wins rey ST Strategy for Start-Ups by Joshua Gans, Erin L. Scott, and Scott Stern au Tre am The AS A START-UP, RapidSOS was an easy sell: It would bring 911 calls into the smartphone age. Emergency-response systems had evolved in a premobile era, which meant that few of them could accurately identify the location of callers who were using mobile phones, com- promising response times and medical outcomes. The founders of RapidSOS-Michael Martin, an HBS graduate, and Nick Horelik, an MIT engineer-had developed a way to transmit mobile phone loca- tions to existing 911 systems that would require only minimal adap- tation on the part of other players in the emergency-services sector. After attracting early-stage financing at business plan competitions, Martin and Horelik reached a crossroads: How should they take their technology to market? The answer wasn't straightforward-in fact, they identified four possible paths. (See the exhibit "The Entrepreneurial Strategy Compass.") They could be wildly ambitious and attempt to replace the emergency-response system altogether-creating an "Uber for ambulances." They could try a classic disruption strategy-initially targeting poorly served populations, such as people with epilepsy, with the intention of eventually expanding to a wider swath of cus- tomers. They could avoid direct competition altogether, either by helping incumbents modernize their operations-perhaps working with 911 equipment suppliers such as Motorola-or by partnering with insurance companies, which ultimately cover the cost of ambu- lance service.GANS, SCOTT, AN Many entrepreneurs, operating in the fog of uncertainty, worry that exploration will delay commercialization. They go, therefore, with the first practical strategy that comes to mind, deriding the deliberation and planning that accompany careful strategizing. As Richard Branson has famously claimed, "In the end you [have] to say, 'Screw it, just do it' and get on and try it." There are times when that approach works, of course. But usu- ally such ad hoc experimentation should be avoided, even when it requires few resources. Entrepreneurs who commit to the first promising route they see leave their start-ups vulnerable to compet- itors that take a less obvious but ultimately more powerful route to commercialization and customers. Shai Agassi, for example, spent almost $1 billion building an ecosystem to support Better Place, his and how to position "swappable battery" approach to the electric car business. Elon Musk's more deliberationwise approach to developing an inte- de sidebar "The Fo grated, highly reliable Tesla turned out to be a smarter strategy. castins are interdeper And that's not the only problem with an action-first philoso- phy. Founders are both more confident and more persuasive to eupany's organizat investors, employees, and partners when they can demonstrate an idea's potential across multiple strategies, validating the underlying assumptions and strength of the idea itself. catins with resource Is there a way to think through your strategic options without they probably already slowing down the process too much? After working with and study- age in market res ing hundreds of start-ups over the past 20 years, we have developed a framework, which we call the entrepreneurial strategy compass, red And they can d that allows company founders to approach the critical choices they fay in contrast, la face in a practical and clarifying way. It delineates four generic go- Forever, that can act to-market strategies they should consider as they move from an idea to the launch stage, each of which offers a distinct way for the ven- e historical data, ture to create and capture value. as may create bil is to nobnotal . The Entrepreneurial Strategy Compass At the heart of our approach is the recognition that a go-to-market strategy for any innovation involves making choices about which customers to target, what technologies to apply, what organizationalIdea In Brief The Problem delay commercialization. The stra- In their haste to get to market, en- tegic commitments they make in forks, of course trepreneurs often run with the first moving forward limit their ability to pivot. popION 39 plausible strategy they identify. As a result, they end up losing out to The Solution wutoo ou second or even third movers with Start-ups can improve their superior strategies. chances of picking the right path Why It Happens by investigating four generic go- to-market strategies, articulating In the innovation space it's easy to get overwhelmed by the apparent multiple plausible versions of those range of opportunities. Entrepre- strategies, and choosing the one neurs fear that spending too much that aligns most closely with their develop time weighing the alternatives will founders' values and motivations. arter strate on-first ghi identity to assume, and how to position the company against which re persuade competitors. (See the sidebar "The Four Decisions.") To complicate demonstras matters, the decisions are interdependent-the choice of customers the under influences the company's organizational identity and its technology options. tions wither For corporations with resources, the four decisions involve ana- th and stud lyzing data they probably already have. They can also quite often afford to engage in market research and experimentation along e develop multiple fronts. And they can draw on prior experience. A start-up y compa on a shoestring, in contrast, lacks a history and the knowledge it toices the brings. However, that can actually be an advantage, because prior enerice experience, historical data, and commitments that drive exist- m an ida ing practices may create blind spots for established corporations, the VE possibly even causing them to overlook innovations that pose an existential threat. Nevertheless, start-ups may ultimately face com- petition when incumbents wake up to new innovations, and they will definitely face pressure from other start-ups trying to beat them to market. Entrepreneurs may feel overwhelmed by the vast number of choices they face, even though some paths can be dismissed as impractical, and some won't coherently mesh. Our research 73STERN The Four Decisions AT LEAST FOUR DOMAINS of decision making are crucial for every venture Create and Although any company will face additional choices that are particular to it's often using a pe context, a start-up that has not wrestled with at least these four decisions is protect intalla is illustrative. unlikely to create and capture value on a sustainable basis. Amazon's story For example. Customers proprietary Identifying customers and understanding their needs is usually the first step this the so in any go-to-market strategy. But the target customer is not necessarily the diners to swas an being an first customer-and it is important that you understand the relationship be- nd it tween the two. You validate your product by getting the right early adopters. over cust Amazon's decision to initially target book readers was a strategic choice. it's go the global standard leadership recognized that books were a beachhead from which the company asintegr it licenses could expand into other retail categories. It Sony Bose, Technology Technology and customer choices are interrelated. Amazon could have built a simple online ordering system to service existing stores. Instead its goal was to let consumers buy the long tail of books that could not be stocked Intellectual Arch physically at the local mall. Thus the company had to invest beyond trans- action services to build a database and a search engine capable of guiding property readers through millions rather than thousands of books. Identity, Culture, and Capabilities Choices in this category should both create a narrative about what the com- pany will stand for and communicate to all stakeholders what behavior to expect and what capabilities it will develop. Readers loved Amazon's offer, Value chain Storm and Wall Street quickly saw how much money the company could make. But the produc athe form of Amazon's founder, Jeff Bezos, wasn't building a bookstore. He wanted to cre- Collaborate ate the "everything store." That would require that ordinary consumers trust they were getting a good deal, which meant that Amazon would focus relent- areading value for partners in lessly on lowering prices, despite pressure from investors for early returns. sing rabe chain. Execute quick aft Peapod became the leadi Competitors here grocer by fitting into-an Amazon defined its competition as other retailers and chose to compete ag- in the grocery industry. gressively by offering consumers more choice, greater reliability, and lower prices. In its early days it could easily have chosen to work with existing retailers-perhaps even defining them as customers. Competitors would have been other search and logistics service providers, and the company could have established itself as a premium service provider by adding more value for booksellers.STRATEGY FOR START-UPS The entrepreneurial strategy compass strategic opportunities for new ventures can be categorized along two dimen- sions: attitude toward incumbents (collaborate or compete?) and attitude toward the innovation (build a moat or storm a hill?). This compass produces four distinct strategies that will guide a venture's decisions regarding customers, technologies, identity, and competitive space. The emergency-services pro- vider RapidSOS used the compass to explore its strategic options. Maintain control of the innovation and Create and control a new value chain, find a way to create value within the often using a platform business. existing marketplace. Focus on being an Protect intellectual property. idea factory. For example, OpenTable developed a For example, Dolby is the global standard proprietary platform that allowed setter for sound technology; it licenses