Strategy should be painful

Businesses plateau for two reasons:

  1. Their strategy is wrong (Wrong Strategy Syndrome)

  2. They fail to execute any strategy at all (Fuzzy Strategy Syndrome)

Unfortunately, these two separate problems have identical symptoms (stagnant growth), but opposite cures. If you think your strategy is wrong when it’s really fuzzy, you’ll start to run more experiments and make the problem even worse. And if you think your strategy is fuzzy when it’s really wrong, you’ll prune important projects that could lead to renewed growth, in order to focus on a broken core.

So it’s critically important to get the diagnosis right.

Wrong or Fuzzy?

Of course, it’s always a case-by-case situation, but I recommend starting with Fuzzy Strategy Syndrome as your default assumption.

Here’s why:

In struggling companies, people often subconsciously assume they have Wrong Strategy Syndrome, because it is human nature  to invent new narratives when we’re in trouble. It doesn’t occur to us as easily that the old narrative would work if we implemented it with more focus and clarity. 

Plus, it’s hard to convince your team that the problem might be Fuzzy Strategy Syndrome, because you probably have a lot of meetings and documents and slide decks talking about your strategy. It doesn’t feel fuzzy! But it all amounts to nothing unless you’re good at saying “no” to enticing opportunities that don’t fit the plan. Tangential ideas waste resources and degrade the core customer experience. Retention goes down, CAC goes up, and the growth curve begins to droop.

This last point is really important. It's painful to say no.

But — strategy should be painful.

How the pain manifests

Consider Squarespace, for example. Every day, I’m sure some of their most profitable customers leave the platform. They keep growing and increasing their spend, but the platform doesn’t permit the control they require, so eventually they develop a custom solution and churn. Ouch.

But what can Squarespace do? Muddle the roadmap with projects for customers that grew out of their actual target market of simple smaller websites? This diverts attention and money away from — and worse, degrades the experience for — the people they actually want to serve. So they decide to absorb the pain, and let their biggest customers go with grace when it’s time for them to graduate.

Every business faces some version of this dilemma: The fancy restaurant down the street is tempted to buy cheaper raw ingredients, but accepts the cost, because their strategy demands it. The digital payments processor would like to accept bitcoin, but kills support for it when they realize it’s not working for the vast majority of their customers. The successful early-stage VC firm would like to raise bigger funds (and earn more management fees), but is willing to sacrifice the easy upside in order to give themselves the best shot at winning the game they originally set out to play.

Focus. It’s painful, but worth it.

Isn’t that obvious?

Of course! Everyone knows focus is good. So why do smart people keep suffering from Fuzzy Strategy Syndrome?

Because new opportunities are exciting! And not in a shallow way — they really do generate tangible growth. It’s hard to say no, especially when it’s not obvious whether that growth is pointed in the wrong or right direction for the business. 

The thing is, sometimes you should pursue a tangent. Sometimes it’s a worthy addition to the strategy, and sometimes you even have Wrong Strategy Syndrome! In fact, every new company is born with some degree of it. Entrepreneurs don’t have a perfect model of the world. They must experiment, see what works, and respond to market information. If you never experiment, you never grow.

The entrepreneurs that succeed are more likely to have an experimental mindset, which served them well at first, but could create Fuzzy Strategy Syndrome later on.

Taking all of the above into account — the human bias for new narratives, the pain involved in maintaining focus, the selective filter for experimental entrepreneurs — I think it’s rational to hold the assumption that a stagnant company is more likely to have a fuzzy strategy than a wrong one.

What you can do

So, if you do have a fuzzy strategy, how can you fix it? Embrace the pain of saying no. Remember that strategy should be painful. And, if it helps, recognize that the pain is actually inevitable. (This applies to our personal lives too, as Dan wrote today.)

You can either take it on intentionally, now, for the sake of a strategic trade-off, or you can let it swallow you, later, because you avoided hard decisions.

Today is Saturday. It’s a great day to reflect on your week and ask if you calibrated your “no’s” properly. If not, that’s ok! You can revisit them.

You probably have more power than you realize, and need those “opportunities” less than you think.