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As the tide goes out, don’t be caught swimming naked

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I’ve always been a keen swimmer. I remember those early lessons, squeezing into my trunks, a pound for the locker, a rubber wrist tag for the locker key and my weird fitting goggles. To this day I have not mastered the art of goggles – they are either too tight, let water in or foggy. I resign to the fact that they are part of the swimming experience.

In my head, I am an elegant swimmer, gliding gracefully through the water. Until a ten-year old whizzes past me with the grace, speed and poise of a dolphin and the sheer strength of the ancient gods. I wonder why these gods did not endow me with this gift. On good days, I can swim for up to an hour (not that time spent is a barometer for success). This is a long time for my mind to wander, in between worries of drowning or feeling like I could give Phelps a run for his money.

Recently, I’ve met a couple of blokes who are training to swim the English Channel. They are in the sea each morning at 7am as I walk the dog. I admire their commitment and motivation, and marvel at their sheer bloody-mindedness as they get into the water each morning, regardless of the weather, as I stay safely on shore. I am in awe of their tenacity and ambition for their challenge ahead.

All this talk of swimming allows me to introduce the Warren Buffet quote, Only when the tide goes out do you discover who’s been swimming naked. It’s a very apt idiom for the current business climate for startups. There’s little evidence that Buffet skinny-dipped himself as the motivation for the quote, rather Buffett is referring to the more mundane tendency of companies to overextend when times are good, only to regret their imprudence when the tide eventually (and inevitably) turns.

What he meant by that is when business conditions in general are favourable, most participants look good. Flawed business models/practices temporarily show decent profits. On the other hand, when business conditions worsen, it is much easier to see who truly has a good business model versus who is just getting lucky during the boom times – meaning, you don’t really know how well or how poorly a company is doing until it’s faced with a major challenge.

Well, the tide has just gone out again, and clues to who’s been swimming naked have begun to emerge, as the financial system is about to undergo its first real-life stress test since the 2008 financial crisis and subsequent recession. While the full extent of the damage remains to be seen, there’s no doubt that the virus will take a serious long-term toll on global economic activity.

There’s no reason to believe that anything of that magnitude of 2008 is lurking within the financial system today, but the financial plumbing is under pressure. All of this is unfolding after years of low interest rates, which have left the Bank of England with little room to manoeuvre. However, unsettling volatility surges into longer-term opportunities. Long periods of economic calm and growth also create the conditions for violent air pockets, as the economist Hyman Minsky research identifies: the phenomenon of prolonged stability breeds complacency as a precursor to instability. 

During turmoil, differentiation gives way to indiscriminate action, as explained by the market for lemons theory put forward by George Akerlof, and by the work of Nobel Laureates Michael Spence and Joseph Stiglitz. It becomes very difficult to signal your offering provides more value than others when the context is extremely noisy and volatility is unsettling, so even solid names get treated as ‘lemons’ initially.

There’s lots of talk about coronavirus as a ‘catalysing event’ for startups. For some, COVID-19 may be a jumping-off point that pushes them into an overdue pivot of product, or a much-needed refresh of digital marketing. For others, it will drag them under. So, what are your thoughts, given the challenges you’re facing right now, the tide is certainly out, what are you going to do to ensure you’re not caught out swimming naked in an outgoing tide? Here are some of my thoughts as you prepare to test the water.

1. Swim against the tide: allow yourself the uncomfortable luxury of changing your mind

Cultivate a capacity for reflection, and then as required, changing your mind. We live in a startup culture where one of the greatest social disgraces is not having a ‘north star’ and being full-on a hot-gas fuelled journey to success. But in reality, you could be working on hunches or insights, still experimenting based on superficial impressions or the borrowed ideas of others, without investing the time and thought that cultivating true conviction with customers necessitates.

We then go around asserting these donned opinions and clinging to them as anchors to shape our own version of reality. We can simply be wrong, or kidding ourselves. It’s enormously disorienting to simply say, I don’t know, but ultimately, it’s infinitely more rewarding to understand than to be right, even if that means changing your mind about a strategic belief, an ideology, or, above all, yourself.

2. Pace yourself: build pockets of stillness

Read poetry. Go for walks. Ride your bike going nowhere in particular. There is a creative purpose to daydreaming, even to boredom – the best ideas sometimes come to us when we stop actively trying to coax the muse into manifesting and let the fragments of experience float around our unconscious mind in order to click into new combinations.

Without this essential stage of unconscious processing, the entire flow of the creative process is broken. Most importantly sleep, as besides being a great creative aphrodisiac, also impacts our every waking moment, our social rhythm and our moods. Be as disciplined about your sleep as you are about your work. We tend to wear our ability to get by on little sleep as some sort of entrepreneurial badge of honour that validates our work ethic. But it really is a profound failure of self-respect and of priorities. What could possibly be more important than your health and your sanity, from which all else springs?

3. Jump into the water: start, even if you are not sure

I have always thought too much and the in the past borne the resultant cost of being paralysed by the noise and not doing anything. I have found many reasons not to swim, many excuses – other things to do, it’s a cold day, I’ll go tomorrow – you get the drift.However, the questions do not go away unfortunately, they are always there in some form or the other. How you respond to them is what matters.

Nothing beats the questions, like starting or doing it. If I need a reminder of making a start, I re-read the Elon Musk quote on innovation: There was a time when only those with the largest mouths could enjoy potatoes. Thanks to the invention of French fries, now they will fit pretty much anywhere.

Also, remember why you are there and what you are aiming to achieve. You must be crystal clear on your goal, whether you want to swim 10 lengths or 100 lengths, improve your buoyancy or if you want to swim faster.

4. Focus: how we spend our days is how we spend our lives

The Anne Dillard quote above about how use our time reminds me to ensure we retain the capacity for enjoying what we do, that gives startup life some highlights amidst the graft. The cult of productivity has its place and getting stuff shipped is important, but presence is far more intricate and rewarding an art than productivity. Ours is a startup culture that measures our worth as humans by our efficiency, our earnings, our ability to perform this or that, but this loses sight of learning, having our own definition and perspective of success, and our purpose.

The tide will turn, and expect anything worthwhile to take a long time. It’s hard to better capture something so fundamental yet so impatiently overlooked in our culture of immediacy. The myth of the overnight success is just that, as well as a reminder that our present definition of success needs serious retuning post-Covid. The allotment doesn’t go from seed planting to blooming crops in one spritely burst and yet, as a culture, we’re disinterested in the process of the weeding, nurturing and growing. But that’s where all the real magic unfolds in the making of one’s character and destiny.

5. Be curious: enjoy what magnifies your spirit

Understand and tolerate the difference between where you are and where you want to be, and then make it a habit to ask questions and be curious, even when the answers to those questions are uncomfortable. At the core of curiosity is understanding that you see the world through a particular lens of your own experience and ambition.

Curiosity is at the core of what drives the entrepreneurial spirit, the belief that you can solve problems with unique solutions and innovate on the status quo. Building a company relies on curiosity about testing different hypotheses and continuously iterating. This might be frustrating and you want to simply move forward, but I always tie this trait back to recognising the value of feedback.

I’ve been reading about musician Patti Smith, discussing her creative influences. She talks about writers and artists who magnified her spirit – it’s a beautiful phrase and notion. Who are the people, ideas, and books that magnify your spirit? Find them, hold on to them, be curious about them and visit them often. Use them not only as a remedy once your fading momentum has already infected your vitality, but as an ongoing vaccine while you are healthy to stimulate your curiosity and protect your radiance.

6. Push on: don’t be afraid to be an idealist

There is much to be said as entrepreneurs for focusing on the constant dynamic of startup interaction we call immediate progress. But which side of the fault line between nurturing and doing are we to stand on? The commercial enterprise is conditioning us to believe that the road to success is paved with catering to existing customer demands, but the idealist in me says the role of the entrepreneur is to lift people up, excite them with innovation.

On your startup journey, the richest inspiring days are lifeboats, but there are also submarines that descend to us to the darkest and most disquieting places, to the unfathomed trenches of the startup soul where our deepest embarrassments and vulnerabilities live, where we are less than we would like to be. Idealism is the alchemy by which you should strive to create something new, the engine of buoyancy that keeps the submarine rising again and again toward the light, so that it may become a lifeboat once more.

The sea, the green sea, the scrotum tightening seas – the words of James Joyce in Ulysses captures the reality that the sea doesn’t like to be restrained, it has a serene brutality, filling the wet, briny air. As Buffet highlighted, you can’t be caught swimming naked as the tide goes out, you need to set sail and not be tied at anchor, and sail not drift. Whatever the imagery, prepare yourself for the coming challenges by being thoughtful, balancing thinking and doing, but don’t be left standing with the water waist high, waiting to be embarrassed.

Don’t think about using the F-word, triage your startup

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Start-ups have always been risky, perpetually hovering with an uncertain future, but the pandemic is turbocharging natural selection and causing a hiatus for many. In just a few weeks, many have cut or furloughed employees, and funding is drying up – startup funding in the first three months of 2020 was on a pace for its second-steepest quarterly decline in ten years, said CB Insights. The virus just nailed it.

The fallout is hitting the highest-profile tech businesses too. For example, Airbnb. valued at $31Bn, has stopped hiring and has suspended $800m of marketing. The coronavirus outbreak is economically akin to a major earthquake occurring for weeks on end. There are no distractions now, there is no coddled. You need to have thick skin and a high adversity quotient.

Start-ups in some sectors – telemedicine, food delivery, online learning, remote work, gaming – are thriving amid the quarantine, but the pain is now deeper and most likely just beginning as investors, already bruised by the collapse of a string of tech unicorn valuations last year, become even more cautious. Indeed Sequoia Capital issued a warning to start-ups, calling Covid-19 the black swan of 2020, and calling on its portfolio firms to rein in costs, conserve cash and brace for capital scarcity.

The coronavirus strikes at a time when many of the tech unicorns were looking ropey. Their perpetually loss-making business models and exuberant valuations were increasingly being questioned. Most telling, the gospel of growth at all cost has gone out of the window. After years of ‘blitzscaling’ being done without much focus on profits, path to profitability is the new watchword. The law of economic gravity has returned, as some discern an echo of the bursting dotcom bubble of twenty years ago. The F-word is out there. Failure. Others are more sanguine. Whoever is right, startup pastures that emerge in the aftermath will look very different.

Unicorns have come a long way since Aileen Lee, founder of Cowboy Venture Capital coined the term in 2013, to convey wonder and rarity. Post Covid-19, it’s reckoned that a third of tech unicorns will thrive, a third will disappoint and a third will be taken over or die. But the euphoria began to ebb last year. First, Uber’s IPO priced at a 30% discount to what the investment bankers had promised, Slack disappointed, then, in October, WeWork disclosed that it lost as much money as it generated in revenues. Its valuation was cut from $47bn to $8bn. A different F-word there.

So, I need to confront the F-word taboo this week, as I’ve heard a few tech founders use it in the UK, and it’s become part of their vocabulary. Yes, Failure.

