As early as 1961, Soviet and American space scientists planned for mid-course corrections: those tiny bursts of rocket power designed to keep spacecraft on their trajectories to the Moon, Mars and beyond. With such long voyages, mid-course corrections are crucial to keeping space flights on track with the minimum of effort – and reserving fuel for later adjustments.
The high-tech opposite of this is something I’ve come to think of as the “post-course correction.” This is the panicky “oops” moment when your startup realizes – much too late – that its core strategy and assumptions are flawed. In space terms, you’ve missed the moon and don’t have enough resources left for dramatic course changes. There’s still air in the cabin (money in the bank), but little hope of a soft landing.
But Business Isn’t Rocket Science
Of course, no young company moves as predictably as the planets. The startup adventure is all about boldly going. It is critical, though, to focus early on the most important choices your company has to make, and take the time to get them right. Some parts of your initial plan are very difficult to change, and the cost of maneuvering grows over time. Here are a few decisions worth getting right:
- Pick one destination. Your initial choice of product and customer shape everything you’re about to do, yet many startups keep postponing this decision – hoping that their technology will solve many as-yet-undiscovered problems. But successful companies focus on one opportunity first, knowing that success is built on more than just the underlying technology.Imagine how differently you’d design your company to make and sell Xbox-style gaming systems for trend-hopping teens versus CAD/CAM animation for automotive. Or pattern-matching chips versus retina scanners that use them. Or investment advice versus accounting software. (In space terms, a Mars rover isn’t much use on manned missions.) The shape of your entire company – including your product – changes as you swing from consumers to enterprise, from OEM to systems vendor.
- Planning comes before launch. Over and over again, I see companies start their strategic marketing process just weeks ahead of their public product launch. Panicked, they hire PR firms and marketing consultants to create “buzz” and collateral, without clear messages or target customer segments. Strategic marketing happens many months in advance: who are our customers, how will we reach them, what is our pricing, how will the competition react? Successful marketers have done most of their work before the final count-down.
- Raise more money than you need. Rockets burn fuel, startups burn cash. Since every company has crises and delays, try to keep a cash buffer. The best time to ask your investors for more money is before you need it.
That leaves lots of tactical decisions to make during the flight. Most companies will change logos and taglines several times, and shift channel strategies as their markets mature. Customers will keep teaching us which features and benefits matter the most. New technologies create new opportunities. Focus early on the stickiest decisions, freeing up time later for smaller stuff. In space terms, the overall trajectory is more critical than a few of the scientific experiments along for the ride.
Houston, We Have a Problem
What does a post-course correction look like? From the dozen I’ve seen, there’s a mad scramble for new market segments and alternative pricing strategies.
(“Do you think we can sell this to the military?” “What about a subscription model instead of package pricing?” “Selling direct to small businesses is too expensive: are there any channels we can sign up?”) While any of these might be a wise choice, there’s little time to decide and execute.
More specifically, this mixes two long-term planning problems. First, post-course correction ideas usually move the company from markets it understand to markets it doesn’t. (For instance, CompUSA’s acquisition of The Good Guys helped them learn that consumer electronics is different from retail computers, but equally tough to compete in.) Second, it takes time to plan and execute a shift in target markets. If the doors are closing in 60 days, it’s too late to reposition the company. Check your trajectory often in case you need to re-think markets or products.
You face some difficult decisions very early in the life of your company. It’s worth spending time now to choose carefully, because course corrections get more expensive the longer you wait. Once you’ve missed the moon, it’s nearly impossible to land your venture safely.