diners to make reservations efficiently proprietary technology to Sony, Bose, and in so doing established influence over customer flow to restaurants. Apple, and others. RapidSOS could keep the Rapidsos could replace technology proprietary the existing emergency Build a moat and work with existing response system 911 equipment suppliers altogether. Intellectual Architectural such as Motorola to modernize operations. property RapidsOS could partner Rapidsos could first with insurance com- target poorly served panies (which ultimately populations (such as pay for ambulance Storm a hill epilepsy patients) and services); the product Value chain Disruption later serve a larger might take the form of swath of customers. a smartphone app. Collaborate Compete Focus on creating value for partners in Compete directly with incumbents. the existing value chain. Execute quickly. Take them by surprise with fast For example, Peapod became the leading execution. U.S. internet grocer by fitting into-and For example, Rent the Runway improving-the grocery industry. challenged high-end retailers by offering aspiring fashion-oriented women the ability to rent rather than buy designer clothes.GANS, SC suggests, however, that the four categories of the compass make the process manageable, getting young companies to workable go- and to-market strategies quickly and laying bare the assumptions that we they move fast a we two questions growth inform choices. To sort through potential strategies, every new venture must con. his Rather than seek to index to for a given sider two specific competitive trade-offs: for value creation Collaborate or compete? Working with established players provides access to resources and the be crafted with supply chains that may enable the start-up to enter a larger and better-established market more quickly. Then again, the venture may encounter significant delays owing to the bureaucratic nature er the four. of large organizations and may also capture a smaller fraction of that potentially larger pie. (The incumbent is likely to hold greater bar- gaining power in the relationship-particularly if it can appropriate actual Property Strat key elements of the start-up's idea.) The alternative, too, has pluses and minuses. Competing against atrant of the compass, established players in an industry means the start-up has more free- eat and retains control o dom to build the value chain it envisions, to work with customers houses on idea generation that the incumbents may have overlooked, and to bring innovations downstream, customer-f to market that enhance value for customers while displacing other- wise successful products. However, it means taking on competitors the to the customers of ir that have greater financial resources and an established business sinceming it will dict infrastructure. epartners for the ventu tuition, because coop Build a moat or storm a hill? Some companies believe that they have more to gain from maintain- bets' activities, the s ing tight control over a product or a technology and that imitation technology investme will leave them vulnerable. Thus they invest in protecting intellec site start-up's iden tual property. Formal IP protection, though expensive, can allow a ted in its developme technology-driven start-up to exclude others from direct competi- tion or to wield significant bargaining power in negotiations with a trough chosen in supply chain partner. But prioritizing control raises the transaction small number of m costs and challenges of bringing an innovation to market and work terence for the in ing with customers and partners. sentation with de sound compa in the markkeIn contrast, concentrating on quickly getting to market speeds up commercialization and development, which typically occurs in close collaboration with partners and customers. Start-ups that choose to pursue this route prioritize the ability to experiment and iterate on their ideas directly in the marketplace. Whereas a strategy built on control can delay entry, start-ups focused on getting to mar- ket expect competition and use their agility to respond when com- petitive threats arise. They move fast and break things. Zeroing in on these two questions greatly simplifies the process of strategic reflection. Rather than seek to identify an a la carte combina- tion of choices that are "right" for a given idea, a founding team can consider the potential for value creation and value capture from the old greas various options that might be crafted within each of the four strategies. can appro Let's now consider the four. peting ze The Intellectual Property Strategy has more In this quadrant of the compass, the company collaborates with ith custoe incumbents and retains control of its product or technology. The g innovat start-up focuses on idea generation and development and avoids the lacingod costs of downstream, customer-facing activities. The core idea must compet be of value to the