Startup 101: Ensuring You Have a Real Strategy (Part 2)
To repeat the introductory notes from Part 1: 'Strategy' is an overused and widely misused word. However, in recent reading (of Gary Hamel's insights) I discovered a precise definition that could transform how startups navigate their busineses. There are only two parts to a clean, executable strategy.
Part 1: Are you building products to solve problems that really matter to customers?
Part 2: Does what you do set you apart from any other players in the market?
In this post, I'll dive into the latter. Part 1 of this post is here.
Block 2 of Strategy: Differentiated Product compared to any competitor in the market
Broken to its constituents, that statement indicates:
- You understand who your competitors are
- You understand what they do, what problems they're solving for, and how they do it
- You have a focus area where you do something significantly better, or different compared to them
First, knowing who the competitors are. The intuitive belief many of us that all companies know their competition is flawed - so I propose a definition for competition that might be more comprehensive: A list of companies your clients name in the same vein as your company. Anytime one feels "But Company X in't competition because they do no 'xyz' and only 'abc'", it's a good time to simply step back and acknowledge that Company X is most definitely competition that has focussed energies and excelled at 'abc' and that's what they're known for (a.k.a. Differentiation).
Next, understanding competitors. As most companies exclude most of their actual competitors from their consideration set of 'competitors', having a clean understanding of what they do, what problems they're solving for, and how they do it, is a long shot. Most companies are bad at this, despite having no choice but to excel at understanding competitors better (and hence, their customers better). I've noticed that SaaS startups have good competitive intel, borne through giving their competitors' products a spin by signing up as a self-serve customer - but this is a gaping hole in most startup operations outside of the enterprise SaaS ecosystem. Very simple to solve, though.
Last, yet most important of all, is Differentiation.
This is, usually, just a matter of picking one battle that can be won. Every startup needs to know its core strengths and weaknesses compared to every other player - and then quadruple down on the strengths alone to get ahead of every other competitor. In simple terms, the secret to building differentiation is in creating imbalance in your universe.
A startup can only create imbalance through excellence, and excellence is a product of honing what's already great with an extra dose of an ingredient called Focus.
To exemplify, take Instagram vs. WhatsApp. Both apps have the exact same features (let's not argue on that - they're basically the same app at this point), yet they're fully differentiated, with separate use cases. Think deeply on why that is, and therein lies the answer to the Differentiation question.
And that's that, about Strategy: Solve big problems, and solve it differently from everyone else out there.