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The Word “Strategy” In And Around Startups

A few days ago, Fred Wilson wrote about strategy and specifically in startups. I was glad to see it, but my immediate reaction is that, at least in my experience, “strategy” is not a welcomed term or role in Valley startups. Sure, leaders are strategic about the choices they make before execution and tactics, but there are no titles like “Chief Strategy Officer” and generally strategy is associated (negatively) with those carrying MBAs (many of whom are VCs) and who draw up matrices on whiteboards.

I wrote a brief comment in this spirit, and both Fred and FAKE GRIMLOCK (still don’t understand what this is!!) replied. You can read the comment here.

I have written before on this topic on Quora. I dug up and modified my answer, but here goes: I believe there is a micro (Silicon Valley and/or startup) connotation for the word “strategy”, and also a denotation that applies generally. I know this first-hand because the term most people label me with is “strategic” and automatically assume that, because of this label, that I cannot execute or operate.

My sense is that this negative in the startup world for good reason, though there are exceptions, of course.

Part of it is driven by the fact that it’s a word often used by non-technical people who oftentimes knock on the door with an MBA or equivalent-type degree. In those educational settings, instruction is largely driven by a blend of the socratic method and/or the use of case studies that reinforce learning by reading and/or listening to stories and deducing lessons from them, mainly about how the protagonist in a situation would make a decision.

Those decisions are largely arrived at by going through the strategic process:

  1. Taking the time to understand the challenge or opportunity;
  2. Using domain knowledge to lay out a set of “completely exhaustive yet mutually exclusive” (CEME) options;
  3. Weighting them accordingly based on the cost vs. benefit, the risk vs. reward, and so forth, to steer something to its optimal destination; and
  4. Creating a full-proof plan that you and/or others will execute tactically to realize the strategy.

Part of this may also be driven by the fact that for a long time, most of Sand Hill held blue chip MBAs and were seen to have a lock on offering strategic advice without having operational “dirty-hands” experience. So in startups, when people use this word coming from a non-technical background, the assumption — which is oftentimes correct — is that the value-add of someone with this skill will largely be worthwhile only after the product or service has reached a certain point of stability.

In other work situations, outside the startup ecosystem, “strategic types” often congregate (I’m generalizing) at places like big box consultancies, management consultancies, investment banks, corporate strategy departments, and the like. Here the word has less of a negative connotation, though I have a friend who worked in the corporate strategy arm of Lehman Brothers who said that everyone else at the bank hated the department because they assumed his group were the ones that would tell the brass what they needed to know about the company, the good and the bad. They were seen as an elite asset by the management, but as snitches by the rank and file.

Overall, I do think it’s a tricky word in and around startups, and I’m not sure there’s much to do to change that.

[So, what makes someone actually good at strategy? I would say what separates people who claim they are “strategic” versus ones that actually, demonstrably, are, would be those that complete #1-3 and those that also make sure there are controls set in to ensure #4 is done, too.]