Recently I was talking to an entrepreneur that was making good progress in his startup. After signing a couple dozen customers it became clear that there were two strategic directions to take the business, each with their own pros and cons. We got to talking more about the strategic directions, and even after drilling in, both appeared favorable.
Here are a few questions to ask when comparing two strategic directions:
- Of the existing customers, how many fit the proposed directions? How many are good fits vs OK fits for the new directions? Why?
- Which direction has the largest total addressable market?
- Which direction is growing fastest?
- Which direction has the most competition? How innovative is the competition (e.g. most incumbents have difficulty innovating)?
- Which direction excites the team the most?
Tweaking the strategic direction in a startup is more common than expected. In fact, there are many success stories of startups that started doing one thing and ended up doing something entirely different. Regardless, comparing strategic directions is a normal part of the journey.
What else? What are some more thoughts on comparing two strategic directions?