Going from idea to execution is easier said than done. Or it simply doesn’t work. With reality always looking different than anticipated, this should not be frustrating. Instead, it should be motivating to emphasize the missing link in the middle: strategy.
At APX, we love to share best practices. One of the big topics we continuously work on is turning dreams into reality.
We, Tilman Kemper (Head of Venture Development) and Joerg Rheinboldt (Managing Director), are permanently looking for patterns that help us, especially the founders of our portfolio companies, turn goals into results. Usually, these conversations start with two questions:
- What does success look like?
- How do we get there?
Figuring out (1) what you want to achieve and (2) how you can reach your vision is a continuous process when you start a company, and you’ll likely need multiple steps to get there. Luckily, we are not the first to think about this and claim that the way to get there is based on a good strategy and execution. There are many definitions of what a successful strategy consists of, but here is one we like (it’s from a strategy class Joerg and his friend Stephan used to teach together):
Developing a strategy means…
… to manage a recurring process with all relevant participants…
… that consists of developing a set of hypotheses, analysis, and synthesis and the documentation of the results in special formats (documents)…
… which will enable the organization and yourself to take and communicate consistent strategic decisions again and again, over time, which…
… will fulfill your organization’s purpose, vision, mission, and strategic goals or project with above-average success compared to your competitors.
Helpful? Let’s get into more detail: When you start your company, figuring out your definition of success and how you want to reach it is crucial. As all companies are individuals, there is no one way to do it, but we are sure there are some useful tools and concepts that can help you work in the dynamic environment of a startup.
Most of the time, it is not possible to make the plan and execute it. Your strategy’s goal is to develop a deep understanding of your business, customers, stakeholders, market, direct and indirect competitors, and your business’s mechanics and economics. To try out something meaningful and iterate, you need to derive your ideas from something.
There is no contradiction between being strategic and being fast. Turning information into knowledge and drawing the right conclusions from this is what good strategic execution is all about. Just executing or generating lots of data without ‘working’ with it usually does not lead you anywhere. You have to determine the speed of your execution, your interpretations, learnings, and iterations. (and most likely pivots) Failing granularly vs. failing epically is, on the one hand, closely connected to how good and fast you and your team are in dreaming, quantifying, qualifying, goal setting, execution, and working with the results — more details on this in another post.
Frequencies are essential when it comes to building organizations. When you are working on your strategy and tactic too often, you get nothing done, and when you never take a few steps back and work on the bigger picture, you might do the wrong thing. Good companies have rhythms on when they focus on strategy and execution. Your company’s speed is determined by your ability to develop a plan, execute it, and adapt to the reality you create.
In our experience, especially in your company’s early stages, it is crucial to execute and learn quickly. Frequency is a matter of days or weeks rather than of months or quarters. Still, it is essential to know where you want to go and how you want to try getting there. Failing fast and granularly by trying out a lot is a lot better than preparing and thinking and strategizing too much and then failing epically and slow. Nevertheless, you need to know where you want to go while you execute.
Define the stakeholders you want (must, and should) include in the process. During ideation and at the very beginning of a startup’s journey, The strategy is typically established by founders only. Then, over time, the composition of relevant participants in strategy meetings changes. In a larger, more mature organization, the COO might establish and implement a new sales strategy with the Head of Sales. You get the idea.
There are some optional participants, and despite being optional, they might be of utmost importance. Three types to point out are (1) existing investors, (2) potential future investors, and (3) mentors:
- Existing investors should be 100% on your side. As incentives (i.e., a significant exit) are aligned, they should have your best interest in mind. Why are they relevant in the first place even though you might be the industry expert? Because investors are good at recognizing patterns. After having screened hundreds and having invested in dozens of companies, investors can observe what strategies typically work and which do not. Get them to share their experiences with you.
- Potential future investors are talking to you because they see a possible opportunity in what you’re presenting. Yet, you haven’t gotten there. Like existing investors, they know what strategies have worked for others entering the next fundraising stage. Also, getting them invested in your idea, and strategizing early how the opportunity you’re presenting could turn into a chance you’re jointly capturing, brings you a big step closer to them investing.
- Mentors should be a no-brainer. Try to find people who are not just giving advice but share experiences. They’re an excellent resource for sparring, avoiding mistakes, reality checks, and identifying shortcuts.
