When Covid-19 burst upon the scene this past march, startup ventures faced dramatic shifts in markets and the importance of strategic agility became undeniable: If you wanted your venture to survive, let alone thrive, business experts almost universally advocated deep internal cuts accompanied by pivots to new markets and business models. However, many well-funded startups in hard-hit industries such as hospitality, travel, and furniture to name a few — shunned strategic agility (changing product-market fit) for stability and resolutely stayed the course with only minor tweaks.
However, staying the course doesn’t mean total inaction. Across a number of ventures, the authors found some commonalities, a set of rules that the “stay-the-course” companies followed. The following is a brief summary of the rules summarized by the authors:
- Immediately slow down. Entrepreneurs tend to run at breakneck speed. However, when their markets started to meltdown, rather than slamming on the brakes, they downshifted in order to listen to customers, track the market, conserve resources, and enhance their ability to change direction if needed.
- Take time to reaffirm your basic thesis. Slowing down also allowed these entrepreneurs to make double sure that their view of their future marketplace was still valid.
- Trim fat, not muscle. Part of slowing down is trimming operations, but only around the margins.
- Watch new data like a hawk. Within days of the lockdowns starting, many businesses saw demand for their products and services start to plummet. However, rather than overreact, they started looking at all kinds of new data. Rapidly absorbing this new data has paid off in spades for many new ventures. For example, administering the Line-of-Sight assessment will quickly expose any hidden vulnerabilities that have risen inside the business and put the executive team in the proper position to take the appropriate corrective actions.
- Test for weaknesses and prepare internally. Companies should apply increased scrutiny not only to the marketplace but also to their own internal points of failure. You can stay the course only if you stay ahead of the organizational disruption that external shocks can cause.
- If and when you do decide to pivot, consider doing it explosively.
Methodically not-pivoting can pay off — in the right situation, that is. Staying the course, with minor adjustments, has proved to be a winning strategy for many ventures. The lesson here is that when a crisis hits, it pays to resist knee-jerk reactions on how to handle external shocks. Instead, ask what is going to work best for your company, based on the particular realities of its business. Ignoring the playbook of rapid cuts plus strategic pivoting can be the smart move.