In my opinion, culture and strategy go hand in hand. I agree with Renn Vara – a leading coach who works on developing company culture at some of the most successful companies, when he says, “Many companies …have terrific strategies and no culture. I don’t know any great companies with great culture and no strategy.Seb Hempstead
In the startup world, anyone can come up with the next big idea. However, not everyone is capable of grasping it and making it available to the consumer. We’ve all heard the infamous startup statistics about how few businesses survive their first five years. Nobody would tell you that starting and running a startup in 2021 is easy.
The hardest part of succeeding in the startup environment is being able to steer your company on a road that increases its chances of surviving and growing rapidly. This suggests that you must implement a very strong expansion strategy. Fortunately, over the years, there have been many startup success stories, and we at Dynamic Business have worked tirelessly to share them with you to motivate you.
Enough startups have achieved unicorn status for us to recognise the importance of an effective startup strategy. Seb Hempstead, Vice president of Partnerships at GoCardless, joins us today to discuss what entrepreneurs must do to establish a startup development strategy to help their business achieve long-term success and growth.
Seb’s experience is more in B2B and B2B2C than in direct B2C. This is where he feels his strategic thinking comes from. He currently works in Fintech, and he has a background in SaaS Martech.
“Before I dive in, it’s worth noting that Strategy should not be an academic exercise, outsourced to consultants, documented and slipped into a drawer after a fair few grand has been spent on it. Nor should it be owned in the ivory tower, guarded as a well-kept secret. Strategy is a living, evolving process and should be understood at every level of the organisation.
“In my opinion, culture and strategy go hand in hand. I agree with Renn Vara – a leading coach who works on developing company culture at some of the most successful companies, when he says, “Many companies …have terrific strategies and no culture. I don’t know any great companies with great culture and no strategy.”
Strategy 1: Developing a successful Go-to-Market strategy
What problem do you solve, and how important is it?
Seb notes that any Go-to-Market (GTM) strategy should be based on a thorough understanding of the consumer and the problem that a business is solving for them. This defines the value provided to that customer. It’s important to keep testing this idea, especially in a new or rapidly evolving industry.
“You’re looking to understand the level of pain the problem you’re solving causes the customer and how motivated they are to solve it. It would help if you also understood how core the problem is to the customers’ business – there’s a huge difference between ‘nice to have’ and ‘must have’ solutions regarding strategy, market resilience and perceived value.
“To do this, those responsible for shaping strategy should stay close to customers directly and through the ‘front lines’ of the organisation – the Sales, SDR, Success and Partner teams. Don’t rely on CRM ‘lost’ notes and analysis. Run interviews with lost prospects to find out why you lost them. Do the same with customers to find out why you (really) won and dig deep into any churn.
“I currently run Partnerships at GoCardless, and this is a hugely rich source of information for us. Our Partners are an extension of our company and bring more stories, data and context from outside the organisation, helping us constantly refine our strategy. For those who do not work with collaborators, make it a priority to seek as much outside perspective as possible. You’ll be pleasantly surprised at what you might find.
The watchword here is ‘focus’
Seb insists that losing sight of the core problem(s) can lead to missed opportunities and, if unaddressed, irrelevance and openings for competitors. “It’s easier to fall into this trap than you think, especially when you’re in the thick of growing a business or a more mature business in supposedly ‘stable’ markets. As you develop, data will always be a useful input to strategy development, and it’s absolutely worth the investment – but beware of ‘analysis paralysis’.
“The watchword here is ‘focus’ – too many companies try to solve too many things for too many customers. If you find that you solve lots of problems for lots of companies, pick the ‘best’ problem to solve, crush that segment and then move on.”
Strategy 2: Be aware of your demand type and its implications
“I’ll illustrate this with an example: GoCardless originated as a way of solving an existing problem in payments. Eleven years ago, the founders saw Direct Debit as a fantastic payment option that just wasn’t available to much of the market due to its complexity and the banking relationships required. We replaced existing line items for recurring payments – often credit cards – which were (and remain) more expensive and less effective ways of making recurring payments,” Seb says.
“Over our 3.5 years’ operating in Australia, we learned to help recurring revenue businesses retool Direct Debit from a ‘clunky’ payment option to instead understanding how to best deploy it to drive specific business outcomes such as reducing failure rates, increasing customer acquisition, and improving cash flow.
The inbound marketing trap
“A trap I’ve seen companies fall into is being completely fuelled by inbound marketing in the early days. Whilst it’s great to see the leads flood in, be clear on whom you want to win and invest in going out to win them. This will help test whether your assumptions of the “perfect account” are right and understand better what’s needed to win those accounts, Seb says.”
“You must always be acutely aware of Geoffrey Moore’s “Chasm” – the gap between the early adopters and the majority of the market who are averse to risk and change (often with good cause!). But this is where most of the market and money sits. Your GTM strategy for each audience and for crossing that ‘chasm’ must be different!”
Strategy 3: Know your customer’s ecosystem, how they buy and what they need
Seb adds that one outcome of doing the work above is that you’ll start getting sight of the customer ecosystem – how they buy, where they get their information from, whom they’re influenced by and the like.
