Despite the streak of independence and self-guidance that runs through entrepreneurship, there is another side to founding and growing a company. This is the realm of entrepreneurial strategy, the sound principles that can take a startup from humble beginnings to a strong valuation and sustainable future.
The principles behind entrepreneurial strategy make up a distinct corner of overall business knowledge, and can be imparted through executive education. MIT Sloan Executive Education faculty members such as Erin L. Scott and Scott Stern have focused on these issues in their work, helping guide ambitious business leaders as they consider becoming founders — Scott and Stern accomplish this in their course Strategy for Startups.
What is entrepreneurial strategy?
Entrepreneurial strategy is the process of evaluating the best possible options and paths for a startup to take early in its lifespan, which can have long-lasting and far-reaching consequences for the business. These agile new companies are especially beholden to the strategic choices made by their leaders, as they typically have fewer levels of bureaucracy and lack the assets of a legacy business.
Professors Stern and Scott emphasize that the fundamental choices facing startup founders have many possible answers. Rather than falling back on go-to responses, each leader will have to decide for themself how to proceed through the entrepreneurial journey, given their unique circumstances.
Unlocking that kind of decision-making power means testing hypotheses and weighing options. Comparing options side by side when facing critical points is a simple but valuable approach — one that can point businesses to the right growth path for them, right from the moment of new venture creation.
The process of making important decisions will ideally lead up to a cohesive strategy and business plan that apply to the whole organization and its direction. Getting this point, in Stern and Scott's view, means finding sensible and complementary answers to four questions:
- Who are the company's customers?
- How is the business going to innovate?
- How is the company organized?
- How does the startup gain a competitive advantage?
A truly successful founder will tackle these points in a way that suits their unique skills and interests while preparing the company for ongoing growth and success in meeting its goals. Scott lays out a framework that allows a founder to lay out a solid plan for a business:
- Opportunity: The niche in the market the company will fill to make money.
- Unfair advantage: The founder's unique edge, based on their background or skill.
- Passion: The reason why the founder cares about the industry and business idea.
Between the key questions and the experts' framework, there's room for a founder to find their own path forward as a successful entrepreneur, one that will suit their unique vision but still keep them grounded in the fundamentals of their industry.
Learn more about the way effective decision-making can lead to a reliable foundation for a startup.
Why is entrepreneurial strategy important?
Entrepreneurial strategy matters because each startup should have a path to follow, a course of action that puts it on a path to growth, where it can seize potential opportunities. When a leader excels in strategic thinking, they can place their business on such a path. In the absence of this type of leadership, the company may end up directionless, spending money but not making progress.
Committing to a strong strategic framework doesn't mean that companies should be inflexible or lack creativity. Rather, it gives them principles and a mission to operate around, adding rigor to a business that is young and fresh in the market and helping it stand shoulder-to-shoulder with its more established competitors.
As part of Strategy for Startups, Stern and Scott emphasize that the process of establishing an advantage within a startup's market segment, an essential consideration, comes down to making effective decisions. These decisions will ideally form a strategy, rather than being impulsive or off-the-cuff.
It is possible to reconcile the vision of a decisive, visionary startup founder or successful entrepreneur with a sensible, strategic approach. Through exploration and experimentation, founders can determine what does and doesn't work for their specific companies, and then use their findings to inform an overall strategy.
The overall strategy guiding a company incorporates the business's approach to important concepts like:
- The company's go-to-market plan.
- Target market and audience segments.
- Pricing strategies for the business's products and services.
- Plans for potential organizational scaling.
Having that set of guiding principles to shape these strategic planning decisions can give the company a competitive advantage in building on its business plan and reaching its goals. This can also help it stand apart from less-prepared entrants to the same field.
Discover more about how executive education can empower startup founders' strategic visions.
Building an entrepreneurial strategy for a specific organization
The power of taking a strategic approach to entrepreneurship comes from applying strong, reliable principles to a field that is sometimes seen as being driven by factors other than business fundamentals. The idea that charismatic founders are born with all the skills and traits they need to succeed in business overlooks the fact that entrepreneurial strategy can be built.
Building up a capacity for strategic thinking allows founders to apply reliable principles and frameworks to their specific business ideas, industries, and concepts. Thinking rigorously about these aspects of business management helps these leaders control their own destinies, rather than being too beholden to booms and busts in their target market.
The adaptation of a few core principles is the major theme of developing a unique approach to entrepreneurial strategy. A great founder may have the natural magnetism to make people follow their vision or they may not — what matters more is the strong set of underlying principles that keeps the company on the right path to profitability and growth.
Fortunately, for ambitious leaders eager to step into the startup arena, those principles can be taught.
Read a firsthand story of a founder who honed his idea in an entrepreneurial course run by MIT Sloan Executive Education.
Develop entrepreneurship knowledge through executive education
Building the skills and thinking strategies associated with entrepreneurship can help business leaders when they're building toward a new launch, whether as a first-time or repeat founder. Enrolling in Strategy for Startups can serve as an important part of this continued executive education.
Scott and Stern have built their course on a foundation of their own business experience and cutting-edge thinking about the way the startup market works today. The professors use interactive lectures, case studies and exercises to prepare entrepreneurs to make the critical choices that appear early in any founder's journey.
In addition to the strategy implementation framework and evaluation methodology, Scott and Setern present in-depth descriptions of crucial choices founders need to make, along with insights into the necessary skills and behaviors to succeed in the field.
No matter which industry a prospective founder is considering for new venture creation, learning about entrepreneurial strategies is a way to acquire related knowledge. With these lessons in hand, it's up to that business leader to choose where they go next.
Does this sound like you? Learn all about MIT Sloan Executive Education's approach to the entrepreneurial journey in our innovation@work eBook and view more details on Scott and Stern's course, Strategy for Startups.