We’re hypocrites about it. You find scores of pleasant aphorisms celebrating the inevitability of failure of underdogs and entrepreneurs, their determination to come fighting back and the importance of learning from it, but in real life failure is painful. So rather than thinking about startup funerals, wakes and autopsies, lets focus on survival, and determine the priority of startup patient fixes and treatments, based on the severity of their condition that can halt the terminal decline. Let’s talk about startup triage.

Triage is the process of determining the priority of patients’ treatments based on the severity of their condition. The term originated during the Napoleonic Wars from the work of Dominique Jean Larrey. Those responsible for the removal of the wounded from a battlefield or their care afterwards would divide the victims into three categories:

  • Those who are likely to live, regardless of what care they receive;
  • Those who are likely to die, regardless of what care they receive;
  • Those for whom immediate care might make a positive difference in outcome.

The term ‘post-mortem’ is Latin for after death, and originally referred to a medical examination of a corpse to determine the cause of death. The term has, more colloquially come to refer to any ‘after the fact’ analysis and discussion of a recently completed process or event, to see what lessons we can learn from it.

Such analyses are have been going on for a long time. Five thousand years ago Egyptian doctors recorded wounds, treatments and results to build up a body of knowledge about what did and did not work. Military strategists have long studied every battle so that they could learn lessons without having to suffer defeats.

The post-mortem is focused on understanding what we did wrong and historically (and perhaps psychologically), failure has proven to be one of our best teachers. ‘Failure’ has become an integral part of the startup vocabulary, where we have the mantra ‘fail fast’ as a way of learning and making quick changes to find product/market fit.

Indeed ‘fail early, fail often’ has become something of a startup badge of honour that makes it sound like it’s a good thing, but I struggle with the fascination with failure being the source of lessons to be learned. Pause for a moment, what did you really learn? You learned what didn’t work. So, ‘we all learn from our mistakes’ – you’d like to think that we won’t make the same mistake twice, but as Jason Fried said, You might know what didn’t work, but you still don’t know what will work. That’s not much of a lesson.

Making mistakes isn’t part of a scalable startup model. So if we accept that learning from failure is overrated, how can we turn the ‘it’s good to fail’ philosophy on its head into a new way of thinking, that the most valuable experience to take your startup to the next level is learning from the stuff you got right? Isn’t this just about taking what you’ve done that others don’t have, and creating further advantage from it?

So, what are the triage priorities? Here are some thoughts.

Triage 1: Start for purpose, don’t start for money If you set out simply to make headlines motivated by success equating to money, you’re setting yourself up for failure. As Michelangelo says, our biggest tragedy is that we set low goals and achieve them. Now is the time to focus on purpose, not revenue.

Triage 2: Define what success looks like If success is defined as a big raise, going public or being acquired, it is a skewed measure of success. How about sustainable growth, loving your work, and making a dent in your universe? You may need to reset your North Star.

Triage 3: Don’t assume, find a need Just because your mum, your best friend, and your dog think that your idea and business model is cool, doesn’t mean that you have a valid business. Move quickly to get a MVP to test on real potential customers. Get worthwhile feedback, tweak your product and model as needed, and repeat this process until you find what truly works. Now is the time to experiment, not being maudlin about failure.

Triage 4: Nail it, then scale it Via your MVP, find your formula for solving the problem, figure out your ‘secret sauce’ and scale, but don’t scale until you find your formula first. You need to ensure you have product-market fit, and that there is a sizeable market to sustain your business model. Asking questions to define the problem comes before you build your full product. Use this time for more customer discovery than you’ve ever done before.

Triage 5: Take control of your emotions A startup founder’s feelings are contagious, so you need to be in control of your emotions, or your team will see through you. Being down-in-the-dumps and muttering the F-word isn’t going to help anyone. Mental toughness is needed now. Lead with confidence and calmness, avoid getting too elated or too despondent on the highs and lows.

Triage 6: Know when to value speed vs. stability Developing great tech, content and a team simultaneously takes time. You try to make each deep and stable, but also need to be agile and pivot. Keeping all aspects of your startup aligned for growth is a real challenge – but keep shooting for the horizon. Noah built an ark – what are you going to build?

Triage 7: Control and calculate your user acquisition costs Many startups initially conceive of marketing as a creative exercise. That’s partly true, but the best marketing is controlled and calculated. If you know how much it costs to acquire a user and you control the process. Now’s the time to double down on marketing strategy, reducing your marketing plan from fuzzy guesswork to a clean formula.

Triage 8: Don’t move slow. Move fast. Moving at a snail’s pace and waiting for the next blow to your business can be detrimental, losing advantage in terms of getting customers first. Be sure to move fast, but not so fast that you lose attention to detail. Find a pace that you can work within that allows you to make smart decisions while also moving your business forward. That’s a better F-word – forward.

There are entrepreneurs who fail first time, learn and then succeed second time round, but people generalise from anecdotal success-after-failure stories. There is a lot of startup folklore and myth out there. Failure is an opportunity to try again, a signpost alerting you to the fact that you need to change your business model.

We all want to try, stumble, fall, get back up, try again, and learn as we go. But don’t enjoy the scratched knees. Appreciate where you are at each point. Everything is a learning experience, good and bad, there’s something to be learned. But all learning isn’t equal. I’ve found that if you’re going to spend your time pondering the past, focus on the wins not the losses. The lessons learned from doing well give you a better chance at continuing your success.

Keep your self-belief and keep your eyes open, you will inevitably see opportunities when the dark clouds clear. Keep walking with your head held high, reaching for the sky and not walking with your gaze on your feet and seeing only puddles. I forget where I recently read this anecdote, but a young boy was looking to get a job. Everywhere he went, he heard they weren’t hiring, so he decided to set a new goal: for each company he visited, he would either get a job or sell them a “Not hiring” sign which he would make.

For me, keep pushing forward and having a triage mindset to encounter the wounds experienced in your startup life. Failure is not an option, be relentless, be limitless, but not simply doing the same thing as last time. If what you’re doing now is not a viable solution in this new world and in a different economy, then find something that is. Failure is an experiment that had an outcome, just one you didn’t want. Don’t develop a fetish for failure.

How to start thinking about tomorrow: hope is not a strategy, but strategy can provide hope.

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The COVID pandemic has wrought enormous personal and social damage, upending countless lives. It is serving as a catalyst to embrace the need for greater compassion and solidarity across our society. It is inspiring heroic feats of public-spiritedness and charity, while also providing an opportunity for us to view the competence, morality and ethics of leaders in government and business.

Beyond that, it has unleashed a set of acute economic shocks, laying bare the viability of many businesses, creating the greatest sense of uncertainty ever experienced. Getting our minds around what is happening is difficult, as its effects are paradoxical: it has caused a supply shock and a demand shock.

The pandemic is primarily a public healthcare problem, but one with immense implications for business, and for economic, fiscal and monetary policy. The virus is accelerating powerful existing trends such as digital automation and simultaneously slamming the brakes on trends that had, until very recently, possessed clear momentum, such as globalisation.

Many startups spent the first several weeks of the crisis preparing continuity plans, and assessing the various government stimulus programs. These businesses are now learning to operate in the ‘new normal’ yet continuing to respond to immediate fires. Much of the focus is on implementing tactical steps to preserve business value, including liquidity analysis and operational scenario plans.

Startups need to address vastly weaker balance sheets, steep revenue declines, weakened supply chains and stressed or depleted employee bases. Each of these elements will require triage, and in many instances, attention and resources will be focused on triage for a long time. Of course, some firms will emerge from the pandemic in relatively good shape and thus be in a position to take advantage of opportunities arising.

The central question in every (virtual) startup leadership meeting is how to grapple with the short-term consequences. The challenges are philosophical and intellectual, as well as physical and practical. Simply, we are wondering how to go about restarting, repairing what was broken and readying ourselves to cope with a host of urgent demands as we build bridges to a post-pandemic future for our embryonic ventures.

Ian Burbridge of the RSA has developed an approach to thinking through the measures that we’ve taken in response to Covid-19 in four categories that can help us focus on what’s worked and what can last – stopping activity, pausing activity, temporary activity, and innovative activity – and I’ve adapted it for startups.

1.     Obsolete activity

The crisis has afforded us the ability to stop doing some things, either because we already knew they were not fit for purpose or because the crisis has rendered them obsolete. Emerging post-crisis, the challenge is to let go of these obsolete aspects of pre-existing systems and functions that we know are no longer fit for the new ways of working.

As Peter Drucker said, the greatest danger in times of turbulence is not the turbulence, it is to act with yesterday’s logic. Letting go of what we no longer need releases trapped resources for work that is a better strategic fit.

Rethinking starts with the context in which the repair efforts needs to happen, so be ruthless on what you can eject from your business model. Every organisation needs to reimagine the future at both a practical and a conceptual level.

Startups need to be strategic at a time when grappling with an intense crisis and coping with day-to-day emergencies. Redesigning a boat while bailing water from the hull may sound ambitious as you’re sailing in a storm, but it is necessary.

Organisations need to rethink technology strategy, geographic footprints, and business models to make them more robust and to recognise the strong pressures for localisation emerging. They will need to evaluate their portfolios from the standpoint of the products or services needed in a very different economy.

Move your orientation from physical in-person processes into digital or virtual tactics;

You may have a new business sales focus, but this is a time to be our best selves, and customers need more from us. They don’t need to be sold to, they need to be heard and supported. We’re all now in customer support. They need us to put humanity above profitability.

2.     Paused activity

We have had to bring a halt to doing other things in order to divert capacity to the crisis response, but we have to restart these again. Potentially, this is storing up significant challenges for the future, so we need to figure out how to reboot these activities in ways that are relevant to the new, emerging context and are not simply a blind copy and paste of the pre-virus approach.

It will be impossible for our structures and systems to cope with the next challenge if they remain in the same state in which they entered this one. The next step is to quickly begin reimagining and adapting strategy. All this must be done with a keen eye toward understanding trade-offs and building the capacity to navigate the disruptions that are bound to arise in the future.

This is an opportunity to refactor your business model, focused on competitive and collaborative strategies dramatically different from those we might have imagined a few months ago. Rethinking paused activities ensures that startups are repaired in a way that makes them more resilient and more successful by bringing considerations about the future into the present.

Redeploy physical event spend, leaning more heavily into digital and account-based strategies, focused to maximise pipeline generation potential in the short term, mapped out in 30, 60 and 90-day priorities;

Create online content that is informative and responsive to current landscapes, be valuable to both current customers and potential prospects by investing in general customer experience improvements.

3.     Temporary activity

Some things that we have done in responding to the immediate demands of the crisis are inappropriate to become part of the way forward. Ending temporary measures should be a focused endeavour, remove them before they become systematised, and burn valuable resources.

Identifying your own revealed weaknesses unearthed by crisis will undoubtedly have exposed needs for greater preparedness, resilience, agility, or leanness in your business. Those weaknesses also signal opportunities to renew your products and business model and serve customers better. They may also help you understand broader customer needs, since others are likely to be experiencing similar stresses.

On the plus side, you may have adapted new activities that offer future value – for example, reducing customer friction in terms of unnecessary delays, costs, complexities and other inconveniences.

