Revisionary exercise in startup strategy — Part 4/5
In a series of previous posts, I mentioned a thought-provoking strategy framework not many founders I’ve met know about. I also wrote about the four factors influencing the choice of a particular strategy.
In this post, I’m briefly describing the four strategies, with examples from the wider industry.
Founders have four sliders — customers, competition, technology and identity — to adjust and move their company across axes between collaboration and competition and between execution and control.
- Customers: target a new, underserved segment or an existing segment.
- Competition: collaborate or compete.
- Technology and Identity: execute fast or invest in long-time control.
Intellectual Property Strategy
Control + Collaboration
Customers: The startup focuses on enhancing value in a new way for existing players. It builds a reputation as the lead innovator in their market.
Competitors: The startup controls their innovations via patents, trademarks or trade secrets but collaborates with other competitors by commercializing the IP.
Technology: The startup is on the technology frontier, setting new standards. It builds modular components that can be easily transferred/integrated into existing value chains.
Identity: The team is the source of invention and continues to innovate. They are a team of expert researchers and engineers capable to build a solid patent portfolio.
Examples: Xerox, Dolby, Genentech.
Architecture Strategy
Control + Competition
Customers: The startup matches stakeholders in the market to create and deliver value for all sides. It becomes the de facto hub in the market, creating networking effects.
Competition: The startup creates a new value chain, controlling it entirely, and competes against other value chains.
Technology: The startup creates a platform for others to build upon or a market intermediary. It produces a new source of proprietary data that didn’t exist before.
Identity: The team it’s skilled at managing the needs of complementary stakeholders.
Examples: Facebook, Amazon, e-bay, Etsy, Hopin.
Value Chain Strategy
Execution + Collaboration
Customers: The startup creates the best solution for a segment through an existing value chain, in which they serve a unique, vital link.
Competition: The startup becomes the preferred partner for other players, to enhance their value proposition and market power.
Technology: The startup facilitates the integration and transition from old to new technology s-curves.
Identity: The team has unique capabilities and is determined to create higher quality and lower-cost products. It has biz-dev talent to build partnerships.
Examples: PayPal, Plaid, GoCardless.
Disruption Strategy
Execution + Competition
Customers: The startup focuses on customer segments poorly served due to size or niche demands.
Competition: The startup is fast to market and avoids incumbents’ response.
Technology: The startup chooses nascent technology what requires iterative improvement.
Identity: The team aims to displace incumbents and bring the product to the market with minimal resources by attracting early adopters with low acquisition costs. They iterate on customer feedback.
Examples: Zipcar, Netflix, Monzo, Deliveroo.
The hard bit is that, like many startups, we were faced with multiple choices, potentially leading to equally viable revenue models. We considered pivoting between strategies or even creating multiple units, each with a different one.
As food for thought, it might be easier to position a startup for acquisition, by choosing an Intellectual Property or Value Chain strategy, and for IPO-ing, by picking one of the remaining two.
In the next and final post, I’ll apply these four strategies to our startup to exemplify them.
