Positioning And The Black Box

Michael Dearing
A clear positioning statement and an understanding of your company’s black box are essential for every business

Do you have a special insight about the world? Well, you can turn that insight into a product and then you can turn the product into a business. It’s all incredibly hard to do, but let’s be honest; that’s what many of you have signed up for.

There are two things you can do that meaningfully increase your chance of success. First, positioning.

A positioning statement is an internal document for clarifying the main idea of your business

Nail the basics of positioning by filling in the following: (PRODUCT NAME) is for (TARGET USER) who needs to (PROBLEM TO BE SOLVED) and feel (FEELINGS) while they do it. (PRODUCT NAME) is based on the (ADJECTIVE) idea that (UNIQUE INSIGHT). It will win because (REASONS).

Now, this is not a customer facing tag line at all. It’s a tool to focus all the work inside the team. Companies with clear positioning statements spend smarter. They nail their product design more often and they take less time and cash to accumulate happy customers. If your statement isn’t perfect right off the bat, relax. You can iterate this over time. It’s a prototype.

The black box puts what your business does in clear, simple terms

Second, the black box. In his excellent book, High Output Management, Andy Grove used a very simple cartoon to illustrate practically any kind of business, as seen above. Inputs go into the black box. Processes happen inside the box and output comes out of the box. This cartoon can describe any product or service.

Let’s go back to our favorite lemonade stand from previous posts. The ingredients (Lemon, sugar, water, etc.) go into the black box. Inside the box, we’ll turn the raw products into a business: we mix the ingredients, put it in containers, and advertise it to customers. We’ll take orders at the counter. We pour the lemonade into cups. We’ll collect the money and out comes cash and happy customers.

You can peer inside your black box to manage effectively

If you want to understand a business — your business! — you have to be able write out the chain of events just like Grove did and if you want to manage the business well, Grove says, “Hey, cut little windows to peer inside the black box.”

It’s fun to measure the inputs, the processes, and outputs so you can get better over time. From time to time, you can even reexamine the black box and change parts of it to increase output. A little grease here, some new gears for leverage there. You should definitely go read High Output Management to gain further insight into how this all works.

Grove is describing this fundamental and sacred duty of leaders and he’s doing it in a freaking cartoon. He is a hero of capitalism. He survived the Nazis, the communists and Scarlet Fever. You should totally listen to Andy Grove.

Use positioning and the black box to build and understand your business better

If you’re hiring, building products, marketing products, selling things, having a clear positioning statement and a black box cartoon of your business is a must. This stuff is not optional. It’s basic hygiene of business. But don’t stress! You can iterate all of it over time. Everything is a prototype.

Michael Dearing

Written by

Founder of Harrison Metal, a seed-stage venture capital firm and exec education space. I like all animals more than I like most people.

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