A VC in Vacationland

I have just sat through another 65 page PowerPoint presentation on the strategy for one of my portfolio companies.  It was the the second one in as many months.  This one was facilitated by an outside strategy consultant and was requested by a number of board members, who seemed very satisfied with the results.  I wasn’t.

I was a supply chain strategy consultant for over 30 years and admit to more than a little bias on the subject.  It was not that the presentations were not well done, or that the executives did not work hard on finishing them.  The problem was the "strategy" proposed in both cases was way too complex for small, resource challenged companies to ever think of executing.

I won’t go into the details of why the strategies ended up being overly complex.  I will offer a few suggestions to other start ups on how to craft a strategy that matches capabilities and resources.

1. Business Model Centric–You presumably have a developed a business model that works well. Start any strategy discussion about how to strengthen that model and make it richer in revenue potential as well as clearly differentiated from competitors.
2. Customer Focused–Both presentations had substantial customer input.  But you know a little secret I learned in many years of consulting?  Most customers have no idea of what they should want in terms of additional, value creating services and products.  Getting feedback from customers can easily lead you down some wrong paths.  For example, few customers in one of the companies indicated any interest in outsourcing functional activities, while many others in the industry are embracing BPO as the next big thing. You need to set the strategy ahead of your customers and then develop the marketing, sales and operational capabilities to deliver it. Otherwise, you will not be a market leader.
3. Structured Priorities–I am a great believer in the "keep it simple" strategy.  Assuming my portfolio company is executing well against current initiatives and keeping customers happy, I would rather see just one new straetgy initiative a year.  Pick one out of the many proposed and do it well.  Multiple strategic initiatives, like developing new products and opening indirect channels, generally do not get the resources they need to both be successful.  I know many of you are thinking that start ups have to have many new initiatives going at the same time to be successful.  Planting many flowers and seeing which ones grow is a great strategy for a garden, but not for a small company.

So keep the strategy simple, customer focused and all one one page.  It makes it easier for your professionals to know what’s going on and to help the CEO develop perfomance metrics to judge the effectiveness of the new initiative. Put the other 64 pages of market and customer analysis in an appendix, if you must. But, most importantly, make sure that your senior team understands the new strategy and is able to communicate it effectively to your customers, partners and employees.