Chapter 11:: Strategic Thinking for Your Daydreamer Start-up Business
“If you don’t have a competitive advantage, don’t compete.” - Jack Welch
The strategic thinking involved in a start-up business is very different to strategic thinking in a well-established company or organisation.
Too many start-up entrepreneurs get their ideas from MBAs and reading literature from well-known management gurus, or from their experience in a multinational corporation. Unfortunately, the ideas and strategic thinking from those sources are somewhat lacking and inappropriate when it comes to a technology start-up business.
Where are You Going?
In my experience, it is important to know where you are going in the first place. Spend time daydreaming to get clarity as to where you want to go with your start-up.
If you are not clear about where you are going, people will not know where you are heading. It creates uncertainty and problems for your start-up to move forward. This is not just for you personally, it is for your team to know where your start-up is going and whether they want to join with you on the journey or not.
For most start-ups, your strategy is made up and adapted along the way, because it is impossible for you to know all the variables involved to plan forward for the next 3 or 5 years. So your business needs to anchor on something at the very core.
It’s like one of those ‘What do you want to do when you grow up?’ questions you had when you were in primary school. You need to gain clarity as to what your business will become.
For me, my core vision was always on ‘helping people make decisions better with data.’ That was the core vision in all my businesses and it helped anchor me against going in the wrong direction.
Yes, the strategy of getting there may be differ by technology and the people you use to get there, but the core vision remains the same. This is absolutely critical in ensuring that you continuously move your start-up in the right direction.
Have Different Stories for Different People
From your core vision, you need to craft a different story for different people, in a way so that your core vision relates to their background. Essentially, you will need to contextualise your story so that each person buys into your vision.
The mistake most entrepreneurs make is that they get their vision printed and hung on the walls in the office. They believe this is the communication required to make sure that everyone knows where the company is headed.
However, that is not an effective way of communicating your vision to your shareholders and your team. You need to personalise your story-telling to each of them, based on their personal background and interest.
For example, what’s it for the techie who is helping you build the platform? He may not care about customers making more informed decisions. But he can understand the part of the story about using technology to derive critical data. This is an example of how you need to relate your vision and create a different story for each individual.
The marketing person is another instance where they may not care about your core vision, but they are concerned about being able to sell your stuff to corporations. So again you need to tell a story that relates back to the person’s interest, that is based on your core vision.
It’s the same with investors and other stakeholders; you need to create a story for each one of them based on their interest, to get them enrolled in your overall vision..
How to Find Their Hot Buttons
This is an ongoing and important process as you get to know people and take notes of them as you go along. In meeting people, you need to jot down their aspirations, what stage of life they are in and create a repository of information on them.
The second thing you can do is to create something of a job description and broadcast it to other people that you know. You need to then be able to profile what your ideal member will be for each stage of your business development. For example, a tech guy that has these stills and is looking for these challenges in a job.
The job description should also be able to communicate in the right language and push the desires of the person in each role, so that they know what part they play in the context of your core vision.
As the founder of a start-up, it’s not about business strategy, but the strategy of how you are going to make your vision happen. Figure out what kind people are going to help you get there and provide them with a value proposition that excites them to join you on your journey.
Remember the children’s story The Wizard of Oz? Dorothy got her companions, the Cowardly Lion, the Tin Man and the Scarecrow, to join her by telling each of them what the Wizard could do for them. For the Lion it wanted courage, for the Scarecrow a brain, and the Tin Man wanted a heart.
That fairy tale is a good analogy of how you need to communicate with your different stakeholders to join you on the journey.
You can’t get everyone to agree with what you want to do, but you can always get them to agree what they want to do. As long as they are getting what they want out of the venture, then you will always have their attention. That is why you need to dream up stories that will help your people to buy in to your vision. You don’t need them to buy in to your full vision, but just buy into the story you tell them so they can fulfil their role in helping you achieve your vision.
I had cases where people just wanted to come and join us because they just wanted to ‘have the experience of being in a startup’. Sometimes, they just wanted to have that on their resume. In such instances, we knew that the person would only be with us for a certain amount of time. Therefore, we needed to plan how to use them for the two years they were going to be with us, so that we benefitted from the relationship as well as help them achieve their personal objectives.
