The startup business framework has 10 sets of components.

Purpose of this document

This document outlines the business framework of a successfully scaling startup.  When a company is first launched, some components may not exist, or may be very simple. Successful growth results in the evolution of the framework, with components being added and changing.

The 10 components of the business framework are all inter-related( e.g., every component requires talent):

1       What can only the CEO do?

There are three things only the CEO can do, and no one else in the company:

  • Create and maintain alignment of people with the purpose of the company;
  • Nurture the company’s values, morals, and ethics (often referred to as culture);
  • Hire the leadership team and ensure they work well together.

Many startups fail because:

  • People are not aligned and working towards the purpose.
  • Morals, values, and ethics vary, leading to inconsistent and dysfunctional behaviours and decision-making.

2       Company purpose

What is the purpose of the company? Why does the company exist? The description of the purpose of the company should be positive and outwardly focused on how you benefit customers and society.  For example, Nike’s “authentic athletic performance,” rather than “sell lots of shoes made in China.”  Is the purpose of the corporation to make as much money as possible? How should the company benefit society?  Or, should it?

Larry Fink, in his 2018 letter to CEOs, said “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate…..Without a sense of purpose, no company, either public or private, can achieve its full potential…..And ultimately, that company will provide subpar returns to the investors”[1]

3       What are the company’s values, morals, and ethics?

What are the company’s values, morals, and ethics?  These are often referred to as culture.

Values: Values are what someone thinks and feels internally and the rules by which they make decisions about what they should or should not do. Values have different importances, which are helpful when people need to trade off or balance one value versus other values.  You make a decision based on what you believe is “the right thing to do.”

Morals: You are judged by others as to whether or not your actions are moral or immoral.  Morals reflect external observable actions and behaviours. Morals are decisions, actions, and behaviours which people feel are right or wrong, good or bad.  Morals are actions and behaviours arising from one or more values.  Not all values are related to morals.  Morals are based on a broader perspective than just the individual.

Ethics: Ethical decisions, actions, and behaviours are based on following a documented set of standards or principles.   Many companies and professions have a Code of Ethics.

Values, morals, and ethics should also tie back to the purpose of the corporation. Is the sole purpose to make as much money as possible, constrained by laws, regulations, and company policies?

Some companies have published a set of decision-making principles.  A famous example is Bridgewater Capital (a $150 billion investment fund).  Ray Dalio, the founder, has published many of his beliefs in the book “Principles”.

4       Customer perceived value proposition

A value proposition is the customers’ perception of value.  This perception can be influenced by facts, emotions, family and friends, social media, etc.

The value proposition = (All the customer achieved benefits) / (All the customer incurred costs)

  • All the customer achieved benefits can include both financial and non-financial factors (e.g. time savings, convenience, status, etc.).
  • All the customer incurred costs can include financial (purchase costs, costs to switch to your company, other adoption costs, and ongoing costs) and non-financial (time, inconvenience, loss of status, etc.).

You will only succeed if the customers believe your value proposition is better than the alternatives, which may include the status quo.

5       Business model

5.1      What is a business model?

A business model describes:

  • The value the company enables its customers to achieve.
  • The resources and capabilities to create, market, and deliver this value.
  • How to generate profitable and sustainable revenue streams.

5.2      What are the 9 elements of a business model?

  • Who are your target customer segments? Some segments may not provide any revenue. g. Google seeks to provide the best search experience, which enables Google to generate advertising revenue.
  • What is the customer’s perceived value proposition of your solution? How are you different from, and better than, the competition?  The value proposition includes all of the customers’ costs and benefits associated with adopting your solution, which includes any transition costs from existing solutions.
  • What are your customers’ expectations of their relationship with you? g., if it’s a software product, how often will there be updates with new features?  How easy will it be to install a new version?  Will customer service be a chatbot or a live person? Etc.
  • What will be your channels to the customer?
    1. Communications channels with potential customers?
    2. Sales channels which result in a sales transaction?
    3. Logistics channels which deliver the product or service to the customer?
  • Who are your key partners? A partner is more than a channel. A partner may be: enhancing your credibility due to their reputation; adding value to your solution due to their resources; or enabling you to close sales.
  • What are the key activities? Which processes and actions are required to manage partners, channels, and resources in order to enable customers to achieve their value proposition.
  • What are the key resources to enable customers to achieve their value proposition? These include: intellectual property, technology, people, contracts, financial and physical assets.
  • What is the cost structure to create and deliver the value proposition?
  • What are the revenue streams? These could include: subscription-based per person per month, free for a basic service, with multiple tiers of extra services with fees, etc.

