Master Strategic Thinking in 5 Simple Steps as an Entrepreneur

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“Strategy Tragedy?”

If you’ve ever listened to corporate speak, you probably are flicking your nose at the idea of crafting a strategy. In fact, I’ve heard many SaaS and startup companies growl at the idea of strategic thinking, as if only Fortune 1000 companies qualify to do it. If so, where does the line end, Fortune 1501?

I’ve spoken to many entrepreneurs and founders, CEOs and their senior management. The challenge is not in the idea that strategy is useful, but the issue that weighs on everyone’s mind is that strategy is just so complicated. With over 200 methodologies, one could literally spend a lifetime crafting a strategy to sort out strategy and still risk going half-bonkers (trust me I tried).

Well, my aim in this article is to help those who are a little miffed by the idea of strategy, and make it as clear and as simple as it gets, at least in the context of small business management (just because the big boys have complexity and will need big bucks for a McKinsey or Bain to help with that level of strategy).

The basis of my thinking is really grounded in two incidents that would change my business life forever and propel me involuntarily into the space of strategy. The first was being completely screwed over in my business. The second was being introduced to Guerrilla Marketing, by Jay Conrad Levinson.

Before that, let’s talk about fast food.

“Would You Like That Strategy To Go?”

The McDonald’s story is so famous, Michael Keaton played Ray Kroc on the big screen in The Founder. To depict the iconic fast food restaurant chain in this relatively bad light was quite divisive for some. But it highlights something that we need to talk about in strategy.

This story was powerful, but in a way that you might not expect. There are many elements of strategy. The first was about the landscape of the burger market – overpriced burgers that had high overheads in a dine-in restaurant were starkly compared with the fast food concept that was pioneered by the McDonald’s brothers.

The second was about partnerships, and how working together required not just clarity of vision, but also alignment. This lack of alignment set in motion the events that would cause the McDonald’s corporation to be created under some gray ethical circumstances.

The third is about the value proposition. Sure, burgers are nice. But franchise owners need to have land to run their burger chains. This idea was pointed out as the central defining difference in the way the business model was set up, that made a difference to the financing model for McDonald’s for all its apparent and portrayed ethical drama.

I’m not going to tell you to follow Ray Kroc. I’m just going to ask you to consider the factors that make a difference to the strategy to scale your business that could help you be successful in whatever you are doing… and still watch your back!

“Would you like that with fries?”

I was in a much larger training organization back in the day. Growing to $1m was rather easy, given that we were a team of 2 people and 3 partners, and we exceeded that in our first financial year. In our growth phase, revenues doubled for the next two to three years. And the rest of the way was tough, and the ability to scale was something that was not very healthy, at least for me, and I took a step back to do my own thing in 2011 where revenues hovered at the low 8-figure mark.

What made me get really interested in strategy began with us getting into trouble in 2004. A couple of trainers in our organization wanted out, and one of them wrote a contract and got one of my partners, a trusting guy who had no knack for wanting to read details in a long document, to literally cede content over in fine print. This dastardly move got the three of us quite raving mad. We had lost hundreds of thousands in booked deals that got canceled because these trainers undercut the deals with lower prices, but essentially, the same program.

You see, this kind of competition has a funny way of making you think differently. We had to rethink the way we did business. This included:

How to better hire the people we needed and establish a good relationship with them;
Differentiating our program in the market while serving customers in a way that brings them back.

I can spend lots of time talking about the details about how this was done, but I’d like to suggest that they boil down to the kinds of choices you should and should not make.

On hindsight, here are some choices we should have made:

As a principle, communicate openly, hold the space for dissenting ideas, share the logic of decisions in the interest of all partners.
Create more deliberate differentiation about our programs and what these programs could do for our customers based on process, not personality (the trainer).
Test new businesses in an agile fashion with clear criteria to cut losses where required.
Not to enter markets that we were not familiar with, or had to spend too much time building.

I suppose these are not silver bullets either. And hindsight is 20/20. The fact is that these choices have to be listed in your own mental canvas based on a thinking process that cannot be limited to my articulation of strategy here. The elements of your strategic thinking process must be elevated to a level that makes sense.