In terms of messaging, shift the focus to emphasise more of the WHY – not just your own WHY as a business, but the bigger WHY for your audience;

Revisit your temporary pricing strategy, you may need to continue to offer more options at lower price points to accommodate customer’s tighter budgets.

4.     Innovative activity

Emergencies will have opened up the need for innovation and rapid experiment as a result of the crisis. These will have shown the imperative for an agile way of thinking and working, removing barriers and inertia, with the demand for instant change. The post-crisis task is to find ways to amplify and embed the most promising changes and innovations into your new business model.

The crisis has put into strong relief the uncomfortable truth that many startups are simply not as nimble or as adaptive as they anticipated. What does this mean in practical terms? To a degree, this means jumping on the trends that have suddenly gained currency in response to the pandemic, including remote working and the localisation of supply chains, but now is the time to become a maverick, a small outlier enterprise that thinks and act differently from incumbents.

Seek out maverick activity. Startups sit on the edges of an industry, and as such can make bets predicated on new customer needs or patterns. Look to EasyJet as an example.

EasyJet, now the fourth-largest airline in Europe, built its business as a no-frills, low-cost carrier by pioneering a novel business model and ignoring many of the industry’s unwritten rules. EasyJet shook up the business model of the airline industry by moving from a hub-and-spoke model with a diverse fleet to a point-to-point model with lean operations and high-capacity utilisation. By removing or charging extra for all noncore elements of the customer experience, EasyJet was able to cut costs while focusing on what customers care about most – flight availability and punctuality.

Organisations tend to become myopic and insular when under threat, but crises often mark strategic inflection points, and a necessary focus on the present should not crowd out considerations of the future. The key questions are what next, and with what consequences and opportunities? The keys to success are to harvest good ideas from every layer of an enterprise.

Don’t just seek to reducing costs to maintain viability, adapt and innovate around new opportunities. Invest in growth drivers in order to capture opportunity in adversity and shape your own future.

Certain back-burner projects will have become more relevant given current events, so shift resources to make these a priority;

Reposition your product from pure revenue growth or churn mitigation to a more defensive posture to focus on helping businesses curtail losses and retain customers longer.

Summary

COVID-19 has provided a rare moment of pause, albeit a hazardous one, an opportunity to make changes that previously seemed too daunting or even impossible to execute. We should not lose the potential benefit of the natural reflection we are going through, but be mindful not to simply recreate the business we had before – consumer-led disruption will have an even greater impact than previously expected.

Stepping out of the crisis will force startup leaders to activate transformation plans, shrink execution timelines and experiment at lightning speed. Some startups are more immune to short-term shocks, such as those with subscription models. This presents an opportunity to further strengthen engagement and loyalty with existing customers, supporting them with attractive discounts or expanded service offerings.

However, for sub-sectors that rely on transactional revenue, the concerns are more immediate. They need to extend their liquidity runway to remain solvent while covering costs, and managing the emotions of their people. In these cases, give emphasis to simplification of all aspects of your enterprise. For example, you’ll need more adaptive digital strategies that can change and respond quickly, and an empowered management team that has greater responsibility and is less siloed. Steadying the ship is only part of the story, you must also look to the horizon.

The open-mindedness, flexibility, and faster clock speed of startups make them showcases of future development when an industry is at a turning point. So adopt the four strategic themes identified earlier, but be a maverick, be an outlier, and look to the periphery, be different and challenge your industry’s core beliefs and assumptions. Create the shocks, avoid being taken by surprise, bet against your existing business model. Think big, act small. Hope is not a strategy. But strategy can provide hope.

Startups are like a game of chess: what to do now and next?

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Startups need to out-manoeuvre the uncertainty hanging over them from COVID-19, but what to do now and next? The containment policies aimed at controlling it have changed how we work. As startups juggle a range of new priorities and challenges, founders must act quickly and lay a foundation for the future.

The global COVID-19 pandemic has forever changed our experiences―as customers, employees, citizens, humans – and our attitudes and behaviours are changing as a result. Once the immediate threat of the virus has passed, what will have changed in the way we think and behave, and how will that affect the way we design, communicate, build and run our startups?

History shows crises can cause fundamental shifts in social attitudes and beliefs, which pave the way for new thinking, ways of working, and consumer needs and behaviours, some of which persist in the long run. How then can startups prepare for a post crisis world, rather than hunkering down and simply waiting for a return?

Entrepreneurs follow their instinct, driven by curiosity, leading to the conversion of new ideas into new products and services, moving from imagination to impact, from innovation to invoice. For innovation to flourish in these uncertain times, both freedom and discipline must be present – freedom to imagine what is possible and discipline to turn ideas into action. Now if freedom and discipline are to be a duality rather than a dichotomy, how do you get the balance right?

Garry Kasparov, Grandmaster and World Chess Champion shares how he combined disruptive and disciplined approaches to bring him success in chess – a result of calculation, foresight and intuition. His book How life imitates chess is a must read for chess players and entrepreneurs alike.

It’s about having the vision to see your moves ahead, but you don’t need to appreciate chess to enjoy this book. Kasparov highlights long-term strategy, short-term gains, being creative in the ‘middle game’ in terms of chess, and how important decision-making is at any stage of the game. We do need to think ahead in business, if not for ten moves, but at least truly think through options and the consequences – that’s not calculating, it’s common sense.

Chess is really about psychology and intuition because the mathematics get complex very quickly. For me, the main take away of chess to startups is the ability to execute strategy, which can be exploited through practice and repetition. Kasparov illustrates that the subtle and intricate potential moves that lie within the 64 squares of a chessboard are totally applicable to business, and how the game can help you step back and evaluate yourself to identify you strengths and weaknesses and thus better your game.

Kasparov is probably the greatest chess player of all time. His 120 games in a three-year struggle against Anatoly Karpov was one of the most intense head-to-head rivalries in chess history. Nobody has played chess so aggressively at such a high level for so long.

So what are the entrepreneurial learnings we can take from Kasparov’s thinking, to help reboot us from the doldrums of coronavirus?

The first phase in a chess game: the opening The purpose of the opening isn’t just to get through it, it’s to set the stage for the type of middle game you want. This can also mean manoeuvring for the type of game your opponent doesn’t want. The openings are the only phase in which there is the possibility of unique application, you can find something that no one else has found. Be first, and be brave is the lesson for startups.

The second phase: the middle game What sort of middle game is our opening going to lead to? Is it one we are prepared for? We must also play the middle game with an eye on the endgame.

After a bad opening, there is hope for the middle game. After a bad middle game, there is hope for the endgame. But once you are in the endgame, the moment of truth has arrived. In business, it’s important to have a strategy, tactics and a game plan.

Decision-making: understand the rationale behind every move Chess is the gymnasium of the mind. We all make our decisions based on a combination of analysis and experience. For your startup, take a similar wider view so that we can evaluate the deeper consequences of our tactical decisions.

The best move The best next move on the board might be so obvious that it’s not necessary to spend time working out the details, especially if time is of the essence. However, often when we assume something is obvious and react hastily we make a mistake due to complacency.

Chess is the struggle against the error. More often we should break routine by doing more analysis, not less. These are the moments when your instincts tell you that there is something lurking below the surface, but take a moment to validate.

Dream a little, don’t settle automatically for routine solutions The paradox of chess is that there is a routine set down my mathematics to make a strong move based on its objective merits. But recall Kasparov was a combination of freedom and discipline, sober evaluation and calculation mixed with outlandish ideas.

Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. For a startup, you won’t find new ways of solving problems unless you seek to do so, and have the nerve to try them when you find them – but ensure flair doesn’t mean you make fateful blunders.

The future is a result of the decisions you make in the present  Tactics is knowing what to do when there is something to do; strategy is knowing what to do when there is nothing to do. A chess Grandmaster makes the best moves because they are based on what they want the board to look like in twenty moves ahead.

This doesn’t require the calculation of countless twenty-move variations, but an evaluation where their fortunes lie in the position and establishes objectives. They work out the step-by-step moves to accomplish those aims.

Have a game plan Chess is rarely a game of ideal moves. Almost always, a player faces a series of difficult consequences whichever move he makes. When you see a good move, look for a better one.

Too often we set a goal and head straight for it without considering all the steps that will be required to achieve it. If you work without long-term goals your decisions will become purely reactive and you’ll be playing your opponent’s game, not your own.

In startup life, as you jump from one new thing to the next you will be pulled off course, caught up in what’s right in front of you, instead of what you need to achieve. Have a vision of success, clarity and focus in your strategy.

Intuition & analysis Half the variations which are calculated in a chess game turn out to be completely superfluous. Unfortunately, no one knows in advance which half. Even the most honed intuition can’t entirely do without analysis. Intuition is where it all comes together – our experience, knowledge and judgement – or even hunches. 

But it doesn’t matter how far ahead you see if you don’t understand what you are looking at before you, so combine the two. No matter how much practice you have and how much you trust your gut instincts, analysis is essential.

Attack An attack doesn’t have to be all or nothing, or lightning quick. Sustained pressure can be very effective, and creating long-term positions can lead to a win in the long run. One of the qualities of a great attacker is to get the maximum out of a position without overstepping and trying to achieve more than what is possible.

Going on the front-foot requires perfect timing as well as nerve. The window of opportunity is often very small, as with most dynamic situations, so balance opportunity with rationale – back to the combination of freedom and discipline in your game plan.

Initiative Once you have the initiative you must exploit it. Kasparov reminds us that the player with the advantage is obliged to attack or his advantage will be lost. In business, a lead in initiative can be converted into a sustainable position. In both chess and in your startup, being a step ahead means we can keep our competition off balance, shifting and moving in order to provoke weaknesses.

Chess is eminently and emphatically the philosopher’s game, so let’s translate Kasparov’s chess strategies, into a clear startup strategy for the current crisis:

Hope is not a strategy. Create a real plan together with your co-founders and investors and look the truth straight in the eye. Things could get worse before they get better again. Make sure that your team see eye-to-eye on the vision you have and the measures that you will take in the next weeks and months.

Know your exposure Your first step is to identify areas of vulnerability, and decide which of these can be mitigated early. Have a solid financial model and run financial scenarios – think about what happens if your revenue drops 50%. Can you extend your runway? Plan to stay as lean as possible. This will further help you to know when to pull the trigger on major changes as things play out. Stay optimistic but realistic.

Check in with your thinking Make sure you are transparent during times of uncertainty and that you give your team and investors comfort. Do not make decisions without them, even if you can do so from a legal standpoint. Make sure they are part of the process.

Try to stick to the long-term plan Do not lose focus of your long-term goals, you shouldn’t let short-term external forces unnecessarily influence your path. I know, it can be tough when conditions deteriorate, but staying focused on long-term goals can help you with a frame of reference by which to measure short-term decisions.

Stay disciplined This is good advice always — not just for downturns. Use this time to establish a culture of discipline for all conditions. Be helpful, smart, and prudent. With an established culture of discipline, you will be in a better position for any shock to the business and it will bring your team closer together.

This is a challenging time. When people talk about entrepreneurship being tough, this is what they mean. It’s a true rollercoaster ride. But remember, it’s also a time to grow, and shine. Chess is the struggle against the error, one bad move nullifies the previous twenty good ones, the blunders are all there out on the board waiting to be made – as they are in the maelstrom we are in now.