Adjustments are Necessary
As you probably will have guessed, you have to keep adjusting and improving. You need to ask yourself, ‘Do I need more of these skills or less of these skills?’
This is part of the growing pains in a start-up. ‘The dream team’ may bring you to a point where you realise that this is no longer your dream team, because you realise that you need a different combination of people to get you to the next level of business growth.
It’s a sad thing but now you might need to create ‘Dream Team 2’ to achieve milestone 2. So you have to reconfigure your team. Inevitably, some people might feel that they have been used, but this is also what a founder and leader has to do. It requires forward planning and, in a worst-case scenario, the founder also needs to displace themselves. You need to find a successor to replace you.
Daydreaming has to come in from the point of the end goal. What if you have the perfect scenario? What team will get you to the end goal, and what resources and time do you need? Daydreaming helps because you will be able to anticipate what you need in terms of personnel or resources. In some quarters, they call it ‘predictive analysis’ nowadays.
Examples of Daydreaming
Let me give you a case in point. While writing this book, ‘Alpha’ was developed by Google and beat the world Go! champion. It all started with a daydream that it was going to be possible for a computer to beat a Go champion. Things like that might take 5, 10 or even 20 years, but it all started with someone having a dream that one day they could come up with a program to beat the world Go champion. It became a reality, because something thought it was possible and anticipated the resources required to get there.
The method to get there, whether it was neural network machine learning or pure supercomputing, doesn’t matter. It was just about someone dreaming that this could one day happen and assembling the necessary team to get there.
Another example is that we talk about robots becoming our social companions one day. This is a real need as many old people have no social companionship. So we can create a robot to talk to us. Humans are social animals, and so what happens when we get to a point where no one wants to talk to us? While it sounds funny, this is a real problem.
The dreaming part here helps because you need to have the hope that it may happen, otherwise it will be difficult to lead your team - because most people will either see you as crazy, or they will believe that your vision might actually happen. That is how you can get people to join you on your ‘entrepreneur-ship’ journey, fraught with dangers and adventures on the high seas!
For someone to fulfil such a dream, for example, you will need to develop material that looks and feels like human skin. That is where a material scientist may need to buy into your dream, and you have to create a story for him or her. In this case, it may be the challenge of actually creating such a skin and becoming famous for it. At the same time, the whole thing about creating a robotic companion may have zero appeal to the material scientist.
There will be people who will attracted right away and come onboard faster. There will also be many others who are sceptics. My experience is not to waste time with the sceptics. Those who instinctively think that ‘This idea may not be so crazy after all’ will be the ones that are more likely to join you on your journey either as a team member, investor or customer.
For example, I have recently pushed the idea that we need to use social media to promote research technologies and papers from universities to the world. There are people who are sceptical and there are others who are willing to embrace this idea right away.
People who embrace don’t need much work, you only need to support them. Their instinctive response will determine how much they are willing to do and the results they get will demonstrate that. Those that don’t believe it and need convincing will not be willing to do it and will not get results as good as those who do.
So my general rule is not to waste time with the sceptics; but the important thing is to keep talking and communicating your ideas, because there will be others out there who will buy in. This principle applies not just to your internal team but to customers as well.
Your idea can be radical, but it cannot be unreasonable. You have to at least articulate why you think it is possible and why you think it is doable. For example, when we are talking about price comparison and documentation code it is actually doable. There is a rationale behind the idea and the technology to make it happen.
It all comes back to whether the need is real. When the need is real, there is a real user, and when you can overcome the obstacles then you have a real business.
Business Planning
For me, a business plan is merely a document for me to articulate what you need to do.
What is really important is to define and get clear about your USP, which is your unique selling proposition. Get clear about what you are selling and what you are not selling. You have to sharpen that message daily. You should keep getting clear about what you are and what you are NOT. Of course, it is not expected that you get it right the first time around. But you should continuously refine it.