For example, around 2006, we noticed that demand for our training programs was flagging. That was when I was studying Guerrilla Marketing, and attempted it to raise the offer stack for our training program. Because I had started to learn that many online gurus were providing an offer stack that was irresistible, we created adjunct products that were then packaged as bonuses for our training program, such as additional learning content, a CD program they could use anytime, and even an interview series that me and my partner did on ‘success’ and what one’s mindset needs to be in order to get it. It was a raving hit, to a point where those products were sold online and turned into a 6-figure sum as a business on its own.

I had later met Jay Conrad Levinson, the father of Guerrilla Marketing himself, in 2007, and told him this story, and there was nothing in his eyes that told me he was surprised that this worked. He pointed this out in his book, and literally everything I had done was already in his guerrilla “weapons” list.

“Enjoy Your Meal!”

So what do these three, seemingly disparate situations of the history of McDonald’s, losing over $300,000 to schemers, and Guerrilla Marketing offers, have with each other that makes strategy simple?

Well, we have to remember that people who eat burgers aren’t interested in the way you grill, how long it takes to make it, what kinds of sauces you put in what proportion, etc. What makes them great is the fact that the final product delivers satisfaction, if you put in processes for knowing your customer well.

In order to arrive at that, we need to be able to give the burger to your customer and with a face of confidence, say “enjoy your meal”! Nothing on your face should convey any doubt that they will enjoy their meal.

So what are the special ingredients to put into your strategy?

Here are the Five Simple Steps.

1. Gather input and environmental knowledge

Ray Kroc was surprised at the brothers’ speed of fulfilling burger orders. He was intrigued about the different experience of dining, and was also able to connect the dots to what such an experience meant. The brothers themselves were operational experts serving the needs of the customer and could not see a bigger picture. Kroc himself was unable to see that real estate would be the financial driver for the business rather than just the franchise itself. He needed input from related industries and experts who could point out these blind spots.

This is why in your strategic thinking process, you will want to study the environment and customers’ input about the service they are currently experiencing. This kind of environmental scan is the central tenet of what Sun Tzu, in The Art of War, calls terrain. When you know the terrain, the army on the march can anticipate where battles will and can be fought, and where they should not be fought.

If there is a pandemic, the use of virtual means of business will grow exponentially. We know that from our own recent COVID experience. But now that the new normal has happened, you cannot apply the same virtual strategy to move forward.

Things have changed after the change!

Feedback from multiple sources also means putting your ears to the ground to gather seemingly disparate pieces of information and putting them together. Sometimes, customers provide feedback about your product. But you can also inquire from customers where you don’t even have a product yet, simply by studying their patterns of consumption and why they buy.

Who would have known that tactics (such as bonus offerings) I observed being used on the internet in 2004 and 2005 could be repurposed to revive a dying product?

Making a list of all such available options in and out of your industry, and making them visually accessible on a blank canvas and deliberating on the connections between these could cause a strategy to emerge when you get an aha moment as to what could work.

2. Decide What Game You Want To Play And Where.

You’ll be able to surf when there is a wave. But without the wave, trying to surf would be pointless. You can either change the activity you are participating in, or change your location so that you can surf.

A direct approach to building a McDonald’s burger is to build a McDonald’s kitchen from scratch, brick by brick, just like how you might code a program line by line. However, some have innovated on just selling a program to selling white label rights, or even offer Open Source or Creative Commons licenses to propagate their software.

But the value of franchising based on real estate, versus only recipes goes beyond just the intellectual property alone. This is what changes the playing field – a confluence of diverse ideas that probably have to come from an interconnected nexus of information that can only come from a team of people and their diverse experiences and opinions.

We recently had a client attempting to launch a SaaS educational software platform toward the end of the tech boom during the COVID pandemic, and in spite of their best efforts, ended up with a single digit user rate in recent months. They were unaware of trends and even current practices in SaaS as a new player, and how building a larger user base would have made a difference. Their value proposition became clearer to customers when their app was made part of the educational institution’s physical classes as a value enhancement.

3. How Will You Win?

In a world where people don’t just buy a product, one has to constantly gain clarity about the value one is offering. A product is not an offer. If I claim that I am selling a computer, that’s product. But if I am telling you that my computer was created because I prefer creative innovation and hate rigidity, then I resonate like how Apple has resonated with many, enabling strong customer loyalty, which is at the core of their business success, a strong offer.