Chess is a mental game, it requires vision, tenacity, thoughtfulness, and multiple tactics. From this, take the thinking that in a startup we can look for ways to experiment and to push the boundaries of our capacity in different areas, it really is a combination of disruptive and disciplined approaches, just what’s needed to move your startup strategy forward in these challenging times.

Startup bets – when going back to normal, when normal isn’t waiting for us

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So, what‘s your strategic approach looking to the horizon beyond the current turmoil for your startup? Among all of the nuggets I’ve heard, one word has jumped out at me: bet. I’ve heard people use the words Reboot, Initiatives, and OKRs – but bet captures the sentiment, the interplay between experiments, unknowns, risk, and outcomes.

The reality is, a startup has more in common with gambling than you may think. There’s a random nature to success – only 20% of startups get to a five year anniversary – but learning how to bet is important when it comes to your venture, as there are things you can do to improve your odds. To quote Nassim Taleb in Black Swan: The strategy for discoverers and entrepreneurs is to rely less on top-down planning and to focus on maximum tinkering and recognising opportunities when they present themselves.

We need to navigate these turbulent times, when it’s hard to imagine an upside, and discover the potential hidden within them. The decisions we make involve luck, uncertainty, risk, and occasional bluff – prominent elements in poker. In both startups and poker, you can’t control the cards, but you can control how you play the game of chance.

A bet can be tactical or strategic. Product decisions are bets. Sales negotiations are bets. Hiring is a bet. In these decisions, we’re betting against all the alternative outcomes that we are not choosing. By calling it a bet, we are admitting that something will happen, and of course, losing is an option. Timeframes matter too, when will we know if the bet has paid off? Placing small bets with a short timeframe enables us to learn information that can clarify the odds for larger bets, and de-risk.

You can make concurrent bets too, but taking too many bets at once can distract. Equally, you can’t win much if you spend all your time at the penny slots – you can’t win big unless you pull up a chair at the high stakes blackjack table. Each time you release an update to your product you’re playing a hand at the startup blackjack table. The combination of funding and your burn rate determines the number of hands you get to play.

The way to maximise your odds is to lose preconceived notions and instead pay close attention to the response to all of your moves. Everything is a test. Every bit of feedback is a signal. You need to look at what’s working and discard what isn’t. When we work backwards from results to figure out why those things happened, we need to avoid cognitive bias traps, cherry-picking data to confirm the narrative we prefer. We will all push square pegs into round holes to convince ourselves at time.

But imagine a startup as a game of poker. During a poker game, a player makes decisions quickly without knowing all of the facts; you don’t know the other players’ cards, you don’t know which cards are going to be turned over next, and you don’t know how the other players at the table will bet or play. Decisions need to be made in every hand in quick succession.

With a poker player’s hat on, we should adopt the betting mindset to determine which scenarios would likely play out in our game of startups. Generally, in every poker hand, thinking about what other players have and what their move could likely be, determines what you will bet and how you will react. Can you do the same for your startup strategy?

Great poker players are thinking not only what their opponents’ next move is, but the four rounds after that. It makes a lot of sense to start looking at your startup decisions and the potential outcomes of those decisions and the effect of each one in the same way. Of course, you end up with competing voices in your head, each saying how they would play it, but information remains hidden and as James Clerk Maxwell, the great physicist said, Thoroughly conscious ignorance is the prelude to every real advance in science.

What good poker players and good decision-makers have in common is their comfort with uncertainty and unpredictable circumstances. They understand that they can never know exactly how something will turn out. They embrace that uncertainty and, instead of trying to sure, they try to figure out how unsure they are, making their best guess at the chances that different outcomes will occur.

Simply, the future does not exist. It’s only a range of possibilities. The expected value from any activity is the product of the gains available from doing it right multiplied by the probability of doing it right, minus the potential cost of failing in the attempt multiplied by the probability of failing. Every decision commits us to some course of action that, by definition, eliminates acting on other alternatives. Not placing a bet on something is, itself, a bet.

So let’s adopt the poker player’s mindset, how should we make startup bets?

Acknowledge uncertainty Making better decisions starts with understanding that uncertainty can work a lot of mischief. We are generally discouraged from saying I don’t know or I’m not sure, we regard those expressions as vague, unhelpful, and even evasive. But getting comfortable with I’m not sure is a vital step to better decision making.

We have to make peace with not knowing, I’m not sure is simply a more accurate representation of reality. When we accept that we can’t be sure, we are less likely to fall into the trap of black-and-white thinking. When we move away from holding just two opposing and discrete boxes that decisions can be put in – right or wrong – we move along the continuum between the extremes. Making better decisions stops being about wrong or right but about calibrating the shades of grey.

Open your mind to all possible options The startup world is a pretty random place. If we don’t change our mindset, we’re going to have to deal with being wrong a lot. We become focused on the immediate situation such that we overlook the range of possibilities. This can lead us to make rash decisions or miss opportunities because we don’t recognise them.

There is always a context beyond than we initially thought, filled with more possibilities than we envisioned. With a broader mindset we can counter the discomfort of uncertainty with greater optimism. Rather than focus on digging yourself out of a range of worst-case scenarios, recognise we have options based on upsides too.

Think in terms of probabilities, not binary outcomes Human nature means we spiral into imagining extreme outcomes. But the poker player thinks in probabilities. Stop thinking in binary terms – stranded or not stranded – we create anxiety and not options. When we consider the full range of possible outcomes and assign probabilities to them, we see things differently. This reminds me of French philosopher Michel de Montaigne’s poignant observation: My life has been full of terrible misfortunes, most of which never happened.

Throw the thinking forward Suzy Welch developed a popular tool known as 10–10–10 that has the effect of bringing the future into our in-the-moment decisions. Her 10–10–10 process starts with a question: What are the consequences of each of my options in 10 days ? In 10 weeks ? In 10 months? Proceeding this way reduces the weight of the emotion of the moment and brings more rationality to the decision-making process, considering the outcomes.

Backcasting – work backwards from a positive future When we identify a desired outcome, work backward from there to identify the steps that must occur to reach the goal. That leads to developing strategies to increase the chance this event occurs with a clear focus. Imagining a successful future and backcasting is a useful mental time-travel exercise for identifying what we need to make happen. Working backwards is proved to be a more positive approach when working in a crisis, as we give ourselves the freedom to imagine a favourable result from our bets and achievement of steps along the way.

Pre-mortems give us a balance One approach to achieve success is through positive visualisation outlined above, but the corollary of incorporating negative visualisation is also a useful technique. While backcasting imagines a positive future, a pre-mortem imagines a negative one. It may not feel so good during the process to include this focus on the negative bets, but the balance gives us a contrast to turning a blind eye to negative scenarios.

Less time means less room for making excuses The problem when we have time to plan is that it dilutes the thinking. Our focus needs to be reducing the amount of time we can cheat on our time. Short windows force us to make the most efficient use of our time and make the bets, because there’s no room to make it up later.

Just because we operate in short timelines doesn’t mean we don’t have long term thinking. We zoom out and pick strategy bets, but once the course is set, we zoom all the way back into, OK now what can we do today? A short focus window is about maximising output with zero room for waste. Use bets to make decisions in the here and now. Short windows also force us to set priorities, we’re forced to have a hard discussion about what really matters to us most, which is a very important and cathartic conversation to constantly have.

Balance probabilities with a humanistic approach Painting by numbers doesn’t guarantee a great finished picture. It provides a useful guide but removes creativity. Likewise, in decision making, balance the number-crunching and logic with a humanistic approach – business growth is derived from personal growth and learning too, integrate the two approaches.

Don’t simply execute bets based on what appear to be logical, empirical outcomes, but consider effort, risk taking and perseverance required. Use your emotional intelligence, every outcome is an experience and a chance to share, listen, reflect and learn. Treat outcomes as feedback.

Luck plays a part, like it or not No one has done more thinking regarding the impact of luck on making decisions than Michael Mauboussin. He states that it is reasonable to expect that a different outcome could have occurred. Mauboussin points out There’s a quick and easy way to test whether an activity involves skill: ask whether you can lose on purpose. In games of skill, it’s clear that you can lose intentionally, but when playing roulette or the lottery you can’t lose on purpose.

As the poker player knows, some things are unknown or unknowable. The influence of luck makes it impossible to predict exactly how things will turn out, and all the hidden information makes it even harder.

We need to keep a forward-looking mindset during these turbulent times. We’ll have hunches, insights and intuition about how to approach the post-corona economy for our startup, but going back to normal when normal isn’t waiting for us is going to present some huge challenges.

Much better to put your energy into shaping what ‘a new normal’ could be, a new reality, a new game, a new space. Better to bet on and shape a new future, but not a ‘back to normal’, because normal is not waiting for us. The ‘new normal’ is for creators, makers, innovators, builders. So place your bets.

Reflections on the failure of Flybe offer insights for your startup strategy

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If 007 is taking cover for the next few months, what hope is there for us mortals left exposed to the economic ravages of the spreading coronavirus? The release of the next James Bond film, No Time To Die, has been postponed until November. There will be better profits made then, and film distributors can afford to wait.

Others can’t, though, they have to battle through some tough times ahead, and airline Flybe collapsed on Thursday, the first to fall because it had underlying financial health problems in the most exposed sector to the economic impact of coronavirus. This has been underlined with an announcement by Lufthansa that it plans to cut up to half its capacity in the next few weeks, while grounding its biggest aircraft.

There will likely be big differences in vulnerability and impact between sectors. There will be a shift to online shopping, but while household income is uncertain, big ticket expenditure could stop abruptly. But let’s look at Flybe, because in reality the sharp downturn in revenue in response to the global infection was the final straw that broke their business model, and offers insights to startups intent on an aggressive, high growth strategy.

Flybe carried 8m passengers a year between 56 airports in the UK and Europe, with over 210 routes across 15 countries, but had a very unstable fragile strategy, operating model and ownership history. The Flybe brand originated in July 2002, positioning itself as a full-service, low-fare airline. Various pricing and product introductions were made in line with this position, such as discounted one-way tickets, the abolition of overbooking practices, a customer charter of the airline’s service standards, as well as compensation for delays.

The company acquired BA Connect in 2007, increasing its route network in both the UK and continental Europe, making Flybe Europe’s largest regional airline. But there were turbulent times, and fast forward to 2013, and Flybe sold its slots at Gatwick for £20m – out of 158 routes flown, 64 did not cover the operating expenses of crew and aircraft.

Despite this downsizing, in April 2014, Flybe announced that it would launch domestic and international flights from London City Airport, signing a five-year deal. Into 2015, Flybe announced new routes from Cardiff and Sheffield Airport starting nine new European city routes, and twelve months later opened a hub at Dussledorf.

Despite this growth strategy, November 2018 saw a 75% collapse in the share price as Flybe announced that it was talking about a potential sale. Subsequently, the Connect Airways consortium acquired the business, which included Virgin Atlantic and Stobart Aviation, with £100m of new funding provided to support the business.