customers of incumbents; therefore, development ed bust choices concerning it will dictate which incumbents are the most suitable partners for the venture. In addition, because cooperation requires alignment with the incumbents' activities, the start-up will probably choose general- izable technology investments compatible with existing systems. imitaty Finally, the start-up's identity-as a kind of idea factory-will be intel reflected in its development of innovations that can be brought to allow market through chosen incumbents. But it will see itself as develop- ing a small number of modular technologies that can make a deci- sive difference for the industry and it won't engage in unstructured experimentation with every potential new technology. The sound company Dolby provides a quintessential example. Anyone in the market for a stereo system or watching a movie in atheater is guaranteed to come across the Dolby name. Dolby Lab- improv oratories' patented noise-reduction technologies, invented by Ray noticesew tex Dolby in 1965, became a global standard, retaining market lead- ually difficult ership for 50 years. Dolby technologies have been credited with Superi'sfor dramatic time elevating the emotional intensity of iconic films such as Stanley itments are built ladies are usually Kubrick's A Clockwork Orange and George Lucas's Star Wars. Yet Dol- by's multibillion-dollar valuation was achieved with only limited and commitme interaction with film directors, music producers, and audiophiles. preneur's identity proje The company has licensed its proprietary technology to many prod- uct developers and manufacturers, including Sony, Bose, Apple, and atby the young and the hu Yamaha. idoesn't fear the competitiv Entrepreneurs that pursue a strategy like Dolby's take maintain- ing and protecting their intellectual property very seriously. Care- cally conceived Premier , managed in compa care. he lean and qur with solid R&D, can create powerful defenses that allow a start-up to dugin aster child for this quadran preserve bargaining power over long periods of time. This strategy dictates culture and capability choices: The start-up needs to invest has its founders, Marc Ran not only in relevant R&D skills but also in smart and committed legal station that would leverage minds. The IP strategy has proved powerful not only in narrow cases like Dolby's but across whole industries, such as biotechnology; has difertesting their concept with leading technology platform players, including Qualcomm; and they created a service in t for market intermediaries, such as Getty Images. Fater than mainstream con latest blockbuster-to re The Disruption Strategy instrategy was to take ad This strategy is the polar opposite of an IP strategy. It involves a deci- entent and build a recomm sion to compete directly with incumbents, emphasizing commer- shomer relationships, er cialization of the idea and the rapid growth of market share rather duf movie rental that wou than control of the idea's development. Disruption entrepreneurs aim to redefine established value chains and the companies that a model obsolete. (Blockb dominate those chains. But the very nature of disruption permits ng mainstream custom others to follow. Thus the heart of this strategy is the ability to get Alability of its stores dr Runway is using the ahead and stay ahead. Although the word "disruption" connotes chaos, the entrepre- ewomen's high-end cl neur's initial goal is in fact to avoid poking the beast and provok- man and Jennifer Fl ing a strong (and potentially fatal) response. The start-up strives to ing the challenge buy dresses that sped ansurey But Sat30 STRATEGY FOR START-UPS sons surfy opuo quickly build capabilities, resources, and customer loyalty so that chieved NO M 1DIS S sean when the incumbents finally wake up, the start-up is too far ahead for imitators to catch up. oducers, an For this reason, the initial choice of customers is usually a niche technology segment-typically one poorly served by incumbents and off their radar screen. This allows the start-up to establish credibility and g Sony, Bose explore (before anyone notices) new technologies that may have ini- tial flaws but solid prospects for dramatic improvement. If they prove viable, these technologies are usually difficult for incumbents- Dolby's take mat whose capabilities and commitments are built around established cy very seriously technologies-to adopt. naged in combin The disruptive entrepreneur's identity projects hustle and verve. that allow a start The start-up is staffed by the young and the hungry (and not just for ramen noodles). It doesn't fear the competitive war to come; rather, of time. This ste it's eager to engage. It must be lean and quick to respond. And it is it-up needs toin intensely focused on growth. and committed Netflix is a poster child for this quadrant. Frustrated by movie- only in narrow ca rental overdue fines, its founders, Marc Randolph