Spoke to multiple startups at various stages of their journey to analyze
1. Reason behind the idea?
2. What long-term strategy /Vision they had when they started?
3. What went right/wrong in the journey if any ?
There were plenty of interesting points but the strategy alignment was a common one.
Observation :
- Many startups lack market research or the market is overestimated
- Rush to be number 1 in the sector/pain point they are solving for
Many entrepreneurs, operating in the fog of uncertainty, worry that exploration or market research will delay commercialization. They go, therefore, with the first practical strategy that comes to mind, Careful strategizing goes missing. As Richard Branson has said, “In the end, you have to say, ‘Screw it, just do it
There are times when that approach works, of course. But usually, such ad hoc experimentation should be avoided, even when it requires few resources. Entrepreneurs who commit to the first promising route they see leave their start-ups vulnerable to competitors that take a less obvious but ultimately more powerful.
At the heart of our approach is the recognition that a go-to-market strategy for any innovation involves making choices about which customers to target, what technologies to apply, what organizational identity to assume, and how to position the company against which competitors. This is already super complicated and interdependent.
A start-up needs a history and the knowledge a market leader brings. However, that can be an advantage, because prior experience, historical data, and commitments that drive existing practices may create blind spots for established corporations, possibly even causing them to overlook innovations that pose an existential threat.
To ponder on :
Probably, It comes down to 2 important questions:
- Collaborate or compete?
- Build your moat or storm a hill?
Zeroing in on these two questions greatly simplifies the process of strategic reflection.
Intellectual Property Strategy :
The company collaborates with market leaders and retains control of its product or technology. The core idea must be of value to the customers of the incumbent.
Example: Dolby, Qualcomm, etc are a few examples. They are mostly horizontal players.
Disruption Strategy :
Disruption entrepreneurs aim to redefine established value chains and the companies that dominate those chains. But the very nature of disruption permits others to follow. Thus the heart of this strategy is the ability to get ahead and stay ahead. The start-up strives to quickly build capabilities, resources, and customer loyalty so that when the market leaders finally wake up, the start-up is too far ahead for imitators to catch up. It doesn’t fear the competitive war to come; rather, it’s eager to engage. It must be lean and quick to respond. And it is intensely focused on growth.
Example: Startups focus on target Niche segments poorly served by market leaders.
Value chain Strategy
Disruption is exciting; by comparison, a value chain strategy seems somewhat pedestrian. The start-up invests in commercialization and day-to-day competitive strength, rather than in controlling the new product and erecting entry barriers. Still, its focus is on fitting into the existing value chain rather than upending it.
The start-up’s capabilities must translate into enhanced differentiation or cost advantage for the established companies. And even if the innovation does enhance the competitive position of the overall value chain, the new venture can prevail only if other players in the chain are unable to replicate the value it has created.
Architectural Strategy
Whereas the value chain strategy is the domain of quiet achievers, entrepreneurs who choose and succeed with an architectural strategy tend to have very high public profiles. This strategy allows start-ups to compete and achieve control, but it is out of reach for many if not most ideas and incredibly risky when feasible. This is the domain of Facebook and Google.
Entrepreneurs who follow an architectural strategy design an entirely new value chain and then control the key bottlenecks in it. In other words, the risks for architectural entrepreneurs come from the fact that they may have only one shot at glory.
Eg: Google, Facebook, etc
