It takes a lot to manifest a dream and pursue your passion. You toil away, hoping to one day see the fruits of your labor. You put your baby out into the world with hopes that others will see what you see, and you become the next big fill-in-the-blank. But hope, you see, is not a strategy. Here are the five things entrepreneurs and startups get wrong about strategy and planning, and what to do instead.
#1 – Lack of Clarity and Confusing Tactics for Strategy
This first one is a biggie. But if you get it right, it can create the foundation for success. When many founders start their companies, it’s often as a side hustle. Eventually, the time comes when they feel confident or see is as a necessity to dedicate 100% of their time to make the dream a reality. Copious amounts of time go into perfecting the product, raising capital, and networking. During this time, they often overlook setting a strategy and getting clear on their desired outcome. At a high level, they want to commercialize the product. However, they didn’t take the time to write down ‘why’ ‘what’ and ‘how’ leading to startups sacrificing long term success to obtain short term gains. In other words they chase dollars, not sense. It can also result in a flurry of activity but not productivity.
However, they didn’t take the time to write down ‘why’ ‘what’ and ‘how’ leading to startups sacrificing long term success to obtain short term gains. In other words they chase dollars, not sense.
Whenever I discuss strategy with clients and entrepreneurs that I advise, I always include one of the most studied business cases, Southwest Airlines. We don’t hear much about them outside of their fares, travel philosophies, and their singing flight attendants. And that’s probably just fine with them.
They are one of the most successful companies of all time, primarily because they got their strategy right. The founder, Herb Kelleher, and current CEO since 2008, Gary Kelly, are among the most, if not the most, admired CEOs in American business.
Southwest’s vision is simple. They want to provide an excellent customer experience at a low cost. Founder, Herb Kelleher, didn’t believe the customer should sacrifice excellent service for low fares. Their strategy is to maintain low operating costs and pass the savings on to the customer. And also to create a culture where people want to work and do their best.
Another area where startups go wrong is confusing tactics for strategy. To support the strategy, Southwest employs several tactics. A few examples include “borrowing” space at airports rather than build an expensive hub and spoke model similar to other major airlines. They designed flight schedules to maximize flying time. Open seating facilitates faster boarding times. And not offering food beyond peanuts and pretzels helps with a quick plane turnaround at the gate. In short, a strategy is the ‘what’ and tactics are the ‘how.’
Do This Instead: Pause the activity and gain clarity. Dedicate two to three days to write down the mission and vision of your company. Define your company’s values and describe the desired end state. Then clearly outline your strategy (what) and the actions to support it (how). Hiring a consultant to help facilitate this process can be beneficial.
Additionally, improving how you do business isn’t a strategy or a value proposition. I’m a proverbial student of Harvard Business School professor, Michael Porter, one of the leading strategy experts arguably in the world. He cites this is where a lot of companies go wrong. They rely on operational improvements to differentiate them from the competition rather than generating value for the customer. Operational improvements or economies of scale are easy to replicate. I love his elegantly simple explanation of strategy. It’s “…about making choices, trade-offs; it’s about deliberately choosing to be different”.
#2 – They Put People Second, Including Themselves
Most of us have probably heard the statistic from Gallup that 75% of employees leave a job because of their manager. I’m aware of a startup with roughly 98% turnover. The founder replaces his entire staff nearly every six months, #truestory. One of the many staff concerns was the lack of training and development. To which the founder said he didn’t have time, there was too much work to do. Instead, he opted for angry outbursts and berating his staff to get work done.
If you don’t take the time to invest in people, you will spend your time (and money) continually hiring new people.
Worse, the culture was awful because the founder demanded and expected around-the-clock availability and demonstrated no staff appreciation or recognition. Further, he was getting burned out. Not only did he not take care of his staff, but he also didn’t take care of himself or spend time with family and friends. If you don’t take the time to invest in people, you will spend your time (and money) continually hiring new people.