and Reed Hastings, as biotechnology envisioned a solution that would leverage the then-emergent tech- nology of DVDs. After testing their concept by sending a disc through ng Qualcomm; the U.S. mail, they created a service in the late 1990s that allowed cinephiles-rather than mainstream consumers who simply wanted to watch the latest blockbuster-to receive and return DVDs that way. Netflix's strategy was to take advantage of the "long tail" of (low-cost) content and build a recommendation engine that would involves a dec reinforce customer relationships, enabling the development of a izing commer new method of movie rental that would render the brick-and-mortar et share rather Blockbuster model obsolete. (Blockbuster initially dismissed Netflix ntrepreneur as not serving mainstream customers in a timely manner but then npanies the saw the profitability of its stores drop and ultimately disappear.) tion permit Rent the Runway is using the disruption playbook in its drive to bility to ge reshape the women's high-end clothing market. Two Harvard MBAs, Jennifer Hyman and Jennifer Fleiss, founded the company in 2009 entrepre after identifying the challenge that fashion-oriented women faced in d provok having to buy dresses that they might wear only once. Rent the Run- Strives to way developed an online site offering aspirational women the option 79ined the know rizont ath which it has le of renting rather than buying designer clothing and focused on sol ing the operational and logistical challenges of shipping dresses bag abilities ours who adopt Peapod's and forth. Although the company has yet to displace Neiman Marek and other more traditional players, whose focus is on wealthy hag ing on a single hon ategy does th couture customers seeking a personalized in-store experience, it by pertise and capable created a dedicated customer base that evangelizes the brand actor n to hiring s social networks. Its extraordinary growth is testament to the power neurial strateg eers who can of execution in the face of less nimble incumbents. role In addition t must be able to The Value Chain Strategy ers, and supply cha owners, or enginee Disruption is exciting; by comparison, a value chain strategy seems aroduct, it mu apabilities must somewhat pedestrian. The start-up invests in commercialization ent leaders, advantage for the est and day-to-day competitive strength, rather than in controlling the cant up's capa new product and erecting entry barriers, but its focus is on fitting un does enhance the c into the existing value chain rather than upending it. car cost adv A pedestrian approach can nevertheless create very lucrative in, the new venture can nation businesses. Consider Foxconn, the Chinese electronics manufac unable to replicate the v turer, which is one of the few global companies that can bring new products from Apple and others to market at scale and on time. The identity of such corporations arises from competence rather than chitectural Strategy aggressive competition. And although value chain entrepreneurs are driven by the customers and technology of other companies, they as the value chain strate focus on developing scarce talent and unique capabilities to become Preneurs who choose and preferred partners. lato have very high pub The value chain strategy is available to most start-ups. While onboth compete and ach the online grocery business Webvan, founded in 1996, was try- ing to disrupt the supermarket industry, Peapod became the lead- thot most ideas and in ing U.S. internet grocer by serving as a value-added complement to Elimain of Facebook an traditional retailers. (Webvan went bankrupt in 2001.) entrepreneurs who follow An early partnership with a Chicago-area food supplier, new value chain an Jewel-Osco, allowed Peapod to clarify who its ideal customers e may not be the orig were (professional women) and what they valued (the ability to engines existed pri repeat an order on a regular basis and to schedule deliveries for certain times, among other things). Whereas Webvan's disruption ask-but they bri strategy required reconceptualizing the entire grocery-shopping et of customer, te sted early to not chexperience, Peapod's more-focused approach allowed it to develop a meaningful value proposition for customers who were willing to pay a premium for automated ordering and delivery, result- ing in a profitable partnership with the supermarket chain Stop & Shop. Peapod gained the knowledge and developed the specialized capabilities with which it has led the online grocery business for nearly 20 years. Entrepreneurs who adopt Peapod's approach create and capture value by focusing on a single "horizontal" layer of the value chain in which their expertise and capabilities are unrivaled. In probably no other entrepreneurial strategy does the founder's team play a more important role. In addition to hiring salespeople who are focused on final customers, or engineers who can improve the