Be honest as to what you can provide and what you will not provide. There is a tendency for us to say, ‘I can do this and I can also do that’. At times, you might have to do other things for survival, just to pay the bills. But you cannot keep on getting side-tracked for a small pay check forever. It’s like when you are a baby you cry to get what you want, but when you grow up you actually need to mature and communicate in different ways to get what you want. It is not sustainable.
That applies to your business. As you mature you cannot remain a jack-of-all-trades. You need to have a unique selling proposition and turn away business that is not in sync with what you are doing. If you want a business that can grow, you need to be able to have something unique that is repeatable and scalable; otherwise you would just become a contract manufacturer, which is a different game altogether.
You need to have a plan that focuses your team on finding the answer to what your winning product is, and once you get there you will find a formula that is like a money-printing machine because of its scalability and repeatability. You need to be focused on finding that formula, and you cannot be distracted with other odd jobs that come along your way.
This is the danger that many start-ups fall into. They get into the trap of getting distracted by short-term, small shiny objects and they miss the golden mountain in the distance. These distractions can be in the form of one-off deals, partners offering you bundling deals and such things that distract you from your USP.
You started a business because you wanted to find that formula to make it happen. And you want to find that formula sooner than your competitors do. If you look at many successful start-ups, you will see an S-curve, hockey stick growth. The point where they achieve rapid growth is the point when they find the formula - and that is when the business starts achieving rapid growth.
How do you find this formula?
Through struggle, trial and error, and sticking to your core vision.
I have a friend who has a technology business, who really came to the end of the line in terms of their business survival. They were staring bankruptcy in the face as they did not have enough cash to pay for the coming month’s salaries.
They had developed a content management system (CMS) and that month they were going down the tubes was when they were scheduled to build a version control feature. Version controlling to most companies is no big deal. All version control does is that it enables each edition of the content to be tagged with a version number, allowing easy recall of past versions. A word processor has this feature but early days CMS programs did not have this.
It wasn’t a major feature by any stretch of the imagination. But it was in the schedule for their product development, so they went ahead with it.
Against the odds, that turned out to be what everyone wanted in a content management system in their field. And upon releasing the version control functionality, the product sold like hot cakes. In the following year, they achieved their dreams of listing the company on Nasdaq.
I asked him, “Who gave you the idea to do that?” He simply told me, “It was just in our product development roadmap, we never would have thought it would be our lifesaver!” It was simply part of the product plan anyway, and if they were not able to raise another round of funding they were prepared to close the company.
At the end of the day, his shares in the company was worth over $100 million in value.
It was almost the proverbial “darkest time of the night” when the light came. Yet no one imagined that was the feature that would change everything for them.
You will never know whether it is the feature, the timing or the market that will get you riding that S-curve growth. But you just need to be able to stick to persevering and finding your winning formula.
This example highlights the importance of sticking to finding your winning formula, rather than getting distracted by bright shiny objects; because you simply don’t know if the next feature could be the one that changes everything for your business.
I’ll be honest, there is a small dampener to this story. My friend didn’t get out when his share values were at their peak. Subsequently, when the crash happened on Nasdaq, his shares were worth just over $10 million. But $10 million is still way better than being bankrupt!
Luck Plays a Part
When I was doing my documenter software, business was going alright but it wasn’t what anyone would classify as ‘fantastic’. Then the year came when I mentioned before that the EU implemented a policy for exporters from Asia to comply with IS0-9000.
This was a boon to our software because suddenly everyone required our software for documentation purposes, as part of their ISO-9000 certification. Everyone wanted our documentation and we didn’t even do much marketing, but the phone was ringing off the hook with orders!
That year ended up being the best year for our business.
As the proverb goes, “Success is 99% preparation and 1% luck”, so keep working on your formula and your luck will come in time.
Keep trying…Until you Really Can’t Try Anymore
The moral of the stories that I have shared here is to keep trying until you really cannot try. Because you never know, sometimes just at the last minute, with a bit of luck, things could totally change for you.
All the research in the world would not have helped my friend or my business in the real-life examples here. I simply could not predict that the EU would change their policies and that would have a dramatic impact on my business, neither could my friend predict that a simple versioning module would transform his company from being on the verge of bankruptcy to getting listed on the Nasdaq.
