Strategic thinking is what separates successful startups from those that struggle. Strategy is about making clear choices about where to compete and how to win.

The Hedgehog Concept

From Jim Collins’ “Good to Great,” the Hedgehog Concept requires you to find the intersection of three circles:

  1. What can we be the best in the world at? - Not what you want to be the best at, but what you realistically can be the best at given your capabilities and constraints.

  2. What drives our economic engine? - How do you make money? What’s your path to profitability and sustainable growth?

  3. What are we passionate about? - What deeply motivates your team? What mission will sustain you through the inevitable challenges?

Your strategy should live at the intersection of these three areas. This creates a simple, focused plan that everyone can understand and execute.

Embrace Change as Default

In a startup, change is not the exception - it’s the rule. Execution involves constant change and adaptation. Your default should be to change unless it’s crystal clear that the old way is substantially better. This mindset helps you:

  • Respond quickly to market feedback
  • Adapt to new opportunities
  • Avoid getting stuck in outdated approaches
  • Maintain competitive advantage

What Makes a Real Strategy

Many companies have mission statements, values, and goals, but these aren’t strategies. A real strategy involves making hard choices about:

  • Which customers to serve (and which to ignore)
  • Which problems to solve (and which to leave unsolved)
  • Which markets to enter (and which to avoid)
  • How to differentiate from competitors
  • Where to invest resources for maximum impact

As Harvard Business Review notes, many strategies fail because they’re not actually strategies - they’re just lists of initiatives or aspirations. So make sure your strategy addresses all the points above.

The Five Questions Of Strategy

  1. What are our broad aspirations for our organization & the concrete goals against which we can measure our progress?
  2. Across the potential field available to us, where will we choose to play and not play?
  3. In our chosen place to play, how will we choose to win against the competitors there?
  4. What capabilities are necessary to build and maintain to win in our chosen manner?
  5. What management systems are necessary to operate to build and maintain the key capabilities?

📝 The Five Questions Of Strategy