Do This Instead: Put people first and business second. Why? Because people run businesses. You may win the customer, but your employees help you keep them. Richard Branson, the founder of Virgin Atlantic, says, “Clients do not come first. Employees come first. If you take care of your employees, they will care of the clients”. And, you must include yourself in that as well. Be kind to yourself, get rest, and spend time with loved ones.
#3 – They Forget Execution and Conflate Action and Activity
Even after crafting a compelling strategy, mission, and vision, companies can forget that they still need to get things done. The struggle to move from ideation to action is known as the strategy-to-execution gap. At this stage, many teams may find themselves stuck in analysis paralysis. They understand where they’re trying to go, but they can’t see the path nor how to create it. So they start doing a bunch of things and calling it action. What they failed to do after strategizing is create an action plan.
Do This Instead: I like to characterize strategy and planning as being the operator of an airline. While Southwest and Virgin Atlantic are persuasive examples of this, my inspiration comes from my desire to be a fighter pilot when I was young. Different story. Different day. As the airline operator, once you decide where the planes are going, you have to file a flight plan, determine the number of passengers, flight crew, and so on.
The point is, you don’t stop after you decide the plane is flying to Miami. That’s only the beginning. Create a plan that outlines goals, key performance indicators, and accountability measures. Focus only on activities that support the goals and the goals that support the strategy. Everything else is a distraction to which you will say ‘no.’ Michael Porter ties it up in a bow when he says, ‘the essence of strategy is choosing what not to do.”
#4 – They Act Too Fast or Too Slow
Whether you’re a startup or an established player, business is still a chess match. Those who have been successful over time have learned to balance the art of the strike. If you act too early, you may miss the market, but if you move too late, you can become a ‘me too.’
Some entrepreneurs will act too fast to gain first-mover advantage. That’s a good reason unless you’re Myspace, who preceded Facebook. Who launched the first compact disc (CD)? Sony? No. Philips was the first-to-market in 1979. They later teamed up with Sony to produce the first commercially available music CD, Billy Joel’s 52nd Street, in 1982 because Sony improved upon the technology. Being the first doesn’t guarantee results.
But you can wait too late. Google, already dominating the search market, decided to launch Google+ to compete with Facebook. It was just too late. They didn’t correctly read what consumers wanted. Facebook became synonymous with Boomers and Gen X’ers, while Millennials and Gen Z flocked to Snapchat and Instagram. Google+ wasn’t part of the equation at all.
Do This Instead: Fail fast. Too many teams have let fear guide the next decision. A master strategist keeps an eye on the future, a foot in the present, a hand on the past, and their head on a swivel. Meaning, you must watch the entire landscape for potential disruption, economic trends, and the winds of change to be ready to act or pivot. Make the best decision you can with the information you have. And don’t be afraid to fail. You’ll get more answers and be able to adjust course at an earlier stage in the business.
#5 – No Feedback Loop
Another struggle startups have is that they don’t gather information to make informed decisions. What they are probably getting right is the voice of the customer market research to refine their product. What they are getting wrong is not consistently tracking metrics on the goals and tactics they have put in place. Similar to putting people second, they are putting their internal processes on the backburner leading to the inability to make data-driven decisions. And because they lack a feedback loop, they can get blindsided.
Do This Instead. This problem is probably one of the easiest to fix. Create dashboards to review weekly, monthly, and quarterly. Discuss the information candidly. Solicit suggestions. Listen. Listen. Listen. Lastly, act on the data. The best ideas will come from those who are closest to the problem. Empower your problem-solvers to try (and fail) new things that could potentially lead to extraordinary outcomes.
Strategy and planning are my jam. My superpower is being able to go from flying comfortably at the 12,000-foot level then seamlessly switch to tactical execution at the 12-foot level. Let me know your thoughts in the comments below. My promise is to create content that is inspirational, informational, and implementable. If you’re craving more excellent content on how to gain clarity, set goals, and get things done? Subscribe below and follow me at @iamnileharris on Twitter, Instagram, and Facebook.