In one of my technology startups, we are on a third pivot to drive a revenue model that scales. This is always a hard call because part of a strategy is to commit to the time, resources and risk of seeing it work or not. I like to model out the future on a spreadsheet and play with scenarios. After that, we have to test to see if the strategy works and build out a scorecard to measure what we are guessing will be outcomes. The execution part requires teamwork, leadership and high focus.
One of the blind spots I see in entrepreneurship is overvaluing determination. I don’t think in this day and age of massive leverage with technology that determination has as much value as perceive. In fact, I think it’s more of a relic of an industrial mindset. If anything, the determination to plan, take risk and make the hard call when you have enough knowledge whether something will work or not work is extremely high value. You have to know when your small bets can become big outcomes or the strategy needs to be abandoned for a new pivot.
So, here’s a framework I like to think about when trying to make decisions on whether to push harder with determination on a strategy or fundamentally changing the strategy through a pivot:
- Plan the numbers. Build out scenarios with a Google Sheet and know the upper and lower limits. You have to account for as many variables as possible such as headcount, technology resources and other costs.
- Know the milestones. Based on the numbers, how much money is required by when?
- Decide on funding. Do you want to bootstrap those milestones or raise funding? What is the valuation at those milestones? Determine these to create a clear trade-off between time and valuation.
- Create a scorecard. In a separate Google Sheet, identify the weekly or monthly numbers with targets that have to be hit. Ensure there is a clear owner of those numbers. You either miss or hit the numbers.
- Judge quantitatively. Your scorecard will tell you if you are winning or losing against your initial strategy. Use the numbers to get at root causes. Fix each problem based on the numbers. If they don’t move positively, entertain hard choices to pivot.
I don’t like emotional inputs or opinions. I want cause/effect to figure out if a system, strategy or team will get the goal.
If I don’t have confidence that the overall strategy works based on determination, then a pivot is required. Stop digging the hole you are in and get on with the next overall strategy.
In a sense, startup life is experimentation, much like scientific tests. You have to use creativity to figure out the path and strategy. You tune it with best intentions to make the model work. However, when you reach a point where determination is not moving the needle or you can see how the model will play out, then lead by calling the effort failed and move on to the next strategy.
We are constrained by how markets work and resources required to win. That’s the job of the entrepreneur to artfully finesse resources towards winning.