G2 Playbook: Strategy in a Box for Startups

Author: Jasper Platz | Editors: Rob Johnson, Jake Tauscher

We have a playbook at G2 which we’ve developed while investing together over fourteen years in well over a hundred companies. We’ve seen every possible outcome, from spectacular public exits to wind-downs. Each executive team and company with whom we partner is unique, but there is a set of common operating principles that we find works across industries, business models, stages, and geographies. These principles make up our playbook.

Chapter 3: Strategy in a Box for Startups

“Without strategy, execution is aimless.” Morris Chang, founder of TSMC

Why is strategy important for startups?

Startups are defined by having a very limited set of resources they need to prioritize carefully to grow quickly and efficiently. Without the right strategy, companies run the risk of wasting resources on projects that don’t matter and miss out on opportunities that could change the trajectory of their business. Having a well-defined strategy in place is critical to:

1. Align your team (according to Harvard Business Review only 5% of employees are aware of and/or understand their company’s strategy)
2. Align your Board
3. Inform decision-making (around staffing, product development, go-to-market, fundraising, etc.)

Developing the company’s strategy may be a daunting task, especially for founders and operators who are busy running their businesses and putting out fires. To make it easier, we created a simple playbook to develop a winning strategy for your business without spending weeks on it or hiring expensive consultants.

Step 1 — Assess where you are

Every business is different, so make sure to adjust this playbook to your needs. We think most companies fall into one of these three categories:

#1- You got to where you are by focusing on a specific problem and solution, but lack a cohesive, clearly articulated strategy to get the business to the next level.

---> This playbook is great for you!

#2 — The strategy lives in the founders’ heads but is not well documented.

— -> This playbook still works great. It helps you bring your team along, get them to contribute, and document your strategy in one clearly articulated framework.

#3 — You already have a strategy defined, but you’re wondering if you need to update it.

— -> Adjust this playbook to make sure you build on the past work you’ve done. Consider reevaluating your strategy once a year before kicking off your annual planning. You may want to run an abbreviated process to roll forward what you have, or you might need to run a full process if your strategy needs an overhaul given the market shifts around you.

Step 2 — Pick the team

This should be a small number of people who know your business and market well, can think strategically and not get lost in the weeds, and have a good understanding of how businesses win. Participants could be founders, key executives, board members, or advisors. We recommend keeping this group to under 12 in total, ideally 6–10, otherwise it becomes difficult to move along efficiently.

Step 3 — Block out time

Plan for a full day for your strategy session, but it may take longer. An offsite works great to focus the team’s attention and avoid distractions from the everyday execution work.

Step 4 — Do the pre-work: capture the customer’s voice

A critical input to any strategic plan is to collect input from the business and to ensure the voice of the customer is represented well. Interview your front-line staff (sales reps, account managers, implementation managers), and talk to key customers directly. Some sample questions to ask:

• What are we good at? What differentiates us from the competition?
• What are our weaknesses?
• What are our biggest opportunities?
• What is the competition great at that we’re not?

Share the notes from these conversations as pre-reads with the participants. It should be a raw, unfiltered account of the state of the business through the eyes of the customers.

Step 5 — Set the agenda

Strategy discussions can easily become diffused and run over. Setting an agenda ahead of time and having someone on the team moving the discussion along is helpful to keep you on track. Here is an agenda template that you can adjust to your needs:

AGENDA

Discovery:

• Discuss customer insights. Summarize key takeaways and insights from the “customer voice” interviews. (30–60 mins).
• Explore what the future of our industry will look like in 5–10 years. This should not revolve around specific companies (including your own) but be a high-level discussion about the future state of the industry and customer experience. (30–60 mins)
• Competitive assessment. What are our strengths/weaknesses? What are our competitors’ strengths/weaknesses? (30–60 mins)

Vision and Strategy development:

• What’s your big vision for the company? What’s your winning aspiration? You might know this from day 0 of founding the company. Others will need to develop and refine it over time. For startups that want to have a big impact, setting “BHAGs” (big, hairy audacious goals) is a great framework (see more on BHAGs) (45–60 mins)
• Define the playing arena and how to play. This will help you narrow down what areas are most important to play and win in. Consider different vectors like customer segments, product areas, geographies, channels, technologies, etc (45–60 mins)
• Assess the organization’s resources. Now that we have a clearer sense of where we are headed, we need to assess if we have the resources to achieve our goals (planning time frame 3–5 years). If not, how do we adjust either the goals or the resources? (45–60 mins)
• Develop the strategic plan to achieve our goals. With clarity around the goal and resourcing, let’s figure out a (high-level) plan on how we get there. What’s the order of operation for the coming years? Define the path, objectives and key results to measure ourselves against. (45–60 mins)

Step 6 — Drive toward a clear outcome

A challenge with strategy work is to capture it elegantly so it can be shared widely and communicated consistently. The best approach is to develop a short, concise summary of the strategy — a “strategy on a page”. Here is a great template you can use to customize and fill out:

Copy and edit our template here

Step 7 — Sleep on it and refine

Finding the right language to describe your vision and strategy requires iteration and crafting. After you have the first draft, continue to improve and wordsmith it. It’s worth it. The more precise and engaging the language is, the easier it will be to rally your organization behind it!

Consider bringing in internal comms/marketing at this stage to help with messaging and wording. More mature startups can also consider engaging with an external agency, but I would recommend against outsourcing core strategy work to others. They will never have the same ownership over the outcome nor the same knowledge about your customers and sector.

A note on involving your Board

Just like your team, not involving your board in strategy work will lead to dissonance and thrash in the future. New ideas and distractions will come up all the time. A clearly agreed-upon strategy will help guide those discussions to ensure you, the team, and the board are aligned.

Good board members will be able to bring a lot of valuable insight to the discussion. They know the competitive landscape, have a view of how the market will develop over time, and have the benefit of seeing strategy play out over many companies and verticals. Make sure to leverage their experience productively.

A few ways to involve your board are:

• Inform your board about the process ahead of time so they are aware and solicit their input.
• Consider inviting someone from the board or investor team to the strategy session — that should be dependent on your relationship with a given investor and how much value you think they can add.
• Once you have a first draft of the strategy, make sure to present it to the board and get their input. “Step 7” is a great time to do that.

Step 8 — Resourcing and deployment

“Strategy without execution is useless” — also Morris Chang, founder of TSMC

This is where the rubber meets the road. Make sure to figure out the WHO, WHAT, WHEN, HOW and HOW MUCH. Each function in your organization needs to put together a plan to support the strategy and fund the resources to go after the opportunities identified and reduce/remove resources from areas that are not a priority. Without the proper resourcing, your strategy will fail.

As you deploy your strategic plan, make sure to track progress. Hold people accountable to the plan, timeline, and goals along the way. This is where OKRs are valuable and help break down high-level goals into team-specific objectives and metrics.

Step 9 — Communicate and evangelize

Strategy needs to be communicated and evangelized repeatedly, especially at fast-growing organizations where new team members join weekly. The default organizational momentum is entropy and having a well-defined strategic plan helps the organization stay focused. Use all-hands, offsites, exec team and board meetings to share your vision and strategic plan.