Value capture is simply the market’s response to the real or perceived value of your offer. If you expected $1m in ARR, but you captured $500,000 ARR, then there is a gap in value capture. It is probably also a blind spot because you may not have listened to or understood the real needs of the customer.

In almost every game, provided you understand the rules, there are different approaches to winning. But each game you play is dependent on dynamic changes that happen to the players in the game. This is why hard work is not good enough. You work hard and train so that you can be open to exploit opportunities when they present themselves, while reducing exposure of your weaknesses.

The fastest way to do this is to do something called a SWOT analysis. You may probably have heard about it before, but never thought of aligning it by (1) putting your strengths to capitalize on opportunities in the environment, (2) applying your strengths to neutralize threats, (3) noticing your internal weaknesses and what you cannot or should not do to capitalize on opportunities, (4) matching your weaknesses to threats in the environment to decide how to mitigate or avoid these vulnerabilities.

4. Keep Score and Adjust How You Play the Game

Because there are an infinite number of ways to capture value, the only way to do this at a level of sanity is to test your offers on an ongoing basis. Don’t stop testing, and don’t stop offering. Measure your offers and get feedback about those offers so that they are interesting.

A very powerful way to do this is called Design Thinking. It is a thinking framework that enables you to put some thought into designing and refining your value proposition.

Benchmark the conversions of your offers. We ourselves are now testing whether people are more responsive to our social media based offers or whether email is the way to go. Even something as simple as creating a fun user community (as opposed to just another Facebook Group of customers or users where people complain all the time) can make a difference. While we can have assumptions about it, we won’t really know if there is a great way to do it or not, until it is done!

Examine what others do in other industries. Perhaps what they do can be adopted into your current ways of thinking, and potentially give you ideas about what to improve or add on to your current services.

Talk to people. You can get feedback from people who have opted into an offer, and uncover why they valued it. By understanding their way of thinking, you begin to take implicit assumptions about what you think you know and turn it into explicit knowledge that helps you to make more accurate decisions in the future.

5. Explore and Innovate

3M is known to have a database of innovations that they revisit from time to time, because projects that failed could be reframed in a different context to have value. Their most famous one is the Post-It note, also previously known as a failed glue.

What I deemed to be just a “bonus offer” turned into a separate business altogether. I needed to mine for new innovations and potentially “dismantle” things that we already had to provide offers to current or new markets.

Take for example our Inner Circle. It never occurred to us at first that the inner circle was a community of membership. It started off as a group coaching program but did not have the level of value that we wanted to capture. So we created a one-on-one coaching program that was a hot favorite. But, the market wanted more and varied things. For example, some founders did not know that they were facing emotional distress due to conflict in the team or trusted employees leaving. Fortunately for me, I am a trained psychotherapist and can read some of these subtleties, and this led to an overall experience of an integrated and caring experience. It presented an opportunity to offer Life Coaching (and even Couples Therapy) over and above our Business and Leadership Coaching programs.

Talk to experts in other fields. One story I vividly remember Jay telling me when I stayed at his place in Orlando in 2007 was how two out of three competitors on a street tried to slash prices with huge banners placed above their doors screaming out discounts, while the third one simply printed a banner saying “Entrance: This Way”. It speaks to the spirit of guerrilla marketing that is innovation. This simple reframe was not only humorous, it made the competition’s actions redundant.

Conclusion

As someone who still continues to serve as a volunteer in the army reserves in Singapore, I have a great deal of learning each time I return to service each year. In one exercise we had, one of my former commanders, a tactically clever man, was able to exploit the terrain to fend off opposing forces for days. I remember him saying that a superior strategy is one where even if the enemy knows it, they will not be able to do anything significant about it.

Look at McDonald’s. Their strategy is as clear as can be written on a piece of paper. You can literally observe what goes on in some of their kitchens as a customer. There is no difference in their marketing and advertising approach over the last 10 years. Yet, they are the dominant burger.

As you learn to craft your strategy, all I ask is that you remain open to the input and environment, because the changing times will be revealed in the testing of your offers. Turn strategic thinking into a way of working on your business on a regular basis, so that you will never be blindsided by the changes that happen, remain adaptable, and scale your business!

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