The Anti-BMC — How to make real strategic choices
In preparing for battle I have always found that plans are useless but planning is indispensable.
Dwight D. Eisenhower
This is one of my favourite quotes. It rings true the first time you read it. Why? Ike was both a great strategist and a man who delivered. That is how he became an iconic leader. Success in both strategy and delivery is also the challenge facing a SaaS startup. Creating a new business is not just about having an idea. It is about execution.
And in my mind the definition of execution is two things. Completing the multitude of tasks needed to build, sell and support your SaaS product. And making good strategic choices. The second part of this definition is the key to the Eisenhower quote. Planning is about choices. Plans are just a schedule of tasks.
(As a complete aside, this is the problem I have with all the planning and project apps out there. They are great for making lists. But useless for capturing points of decision or choice. An opportunity for someone?)
And choice is awesome when you start your startup. You have a winning idea. And there is a whole world of choices out there. So many of them look like great options. It is more like putting the first marks on a blank canvas than picking from a menu.
The Business Model Canvas
Perhaps you feel there are too many alternatives. Then you find some tools to give you a bit of structure. And make sure you don’t miss anything. There are plenty of options available. The Business Model Canvas, curated/ designed by Alex Osterwalder, may be the most popular.
Complete this picture and you have yourself a strategy. Or have you? The problem is you have not made real choices at this point. You have a list of things you want to do. Ideas to try out and see if they work. But that is not strategy.
The essence of strategy is choosing what not to do.
Michael E. Porter
Don’t misunderstand me. The Business Model Canvas is an excellent tool for capturing business strategy. Working through the process is planning of the proper sort. However, in a startup that is not always enough. You will make a lot of positive choices. But miss the part where you actively opt not to do certain things.
Just picking some great strategies is a start. But you also need to challenge your thinking. And you need to ask deeper questions. To make hard choices. This brings you to real strategy. And to genuine focus. It is not just concentrating on the task in hand. Focus and strategy are a consistent set of actual choices. Collectively aimed at a clear objective.
The alternative was described in simple terms by David Maister:
Your market appeal will then come down to ‘tell us what you want us to do for you and we’ll do that. We’ll do something different for other people tomorrow!
Or as Andrew Miskin, an old friend and mentor of mine, used to put it. “You will just be doing stuff for money.”
Hard choices are a thought process. So to aid that process, I offer you the Anti-BMC. Or maybe the Business Model black hole. Not as an alternative to Mr Osterwalder’s creation (although it could be). Rather it is a way of getting a different perspective. Of developing a strategy with true focus. One that clearly states what you will not do. As well as all the great things you are going to achieve.
Think of this as just 4 questions:
Which customers will you turn away?
You have picked the customer segments that you want to serve. Will you say no to others? Does your focus on SMEs mean that you will not sell to large enterprises? If you are selling in Europe will you turn down business from the US?
A different way of saying no to customers would be to avoid certain channels to market. Again it is easy to state that you will choose a channel, for example online advertising. Is it also your strategy not to invest in other channels such as direct sales? Or will you move to these channels in the future?
Which problems does your product fail to solve?
Your customers will have other problems. Similar or complementary to the one your product solves. Are you clear that your solution does not work for some things? Perhaps your competitor’s solution is better suited to certain problems.
How will you fail to achieve competitive advantage?
There are many ways in which you can gain competitive advantage. For example, quality, cost, variety, speed and design. Competing on all these factors is impossible. The classic trade off is between quality and cost. You want high quality you must pay more.
Other dimensions offer similar choices. Apple for example offers great simple designs. But a limited variety of products. Henry Ford was thinking the same way when he said “Customers can have any colour they want. So long as its black.”
Some other decisions can change as your business grows. For instance, you can move into selling through different channels at a later date. When your have greater resources at your disposal. It is much harder to move from being the lowest cost competitor to a high quality focus.
Choosing which dimensions you will compete on. And where the competition might beat you. Clear thinking and tough decisions are needed. This is where you decide how your product will differentiate from the competition. Well worth thinking through.
Which activities will not be part of your business?
The other big area where you need to be able to say no is around the activities, functions and assets of your business. Will you invest in premises or work from home? Which processes will be core to your business and which will you outsource? Or avoid altogether? How much will you invest in certain activities? For example, are you prepared to offer face to face customer support.
These decisions are less fixed. As you grow you can expand the activities of your business. Making a conscious choice is still a good idea. Just doing something because you can. Or to match other businesses. These are not good reasons to add to your cost base.
Try it for size
Try this approach for your SaaS. And then step back and look at the result. Notice anything? Perhaps this example will help. This is the anti BMC as I imagine it for a B2B SaaS business I know well. It would also make a good basis for the strategy of a different type of business.
And that is the point. You are thinking about alternatives. Your strategy is actively disregarding things which could make money. Someone else could do the things you say No to and make a good business out of it. You are choosing the focus for your specific business. Not the only option in a losing game. In other words…
The opposite of strategy is strategy.