technical function- ing of the product, it must be able to integrate innovators, business development leaders, and supply chain partners. The start-up's capabilities must translate into enhanced differen- tiation or cost advantage for the established companies. And even if the innovation does enhance the competitive position of the overall value chain, the new venture can prevail only if other players in the chain are unable to replicate the value it has created. The Architectural Strategy Whereas the value chain strategy is the domain of quiet achievers, entrepreneurs who choose and succeed with an architectural strat- egy tend to have very high public profiles. This strategy allows start- ups to both compete and achieve control, but it is out of reach for many if not most ideas and incredibly risky when it is feasible. This is the domain of Facebook and Google. Entrepreneurs who follow an architectural strategy design an entirely new value chain and then control the key bottlenecks in it. They may not be the originators of an underlying innovation- search engines existed prior to Google, and social networks prior to Facebook-but they bring it to a mass market through careful alignment of customer, technology, and identity choices. Facebook committed early to not charging users, even though the dynamics of 81Bill Aulet & CX social media would lock them into the platform. Google adopted the motto "Don't Be Evil" so that it could achieve dominance without Alexander hasen, however, the pushback that had plagued other digital firms such as IBM and s building and tes Microsoft. But in each case pivots were taken off the table. In other words, the risks for architectural entrepreneurs come from the fact work is chi "Bringing Science to that they may have only one shot at glory. (Remember the much- nothesis lamented Segway.) Martin, Jan W. Rivkin. It is perhaps not surprising that architectural entrepreneurs often end up trying to build platforms rather than products. Although platforms can be commercialized through the other strategies, if the num yields crucial core of a platform is closed, the entrepreneur may be able to control in particular paths with a new value chain. Consider OpenTable, an online restaurant-reservation service de dismissed owing to lac founded in 1998 by Chuck Templeton. Motivated by the challenge of making a simple dinner reservation over the phone, Templeton at the capabilities of the fo hypothesized that in addition to offering a reservation platform, a -in terms of cap successful online intermediary would have to solve the problem of restaurant-seating management. He decided to build systems that bedear, allowing the start combined restaurant reservations with seating and management software, putting him in direct competition with established point- on statery work. aties have been identifie of-sale vendors such as IBM and NCR. As Templeton recalls, OpenTable in its earliest days was "the one atmake a choice? Let's go running wire through the rafters to get power and connectivity." To set the next steps for the tip the market toward his start-up, he targeted the most influential restaurants first. "We were able to get the top 20 restaurants [in San suse systems-they used Francisco]," he says, "and the next 50 would all want to be where slated earlier, they could those top 20 were. There began to be a critical mass on the website." Templeton reorganized the value chain of the dining industry so that sting gul system with the internal operations of restaurants were integrated into custom- wa P strategy to collabora ers' first engagement with them: the reservation phase. OpenTable response sector. They co achieved control over valuable proprietary data on customer prefer- ences and demand and established a hard-to-dislodge platform that asurance companies is "table stakes" for a new restaurateur. This dominance underlay its gofeature for a corpor $2.6 billion acquisition by Priceline in 2014. Let's look now at how entrepreneurs can use the strategy com- in strategy to focus pass to decide among the four basic approaches. 82STRATEGY FOR START-UPS too sinauaidanju Making the Choice The first step is to fill as many of the quadrants of the compass as jer than products possible with strategic options. This is no simple task. It involves gathering additional information and experimenting to some degree (but commitments should be modest until a choice is made). Particularly effective approaches for start-ups can be found in Eric Ries's The Lean Startup, Alexander Osterwalder and Yves Pigneur's Business Model Generation, and Bill Aulet's Disciplined Entrepreneur- ship. Whatever framework is chosen, however, it should involve an explicit process of hypothesis building and testing-an observation al auoud au that was nicely made in "Bringing Science to the Art of Strategy," by A.G. Lafley, Roger L. Martin, Jan W. Rivkin, and Nicolaj Siggelkow aged uomen solve th (HBR, September 