If you asked me 3 weeks ago what a strategy is, I probably would have made up something smart-sounding, but the truth is I had no idea. Then I read Good Strategy Bad Strategy by Richard Rumelt, and I had my eyes opened.
Sidebar: If you aren’t sure what a strategy is, you would probably have your mind blown by reading the book. Strategy isn’t just for big companies, it’s for solopreneurs and freelancers and probably even students, too. Having a strategy means you align all of your efforts in a cohesive design so that your scarce resources like time, energy, and money all reinforce one another.
Most people’s “strategy” is something like “achieve these 94 goals”. They don’t account for the fact that simply working harder won’t necessarily achieve results and that doing all that work in the timeframe you’ve allotted probably isn’t possible.
According to Rumelt, a good strategy has
A problem diagnosis, i.e. what is the most important or fundamental problem you need to solve?
A guiding policy, which addresses the problem by leveraging one or more advantages, and simplifies complexity by defining an objective that strategically focuses efforts (think of guard rails on a highway – they keep traffic moving in the same direction but don’t force you into just one lane), and
A set of coherent actions aligned with that guiding policy.
Once you have a strategy, it becomes much clearer what to work on and what not to work on. I think that’s useful for everyone, and it’s definitely useful for us, since no matter how hard we work, we can only finish so much work in a year!
I’ve omitted some details (or made them intentionally vague) in cases where we think it’s more aligned with our strategy to keep quiet. Sorry. That might make for frustrating reading. But we figure it’s better to share a vague version than nothing at all. We know how badly you all want to know what we monkeys are up to (and why we haven’t built that feature you asked for!!) 😉
I’ve also made a few callouts to highlight useful non-obvious lessons about strategy.
Let’s keep this simple. The problem is we are losing money every month and do not have enough traction or validation yet to survive, or raise what venture capital investors call a seed round.
(For those uninitiated in the world of startups, this is not a bad problem: since we just raised money from venture capital investors, the ball is now in our court to show rapid progress.)
Our guiding policy will be:
To test several potential market segments using Lean Startup Methodology, with a focus on paying customers, until we validate demand within 1 key market segment, and then
To pursue product improvements and growth opportunities focused on that market segment.
In lay language, that means:
We want to test several audiences that we haven’t tried yet
We’ll direct our learning toward users who are willing to pay, since we need to generate revenue
We’ll spend a lot of time and effort measuring things, and getting better at measuring the right things in the most useful way
We’ll ship product improvements in the increments that allow us to learn, rather than assuming we know what needs to be built
The Advantage Our Strategy Leverages
The advantage that this strategy leverages is that we are first to market.
Many people assume that being first to market is a big advantage, but empirically this isn’t true.
The implication of being first to market is that the unknown vastly outweighs the known, and it is almost certain to make wrong moves.
This makes it even more important to learn fast and adjust quickly. It implies that learning is a goal in and of itself, i.e. designing an effective experiment is more important than whether the numbers that experiment spits out are “good” or “bad”.
We should assume we won’t “get it right” the first time, and shouldn’t be overly swayed by the first positive results we stumble upon.
#1 We must learn as much as possible from what we’ve done already, by talking to and understanding our existing users.
#2 Making it easier for us to learn and measure important things on an ongoing basis needs to be a top priority, even though that pushes out building new features (and that’s painful).
#3 We need to monetize this year, and ensure that the company survives even if we don’t raise more money.
#4 Internalizing the mindset and behaviors of Lean Startup Methodology is imperative. We need to think of goals and projects as hypotheses to be tested and experiments to be run, to mitigate risks and advance an ever-more validated plan.
This Might Hurt
One kind of non-obvious implication is what we won’t do. This is where strategy gets painful.
What we won’t do—what we can’t afford to do—is focus exclusively on building the features our loyal but small user base have requested. Honestly, we’re deeply tempted to do this. Both Mike and I feel a strong desire to make you all happy. And, as a power user myself, I want the same features you do!!
The reason we can’t do this is we simply won’t learn enough from doing it.
As an example of how this is playing out right now, our focus in January is developing a partnership with an existing community that has an interest in using Focusmate. We’re doing this to learn whether tapping into existing communities is a viable way to grow and monetize.
It also implies that, as a general rule, we should beware the sunk cost fallacy, i.e. the tendency to double down on what we’ve done so far. Instead we should consciously compensate for this fallacy by emphasizing experimentation across a relatively wide array of pathways.