“If you need to, do more homework. Where appropriate, seek to become an active, trusted contributor within the ecosystem. As a payment provider, we deeply understand our customer ecosystem, and as an organisation that goes to market through our partners, we work closely with Marketing to help map and shape that ecosystem as part of our GTM, and new Partnerships are sought out based on this thinking.
“Now that you have clarity on the customer, the problem, how it’s currently being solved, the ecosystem etc., you can shape your product strategy accordingly – for me; this is the interlink between GTM and Product strategy.
“Early stage companies should look to develop a ‘minimal viable whole product’ that takes into account your own product but also the services that would need to solve the problem completely, including third-party products and services.”
Q: What components form your GTM strategy?
Seb Says that a good GTM strategy is not something to be outsourced or relegated to a drawer, but there’s much uncertainty about how to do strategy well.
“Here, I recommend using the approach set out in Playing to Win by Roger Martin and AG Lafley, the P&G CEO from 2000-2010 and then 2013-2015, who was often recognised as making P&G much more consumer-focused.
Their book is full of useful information, but to me, there are two core takeaways:
The process: start with the strategic problem, develop ideas on how to solve them, narrow that to two options and then deep dive into those before you make a selection. This moves the time-consuming investment in data to the end of the process and maintains focus on two things — instead of investing time and energy into investigating a slew of options right at the beginning.
“It also makes you ask an important question that can unlock a lot of forward-thinking for GTM and move you away from being limited by how things are today: “What would need to be true for this to be a great strategy?” Believe me, when used correctly, this question can be powerful.”
The structure: Martin and Lafley use a structure that pulls in what we discussed above in a way that interlinks;
- What’s the winning aspiration – what is it you want to achieve?
- Where to play – in which or with which customers, regions, products, etc., are you aiming to win?
- How to win – what will you do differently in your strategy to win with that segment?
- What capabilities are needed – what do you need to be good at to support the above?
What infrastructure is needed – what do you need to make sure you’re able to track progress and support winning?
“Using this process will help you structure your thinking but also invest the heaviest lift on the shortlisted options instead of generating too much analysis on too many options. It’s a more efficient and faster way to do strategy well.
“There is such a thing as a bad strategy (having no strategy fits in this bucket!). On the flip side, a good GTM strategy will positively impact your business regardless of size and maturity. You can do this if you’re ten people or 10,000 people strong.
“Once you’ve done all this great work – share it – not just internally but with your Partners too. Help them understand what it is you’re looking to do and how they fit into that, look to understand theirs and how you can help them achieve their own goals. I’m passionate about GTM strategy because I’ve seen the positive impact it can have on businesses of all sizes. I hope this and the referenced resources help you on your GTM strategy journey.”
Q: How will FinTech affect businesses and consumer resources over the next two years?
Fintech, or financial technology, is drastically changing the finance and other business sectors. Startups are flooding the market with profitable and scalable ideas that transform how things are done. The rate at which FinTech is evolving has ensured that the popular segment will contribute to most of the income generated by the financial industry.
Seb believes that by emphasising the use of open banking and new fast payment rails, new value can be unlocked for both consumers and companies.
“Like water, most payments want to find the path of least resistance from a process and cost perspective. We believe that path is account-to-account. As well as helping forge that path, we’re focused on leveraging open banking and new instant payment rails to unlock new value for businesses and consumers that were cost prohibitive just a few years ago.”
“There are many ways fintech can help the average SMB, from automating routine tasks to free-up employees for more value-add activities, to providing detailed data which leads to new insights. Another great example, which can be hard to do alone, is expanding into new markets.
“One company we’ve worked with is Deputy, a SaaS platform for employee scheduling and workforce management. Deputy needed a payments partner to support its operations in Australia, the UK and US. Within three months, it was live worldwide with a fully functioning and automated Direct Debit system.
“PayTo is another great example of how fintech can help SMBs. It’s a payments innovation unique to Australia that impacts our local GTM and will likely have ramifications for the wider payments world as other countries watch and learn. Our role is to help local SMBs understand how it can help their business grow faster and more efficiently and share the learnings globally to help the broader payments community understand the program’s benefits and how it may impact their market.”
Seb’s favourite prediction for the fintech business
“Perhaps a little controversial, but we’ve seen the market value challengers that present a clear path to the future– higher than legacy players, even where the revenue comparison favours the incumbent. Consider the valuation of Tesla vs Ford.
“To some extent, this recognises the challenges and risks incumbents face in transforming legacy businesses, even fantastic ones. This goes beyond machinery and processes to the disruption of the very cost structures of these businesses.
“Payments are no different. Legacy payment systems built on credit card networks will find it hard to transition to the new, lower-cost, account-to-account environment. It’s not the end of these payment options; I was told “there are no cliffs in payments. But are we seeing the beginning of the end? Perhaps a valuation of GoCardless higher than Mastercard or Visa will be a clarion call for the industry…”
Visit GoCardless here.