2012). This process at a minimum yields crucial insight into stumbling o build s blocks associated with particular paths within the compass. Some and man alternatives can be dismissed owing to lack of feasibility or lack established of alignment with the capabilities of the founding team. In other cases, the requirements-in terms of capital, commitment, and momentum-will be clear, allowing the start-up to focus on them to ays was "the make the chosen strategy work. nnectivity Once the alternatives have been identified, how should the entre- Ost preneur actually make a choice? Let's go back to RapidSOS. As the urants in founders debated the next steps for their idea-mobile-centric to be whe emergency-response systems-they used the compass to identify four strategies. As noted earlier, they could use an architectural strat- e website egy to replace the existing 911 system with an "Uber for ambulances." ry so the They could use an IP strategy to collaborate with existing players in uston the emergency-response sector. They could use a value chain strat- in Tab egy to work with insurance companies and other consumer-facing prefer partners, becoming a feature for a corporate smartphone app. Or they could use a disruption strategy to focus on a narrow customer seg- ment for whom emergency response is a priority-such as epileptics- and partner with patient advocacy groups to meet its needs. For each compass quadrant the company identified which cus- tomers to target, which technologies to focus on, what identity to 83GANS, SCOTT, AND STERN neurs off to reshape the e assume, and whom to compete with and how. All four paths looked part of it that they will plausible, which was a striking validation of the founders' idea. If or different reality. Which only one viable vision of the future exists, the entrepreneur proba hework is designed to help t bly doesn't have much of a business to begin with. channel imagination and co Having several good options need not be paralyzing. Quite sim ply, entrepreneurs should choose the strategy that aligns best with the purpose they originally brought to the venture. The Rapidsos originally printed in mission to improve services for specific patient groups led the team to focus with a high level of conviction on a disruption strat air ideas. egy. This commitment-which Martin and Horelik could communi- n gratefully acknowled cate with passion and purpose-allowed them to win over patient and Michael Krasner (197 groups and stakeholders throughout the emergency-response sec- tor, enabling RapidSOS to roll out its technology to the broader es7) Entrepreneurship Fun market over two years. The founding team does not just make the choice; it has to live the choice. Alignment between strategy and purpose is crucial for motivating founders and persuading early stakeholders to travel the chosen path. To be clear, making a choice requires commitment but does not foreclose all other paths forward. RapidSOS's decision to engage with both patient advocates and the emergency-response community meant that the start-up was unlikely to bypass tradi- tional 911 systems-at least in the medium term. But the focus on patient advocacy groups encouraged end-user engagement, which over time generated meaningful collaboration opportunities and attracted investment from more-established players, including Motorola. Still, every strategy affects possible future pivots, removing some and opening up others. A venture must be mindful of this so that it doesn't raise future costs but does enable opportunities to move from the start-up to the scale-up phase. The entrepreneurial strategy compass does not eliminate or mini- mize the uncertainty inherent in launching a start-up. What it does is provide a coherent framework for escaping the perceived realities of the existing environment and defining possible new environmentsSTRATEGY FOR START-UPS to choose from. The word "choose" is critical here: When a start-up is competing with new products in the absence of a significant inno- vation, its success is largely determined by how its strategic choices are informed by the environment. Among established businesses, the winner is usually the company that understands the environ- ment better. But entrepreneurs offering something significantly new have an opportunity to reshape the environment-perhaps, as with Dolby, to create a part of it that they will own or, as with Amazon, to create an altogether different reality. Which they choose is largely up to them. Our framework is designed to help them make that choice successfully and channel imagination and commitment toward the realization of their ideas. Originally printed in May-June 2018. Reprint R1803B Erin L. Scott and Scott Stern gratefully acknowledge financial support from the S CruCE Jean Hammond (1986) and Michael Krasner (1974) Entrepreneurship Fund, the Edward B. Roberts (1957) Entrepreneurship Fund, and the MIT Sloan School of Management. decision