On the subject of Strategy - essential thinking

A narrative structure to strategy as opposed a technical/ text-book account of the subject. My intention is to be directionally accurate and to create a harmony in the subject as opposed trying to dismember and fragment into disassociated hierarchies and silo’s. There are a million things to be done, but it is not strategy if it’s not thinking in a certain way. My idea is to reduce for the fluff and not to add to the abstruse. Strategy is certainly not all there is to successful business. It may just be the only thing. The reason why other things, teamwork, innovation, planning, people and culture etc. are even a thing. The sine qua none as they say.

First a working definition of 'business' strategy is helpful: "The process of diagnosing the challenge and then creating a response is the best theory we have of strategy creation" - Richard Rumelt (The Crux - How Leaders Become Strategists)

?

1.????Identify what you think is a customer problem or a job to be done - the customer may or may not know that there is a problem to be solved. This step may be seen as a form of inductive reasoning. Your customer can be at any stage of : 1. Seeking a solution 2. Aware of the problem 3. Have the problem. Where your customer is at, will impact whether a push or pull based approach be applied on the marketing/ awareness front e.g. running content or posting ads; running search or using social media channels to ‘reveal’ what is out there - the difference between intent and being open to being surprised from the customer view point.

·??????Inductive reasoning, in going from the specific to the general may entail some element of initial testing. By implication market research e.g. pre-sale or waitlist; re-direct to third-party seller/s; co-creation; prototyping; MVP etc. That is if you wanted to be true to science. Points outlined will still need to be followed to get to the ‘test’ or the ‘launch’ either way i.e. you cannot short-circuit the thinking.

·??????Diagnosing a challenge and innovating a solution can hardly be done separate of conceiving a customer - better still a customer persona. Market as in market: product fit is generally emergent/ derivative. When people talk about product: market fit they are speaking less of some absolute fit than the quantum presented by the fit and the time-to-value. Broad, versus niche proposition and in turn appeal is a function of problem: product fix. So whilst extraneous research can be?undertaken on the market proper, my intuition is that the market forms around the solution. How you disburse marketing monies may require rank-ordering in terms of where those customers are actually found and therefore some segmentation.

·??????As for Vision and Mission - tread lightly initially. Your effort assumes some Vision in itself. Your Vision will emerge as a function of scale-ambitions and narrative building and ‘emboldenment’ and initial understanding from product: market fit, CAC, time-to-value, payback and general unit-economics etc. Mission in turn is a function of things you commit to actually doing - discussed below. Companies with great ‘Visions’ as well as poor have all failed. I suggest purpose important but alignment more so!

2.????Solving for such problem should present a sizeable enough opportunity for the business - or to make it a ‘business’. For going concerns does it represent as an extension to the core business, an adjacency or an altogether new revenue channel/ vertical? Is this a monopoly opportunity or is the solution step-change enough to accrue sufficient value. A reminder that every adjacency is going to compete for resources with the core of the business. Consider whether to establish as an altogether separate vertical - to allow some runway for growth and dedicated focus. Monopoly businesses are probably going to require sufficient funding early on, in order to scale - post testing for virality/ network effects etc.

3.????Approach with a hypothesis (and conjectures) in mind - if I do the following things in the direction of solving for the job to be done, then are customers likely to want to hire my particular service or product e.g. a tile retailer, solving for a) customers lack of imagination b) the ‘hassle’ associated with installation. This is a good time to run a premortem i.e. stand on the other side of the argument and consider failure. Why would you have failed. Does the alternate conjecture outweigh the initial hypothesis? Do you have an intractable problem? Think across a spectrum of outcomes - effectively reconsider the extent to which your assumptions are incorrect e.g. churn, basket approximate, frequency, LTV to CAC. A small apparent difference in LTV to CAC e.g. 1.5x versus 2x will manifest in huge outcomes in unit economics. There’s a reason economists talk in ‘percentage’ point terms.

·??????You cannot predict the future with certainty - the hypothesis is really about making a judgement call/ your most considered bet on the future. It's giving yourself the surface for imagining or reimagining the future - who we are and who we need to become in relation capturing the future in terms of relevance, differentiation and sustainability? This is where your narrative starts to structure and you go from doing business to designing for outcomes. This is a space for putting sacred cows to rest - but with the responsibility of having done the hard work (mental and research) both to understand and size the opportunity.

4.????Determine how the solve could be extended so as not be unitary but presents in a narrative largesse/ positioning e.g. if the problem is a lack of customer imagination in seeing what the tiles in situ would look like, typically manifesting in a lack of customer decisiveness/ certitude and a kicking of the can down the road, thereby extending the decision making period (time period between first thought and purchase/ installation), then the answer directly to such a problem may be achieved by an Augmented Reality (AR) visualiser. This single data point (the friction from the lack of imagination) needs to encapsulated in a stronger statement of intent as pervades the customer than a unitary resolve. This may give rise to an ambition e.g. to embrace servitisation as core to your customer experience; to pivot from ‘retailer’ to ‘service’ platform. To explode the opportunity to foreclose on customer problems/ inhibitions/ anxieties upfront e.g. creating a hosting environment for interior design capabilities; or allowing for the setting of ‘online-appointments’ where the customer is guaranteed attention - to cut-off for the next likely inhibition/ pain point or job to be done. Such ambition then needs to be nested out/ built out for additional service/ reward mechanisms and friction reductions - actual ‘what’s’ that portend the how’s. This as a means to filling out for a lack of customer imagination or as a means to landing on other opportunities in the connective tissue of abstract objective. Multi-point engagements with the brand are opportunities to bolster the service and experience proposition. Aggregated into an offering for higher conversion or activation metrics or dissimulated for independent monetisation. Think problem-stacks as opposed a unitary problem - constantly embellish for rewards and reduce for frictions. Every day - this is what ‘shipping’ means. It means doing actual stuff that matters.

