Priorities in the Business Strategy Life-Cycle: Phase 1: Foundings

The organizational Life-Cycle requires several distinct phases of strategic thinking.  Each level becomes increasingly complex, as previous strategic phases are nested within each successive phases.  Phases have stages, as the business matures.

1.  In the Founding Phase, the initial concern is refining the fundamental Value-Proposition so that it is clear, concise, and irrefutable to potential customers.  

2.  Although in more sophisticated ventures the “Business Model Strategy” is clearly worked out as venture investors require such management discipline and rigor, for many entrepreneurial start-ups the founder works off an implicit business model, and uses native common-business-sense (rather than rigorous marketplace positioning analytics) to drive the entire strategic thrust.

3.  All businesses and business venures (in existing companies) should have a soup-to-nuts business plan.  It might not be constructed with the complexities that a Harvard MBA might place on it, but it should have, at minimum:

  • a statement of the Value Proposition, 
  • the potential market, 
  • a decent competitive market analysis, 
  • a financial resources plan,
  • a capital assets plan (real estate, equipment, hardware & software),
  • an operations plan (how, where, on what schedule, to what quality), 
  • a personnel plan (acquisition of capabilities/expertise, compensation), 
  • a business development sales/marketing plan, 
  • profit-loss projections for 3 years using worst-case and best-case scenario planning, and 
  • a reasonably good idea of an exit strategy.

4.  Once the initial Value Proposition is acceptable, a business plan is constructed, the business has acquired financial resources, and it becomes time to go into production/service the next sub-stage in the Founding Phase concerns how to actually produce the product or service consistently and with quality so that customers achieve the value that has been proposed.  Although this aspect of strategy is substantially refined in mature commodities industries, the initial concern is actually more tactical in implementation.  Pricing issues to assure profitability (given overhead) and delivery tactics (to please customers) also become tactical concerns in latter periods of this phase.

5.  Business Development and Sales becomes the next sub-stage, in order to move beyond the initial customers, and acquire more revenue.  While some large-scale funded products and services seek the acquistion of market-share, the primary issue for most business-concerns is simply the replication of initial success so that the business will not fail.

NOTE:  The interval over which the initial phase occurs will vary according to the opportunities that the founder makes for him or herself.  In some cases, it may take years.  In others cases, such as in highly networked high-tech start-ups, it may take mere months.  Once momentum has begun to be realized, and the business moves from a dream/possibility to a going concern, there is no reason to let up.  Most businesses fail in the first 2 years of life.  Another 30% fail within 5 years.  Persistent effort is necessary.

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