Ping-ponging your next strategy ideas with relevant people is one of the best ways to get to information on a deeper level and make more qualified calls. It also will likely lead to a more confident and aligned implementation of your next strategy.
The development of a strategy is close to project management (for which there is already enough literature out there). You have different stages and need to hold yourself accountable for specific milestones. Although a strategy is intangible, try to develop a set of (quantifiable) hypotheses and analyze feedback and data on the proposed measures. While developing, this allows you to refine your approach and hone into an optimal strategy given the available information. Create learning loops. In the end, synthesize the individual strings into one consistent plan.
A little bit of meta work is essential. Your goals and strategies do not need to be a massive pile of slides, but in our experience, it is very beneficial to document what you do to communicate it with each other and your stakeholders. And when you talk to investors, they also are interested in how you work and how you do what you do. Using the “real stuff,” meaning the documents you actually work with, is usually a lot better than preparing extra documentation for them later.
This sounds easy: Just make sure you use the optimal formats to document your work results. As you will be producing qualitative and quantitative hypotheses and models, you will need various formats to document the process, products, and progress. This is not rocket science: Usually, a business plan is a spreadsheet. If you visualize something, it is either text or graphs. :-) There is quite a lot of format inspiration available online. Remember: this is about content, not form. Maybe an easy to understand format helps, but if you spend more time generating and designing documents than thinking or discussing them, something is wrong.
This is a tricky one. In your company’s early days, you can make tons of decisions, and many of them might change fast. This speed and attitude are essential to building a winning company quickly. Testing, winning, and failing fast are very important to be successful. Strategic decisions are the ones that have a tendency to shape or influence your company for a longer time or are harder to reverse or change. These decisions are worth getting a little more brainpower or ‘computing-time’ than other choices you will make. The name of your company, the business model and particular revenue streams, hiring of key team members, and choosing your investors are all decisions that are harder to reverse than others. Do not let them slow you down, but develop the awareness, when to think a bit deeper, and ask yourself a few more times: and then?
Purpose, Vision, Mission, and Strategic Goals
Purpose. Vision. Mission. Goals. Grand words with even grander meanings and direct impact on any proposed strategy. Opinions differ when it comes to the exact definition of each term. Some would argue that vision and mission are just two sides of the same coin. We disagree and will try to explain our thoughts and use short examples of our own purpose, vision, and mission statement.
Purpose — why we exist: the purpose states the overarching reason why the company was founded and continues to exist. It defines a drive and an impact on those it’s serving. Here’s ours:
“We believe to offer the best way to help startups be successful by combining the capital and network of a VC, the mentorship and coaching of an accelerator, and the values and close ties of a family.”
Vision — what we want to become: the vision describes a long-term, elevated goal, typically five to eight years out. Ideally, the vision of a company is aspirational and ambitious yet achievable. For scaling and profit-seeking startups, you might want to ask yourself, “How can this become a billion-dollar company?”. The answer is simple: reach your vision.
“Our vision is to become the first choice venture partner for digital early-stage startups in Europe with a pan-European network of investors investing in them.”
Mission — what we strive to achieve: the mission is a concise yet powerful statement explaining your impact, overall goals, and objectives in the context of your vision, market, and customers. While you could claim that a mission is not absolutely necessary, we argue that any strategy becomes stronger, more effective, and easier to communicate if attached to a larger mission.
“Our mission is to build a better, more sustainable future for digital startups in Europe (and beyond), creating a better future for all of us.“
Strategic goals — how do we get there: long-term goals split into quantitative and qualitative measures. Strategic goals such as “becoming the market leader of…”, “achieving a margin of…” or “upselling existing customers by a factor of…” will help you to understand better whether you are on the right track. There are excellent systems to set goals and reach them. We at APX use OKRs. More on this in a later post.
So what now?
Do you have a strategy? Do you know what your success looks like? Do you have a clear idea of how to get there? We work on our strategy at least every quarter. We don’t change it massively, but we continuously adapt and clarify based on the learnings while executing. If you are interested in learning more about us, check out our website, meet us at our online events, and meet us at in-person events (this is harder right now due to COVID-19). If you are interested in working with us on your strategy, execution, and potential shortcuts: send us your pitch deck here, and our investment team will be in touch shortly. Learn more about how you can find out if there is a fit between you and us here.