There are many different frameworks for business strategy, but most are designed for large, complex organizations and therefore tend to be too complicated for startups.
A simple strategy framework that is well adapted to startups consists of the following four layers:
- Vision: The startup should have clarity about the "why" — why does this company exist, why do we go to work every day, why do our customers need us? This should be a constant north star in the long run with a horizon of 10 or more years.
- Mission: Where do we see ourselves in 5-10 years? What will we have achieved?
- Key Strategies: This is an essential layer between the often more abstract long-term goals and the concrete deliverables for the immediate future. These medium-term strategies deal with outcomes that the company hopes to achieve in the next 2-3 years. These outcomes should be concrete and tangible, but also harder to achieve than something that would fit into an annual goal.
- Annual OKRs: Specific plans for the next 12 months.
A typical best practice planning rhythm works as follows:
1. Annual strategy offsite session
Participants: Management team and potentially key team members.
Good timing: Late summer.
During this session, the framework described above is applied and fleshed out for the next year. Long-term goals are revisited based on changes in the environment, e.g. new market realities that make it necessary to adapt the vision.
- Year in review: What went well, what didn't go well, what did we learn?
- Market dynamics: What happened in our market in the last 12 months that will influence our strategy?
- Vision & Mission: Are we still aligned on these points? Is it necessary to change or sharpen something? A good exercise is the "postcard from the future" where each team member writes a fictional postcard from 5 years in the future, describing what we achieved by then.
- Key Strategies: Define the strategies for the next 2-3 years
- Annual OKR draft. These are later to be detailed and clarified with the broader team.
- Action plan: What do we need to do next to make this happen?
- Plan plenty of time for team building and fun
2. Board alignment
The management team should present the strategy to the board to get alignment and decide on the major issues that feed into the budget process.
Participants: board of directors and management team
Timing: Early fall
3. Budget planning
The annual budget should be planned and approved by the Board of Directors, ideally in the last session of the year (or first of the year).
4. Annual kick-off session
All-hands session, ideally offsite. Present the high-level strategy and invite contributions from the team in terms of how the goals can be implemented, potential modifications due to resources and dependencies, etc.
The format depends strongly on company size, but bringing everybody together (as far as possible post-pandemic) has a strongly energizing effect.
5. Quarterly update sessions
A quarterly all-hands session (in person or virtual) serves to track progress in a way that is visible for everybody in the company. Changes to the plan can be discussed and successes celebrated.
Other Useful Resources
Varnish: Scaling Up
Excellent guide from the founder of the Entrepreneurs' Organization
Scaling Up: How a Few Companies Make It...and Why the Rest Don't (Rockefeller Habits 2.0)
Scaling Up: How a Few Companies Make It...and Why the Rest Don't (Rockefeller Habits 2.0) - Kindle edition by Harnish, Verne. Download it once and read it on your Kindle device, PC, phones or tablets. Use features like bookmarks, note taking and highlighting while reading Scaling Up: How a Few Companies Make It...and Why the Rest Don't (Rockefeller Habits 2.0).
Eisenmann: Why Startups Fail
Not as negative as it sounds — many useful tips for how to shape your strategy and execution