Being an entrepreneur is a rollercoaster exploration of providing a solution to market need within society. It emboldens creativity, focuses ambition and challenges problem solving. There is a certain nobility in taking a risk based on your intuition and drive. Despite the litany of skills and planning drawn upon in a start-up, building strategy often drifts down the list of priorities.
In part 1, we discussed the typical elements that construct a business strategy and offered a trio of models based on individual market needs. In part 2, we burrow into the components underpinning your company as a whole – Your Vision and the Basis of Competition.
Create a Vision to See the Path to Start-Up Success
One would be forgiven for thinking that 2020 might bring about clarity of vision for start-ups and entrepreneurs. However, the importance is still criminally underrated and underappreciated.
A vision is not simply a ‘nice to have’; it’s a ‘got to have’.
Creating a vision for your start-up delivers a picture of what success looks like in the future. It gives unifying aims for you and the team to vigorously pursue. Without a destination, how does one build a map to being successful?
In 1989, having emigrated from the Lebanon, my parents opened their first convenience store. Their vision was to provide a future for our family. They were so dedicated to this vision and future proofing our family that they opened another 50 stores over the next 25 years. Having a vision matters!
Developing your entrepreneurial vision props up every business strategy often dictating the milestones to triumph.
Visioning is a powerful tool and the steps to enact it are surprisingly accessible. Creating an appropriate vision means setting forth your view of exactly what a successful outcome of your venture is. Keep it simple and clear so that you can express it in only a few words. It could be to establish your brand as a market dominant. It could be disrupting and changing an industry. It could be any one of a range of dreams you see as the ultimate success that drives you forward but it must be understood, achievable and have a time frame.
With a tangible vision in mind, you can set underpinning goals in line with your values. Incorporating your values into the decision making process is important. Every entrepreneur is tempted by opportunities that may steer their start-up in a new direction. However, new directions can occasionally derail your bigger plans. Despite temptations, being governed by your values steers you back into alignment with the overall plan for success.
The final piece of your visioning strategy is a timeframe. With no delivery date, complacency sets in. By when do you want to have achieved your success? Having a year or date in mind keeps an entrepreneur and everyone responsible accountable to the vision.
Using the Strategy Compass to Find Your Way
Many start-ups are the born out of expertise in a certain field without necessarily having business knowledge to steer the ship. Unfortunately, this skill deficit can lend start-ups to stumbling around a market in the dark with the light off. Industries can be a cruel, cold place without having a plan that shapes your grounds for competition.
This is where the Strategy Compass kicks in. It constructs 4 main avenues of business competition as a new entrant. The framework is based on two questions:
- Do you collaborate within the established market or compete with the current players?
- Will you create barriers against competing with you or do you plan to commandeer as big a market share as possible?
Intellectual Property Strategy
It may be obvious but the IP strategy entrepreneur enters by offering protected diversity to the market. With the knowledge and often legal barrier to entry, the entrant works together with the bigger players within the market by licensing your property to others.
Take the WooCommerce model. As an open source plugin for WordPress, they deliver a vital service to businesses who need an online payment option. Furthermore, they are guarded by the strength of their Intellectual Property which they license out to sites that need it.
The Disruption Strategy
Both the intellectual property and disruption strategy view entry from the perspective of a unique offering entrepreneur. Where the disruption strategy differs is in the aggressive nature of capturing a market share. Rather than collaborate with competitors, the aim is to compete directly in order to gain market share from them.
Transferwise is a perfect example of this. For decades, the primary currency exchange service had always been regular banks or Bureau de Change. Suddenly Transferwise arrived on the market making it simple to send money digitally and internationally and capturing a significant following. The simplicity of the service forced the entire market to make adjustments.
The Value Chain Strategy
The Value Chain Strategy seeks to enhance a piece of an industry puzzle using disruptive products or services in a less competitive manner. The entrepreneur choosing this path typically creates a space in an existing industry where the customer or supplier experience could be greatly improved.
One of the best examples of this is YCombinator graduate, Instacart. Instacart looked at the value chain of supermarkets and the current customer experience and offers an efficiency solution of store to door service. While not entirely unique, it does offer a wider variety of stores to shop at thus improving the value chain for both the customer and store.
The Architectural Strategy
Regularly regarded as the most difficult to engineer, the architectural strategy brings an entirely new value chain to customers. Most entrepreneurial efforts rely on upgrading or improving the current suite of offers to the market place whereas with this strategy, you are inventing a new market place in the most public way possible. As the first to market, these entrepreneurs are typically protected by entry and market control barriers and exclusive innovation.
Netflix demonstrates the architectural strategy as clearly as business. From virtually nowhere, Netflix proposed an entirely new, enhanced home entertainment service rendering an industry obsolete.
Business strategy, effective visioning and coordinating your basis of competition are often the less sexy parts of entrepreneurship. They won’t be on a digital or physical billboard and you might not talk about them like they will impress others. However, they should impress upon you and your team the reasons you are there and how to attain success.
With clarity of vision and how you will pursue your dream in hand, the only thing left is to take action. To strike while the iron is hot!
Feel free to check out part 3 of this series here. We discuss the functional details, the importance of saving time and money and the need to make adjustments on the fly as the start-up owner.