Flybe announced plans to be rebranded as Virgin Connect, but in January 2020, it emerged that Flybe was again in difficulties, and a deal was reached on 15 January, entailing a deferred payment for Flybe’s Air Passenger Duty debts and increased funding from Connect Airways.

As of 28 January 2020, Flybe operated 36% of all UK domestic flights, but on 5 March, they filed for administration and ceased all operations with immediate effect after the Government failed to grant a proposed £100m bailout loan. Virgin Atlantic refused to continue financial support despite its investment of £135m, and placed part of the blame on the negative impact of the coronavirus outbreak on Flybe’s trading.

Was Flybe too ambitious? For the past fifteen years Flybe has been trying to join the big boys of aviation and failing. The serious push came when it raised money with an IPO, and set out a plan to become Europe’s biggest regional airline, flying mid-sized planes between secondary cities. The model works brilliantly in America, where regional airlines, often flying as franchises of the larger network carriers, are a large and thriving business.

It did not work – or at least Flybe did not make it work. It retrenched, and was left in the farcical situation of paying for a fleet of aircraft that it could not fly. The remaining network was still too big, and cash resources dwindled.

So what are the elements of the Flybe business model that ultimately caused its failure, and what can startups learn from their mistakes?

1. Operating a market niche made it vulnerable Flybe dominated the regional UK market, so it was particularly exposed to anything that went wrong in this market – the recent fall in demand prompted by the coronavirus outbreak just added to its list of woes. It already had to contend with storms disrupting travel and the effects of Brexit creating sluggish UK consumer spending. The weak pound following the Referendum also worsened the impact of increased fuel and aircraft leasing costs.

Lesson: don’t put all your eggs in one basket; don’t get complacent when you have dominant market share, take a counter view of inherent vulnerability to apparent strength.

2. It operated in a highly competitive market Aviation is a highly competitive industry at the best of times, saddled with high-cost assets, and key costs that fluctuate uncontrollably – mainly fuel, which accounts for around a third of total airline costs. On top of that, they face high regulatory costs. The UK is particularly competitive, with Flybe squeezed between major airlines such as British Airways and the big low-cost carriers like Ryanair and EasyJet.

Lesson: Always keep a keen eye on your cost base when focused on a high-growth strategy, revenues can often not hit targets or market share be impacted by external margin pressures out of your control.

3. Flybe paid more tax than other airlines Airlines have to pay Air Passenger Duty (APD), a tax per passenger on flights taking off in the UK. For international flights, APD only has to be paid on the route out of the country, but for journeys within the UK, APD is paid both on departure and arrival. The levy is thought to have cost Flybe more than £100m a year, something it had long complained about. The government was considering adjusting the APD and helping Flybe.

Lesson: There are often specific compliance costs or costs of entry into a market, which should be recognised as a harsh burden on the business model, hitting your competitive agility, and factored into your day-to-day thinking.

4. It had too many planes A decade ago, Flybe had ambitious pan-European plan, placing an £850m order for 35 Embraer 175 jets to underpin its expansion. But for years after that it struggled with overcapacity. Flybe ended up putting planes on routes to use the planes, rather than buying a fleet to fly routes effectively. It was a burden, in reality it really was too big for what it’s trying to do.

Flybe’s overcapacity showed it needed to operate smaller aircraft over a slimmer network, and maybe switch its focus to concentrate on the corporate market and forget about endless retail seat sales at peppercorn prices. This would mean higher fares but hopefully a better quality, repeatable customer model.

Lesson: A relentless focus on charging forward can blindside the downside risks and adverse long-term impact of short-term errors. Don’t be blinkered by growth-for-growth’s sake, take a balanced view of opportunity versus risk.

5. There were conflicting shareholder objectives The takeover by the Connect Airways consortium failed because the partners had conflicting objectives and were strange bedfellows. Virgin was eager to feed its long-haul flights at Heathrow, and perhaps snaffle along the way some of Flybe’s valuable Heathrow slots, whilst Stobart was eager to keep regional flights at its main asset, Southend Airport.  The third partner, Cyrus, was a VC and thought it might make money if the business was resuscitated. None of these were compatible with each other

Lesson: Ensure there is genuine compatibility and alignment of vision, purpose and strategy with your co-founders. Never let financial metrics convince you a long-term arrangement has merit, it simply masks the underlying paradoxes.

6. The pricing strategy must support the business model Coronavirus hastened its collapse, but Flybe’s pricing policy was flawed. For any form of travel, the operator with the fastest service generally charges the most. That used to be the case before the arrival of low-cost airlines, when domestic flying was considered a luxury. In Flybe’s case, although it held a monopoly over most of its mainland domestic routes, it was undercutting rail fares sometimes by as much as 50% – because the travelling public compared the cost of flying with surface transport.

However, at the same time as average fares have fallen, squeezing margins and leaving no room for mistakes, Flybe was posting annual losses of £20m.

Lesson: Price on purpose, and price for profit. After a period of entry pricing to gain new market share in a new segment, your value proposition has to fit around the competition and your business model. Don’t kid yourself demand v supply rules don’t apply.

7. Poor customer experience They had a mad hand baggage policy. I had a bag that was 5mm bigger than their cabin baggage guide at the gate. They charged £30 to check it in and, of course, I had to wait 45 minutes to get it back at the other end. The published dimensions of my hardsided case were within the Flybe size limits. I resolved never to fly it Flybe again and never did.

Lesson: Think about the critical non-essentials that can have an out-size adverse impact on the customer experience. Convenience, simplicity and ease-of-use are great customer experience virtues – introduce friction and it all unravels.

8. Dysfunctional culture Flybe acquired many rival’s routes, aircraft and staff and took many franchises into its brand, but wasn’t successful at integrating firms with different work cultures. Even though they were successful at operational integration of small companies, it failed to merge different work cultures.

High attrition rate in its work force compared to other organisations in the industry resulted in it having to spend a lot more than its competitors on training and development of its employees.

Lesson: Creating a diverse and inclusive workplace culture is vital as you scale a startup, ensuring there is a vibrant underlying set of values and philosophy that enables your business to build internally, besides fuelling external growth.

All of the above were factors before coronavirus came along, combining to trigger Flybe’s demise. They were not even able to maintain good revenues on unique routes. Flybe failed because it forgot what its core business was and an over ambitious strategy expanded it beyond it viable economic model.

Startups beware. The adrenalin of growth and soaring ambition can cloud your judgement and blindside some key signs that your model isn’t as unique as you expect.

Failure. We’re hypocrites about it. You find scores of pleasant aphorisms celebrating the inevitability of failure of underdogs and entrepreneurs, their determination to come fighting back and the importance of learning from it, but in real life failure is painful.

Optimism is key, as Friedrich Nietzsche said, That which does not kill us makes us stronger. A willingness to stumble during a quest gives the motivation to spur us onto success against all odds in the first place, so don’t let failure remove your spark, but embracing failure to encourage entrepreneurship is misguided. Keep an open mind as you build your startup strategy, and always be agile, alert and vigilante – euphoria, ego and complacency are virus-like killers to your startup business model.

Startup lessons in strategy & execution from Led By Donkeys

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Well, January 31 came and we left the European Union, and already the schism between Boris Johnson and Michel Barnier on constitutional, economic and cultural consequences is apparent. Putting aside your political views, one aspect of the Brexit campaign that start-ups can learn from is the stunning communication strategy of one political lobbying group, Led By Donkeys, itself a startup venture formed to join the Brexit debate.

Formed in December 2018, Led By Donkeys is a British anti-Brexit political campaign group which used satire targeted at pro-Brexit politicians, calling out ‘thermonuclear hypocrisy’. Led By Donkeys’ main campaign consisted of billboards containing past tweets by pro-Brexit politicians, which appeared to undermine the politicians’ current political position, or clearly have not stood the test of time.

The campaign was initially run as a guerrilla marketing operation, in which Led By Donkeys posters were plastered over existing adverts. It was then expanded into a crowdfunded campaign, which purchased advertising space on hundreds of billboards across the UK.

Later the group staged real-life stunts, including projecting messages on iconic places such as the Houses of Parliament and the White Cliffs of Dover, carving giant tweets and messages on beaches and fields, and directing crowds to unfurl huge flags at marches. The videos of these stunts were subsequently viewed millions of times on social media. Led By Donkeys won the award for Best Social Media Campaign in the 2019 ‘Social Purpose Awards’.

In December 2018, two years after the Referendum, four friends were discussing their frustrations with the Brexit situation in the pub. The four founders – Oliver Knowles, Ben Stewart, James Sadri and Will Rose all have a connection with environmental campaign group Greenpeace. In the Referendum, they had all voted ‘remain’. They were laughing in disbelief as they passed a phone around displaying a David Cameron tweet from 2015, saying Britain faces a simple and inescapable choice – stability and strong Government with me, or chaos with Ed Miliband.

While brainstorming how the tweet could be preserved, one of them noticed a billboard outside. They decided to print it out and paste it up. Each of them then chose a pro-Brexit politician they despised the most and looked for their ‘most offensive lies, lunacy and hypocrisy’ to go on billboards too.

Rose designed the posters, whilst Sadri came up with Lions led by donkeys, a phrase referring to soldiers in WWI who were sent to their deaths by incompetent and indifferent leaders. They thought it described the relationship between the British people and their Brexit leaders well.

Rose shortened it to #LedByDonkeys. The activists bought a ladder, high-visibility jackets to look legitimate, a bucket, a roller and wallpaper paste, and late at night on 8 January 2019 they illegally plastered the David Cameron tweet over an existing advert on a billboard. They posted a photo of the billboard to their new Twitter account and asked The Guardian journalist Marina Hyde to retweet it – resulting in #LedByDonkeys trending. Within a day their billboard poster was removed.

The group then illegally pasted the other four original tweets on billboards around London, aiming to spark a discussion about the promises of leading Brexiteers. They chose Dover, a pro-Brexit constituency, as their next location. They selected four additional historical Brexiteer statements, among which was Dominic Raab’s 2018 statement I hadn’t quite understood the full extent of this but … we are particularly reliant on the Dover-Calais crossing.

On 16 January 2019, they tweeted photos of the four Dover billboards, along with the message A busy night on the Brexit frontline. We’ve covered Dover in the historic quotes of the people responsible for this chaos. Britain is a nation #LedByDonkeys. This was the moment when they went viral. The next day all four posters were removed by the billboard company.

The activists deplored the tribalism triggered by Brexit and agreed that going national was needed. Their followers suggested that they set up a crowdfunding campaign to raise money to legitimately fund billboards. Initially the group resisted this, believing that their acts being illegal was an important part of the activism of the project.

They also feared they would have to give up their anonymity, but crowdfunder.co.uk confirmed they could stay anonymous, and set a fundraising target of £10k. It was reached within three hours. By November the group had raised £500k and became the biggest crowdfunded political campaign in UK history.

