A new year can often become the decision point of many executives, entrepreneurs and board of directors on whether to stay the course, make small corrections or execute a major strategy pivot. Sometimes it is change for the sake of change. Sometimes it is an emotional reaction to a tough year or economic climate. Sometimes it is a critical necessity to ensure future survival and/or success.
When should you pivot, stay the course or just make small corrections? The answer can only be obtained by getting candid answers to specific questions regarding your business.
If you are starting from scratch today the questions that you would ask are:
- What segment of the market is currently underserved? What is the persona of the ideal prospect?
- How much is that market willing to pay? To whom? What terms?
- What protected IP can we create to deliver that value proposition? How long and how much will it take to build the Minimum Viable Product (MVP)?
- What is the ideal GTM and associated costs to make this work?
- What type of team is minimally required to deliver on this across all functions: management, development, marketing, sales, services, G&A?
- Can this initially be funded from 5-10 early stage customers who desire the MVP but will only pay 1/10th the cost? If not is there a VC or angel willing to fund (min $3-6M) under reasonable terms?
- What is the end game? Liquidity event in 2-3 years? IPO? Acquisition? $1B valuation?
If you are not starting from scratch today the questions are:
- Who do you currently have on the team? Are they the right skill sets delivering at “A+” caliber results (objectively measured and not just excuses and good intentions) or should you replace them?
- What is the current state of the product (code stability, independent validation, outstanding known deficiencies, documentation, testing, quick start and best practices guides, training, roadmaps and sprint plans)? What about services versus product revenue and focus split?
- How much capital do you have in the bank versus the current debt outstanding (employees, vendors, creditors)? What capital is currently available and under what terms relative to what is needed to make a serious run as opposed to just surviving?
- What market do you think you currently serve? What market would an industry analyst say you serve based on their assessment of your offering? How crowded is that market and where are you ranked relative to the competition? What is the nature of that market (growing, shrinking, spending, stalling)? Have ecosystems developed and if so who are the players or technologies?
- How does your target market evaluate and acquire this type of solution? What are the timeframes and conversation/evaluation expectations? What is this market willing to pay and under what terms? What are the equations driving “lead to cash” and can they be repeated?
- Is it time to pivot the strategy yet again or take an incremental approach to successes gained in 2013 by filling in the known gaps?
- What is the end game? Liquidity event in 2-3 months or 2-3 years? IPO? Acquisition? $1B valuation?
I recommended two books every entrepreneur should read before starting a venture in order to thrive: “The Advantage” by Patrick Lencioni will drive home the value of a truly aligned and committed management team and “Lean Startup” by Eric Reis provides the roadmap for MVP to success without a lot of outside BS. If we are unwilling to change then the definition of insanity is doing the same thing and expecting different results.