6       Talent Management

Talent management is the foundation for success. Key processes include:

  • Determining talent requirements;
  • Being an attractive place to work for target talent;
  • Acquiring, retaining, developing, and exiting talent;
  • Compensating talent.

Only the CEO, and no one else, can hire the leadership team and ensure they work well together.

7       Capital and cash management

A monthly free cash flow forecast, with detailed assumptions is critical.  You need to understand, and model, what drives revenue and costs.  A rapidly scaling business will have negative cash flow, and likely negative accounting profits.  You need to be able to understand and describe this to both investors and employees.

8       Investor Management

You must define your target investors and how they will enable value creation within your company.  Start building relationships with investors before you need the capital.  Ask potential investors if it is alright to include them on your monthly investor update.  Shareholders will require additional detailed communications and meetings.

9       Exit Management

The founders will leave the company at some point, even if it’s by death.  You need to first establish founder expectations regarding exit and potential risks, such as unexpected death. Processes and legal frameworks should be in place to deal with the risks.  Planned exits, including selling stock as part of an IPO, need careful planning.  The founders need to take into account their personal family, tax, and financial situations.

10   Governance

  • Governance is the set of relationships and the structure to set and achieve objectives, and monitor performance.[2] You need to be clear on how decisions are made.
  • Begin with setting out the stakeholder(founders, shareholders, CEO, C-Suite) expectations and then producing the necessary legal, policy, and procedure documents.
  • Governance will dramatically evolve from the early stage with only two founders, to a company with hundreds of staff.
  • Governance documents may include:
    1. Articles of incorporation and bylaws;
    2. Shareholders agreement and shareholders voting trust;
    3. Board of directors mandate and board approved policies;
    4. Board of directors delegation of authority to CEO;
    5. CEO Management contract.

Your next steps

To enable discussion with your investors, founders, board of directors, C-Suite, and advisory board, download the following one-page slide:

The startup business framework has 10 sets of components

Further reading

“Crafting your value proposition Workbook 1”, MaRS Entrepreneur Workbooks,

“Business model design Workbook 2”, MaRS Entrepreneur Workbooks,



[2] Summary of  “G20/OECD Principles of Corporate Governance”, 2015


What is the difference between strategy and tactics?


I’ve often heard that good execution beats strategy.  My experience is that execution which achieves good long-term results actually reflects a good strategy.  But that strategy may be quite different from the “official” strategy document.  Success requires more than good luck – both a good strategy and good execution are key.

Strategy – Where are you going to end up in the future?  It is critical to look at this from the customer’s point-of-view.  For example, “In five years time, we will be seen as the world’s best online search company.” is much different from (and results in different actions than) “In five years time, we will be the world’s biggest search company.”

Your strategy will define assumptions as to who your target customers are, their ecosystem, and why the customers will be dealing with you rather than your competition.  And of course, your competition will also change.  I’ve seen too many company failures resulting from strategies that basically say “This is what we are going to do.  This is the vision and mission of the company. We hope the customers will buy from us.  Hope is our strategy.”

Strategy describes the company’s position in the customer’s ecosystem.  It is impossible to forecast the future perfectly.  The board and CEO must regularly review the facts, assumptions, and strategy scenarios: the CEO and her executive committee each month, and the board of directors at the beginning of each meeting.

Tactics – What do you have to do to achieve your end result?  What are the type of people you need to build that future? (i.e. board directors, CEO, advisory board, C-Suite, management, and staff) If you are in a rapidly changing environment, you need people who can learn quickly and change quickly – knowing what worked 20 years ago may not be helpful in solving future challenges.

Tactics may include:  organic growth; acquisitions; divestitures; hiring people; letting people go; changes to processes, technology and capital; working with partners; and being part of alliances.

