Great strategy requires situational awareness
I discussed in a previous article the importance of a strategy to position your startup for success. I defined strategy as the attempt to get desirable ends with available means. So, a strategy is the art of building a system to find, formulate, and develop a doctrine that will ensure long-term success if followed faithfully. You want to deliver a unique mix of value with your activities and moves, i.e., the strategic choices for your own company.
I’m personally fascinated by Sun Zue’s Art of War and how he defines strategy on any battlefield. As a refresher, Sun Zue establishes a conflict between two opposing forces (think of your startup and the status quo). That conflict is governed by five main factors: purpose, landscape, climate, doctrine, and leadership. Understanding them and using available resources to exploit these factors in your favor are critical to a successful strategy.
Building situational awareness or understanding your environment is crucial in formulating an effective strategy. Therefore, I thought of focusing on situational awareness and its importance in forming a strategy in this article.
What is Situational Awareness?
Situational awareness is about your ability to identify the building blocks of your environment, i.e., market, technology, economy, etc., and events impacting these elements, i.e., changes taking place to each of these elements now and in the future. Effective situational awareness draws an accurate picture of the present without missing key impactful components and events shaping these components. It also entails a projection of their future status.
As an entrepreneur, many factors impact your situational awareness. But they can be divided into micro and micro trends. Macro trends are significant changes in the economy, politics, etc. Their effects might play with or against you. Micro-trends are scoped by your target customers and their specific environments that might work with or against your solution. You must constantly zoom in and out between micro-trends and macro-trends to formulate a balanced situational awareness. I’m listing some of them below. It is tricky for many. You can get lost as you switch between the micro and macro trends. It depends in many cases on your gut feeling, biases, and previous experiences. That’s why it is an ongoing contest. Below are some of what you should consider in the early stages of your startup.
Macro or Mega Trends
Economic situation. These are changes in the economic mood, priorities, and where money and wealth are flowing. Of course, the economic trend is a complex topic. But to make it a bit more relevant, think of the impact of strained global supply chains and high inflation rates on where the next set of investments will be.
Blackswan events. These unexpected events change everyone’s perspective, such as the COVID-19 pandemic. These are impossible to predict. But you can figure out their impact when they take place. For example, COVID-19 made securing online systems more critical since remote access is becoming prevalent.
War and politics. These are country-level or global levels that change countries and governments' priorities, such as the war on Ukraine right now.
Technology. The emergence of new technologies and accelerated change creates new possibilities and opportunities. For example, Uber and other shared economy companies wouldn’t be able to thrive without smartphones and their ubiquity.
Behavioral changes. You need to focus on changes in individuals' and groups' behavior that will impact the perception and adoption of your solution/product. Examples of that:
The emergence of a group with needs matches what you offer, i.e., baby boomers' demand for longevity and health products.
Change of influence of a group. For example, software developers now influence the use of infrastructure after cloud computing became dominant.
Movement of wealth and economic influence. These are microeconomic factors that will impact the decisions to buy your product. You must understand the ability of your target groups to pay for your product and whether you will be able to build a sustainable business out of it.
How to Form Situational Awareness?
Mica Endsley provided one of the most widely used situational awareness (SA) frameworks. The framework illustrates three stages of SA formation:
Perception (Level 1), is the perception of status, attributes, and dynamics of relevant elements in your environment. This is the basic level of SA. It requires that you have the right lens and the proper level of abstraction to do it properly. It is the ongoing process of monitoring, cue detection, and the basic recognition of objects, events, people, systems, and other factors. You also need to identify each element’s current state.
Comprehension (Level 2) connects the observed elements in level 1 to recognize emerging patterns, interpret the collected cues, and evaluate the impact on your strategy and decision-making.
Projection (Level 3) is the highest level of Situational Awareness. Endsley defines it as the ability to project the future actions and changes of the elements you identified in levels 1 & 2 in the perceived environment. This highest level of SA is attained through the knowledge of the status and dynamics of the elements and comprehension of the situation, and then extrapolating this information forward in time to determine how it will affect future states of the operational environment.
Startup Timing and Situational Awareness
It is easy to wait too long or indefinitely until you see market conditions are in your favor. However, this is not an invitation to become passive and wait for the situation to become in your favor. Instead, you want to understand the landscape and environment in which you will operate and make sure you reduce the unknowns. Your goal is to make choices and decisions that will increase your likelihood of success.
You and Your Situational Awareness
Don’t isolate situational awareness from your self-awareness. An extraordinary general startup opportunity may not be an excellent opportunity for you specifically. Your current circumstances may not work for you to build a startup and go through that long journey. Therefore, building self-awareness is critical to forming a strategy for your next startup venture. Self-awareness is how you consciously know and understand your character, feelings, motives, and desires to be an entrepreneur. I’m covering this in different venues. Listen to my recent entrepreneurial conditioning podcast series. I also hold every few weeks a workshop about the same topic. Stay tuned!
It is worth mentioning that your self-awareness will help you bring the right people around you to uncover your blind spots. Your ability to form situational awareness is governed by your abilities, experience, and training. Therefore, understanding your limitations will help you bring the right skills and minds to join you on your quest. You need to develop that clarity about where you stand. However, as an entrepreneur, you still need to drive clear goals and collect every possible piece of detail about what impacts your strategy. This will be the foundation for your team to solidify your strategy.
Your Startup and Situational Awareness
Your startup is your “army” to win the war against that status quo. You need to look inwards constantly and understand how your startup can work with or against your strategy. If you are the CEO of your company, you should know what your startup is capable of as much as you know yourself! Otherwise, your strategy will fail at the first steps of execution. Therefore, your startup abilities and limitations are part of formulating a solid strategy. Such knowledge will help you decide where to invest and make a change within your startup.