We cannot predict the environmental factors that we cannot control. But if you stay true to your own mission and your unique selling proposition, then hopefully before you run out of money you can hit the S-Curve growth. Remember, the best chance you have of hitting this S-Curve growth is by sticking to working out your formula. The world is changing all the time, and if you get distracted by shiny objects rather than focus on refining your unique selling proposition, you could miss out on your lucky break.
Stay put and focus for 2-3 years; in those 2-3 years you either get you are right or you are wrong, rather than continuously shifting. If you keep shifting goalposts then you will never score. I would encourage people to take a different paradigm if you are a start-up: keep the same goalposts and ask yourself why you are not scoring. Then after 2-3 years, if you are still not scoring then maybe it is the wrong goal and it’s time to move on.
I find that spending time daydreaming on my end goals keeps me focused and refreshed even when things are not going so well. This has often helped me to stay the course for the duration and, almost without fail, it has panned out well for me.
Mental Strength
As a start-up entrepreneur, you cannot underestimate the value of your mental strength. No matter how bad the storm is, you must be able to hold on to your ship’s wheel. It is always easy to be a leader when things are going well. It’s infinitely harder to be a leader when it is not. Because when things are not going well, all your people know as well. This is when the men are separated from the boys, figuratively speaking.
You need to be realistic to admit and acknowledge things are not going well, and the key thing here is to be able to keep the morale of your team up. When things are not going well, it is a challenge to keep your own morale up, not to mention that of your team. No one is going to cheer you up but you have to cheer the rest of your team up! You don’t want to have your team think you are running around aimlessly; you still want them to think that what you believe in remains strong. The time just simply hasn’t come yet.
The leader who keeps changing his mind and charges up different hills every day will soon not have many followers left. This is another reason to stick to focusing on your core product and vision and not get distracted. You are not always going to be right, but you have got to be firm, because you will never know whether you are going to be right or not; only the future will tell whether you are right or not.
Demonstrate to your people that you are in control even when you are nervous. Team morale is the foundation for a successful start-up, without it; your start-up is doomed. So you have to do everything within your power to make sure that morale is high. Because people who work for a start-up are not there for the money and the job. They are there because they want to believe. Once you lose the belief, you lose everything and everybody.
The power of belief is amazing; it is the reason that investors are willing to take a punt with you.
Because they see a group of people who believe, that is often the biggest reason investors choose to invest. The tough part is, you cannot fake what you believe in. So no matter what, you need to keep your belief. To reinforce this belief, daydreaming is a critical part of fuelling your belief.
Take your time to debate it, but once you have made your decision on where you are headed, do not change it easily. This is from my experience very important, and many other successful people have shared the same thing. Otherwise your troops will be scattered and demoralised. Even when it appears to be a death march, go ahead with it because if you radically change direction halfway, you will still lose anyway. Your followers will lose faith in you.
Just like my friend’s company, they continued on their development roadmap even though they were running out of money, and the next release was the winner.
As the entrepreneur, you need to spend time daydreaming to refocus on your core beliefs and vision for your business. This will re-energise where you are headed and, subsequently, reinvigorate your team as well.
When to Dream
As an entrepreneur you will be super busy. But thinking and dreaming time is absolutely critical. In many cases, if I have to spend time at 1 a.m. to think, then so be it. Even if you don’t have to sleep, you think. Your business is what keeps you awake at night anyway, so sometimes it is good to think things through, and often when I do I sleep better anyway. Whenever you have time, you think.
Don’t turn on the TV, instead spend time daydreaming and thinking.
Sometimes when I am faced with an important decision and am not sure how to move ahead, I just simply sit and don’t do anything. Sometimes it will even take a few days for me to think and dream. Sometimes by sitting around and letting time pass, the answers come to you. It’s been my experience where, sometimes in the third day of thinking, an event happens which triggers the solution to my problem. It may seem counter-intuitive, but it’s good to wait it out sometimes before jumping into a decision where you are unsure about the best course of action.
Herein lies the power of daydreaming. It is essential for your morale and for your team’s morale. Keep daydreaming and once again, please consider join our community of daydreamers who could one day have a powerful impact on society.