written by MO.com Subject Matter Resource David Howard
When the Allies stormed Fortress Europe in June, 1944, the battle plans called for the invaders to turn West, towards Brittany, to secure the rear as well as ports and harbors vital to supplying the incredible war appetite of such a massive force. It soon became clear that, as British General Bernard Montgomery put it at the time, “the main business lies to the east,” and the focus shifted to pushing westward, towards Nazi Germany. Clearing Brittany became an effort of secondary importance. In accordance with conventional military wisdom, the battle plans were thrown out the window almost as soon as the first shot was fired. Nonetheless, those initial battle plans were necessary. The same is true for startups.
My partner and I met recently with the founder of a promising new venture that was well underway – the platform was operational, and they were talking to customers about participating in their beta program. It soon became clear, however, that the team was running way ahead with the technology development, without much thought to block-and-tackle marketing questions as to where their product was positioned and priced vis-à-vis their competitors, and why. They had run off into battle without much of a plan.
Take the pricing question, for example. I asked what their pricing model was and how they arrived at it. “Oh, it’s simple!” the founder replied. Their underlying technology was inexpensive, ergo, they had priced themselves cheaply, and without any regard to the actual perceived value they were delivering to their customers. That’s a basic battle plan question that can have serious impacts down the road – you can always discount away prices that are too high, but once you’ve entered the market and anchored your price low, it’s difficult to raise prices. Witness what happened when Netflix tried to raise their prices.
It’s understandable that this founder would make this mistake. He’s a technologist first and foremost. But he was also wise enough to seek outside counsel, and listen to it, to cover the gaps in his experience. In hindsight, I’m sure he’ll look back at our meeting, and the actions that flowed from it, as a critical point in the development of the company.
The lesson is clear – while it’s fun to develop the technology, and gush on the features, one has to take care of the research and planning around marketing and sales as well, even if those initial plans get thrown out in the heat of the battle. Poorly thought-out decisions around pricing, positioning, competitive differentiation, customer segmentation and go-to-market strategy can have long-term impacts that might not immediately be visible. Even if you change course later – after thoughtful deliberation – at least your war plans are carefully considered and defensible. For a startup, it could make the difference between getting a round of funding; it could be a matter of survival for the enterprise.
How does one know if the initial battle plans are thoughtfully considered? Ask yourself, “why?” Why did we price it this way? Why are we positioning it this way? Why did we choose this as our initial target? If the answers tend to come from company internalities, like the technology platform, that’s a good clue the plans are weak. Well thought-out plans are driven by externalities.
To tap those externalities, look to your customers. Too many startups, in the heat of battle, are looking to customers to be just customers, and simply go in for the sell. That’s wrong-headed. Any early-stage customer worth having will engage you on the premise of joint discovery – Hey, we have this great new product we think will benefit you, can you help us understand how best to price it and sell it? You’d be surprised how many prospects will respond favorably to this invitation. Offer them the opportunity to not just buy the product, but to shape it. Of course, you’ll have a lot of reconciling to do between different early-stage customers with competing demands, but this effort will be invaluable in firming up defensible marketing and sales strategies for your company. Don’t be afraid of customers – engage them and find ways to work alongside them, not just sell across the table from them.
Fortunately, the founder my partner and I met with took this advice to heart and spent some more time in the planning room. He recently enjoyed a successful product debut, and we were able to steer some of his upcoming customer meetings into productive dialogs instead of dead-ends.
If you haven’t sanity-checked your own battle plans yet, now’s the time to do it. Do they stand up to constructive, external scrutiny? Are you comfortable answering all the why questions? Make sure you do it now before the battle is lost.