But their campaign of holding pro-Brexit politicians accountable for past promises and exposing their flipflopping views did not achieve their goal. The pro-Brexit parties won the majority of seats in the General Election, and the UK left the EU on 31 January 2020. That day, Led By Donkeys projected a video message to the EU on the White Cliffs of Dover featuring WWII veterans expressing sadness about leaving the EU and hope that one day Britain will be together with Europe again. The video of the projection was seen a million times on Brexit Day. Follow this link: https://drive.google.com/drive/folders/1_zs2ezzvpiR26ZiEqj4l9PsX55PalHj5

As a startup, Led By Donkeys made its mark. The creative thinking was brilliant in its meditative simplicity, the campaign was witty and subversive. In just twelve months, four blokes armed with a £90 ladder from B&Q, four hi-vis jackets and a bucket of wallpaper paste reached over 300 billboards and an audience of 30 million – what are the lessons for other startup ventures?

1.     Have a purpose

Britain voted ‘leave’ in June 2016, since when the UK political system has been in turmoil. Like many others, four everyday blokes had a chat about it in the pub, but rather than just getting angry, they decided to do something about it.

Politicians had either been liberal with the truth or changed their minds so much that it was difficult to know where they stood. They aimed to fill the void that had opened up in the usually balanced UK political landscape. It was missing a nugget of truth and a splash of British humour.

2.     Know your strategy

The idea was simple: uncover the truth, in the format of a Tweet you can’t delete. Going though the social feeds, interviews and articles of Brexit-supporting politicians’ to reveal their claims about Brexit in the past and contrast them with the stark reality we found ourselves in. These would be displayed publicly across the UK, focusing on pro-Brexit areas.

Led By Donkeys opted for a humble screengrab as their design of choice. These were displayed loud and proud on billboards, poster sites and digital advertising vans, plus later in the campaign, took projections to key locations across Europe including Westminster, Buckingham Palace, Windsor Castle, the Glastonbury Festival and the EU Parliament itself in Brussels.

3.     Be clear in your tactics and agile on timing

Led By Donkeys gave people a voice when they needed it most. They responded to events on a daily basis, consistently picking up the Leave protagonists with killer timing and wit, all of which galvanised their supporters and strengthened their reach, which in turn drove funding into their Crowdfunder cause.

Key locations around the country were identified: where Brexit tensions were at their highest, political leaders were based or key Brexit events were taking place. Meanwhile, at the People’s March in central London, their massive banner became the defining image, making headlines worldwide. When the Brexit Party announced their intention to stand in the European elections without a published manifesto, the quartet dutifully obliged by pasting previous political statements on billboards across the UK.

As campaigners, they developed objectives and a critical pathway and a tactics to meet those objectives. They injected passion and edge into the national conversation, even if they admitted that the viscosity of their wallpaper paste was way off at times. The campaign was challenging, thought-provoking, timing and speed was of the essence. They hit the mark every single day.

4.     Focus on intelligent thinking to shape your content

They brought the Greenpeace ethos of the mindbomb of campaigning, where one single picture can shift people’s perceptions. Humour played a key part too, making fun of politicians broke through the partisan atmosphere.

They not only made fun of Brexiteers, they also ridiculed Labour leader Jeremy Corbyn for his ambivalent stance on Brexit with an empty billboard. They left three cans of spray paint and a stepladder by the poster as an encouragement for passers-by to write their own comments. They also worked with artist Cold War Steve to collaborate on a billboard site at the Glastonbury Festival.

When the EU were considering giving the UK an extension to the original deadline of 29 March 2019, Led By Donkeys used a giant projector to display a video on the White Cliffs of Dover. Their goal was to ask the EU leaders for much more time, so that there could be a second referendum. The video displayed an SOS in blue, with the ‘O’ made up of yellow stars, to mimic the EU flag. EU leader Guy Verhofstadt tweeted back the next day that it was “quite something to see the White Cliffs of Dover turn blue”.

In the final week before the General Election, they crowdfunded £250k within 24 hours to run anti-Brexit ads on Facebook. Three ads were each viewed more than one million times. The group organised the carving of a giant message on a Devon beach, with six doctors and nurses writing You can’t trust Boris Johnson with our NHS. GPS technology was used to draw the outlines of the letters and Johnson. The NHS staff filled it in.

5.     Adopt multi-channel communication

Led By Donkeys became the biggest crowdfunded political campaign in UK history, enabling it to have a huge impact in the crowded Brexit narrative.

  • 340,000 followers in total on social media. They follow no one.
  • Reach of 3m on Twitter, with over 1.5m retweets and 3m likes
  • Viewed over 2m times on YouTube
  • The physical poster sites have reached 30 million people.
  • Staggering editorial media reach of 1,400,000,000.

Their provocative marketing campaign flew in the face of modern media trends, using traditional ‘paper and paste’ billboards for illicit messaging, not fast-turnaround, digital screens. There is a trinity of outdoor imagery, online sharing and public interaction in local communities that was at the heart of their approach. Creating political street theatre up and down the country allowed them to hack the local and regional media and to get a conversation going on local community Facebook groups.

Led By Donkeys eschewed the civil disobedience-style approach of Extinction Rebellion but believed strongly in the value of participation to counter apathy and dejection. Their multi-channel communication approach ensured their reach, broadcast and social media footprint resonated with both original and user generated content.

It had its faults, but the EU was a stupendous economic, political and cultural achievement: peace, open borders, relative prosperity, and the encouragement of individual rights, tolerance and freedom of expression. That’s over, and for now the domestic agenda is English nationalism, set by Johnson’s Vote Leave cabinet of mocking grins, whose monument will forever be a special kind of smirk, perfected back from Led Donkeys.

They have vowed to continue their campaign to secure honest, democratic communication from our politicians. Make sure your startup adopts the vision, passion, strategy and tactics of Led By Donkeys, and who knows you’ll make your own mark too in under 12 months.

How playing chess improves your startup game

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Underlying a game of chess is an abstract structure of rules and relative powers, which can be quite mind-boggling. The game emerged in C5th India, but it wasn’t until the C19th, when the set was standardised into the Staunton version we play today.

To follow a professional game is to get lost in algebraic options and notations. When the 13-year-old Bobby Fischer sacrificed his queen against Donald Byrne in the so-called ‘game of the century’ in 1956, it was considered one of the finest moves in chess history – a greatness not quite communicated by Be6.

Chess is an endless pursuit, a game of longevity with logical consequences and sly entrapment. After sacrificing his queen, another 24 moves later, Fischer won – a result, he’d worked out, that was inevitable if he let his queen go. It was sacrifice that was also attack, aggression that was also composure.

When a chess player looks at the board, he does not see a static mosaic of contrasting, patterned squares, but a magnetic field of forces, charged with energy, potential and intrigue. A game of chess opens in a state of balanced equilibrium, and if the optimal move is made with each play, a draw is all but assured.

Norwegian Sven Magnus Øen Carlsen is the current World Chess Champion, holding the title since 2013. His peak Elo rating – the ratings given to chess players corresponding to their performance over the best five-year span of their career – of 2882, achieved in 2014, is the highest in history, ahead of Gary Kasparov at 2851.

Magnus tries to put the accent on play, less on preparation, and is seen as combining the talents of two of the all time greats, Karpov and Fischer. He’s known for getting his positions then holding on with a bulldog bite. Exhausting for opponents, one of his most feared qualities is his ‘nettlesomeness’ – his creative moves pressurise opponents into mistakes. Carlsen’s endgame prowess has been described as among the greatest in history.

The last World Chess Championship in 2018 began with a series of twelve games played under classical time controls, the traditional slow pace of play. Carlsen failed to win a single one of his contests against the challenger, American Fabiano Caruana, but fortunately for the Norwegian, Caruana never reached a checkmate or extracted a resignation either.

With each of the dozen classical games ending in a draw, the match moved to a series of faster-paced tiebreakers, starting with a series of four ‘rapid’ games, in which players are allotted less than one-quarter the thinking time of the classical format. Carlsen, the stronger competitor in speedier formats, won the first three games to clinch the tiebreaker and retain his title.

To the casual observer, three weeks of drawn games may sound excruciatingly boring, but like a football match with smart, impregnable defences, or a baseball World Series studded with scoreless pitching duels, chess title matches feature two equally matched grandmasters competing at an extremely high level.

You start the game with a set of pieces, from king to pawns, each with their own ability and position, each has their own purpose. Novice players push forward immediately with their back row, trying to get their most valuable pieces into win positions early. Experienced players, however, know that it is the pattern of all their pieces working in concert that creates reliable success.

Master chess players see the unfolding patterns of the board over time, thinking not in terms of one piece or one move, but in terms of the entire board over dozens of moves. This ability to analyse actions and their outcomes, combined with skilled pattern recognition, is what defines strategy.

The objective is to play the board, not just your plan. When playing chess your opponent is trying to predict and undermine you, applying their own strategy to capture more pieces, so, what do you do?  One crucial skill is the importance of taking time for reflection. It’s in reflection that the brain has time to learn, to process new information, to recognise patterns, and recall previous successful moves.

I see many similarities between chess and running a startup business from the strategy, thinking and tactics behind the game. Let’s look at the lessons and learnings we can take from Carlsen and his Word Championship success.

The first phase in a chess game: the opening As Carlsen shows, the purpose of the opening isn’t just to get immediately ahead, rather it’s to set the stage for the type of middle game you want. This can also mean manoeuvring for the type of game your opponent doesn’t want. The openings are the only phase in which there is the possibility of unique application, you can find something that no one else has found.

Be first, and be brave is the lesson for a startup, but equally don’t rush. Aim to be bold, but have some thoughts around what the early stages of your business could look like. Of course, early encounters with customers reshapes your thinking, so be prepared to be flexible and respond to feedback.

The second phase: the middle game What sort of middle game is our opening going to lead to? Is it one we are prepared for or have our opponents out foxed us and we’re playing catch-up? We must also play the middle game with an eye on the endgame.

In a startup it’s important to have a strategy, tactics and a game plan thinking in periods initially of no more three months, with objectives and key milestones, things are just too volatile to plan too far ahead. As you navigate what it often a turbulent first phase, what you should be doing in the second phase will emerge. Continue with innovation at the core, but listen to customers.

Dream a little, don’t settle automatically for routine solutions The paradox of chess is that there is a routine set down by mathematics to make a strong move based on its objective merits. But recall Carlsen’s approach is a combination of freedom and discipline, sober evaluation and calculation mixed with outlandish ideas.

In a startup, you won’t find new ways of solving problems unless you look for them and experiment and have the nerve to try them when you find them, but ensure flair doesn’t mean or you spend your life making beautiful blunders.

The future is a result of the decisions you make in the present The strategist starts with a vision of the future and works backwards to the present. Carlsen makes the best moves because they are based on what he wants the board to look like ten or twenty moves ahead. This doesn’t require the calculation of countless twenty-move variations, but an evaluation where his fortunes lie in the position and establishes objectives.

Having a vision for your startup is just as important. Where do you want to be in three years? Make a start, and try to make every day a step in the right direction towards your horizon.

Intuition & analysis Even the most honed intuition can’t entirely do without analysis. Intuition is where it all comes together – our experience, knowledge and judgement – or even hunches. But it doesn’t matter how far ahead you see if you don’t understand what you are looking at before you, so combine the two.

No matter how much practice or experience you have, and how much you trust your gut instincts, analysis is essential. It’s a balance between inspiration and perspiration, blue sky thinking and washing the pots. It’s dreaming, plus hard yards.

