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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Strategy vs. Fundamentals

Comments (14)

Creating companies is hard.  Most fail.  Overnight success is rare (my favorite “overnight success stories” are the ones that take 10+ years, like iRobot or Harmonix.)  While strategy plays a key part in the outcome of an entrepreneurial venture, the fundamentals matter a lot.  Take the following parable that I got from a friend recently.

I was thinking about you as I drove home from my tennis match the other night. My doubles partner was clearly excited to implement what she had learned in previous doubles strategy lessons. Minutes before we stepped onto the court, she developing signals she was going to use for poaching, staying put at the net, etc. Since I had never played against our opponents before, I wasn’t initially concerned about strategy. I figured assess their strengths and weaknesses during the warm up, then play to them accordingly.

We ended up losing 6-4, 6-4 to a team that wasn’t as strong as us. One of the reasons I think we lost is because there was too much focus on strategy and not enough on fundamentals. Our opponents capitalized on some very basic mistakes and ended up taking the last four games from us to win the match.

Clearly there are worse ways to spend a Monday evening than losing a tennis match. But, as a funder/board member/sounding board/cheerleader, have you ever counseled a start-up team where there is an imbalance between strategy development vs. executing on fundamentals? How do you steer them back on course, especially after they’ve experienced defeat?

I’ve been in way too many meetings where the talk is endlessly about “strategy.” Whenever you are in an endless cycle of a “we need a strategy” or “our strategy needs to be X” type discussions, step back and think about whether or not you have a team that is capable of actually building a business.

Great strategy is useless if you don’t know how to serve, volley, and hit the ball.

  • http://zerologic.com Michael Sitarzewski

    I think this is ultimately what caused us to drop out of the funding race. We listened to, and executed too many ideas about what our “strategy” should be, instead of taking advice (and leaving it) where appropriate.

  • http://ben.casnocha.com Ben Casnocha

    “We have a strategic plan. It’s called doing things.”

    -Herb Kelleher, founder of Southwest Airlines

  • http://www.defragcon.com Eric Norlin

    “There is no try. There is do or do not do.”

    –Yoda
    ;-)

  • http://www.thebaldchemist.com Ray Leigh

    Ah! Did you ever see a statue to a committee? What is needed are visionairies. Too right those who have strategies usually are lacking in vision and passion.Did you ever notice when things go a little haywire, the ones who are the most verbose are those who contributed least in the decision making process and are the first to tell you the strategy was wrong?
    Just get out there and feel the water. Those who sit around for conditions to be right before implementing strategy are those who get left behind and are always trying to catch up.Passion, energy, belief go for it!

  • Dave

    “I figured assess their strengths and weaknesses during the warm up, then play to them accordingly.”

    This is the approach that most VCs cannot tolerate, and the reason is that the end result is typically a profitable but not particularly large business. So, next time you’re in one of those meetings, find out whether it’s being driven by investors or the desire for investors, or whether the team really thinks that way.

    The other time this happens (endless strategy discussions) is when the current strategy is not “working,” or not fast enough. Often this is a lack of patience (sometimes on the part of the entrepreneurs, sometimes the investors). Sometimes it is a failure to execute. Only last should the strategy be reevaluated (beyond minor tweaks).

  • http://www.affygility.com Dean Calhoun

    Great sports analogy. I coach a small group of teenage girls (talk about unruly employees) in competitive basketball. Sometimes we scout out the competition, practice some great game strategy and then it gets throw out the window in the first 5 minutes of the game. Like in business; sometimes hustle, run, and shoot the ball works just a good as anything. Many times we enter them in tournaments 3 grade levels higher; we may get our butts kick but they learn so much. Look at Brad’s earlier post on Fear of Failure; and Fear is the Mindkiller.

    Dean Calhoun – CEO, Affygility Solutions

  • http://www.fiftybyfifty.com Farhan Lalji

    Great post. However, I do believe strategy can be useful if applied in the right situation. I’m sure Roger Federer has a strategy when he plays Rafael Nadal (he’s played him before and won and lost, so it’s a multi-round game). Whereas when Federer is playing some schmo in the first round he might just be prepared to stick to his fundamentals.

    If you’re facing strong competition in an established market, strong execution may not be enough.

  • http://www.tech4d.com/blog Frank San Miguel

    I think one fundamental skill an entrepreneur has to have is the ability to come up with above average solutions to problems. This may seem like an oxymoron, but it is a skill that can be developed – you don’t have to be born with it.

    And startups absolutely must have this skill. Regular businesses can be just “plain old good”, but entrepreneurs must be “way better” in order to succeed. I was involved with one startup that failed spectacularly because everyone was too busy planning for the IPO (that never happened) to bother with coming up with good ideas.

  • http://danielberch.wordpress.com Daniel Berch

    Brad,

    Right on target. I occasionally see management and boards focusing on strategy when they should be focusing on fundamentals. Some plans don’t need to be all that complicated – and success is simply a matter of hard work.

    Daniel Berch, Strategy Consultant

  • http://www.criterion-advisors.com/blog/have-you-mastered-the-fundamentals/ Adam Brucker

    Great post! It very closely echoes the sentiments of the introduction to the book that I’m working on. From the first page:

  • Mike

    I think this post really, seriously, and significantly misses the point. One of the most important parts of strategy is to determine if the “fundamentals” are any good in the first place. Without strategy, how can you find a market access point/position? Without a strategy, how do you know which objectives to choose? Which tactics? How do you develop a cohesive method of execution?

    Is “tactic soup” [picking tactics at random regardless or suitability] or “execution soup” [doing things without any real idea of what exactly you're doing and why], any better? Ugh. Can we look at your idea in reverse? Execution is useless [and often wasteful] without strategy.

    Why not write a post that says “people who would rather talk about work in an attempt to avoid work should not start a company”. Isn’t that what you’re trying to say? I think your post describes the laziness of the satisfied but I don’t see what this has to do with strategy.

  • J L

    one of the most memorable quotes from a former strategy professor: Strategy, is DOING.

  • Allison Bergamo

    I was the one who broached the subject to Brad in the first place. And I read everyone’s posts on the subject several times prior to my subsequent tennis matches and business meetings. Speaking for myself as an competitive athlete and entrepreneur, strategy and fundamentals will always be intertwined. The key (at least for me)is knowing what I’m fundamentally good at/weak at and continuously working to improve on both. To me, that’s a key element for creating and executing a strong strategy.

    @Dave – yeah, I assess my competitors’ strengths and weaknesses on an ongoing basis. It allows me to adjust my strategy to take advantage of immediate opportunities and create future ones.
    It might not be an approach that VCs favor, but it helped me land a six-figure deal and win my tennis match last night – 6-2. 6-0!

  • http://equitygreen.typepad.com garrett

    Great Post…agree 100%. Sometimes the best businesses come together with a lot of hard work and careful decisions. I am always a little leary of people who “strategize” the death out of an idea.

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