Peter Drucker famously said that the business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Many modern startup Guru’s paraphrase this to claim that startups have only two functions development (of code or product) and sales. There seems to be a particular angst against having a strategy function. It has become fashionable to claim that start-up strategy is what the founders squeeze within 60 mins over a weekend dinner or drinks.
Catchy though that quip is, start-ups who say are perhaps no different than Gob Bluth of Arrested Development, who when asked for a business model, asked his secretary to be the model. Startups can forget, only at their peril, that strategy is the compass that keeps a startup oriented when the terrain gets uncertain. Startups do need to think on their feet. And the strategy need not translate to a policy carved in stone. But an effective strategy sets a direction and offers guard-rails while permitting exploration and deviation.
Whether it’s a dedicated strategist or just few founding members focused on the big picture, somebody must bring clarity and cohesion to an otherwise chaotic environment. Must answer the fundamental questions: Where are we headed? What markets should we focus on? Which customer problems are worth solving? Most importantly, what should we not do?
This last part—choosing what not to do—is often overlooked. Strategy isn’t just about picking a path but cutting away distractions and dead ends. Startups face countless opportunities and shiny objects, but spreading too thin can kill momentum. A clear strategy function acts as a filter, helping teams say no to distractions and yes to what aligns with their core mission.
Another danger is pivoting too frequently. While startups must be flexible, constantly shifting direction can confuse teams, frustrate customers, and drain resources. Without a clear strategy anchor, every new idea can feel like the “next big thing,” leading to a lack of focus and execution fatigue.
Moreover, having a formal strategy function can reduce the risk of drifting aimlessly. Without someone keeping an eye on the plan, startups may find themselves stuck in “execution mode” without stepping back to assess if the product still fits the market or if the business model needs tweaking. In volatile markets, this kind of course correction is vital.
Startups off-course are necessarily scrappy. They operate with lean teams, tight budgets, and a relentless drive to prove their ideas in the market. Given this resource scarcity, the idea of carving out a dedicated “strategy function” might seem like a luxury. After all, many startup teams wear multiple hats—founders might be hustling on product, fundraising, and customer development all at once. So, do they need a formal strategy function merely to keep them on course?
Moreover, startups cannot afford “paralysis by analysis.” A formal strategy team might overthink or slow down decisions, which kills the rapid iteration startups rely on. Startups need to balance planning with action, and too much strategy talk can bog down momentum.
Given these realities, many startups to make strategy a habit by integrating it with regular governance meetings amongst the founders.
- Short but formal & frequent strategy sessions
- Continuous market analysis and customer/prospect feedback loop
- Iterative goal setting and review
- Encouraging strategic thinking across all levels
This model respects resource constraints while ensuring strategy remains part of the conversation. Maintaining discipline is crucial, and so long as that happens the startup has a strategic compass—someone championing tough choices about what to pursue and what to drop.
The risk with this model is that the founders caught up in the day-to-day grind may miss the forrest for the tree. A board of advisors comprised of seasoned experts can help provide the big picture. Such a board brings fresh perspectives, and hard-earned wisdom can act as an informal strategy function by challenging assumptions, offering market insights, and helping founders think through critical decisions. Such strategic advisors come without the overhead of a full-time hire, and can provide objective guidance that prevents both blind spots and reactionary pivots. This outside lens can be a lifeline for startups that lack a formal strategy team but still need a steady compass to navigate uncertainty.
In the end, strategy isn’t just a plan; it’s the art of saying no. But saying no to a strategy function, derails the startup from mastering that art that can mean the difference between survival and success.