In practice, this is hard, because what we’ve done already is deliver a product that has real users (that might be you!) who we care about and who want things. We want to give our users what they want but that isn’t always the “right” thing to do, in consideration of our strategy.
[Does this sound cold and heartless? I sure hope not, but I really can’t tell. If it does, you can tell me in the comments how you’re feeling and we can discuss more. Above all I want you to know how much we care and how hard we’re thinking about building this company right. We want you to be able to understand and empathize with our decisions, which we believe will serve you best in the long run, even if you don’t get that thingy you want right away.]
Our 2019 Goals
The third piece of a good strategy is “a set of coherent actions”. We’ll go ahead and call those our Goals.
We have written our Goals using the OKR framework. (OKR stands for Objectives and Key Results.) We are novices with this framework but have decided to use it because it nicely separates the “What” (objectives) from the “How” (key results).
What are OKRs?
Sidebar: I find most of the things written about OKRs frustratingly confusing, and still struggle with the definitions of Objectives and Key Results, so I’ll add mine here.
Objectives are the “What”, i.e. where you want to get to. They are deeply connected to the strategy, and in a way, they are the outcomes that logically correspond to the strategy. They are also written in such a way that there is no implication or bias about how you’ll get there. A well-written objective doesn’t care if it’s fulfilled by waving a magic wand or by working 100 hour weeks.
Key Results are the “How”, i.e. what projects you will work on to fulfill the objectives. Projects and units of work are annoyingly vague and flexible things to contemplate in a high level set of goals, so I think it’s necessary to modulate the specificity of the Key Results to match the timeline and capacity involved.
Objectives for 2019
Here’s what we plan to accomplish in the coming year. S
I’m going to limit this to our Objectives and skip the Key Results, because I think they convey 90% of the meaning in 10% of the words.
#1 Implement a comprehensive feedback gathering and analysis system that effectively prioritizes product development work
As noted above, we need to institutionalize the Lean Startup Methodology feedback cycle pictured earlier in this post.
One Key Result, likely the first one, will be an analysis of our existing user base, designed to improve our knowledge of what our market segments are and what degree of product/market fit we have in them, and build a product roadmap on that basis.
[If you receive an email asking you to share your experience, please respond!!]
#2 Do a pilot to test whether a diverse set of existing “communities” will pay for Focusmate
Community is our term to describe an existing group of people who might want to use Focusmate together, whether that’s a user segment like students or musicians, an affinity group like Joe’s newsletter subscribers, the customers of product like an online course, or the employees of a company.
This objective is about testing our hypothesis that communities will value Focusmate due to relationships and shared preferences within each respective community, i.e. students will want to work with other students, and furthermore, that students of the same course will want to work with other students from that course.
We’ll be testing a diverse set of communities to help us learn more about how different types of users respond to Focusmate.
#3 Get our product ready to support multiple concurrent communities and a large number of end users
This objective is about doing the work necessary to fulfill objective #2. We want to test our hypotheses by putting Focusmate in the hands of the intended users.
#4 Show good retention within at least 1 key market segment
If you’re currently a Focusmate user, this is where your ears should perk up.
Improving retention is all about making a product that users come back to again and again and again.
This objective is also a simple way of saying that we’re going to act on what we learn (see objective #1)!
Note: The 5th goal, below, is predicated on achieving a level of retention we are satisfied with. We’re not sure yet what that level is—part of goal 4 will be to figure out what good retention means. The idea is to apply the 80/20 rule: figure out the 20% of things we can do that will make 80% of the difference to our retention metrics.
The reason we’ll focus on retention before growth is that having good retention makes it much, much easier to grow. We’d rather push a boulder downhill than uphill!
#5 Grow active users and revenue fast, within the key market segment
Having reached a level of retention we’re happy with, we’ll switch gears to focusing on growth. The idea is that, having validated who will pay for Focusmate, and improved the product to a point where they are sticking around, we can go and get more customers from within that “key market segment” mentioned earlier.
What Do You Think?
Was this useful for you? Can you feel the love? Do you have questions? Do you agree/disagree with something? Do you feel like sending us chocolates?
Productivity scientist, reformed procrastinator and creator of Focusmate. Featured in Forbes, CNN, GQ, Huffington Post. I believe that most global problems would get solved if everyone could do their best work. My mission is to make that happen.