The difference between strategy and tactics – Hannibal 218-204 BC

  • Hannibal crossed the Alps (Romans thought this was not possible).
  • Hannibal won massive victories in Italy in 18 months – 70,000 Romans died in battle of Cannae; ¼ of Roman adult males killed.
  • Hannibal never lost a battle in Italy during the next 14 years – but Hannibal lost the war.
  • Roman Consul Fabius avoided battle with Hannibal but did not win the war.
  • Roman General Scipio did NOT engage Hannibal in Italy. Scipio conquered Hannibal’s financial and logistical bases in Spain and then attacked Carthage, resulting in Hannibal being recalled from Italy.

The difference between strategy and tactics – Tiger Woods – 2006 British Open

  • Competitors teed off, using drivers to hit balls over the bunkers.
  • Tiger Woods typically used a four or five iron. His focus was on:
    1. Getting the ball in the hole;
    2. Determining the best place to putt from; and
    3. Working backwards from the best place to put from; therefore use four or five iron to position for eventual success.

 Your next steps
To enable discussion with your board of directors, C-Suite, and advisory board, download the following one-page slide.

What is the difference between strategy and tactics?

What is strategy and strategic planning?

What is strategy and strategic planning?  The following are some questions to consider as your board and management go through the process of strategy and strategic planning.  These questions are intended to help improve your current process, rather than replace it.

What are your definitions of strategy and strategic planning?

Strategy: What are your facts, assumptions, and scenarios about what a successful future looks like? There are four sets of questions to this:

#1 Who will be your future customers?  You may be in different markets with different customers. Customer needs will change and there will be new unmet needs. What will be the customers’ ecosystem? (e.g. Technology trends, demographics, politics, regulation, etc.)

#2 Who will be your future competitors? What improved products and services will they be offering?  Old competitors will likely disappear and new competitors emerge. (e.g. New ventures, entrants from adjacent markets). What will be the competitors’ ecosystem?

#3 What is the vision for the future company?  How will customers and employees perceive the company? What will customers perceive as the competitively differentiated value proposition? What will be the customer experience? How will your company meet customer needs, and beat the competition? What will the people (e.g. board of directors, CEO, C-Suite, staff), processes, technology and capital look like?

#4 How will you measure the future value of success?  What will drive value (e.g. what is driving growth in the number of customers)?  What will be the financial results? These preceding two questions are directly influenced by the board and CEO.  The ultimate value is what someone will pay for the company.

Strategic Planning: How do you make decisions regarding the strategy and the path to achieving the strategy, resulting in future value.

Once you have a draft strategy (i.e. endpoint), then you need to set out the path for going from today to the future. A path requires knowing where you are starting from.  It is helpful to have some definition of: The current target customers, the current competitors, the current company vision and current value metrics.

There are six sets of questions around strategic planning:

#1 Who sets the strategy?  In some companies this is driven by the board.  Based on the future vision, decisions can be made as to: terminating/hiring CEOs and CEO succession.  Some company boards expect the CEO to drive the strategy, with the board providing final approval.

#2 Who is accountable for achieving the measurable results?  The CEO is often accountable for the traditional strategic plan. (The CEO also needs to know who is accountable for achieving the results from each component of the plan).  The board of directors also have a plan, focused on achieving future value.  The two most critical parts are the nomination of directors for election by the shareholders and the ongoing assessment of individual directors.

#3 Will the risks and challenges associated with the strategy and strategic plan warrant the strategy?  A venture capital start-up will have a large probability of failing, but the occasional major success warrants taking the risk.  A large established company may not pursue a strategy with a large chance of failure, unless there is no other alternative.

#4 Are the required changes achievable: Board, CEO, C-Suite, staff, processes, technology and capital?

#5 How will employees and stakeholders be engaged?  If your future will be much different from today, you must engage employees and stakeholders.  Major change is guaranteed to fail if your approach is to simply dictate to your employees.

#6 Which components of the strategy will be achieved by organic changes and which components will require acquisitions and divestitures?

We live in turbulent and disruptive time. The strategy and strategic plan may need to change because forecasts and assumptions are never perfect.  Every board meeting must begin with a discussion about strategy and the strategic plan.  The CEO must have a similar discussion every month with her executive committee.

To enable discussion with your board and management, download the following one-page slide.

What is strategy and strategic planning?