Attack An attacking strategy doesn’t have to be all or nothing, or recklessly lightning quick. Sustained pressure can be very effective in chess, and creating long-term weaknesses in your opponent’s position can lead to a win in the long run. One of the qualities of a Carlsen is his ability to get the maximum out of a position without overstepping and trying to achieve more than what is possible.

In chess, the defender has to race around to cover the threats, but against constant pressure the job soon becomes impossible. Moving to cover one breach creates another until something cracks and the attack breaks through. In chess we have the ‘principle of two weaknesses’. It’s rare to be able to win a game with only a single point of attack. Instead of becoming fixated on one spot, we must exploit our pressure to provoke more weak spots.

So a large part of using the initiative in chess, as in business, is mobility, flexibility and diversion. In business, it’s a combination of product, service and price that creates a winning position, then execution and delivery that secures a deal.

Initiative Once you have the initiative you must exploit it. Carlsen reminds us that the player with the advantage is obliged to attack or his advantage will be lost. In business, initiative can be converted into a sustainable position. Being a step ahead means we can keep our competition off balance, shifting and moving in order to provoke weaknesses.

In business, going on the front-foot requires perfect timing as well as nerve. The window of opportunity is often very small, as with most dynamic situations. No neon sign appears to say that there is a big opportunity right around the corner, so balance opportunity with rationale – back to the combination of freedom and discipline in your game plan.

When you are winning, don’t get complacent Winning creates the illusion that everything is fine, success is seldom analysed as closely as failure and we are always quick to attribute our victories to superiority, rather than circumstance. When things are going well it is even more important to question. Over-confidence leads to mistakes, a feeling that anything is good enough. Our egos want to believe that we won brilliantly against tough competition, not that we were lucky and ‘right time, right place’, but typically, however, the winner is just the player who made the next-to-last mistake.

Carlsen shows that if we’re going to get the most out of our talent we have to be prepared to have a game plan, practice, think on the spot, analyse ourselves critically and improve our weakest points. The easiest thing is to rely on talent and focus only on what we do well. It’s true that you want to play to your strengths, but if there is too much of an imbalance growth is limited. In business, the fastest way to improve overall is to work on your total game, and all the constituent parts.

He highlights long-term strategy, short-term gains, being creative in the middle game, and how important decision-making is at any stage of the chess game. We do need to think ahead in business, if not for ten moves, but then at least truly think through options and the consequences – that’s not calculating, it’s common sense. Carlsen illustrates that the unlimited number of subtle and intricate potential moves that lie within the 64 squares of a chessboard are totally applicable to business, how the game can help you step back and evaluate yourself to identify you strengths and weaknesses and thus better your game.

Chess is a mental game, that requires vision, tenacity, thoughtfulness, and multiple tactics. From this we can take the thought that in a startup we can look for ways to experiment and to push the boundaries of our capacity in different areas. It really is a combination of disruptive and disciplined approaches, and agile thinking that will bring success.

Greggs: an agile approach to strategy & business model thinking

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John Gregg founded his bakery business in 1939, selling eggs and yeast from his bicycle in Newcastle. The business grew, and his son Ian joined his father and mother, selling pies from his van to miners’ wives. They opened their first shop in Gosforth in 1951.

When John died in 1964, the bakery was taken over by Ian, and major expansion began, including the acquisitions of other bakeries such as the Bakers Oven chain from Allied Bakeries in 1994.

Greggs grew to be the largest bakery chain in the UK, home of the bacon sandwich and a coffee for two quid special offer which, disappointingly, is now £2.10 (a friend told me, honestly), famous for pies and pasties and everything you firmly resolved on December 31 would never touch your lips again.

A couple of years ago, Greggs fell victim to adverse PR about its product range and customer base. Oh how the Prêt crowd sniggered into their avocado and crayfish salads. Yet plucky old Greggs just got its head down and kept growing. ‘It’s a northern thing’ no longer serves as an explanation. The patronising notion that Greggs’s popularity is inversely proportional to the nation’s economic fortunes also fails to explain its steady expansion.

Today Greggs generate £1m a week from sales of coffee. It has repositioned the brand from an ordinary bakery-to-take-home to a high growth food-on-the-go entity, meeting changing customer demands and evolving food culture.

A new strategy was introduced in 2013 under CEO Roger Whitehouse, formerly Head of M&S Food, which focused on four pillars: Great tasting freshly prepared food; best customer experience; competitive supply chain; first class support teams.

Whitehouse introduced a ‘restless dissatisfaction’ approach to compliment the traditional business values, ensuring the business would never stand still after recovering from a period of stagnation. He implemented some radical changes, including closing the in-store bakeries, and introducing the ‘Balanced Choice’ range of products with less than four hundred calories, healthier options to the traditional product range.

And it’s worked. Having launched the first vegan sausage roll in January, last week the company announced a 50% rise in profits to £40.6m in the first half of 2019. The business is handing shareholders a £35m special dividend after total sales rose 14.7% to £546m.

In 2016, Greggs weren’t in the takeaway breakfast market but now only McDonalds sells more takeaway breakfasts. With a Fairtrade Expresso, it has overtaken Starbucks to become the third-largest takeaway coffee seller, behind Costa and McDonalds, while only Tesco sells more sandwiches.

So what are the lessons from the success of Greggs changing its business strategy and model that we take into our startup thinking?

1.     Be agile in how you connect with customers

Greggs expects to pass 2,000 outlets this year, 65% are on high streets, with the remaining 35% located in retail and office parks and in travel locations such as railway stations and petrol forecourts. The aim is to change the emphasis of the business so that it is 60% non-high street by the time it has 2,500 shops.

Part of this is having many of its stores open earlier and close later, in order to target those going to and coming back from work, expanding its breakfast menu to suit, and with ‘Greggs à la carte’ stores to open late to 9pm to lure evening takeaway diners.

As well as its new drive-through locations, the company is trialing a click-and-collect service, as well home and office delivery by Just Eat and Deliveroo. They aim to integrate click-and-collect and delivery services with the company’s Greggs Rewards app, which offers free drinks and birthday treats.

Greggs has previously failed with new ideas such as Greggs Moment, a coffee shop-style outlet with seating, and the Greggs Delivered service, which is only available in Newcastle and Manchester city centres, three years after it launched. However, the business is now at a scale where it can experiment without too much risk.

Takeaway: Greggs route to market strategy is to based on expanding their reach to enhance customer convenience, a ‘fish where they swim’ strategy, reducing the barriers between themselves and their customers, uplifting the customer experience and making the ability to connect and purchase convenient.

2.     Build your brand to face your market

Greggs has in recent years persistently bucked the wider trend on UK high streets, where most retailers are struggling to compete as sales shift online and the cost of running stores rises.

In 2013, Greggs began to transition out of the bakery market with the reasoning that it couldn’t compete with supermarkets, switching to focusing solely on the ‘food on the go’ market after discovering that 80% of its business was with that market. They stopped selling bread in 2015.

Greggs has worked hard at getting consumers to think about it as a food-on-the-go chain, developing ideas such as online ordering for collection and home delivery, developing strategic partnerships with their supply chain to focus on the four key pillars of their strategy.

They are more in touch with where the customers are today. It has managed to cater to new markets without being overly ambitious. The builder can still come off the building site and get a hot pasty, but there are also salads. The decor is still recognisable even if it has been upgraded and the older traditional customers still feel comfortable.

Takeaway: Many businesses want profit as their objective. But if you only focus on short-term wins and results, you get distracted from doing the work required to build the skills you need to grow and scale, and it’s the ability to scale that matters. The process is more important than the outcome at early stages of a change of strategy. Focus on getting good before you worry about getting big.

3.     Look forwards, not backwards with your product offering

Greggs sells 1.5 million sausage rolls a week but created the new vegan option due to public demand after an online petition signed by 20,000 people. In recent years Greggs has been innovating within its product range to appeal to a broader range of customers. Its ‘Balanced Choice’ healthy eating range, introduced in 2014, offers options including wraps and salads, all below 400 calories. It also sells gluten-free and several vegan lines.

The company also believes it can take advantage of rising demand for food ‘customisation’, driven by allergies and ‘food avoidance’ preferences, and its stores now make sandwiches to request.

One in eight new customers have bought a vegan sausage roll in 2019, which has overtaken doughnuts and other pastries to become a bestseller. The traditional sausage rolls remain at number one – with its 96 layers of light, crisp puff pastry – but there are more vegan products in development, including a vegan doughnut. It’s worked, such that Ginsters released their own vegan product for the first time in its 52-year history.

Takeaway: Greggs has been bold in its response to the adverse publicity on its offering and changing food culture. Aligning your product strategy with a focused brand image and route to market is core to any business model.

4.     Be clear about your marketing message & tone of voice

Before the Greggs vegan sausage rolls went on sale, TV presenter Piers Morgan sent out a tweet: Nobody was waiting for a vegan bloody sausage, you PC-ravaged clowns. The tone of the company’s response: Oh hello Piers, we’ve been expecting you – friendly but with a slight edge, was perfectly attuned to the ironic, self-confident marketing Greggs has adopted, a James Bond-inspired, droll putdown that was the perfect riposte.

Their hilariously portentous launch video – part of a build-up that parodied the release of a new iPhone model with journalists sent vegan rolls in mock iPhone packaging and stores sold sausage roll phone cases – meant that for days Twitter was engulfed with people talking about a £1 bakery product.

The vegan sausage roll campaign, officially launched to support the Veganuary campaign that encouraged people to give up animal products for a month, followed other memorable promotions include a Valentine’s Day campaign offering ‘romantic’ £15 candlelit dinners in Greggs shops, and a spoof ‘Gregory and Gregory’ event, and one faux pas: a 2017 advent calendar tableau of a sausage roll in a manger. After complaints Greggs apologised and reprinted with a different scene featuring Christmas muffins.

Takeaway: Greggs found its distinctive marketing style in 2012, when it saw off then-chancellor George Osborne’s proposed ‘pasty tax’ on hot takeaway food. Since then it has been consistent in its purposeful, structured and memorable content driven communication strategy, making the brand relevant to its target audience and differentiating its offering in an increasingly competitive market to reposition the brand.

5.     Don’t let your business model become stale

Innovation can be about efficiency. Look at Ikea, and The Billy bookcase. It’s a bare-bones, functional bookshelf if that is all you want from it. The Billy isn’t innovative in the way that the iPhone is innovative. The Billy innovations are about working within the limits of production and logistics, finding tiny ways to shave more off the cost, all while producing something that does the job. It demonstrates that innovation in the modern economy is not just about snazzy new technologies, but also boringly efficient systems.

The Greggs shop environment has been improved and significant investments made in logistics and delivery systems to make them more efficient and scalable. In-store ordering moved to a centralised forecast and replenishment system rather than relying on shop teams filling in manual order forms, which resulted in order accuracy and improved availability for customers.

All shops are on a refurbishment programme (every seven years) to ensure they stay looking bright and welcoming. In-store point of sale and window displays remain key to Greggs’ marketing strategy, however, a loyalty app was also introduced.

