here’s the breakdown:

Valuable: Do your resources drive customer value? If not, you’re just spinning your wheels.

Rare: Is what you're doing unique? If everyone else can do it, you're not standing out.

Inimitable: Can your competitors easily copy you? If yes, it’s game over soon.

Organised: Are your processes and systems in place to support these resources? Chaos isn’t a strategy.

It’s a rigorous audit of what you have and what you need to change. Implementing VRIO means digging deep and ensuring that every part of your business is geared to leverage your unique strengths.

🔍 Then, Dive Into McKinsey’s Strategic Horizons

This framework is about balancing short-term performance with long-term growth. It's a way to allocate your resources and attention across three time horizons:

Horizon 1 (Short-term): This is about strengthening  your core business. You focus on improving operations, increasing efficiency, and maximizing cash flow from your current activities. The goal is to strengthen your position and profitability in the existing markets.

Horizon 2 (Mid-term): This horizon is about building emerging businesses. You take the initiatives that have proven successful in Horizon 1 and develop them into new revenue streams. This could involve expanding into new markets, developing new products or services, or forming strategic partnerships.

Horizon 3 (Long-term): This is where you create viable options for future growth. It involves exploring new opportunities, developing breakthrough innovations, and planting seeds for businesses that could become significant sources of revenue in the future. These initiatives are often high-risk and require patient capital.

To implement this framework:

●Evaluate your current portfolio and allocate resources across the three horizons.

●Ensure a balance between short-term performance and long-term growth.

●Continuously monitor and adjust your initiatives based on their progress and potential.

●Foster a culture of innovation and be prepared to take calculated risks.

●Align your organisational structure, processes, and metrics to support initiatives across all horizons.

The key is balance. Overemphasis on Horizon 1 can lead to stagnation, while too much focus on Horizon 3 can strain resources. The strategic horizons framework helps you navigate this balance, ensuring that you're planting seeds for the future while also reaping the benefits of your current successes.

👊 So, let’s stop treating 'strategy' as a high-level term that’s tossed around in boardrooms. Let’s start treating it as the essential, gritty, and absolutely critical roadmap that it really is.