Many startup founders view strategy as something for large companies, but it is extremely important for startups in terms of operational management, business continuity, day-to-day decision-making, and securing funding.
Roope Pietilä a business coach and business angel at Yritystehdas, compares strategy to a roadmap: you need to know where you want to go, how you’ll get there, and, above all, why you’re going there.
With over 20 years of experience, Roope points out that a startup doesn’t create a plan just so it can be carried out as is. “It’s done so that the entrepreneur can answer the question: ‘What exactly are we doing right now?’ and also recognize when the destination or roadmap needs to be changed.”
In this article, we’ll delve into why a startup’s strategy requires more attention to resilience than usual—and why every founder should beware of the “Mount Stupid” peak, where the apparent ease of things is a deceptive illusion.
Strategic Resilience as a Startup’s Lifeline
According to Roope Pietilä, the processes involved in a startup’s strategy and those of a traditional growth company may not differ significantly, but for a startup, resources are more limited and the risk of internal volatility is considerably greater.
Internal volatility can be more dangerous for a startup than market changes.
The business environment is changing rapidly right now. Both startups and larger companies must be very agile in their strategic approach. However, in addition to external changes, startups face a major risk of internal volatility.
“A more established company already has a staff and a customer base, whereas in a startup, everything depends on just a few people, and the customer base is still very limited. This creates the potential for massive internal upheavals.”
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The importance of the team: If one person leaves a three-person startup team, the company immediately loses 33% of its expertise and workforce. This can paralyze operations. In an SME with 100–200 employees, resignations on the same scale (33%) are rare, even unlikely.
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Customer relationships: A startup may have only two pilot customers at the beginning. If one of them is dissatisfied, the startup could lose half its customer base at once. An established company rarely loses 50% of its customers all at once.
This difference in scale requires startups to take special precautions, which are addressed in strategic planning.
Avoid the dangerous “Mount Stupid” peak
Who wouldn’t be excited about their own business idea? It’s treated like a child of one’s own, which helps drive you to pursue your goals and overcome obstacles. According to Roope, this enthusiasm is often accompanied by overoptimism, which can lead to unrealistic expectations regarding the time and money required: “Things typically take more time and money than an entrepreneur initially estimates. The strategy must be resilient enough to ensure things don’t go awry. That’s why resilience must be built into the strategy.”
Strategy work is deceptively simple in its basic principles. For that reason, a budding startup entrepreneur may unwittingly find themselves climbing to the summit of “Mount Stupid.”
“Things typically take more time and money than an entrepreneur initially estimates. The strategy must be able to withstand things not going as planned. That’s why resilience must be built into the strategy.”
- Roope Pietilä, Yritystehdas
The “Mount Stupid” peak refers to the Dunning-Kruger effect, in which a superficial understanding creates a false sense of mastery: when the basics seem easy, an entrepreneur may think they’re an expert, even though they’re just at the beginning of their journey. In such cases, critical factors—such as the need for time, money, and mental stamina—are typically underestimated, and that poses a major risk to the company’s survival.
Strategic Resilience Is Key for Startups
A startup’s strategy must incorporate significantly more flexibility and buffers than that of a more established business. This applies to both timelines and the amount of funding sought.
“Strategy work isn’t difficult, but it’s deceptively easy to do it poorly.”
Roope Pietilä, Yritystehdas
Pietilä wants to share a message with all entrepreneurs: “Strategy work isn’t difficult, but it’s deceptively easy to do it poorly.” According to Roope, a strategy can be developed independently within a team, as long as you ensure that you see things clearly without overoptimism, identify your own competitive advantages, dare to question things, no single founder dominates the discussion, and resilience is baked into the strategy.
“A startup’s strategy is often subjective and full of over-optimism. An outside coach brings two things to the table: tools and the ability to challenge assumptions.”
If you need help with your startup’s strategy, our top coaches, like Roope, are here to assist Yritystehdas incubator clients.