Takeaway: innovation in Greggs is about efficiency, economy and effectiveness, searching for ways to make their products even better and affordable for their target market. A ‘back to basics’ focus on the business model reflects the culture and humility of the brand. Combined with brave decision making to implement change and execution in a consistent, simple and continuous manner has delivered the results.

6.     Ensure your folks keep clear heads

Amidst the hullaballoo and the fury of the frantic activity in the coming and going of customers at busy times, staff have to keep a clear head. In the heat of the moment, they cannot get caught up in the intensity and frenzy. Resilience in times of peak demand is needed to keep the customer experience as fresh and stimulating as the steak bakes.

When you go to a Greggs, the staff are so engaged in what they do its untrue, they are like whirling octopus serving customers, and they do it with good humour, bantering with regulars, enjoying the success of seeing returning customers, before going again.

With 10% of profits going to the Greggs Foundation to help fund Breakfast Clubs for children and over £1m raised annually for Children in Need, the vegan pastry has helped change the perception of Greggs, but fundamentally it’s a people business, about delivering service, experience and the community it operates.

Takeaway: So, focused on a simple, core value proposition – reasonable quality food at reasonable prices, consistently produced and scaled – but the fundamental premise is to make customer experience the brand differentiator.

Many takeout food companies are head-on competition to Greggs, but due to its focused marketing strategies highlighting choice, quality, nutrition & easy access, the company is able to create sustainable advantage.

Changing lifestyles, changing eating habits and increasing health awareness factors are affecting the growth of the companies in this industry. Greggs has set its strategy from a customer’s point of view and with customer-based insights, to ensure the business model is as robust as it can be.

Adopt Greggs’ agile approach to strategy and business model thinking, to focus on the horizon and hold your vision. Do something everyday to move your business forward, and that makes you stand out from the crowd. A sheep has never stood out from another sheep, so don’t follow the herd blindly. People will take notice.

What’s your startup ideation strategy?

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Nearly forty years after its invention, the world’s most confounding cube of colours is still going strong. It is estimated that there have been 400m Rubik cubes sold worldwide, a simple colour puzzle that offers 43,252,003,274,489,856,000 possible combinations (that’s 43 quintillion in shorthand).

In the mid-1970s, Professor Ernő Rubik worked at the Department of Interior Design at the Academy of Applied Arts and Crafts in Budapest. Teaching geometrical shape concepts, he designed the cube as a teaching aid to show the possibility of 3D modelling. He did not realise that he had created a puzzle until the first time he scrambled his new cube and then tried to restore it – it took him over a month to solve it.

On the original classic Rubik’s Cube, each of the six faces was covered by nine stickers, each of one of six solid colours: white, red, blue, orange, green, and yellow. White is opposite yellow, blue is opposite green, and orange is opposite red, and the red, white and blue are arranged in that order in a clockwise arrangement.

An internal pivot mechanism enables each face to turn independently, thus mixing up the colours. For the puzzle to be solved, each face must be returned to have only one colour.

He called the wooden prototype Bűvös Kocka: the Magic Cube. Rubik applied for a patent, but it took a few years to get the idea to market. In 1979, the Hungarian state-owned toy company Konsumex presented the cube to the International Toy Fair in Nuremberg, where it caught the attention of entrepreneur Tom Kremer.

By the end of that year, Kremer had convinced the Ideal Toy Company to take a chance on the puzzle. Ideal licensed the cube, and within two years it represented 25% of the company’s revenue.

At the end of 1980, Rubik’s Cube won awards for best toy across the world. By 1981, Rubik’s Cube had become a craze. As most people could only solve one or two sides, numerous guide books were published. At one stage in 1981 three of the top ten best selling books in the US were books on solving Rubik’s Cube, and the best-selling book of 1981 was James G. Nourse’s The Simple Solution to Rubik’s Cube which sold over 6 million copies.

Every legal permutation of the Cube can be solved in 20 moves or less. The current world record for the quickest solution is 4.59 seconds – but a robot solved it in just 0.637 seconds. There are also World Records for the fastest one-handed solving (6.88 seconds), feet solving (16.96 seconds).

Though sales fell from their peak in the 1980s, and were negligible in the early C21st, with the advent of the Internet, fans connected and shared strategies, and sales increased. Then earlier this year it featured in the SuperBowl, and in the new Taylor Swift/Ed Sheeran video, cementing the puzzle’s rise back to cultural prominence. It is estimated that one in seven people have played with this fascinating and frustrating puzzle.

Rubik’s Cube is an example of an innovation that took the world by storm, evolving into a populist toy from a device originally developed for teaching. Like many innovations, it came about almost by accident, a successful outcome arising from trying to solve a different problem.

For startups, the combination of original thought, timing, serendipity and chance encounters with future customers, often define the innovation journey. Innovation is not a very well understood process, by its very nature, it involves hits and misses because there is always an element of guessing and pre-empting the future, which by definition, is unpredictable.

Every sphere of human life today is undergoing rapid technological driven innovation, from cryptographic currencies changing the shape of money to the Internet of Things and Blockchain creating a new ‘Internet of Everything’. Newer, innovative technologies are developing faster than the speed with which we can rein in its unintended consequences.

New technologies track your every move, habit, communication or location, reducing privacy and opening pores to access your personal experiences. Startups are establishing Platform businesses, which in turn are disrupted by Blockchain, which promotes disintermediation and elimination of third parties. The biggest human experiment is a Hegelian pursuit of the one truth.

For a startup, innovation should always be customer centric. Never build something that you’ve not tested with users, and that ultimately customer won’t pay for. Startups with product innovation that doesn’t evolve with their customers’ lives don’t survive too long.

So many startups set out to innovate, but lose their way. All of the time, money, and energy invested loom over them like an ominous shadow. There was so much momentum, goodwill, collaboration, and then the painful, crash into the wall.

If you are striving for something new outside of the existing paradigm, think of the first trial or two as a learning investment. You may stumble upon revenue or insights that lead to giant leaps of both customer traction and inspiration, however, embrace this tension and good fortune at the right moment.

Startups often make the mistake of viewing innovation as a set of unconstrained activities with no discipline. In reality, for innovation to contribute to growth, it needs to be designed as a process from start to deployment.

When startups lack a formal innovation pipeline process, progress tends to be based on delivering the best demo or slide deck. Instead, there is a necessity to talk to customers, build minimal viable products, test hypotheses or understand the barriers to deployment.

Startups need a self-regulating, evidence-based innovation pipeline, a process that operates with speed and urgency, and that helps to curate and prioritise problems, ideas, user testing and feedback. Most importantly, minimal viable products and working prototypes will have been built and road tested.

A clear-cut innovation process inside a startup is one focused on ideation, a process that hustles game-shaping ideas by creating customer solutions that deliver remarkable impact at the intersection of purpose and profit – not just ‘disruption’.

Ideation is the act of moving ideas down the track from conception to implementation. It seeks to create clarity and a pathway from imagination to execution. Ideation embraces lean startup principles – hold your vision, but take small steps, and focus on learning as a true measure of progress, providing life-shaping insights that change our trajectory or sober us with reality that kills the ‘awesome’ idea we once thought we had.

While there is no perfect ideation to optimise innovation outcomes, the following is a helpful process that I’ve used and refined over the years while working with numerous startups:

Curation On a regular basis – say every three months – startups should get out of the building and talk to potential users and customers to help explore and identify new solutions that can be deployed rapidly. Gaining reflections to find where a given problem might exist helps to find opportunities for commercially available solutions to problems.

This process also helps identify who the customers for possible solutions would be, and even what minimum viable products might look like. Some ideas may drop out when you recognise that they may be technically or financially unfeasible, but that’s validated learning.

Prioritisation Once a list of innovation challenges has been curated, it needs to be prioritised. One of the quickest ways to sort innovation ideas is to use the McKinsey Three Horizons Model: Horizon 1 ideas provide continuous innovation to a company’s existing business model and core capabilities; Horizon 2 ideas extend a company’s existing business model and core capabilities to new customers, markets or targets; Horizon 3 is the creation of new capabilities to take advantage of or respond to disruptive opportunities or disruption.

There will be some projects in Horizon 0 – graveyard ideas that are not viable or feasible.

Frame the challenge From the prioritised list, articulate, document and frame what the challenge you’re seeking to solve for is a foundation for the next stage. Jumping to a solution before understanding the context of the problem is premature. Ask yourself questions like What is the real problem we’re trying to solve? or What is the real job to be done?  are essential to ensure we don’t leap with a populist, unstructured idea.

Exploration & hypothesis testing Ideas that have passed through the filters so far now enter an incubation process, which aims to deliver evidence for data-based decisions. For each idea, build out a business model canvas. Everything on that canvas is a hypothesis, designed to be tested.

The framework gets you talking to potential customers. This is another major milestone: to show compelling evidence that this project deserves to move into engineering or, alternatively, that it should be off the list and killed.

Diverge & Converge The main goal of this element in the process is to generate lots of diverging ideas from the results of the hypothesis testing, all of the crazy thoughts you have on potential options and alternatives. Make it a rule at this point to never say ‘no’ to any idea, but keep the time defined to give focus.

Once you have a ton of ideas, it’s time to converge through design thinking, to identify common threads, building upon each idea by connecting them, and then determine one or two ideas that are desirable, feasible, and viable. Now is the time to stand back and ask: Does it make business sensee?

Prototype One of the most practical ways to test out a solution is to build a prototype. This doesn’t have to be an elaborate or costly endeavour. Whether the prototype is digital or done through user testing with hands-on customer experience, the goal is to uncover new insights. A good prototype will force idea refinement and iteration.

Iterate Forward A startup should have a culture committed to constant experimentation, and iteration will continue to foster and accelerate this thinking. It will take a few cycles to get a process working with the required diligence and patience, but keep iterating forward. What’s next?

Refactoring: At this point, it’s time to integrate the innovation into the existing business model. Trying to integrate new, unbudgeted, and unscheduled innovation projects into a startup results in chaos and frustration. In addition, innovation projects carry both technical and organisation debt for startups.

Technical debt is often ignored in order to validate hypotheses and find early customers. This quick and dirty development can become unwieldy, difficult to maintain, and incapable of scaling.  Organisational debt is the culture compromises made to ‘just get things done’ in the early stages of an innovation project.

The solution is refactoring, fixing stuff to make it more stable, and avoid the myopia of innovation over business as usual. Whilst technological advantage degrades annually, standing still means falling behind, so it’s all about having the business case from the early stages in the process to act as a bookmark for reference.

Startup innovation is hip, complete with beards and fancy coffee machines, but to do it right can’t be left to chance and serendipitous moments, it requires a rigorous process. Innovation means you have to move the needle, not just vanity of being a ‘unique, disruptive startup’.

For startups, ingenuity and rebooting the offering is essential, but It’s important to be clear about the difference between invention and innovation. Invention is a new idea. Innovation is the commercial application and successful exploitation of the idea. Anyone can invent, not everyone can execute.

Think big, start small, keep moving. Like the Rubik’s Cube, if you are curious you’ll find the puzzles sat in the palm of your hand. If you are determined, you will solve them, with deft visualisation, ideation and execution.