5.????Layout the logic - effectively map the customer journey and touch points; you are looking for a continuity in the growth model for harmony - to ensure that value is added to the entire customer experience i.e. conversions should increase and time to decision should be reduced. The point is to consider small wins (whether ‘shipping’ in the domain of process, marketing etc. whether back-end or front-end) and how these may be multiplied. Think in customer problem stacks as opposed solving for a singular problem. Thinking in customer problems/ sub-problems will help you define capabilities to capitalise on the sub-problems. Think cradle to cradle as opposed cradle to grave. Think stickiness, think retention, think frequency and not just acquisition. Fill-in for the connective tissue - this an opportunity to involve (not necessarily engage) every facet and asset in the Org. inclusive of People and Tech. Think in value loops as opposed ‘funneleconomics’ only - sustainability/ LTV is the idea as opposed only time-to-value or immediate return. Agility and consistency (system thinking or total quality management) are not at odds. To repeat, touch points may impact your pricing model if sufficient value can be realised at a particular interaction. If it is determined from a review process that your business/ product is multitouch then there may be opportunity for individual pricing and or pricing laddering. Or just accrete all ‘rewards’ to deliver a stonking service. Allow your initial hypothesis to be tested, expanded, refined; allow your narrative to expand to become organisation inclusive. Consider likely go-to/ distribution channels upfront. Where to start is premised on rate or scale of return and bandwidth. Consider whether the product will lend to virality and network effects separately. Growth of viral products are typically dependent upon customers loving the product and so sharing with their friends. ‘Free’ is often a good way of gaining access to the market for swaths of customers to use the product and start advocating for the brand. In this instance you become a PLG (product lead growth company) as opposed a marketing or sales lead company. With PLG more time and resources are spent in constantly improving product performance. With PLG your product proper is the basis for acquisition, activation and retention. Think CANVA. Line up second order and third order iterations to product or proposition. Consider initial product or suite of products. Then consider likely extensions to the product.

6.????Translate all ambitions into distinct actions that will ensure the delivery of the ambition - this could spawn a plethora of action items by distinct ‘project’. This is the connective tissue stage where owners by project are defined and jobs distributed by name. Define analytics - approach such as to build as an organisational competence, capturing key user events upfront as opposed post facto -?and success/ activation metrics upfront in order to reflect upon and so direct end-state. Early signals re repeat purchases, retention/ returning customers, MAU’s and DAU’s are vital to course-correcting as early on as possible and overcoming confirmation bias/ bias of the founder and the naivety built into initial acquisition, retention and cost of acquisition assumptions. Align metrics to customer utility/ cycle e.g. for a tile retailer managing DAU is irrelevant. That said there may be cause for some ‘attachment’ to finish the project within a contained period post initial purchase. Businesses may be ‘single-service’ or ‘multi-service’, ‘single behaviour’ or ‘multi-behaviour’, ‘contractual’ or ‘non-contractual’, but mostly something in-between or a little bit of this and a little bit of that - a hybrid (ref. Theta Equity Partners.com). Think probabilistically which ever business you are in - consider the long-game and long-term health. Think commercialisation as value touch-points. Maintain both the proximate and the long-term cycle in attempting to define the size of the prize and so conversion targets. See this ‘actioning’ state/ staging as an opportunity not to assign work but to distribute for competence i.e. with the certitude that the job will be done. Also see this as an opportunity to distribute trust - also known as ‘ownership’. And if you find you cannot distribute for trust or competence then you have a problem - either you don’t have the resident skills or alternatively you yourself are operating as the patriarch - good for the animal kingdom where instinct is the driver, but terrible for human beings where autonomy is required. And if it’s all on you to start with, then so be it. But when you’ve approached some escape velocity and are looking to hire, remember to distribute for competence and trust. At this stage also think about the competencies that you want to create. Competencies are at bottom defendable moats - those things that competitors cannot immediately replicate e.g. vertically integrating for design and manufacturing (if needs be); having exclusive collaborations/ product drops etc. Invest in the work to be done by way of the strategic plan but invest in building competencies. If you are doing all of the work yourself then mimic the behaviour and ethic that you would like to see in others from the get go. Don’t be in a rush to hire until you’ve hit ‘exit velocity’ i.e. that point at which product: market fit has been attained and retention stacks up over a considered purchase cycle and you have some runs on the board.

7.????Resource appropriately - consider time-to-value on the basis of assumptions. Consider break-even point from a timing point of view. Ensure sufficient burn capital to compensate for aggressive (post facto and incorrect) assumptions. Assume a range of return outcomes between ‘high road’ and ‘low road’. Discount returns from ‘proofs of concept’ by 50% - things never work the way they should IRL. Avoid feedback from cheerleaders who are not actually committed to a purchase. Decide on team/ enablement structures e.g. growth team versus cross-functional team. Think Team leadership and project management, Think Pre-sale, Sale and Post-sale when resourcing, both for service attributes (reward maximisation in the customer journey/ experience and friction reduction) as well as marketing spend. Think cost, price and perceived value. Consider the degree to which the hypothesis (driven by intuition) and the story you are telling yourself is certain/ sure, such that you take the plunge or engage a series of tests upfront. Consider whether speed to market gives you any real advantage. Consider whether this is a product led company i.e. premised on network effects and virality, in which case a freemium model may be ideal. Consider general go-to-market on the basis of product type. Are you going to employ both in-bound and out-bound simultaneously or whether you are going to do them sequentially if required at all. The choice will impact your burn rate and cost of acquisition. And dilute your focus. Consider whether your product is first B2C and then B2B - enterprise or SAAS. Doing both at the same time can retard overall progress and dilute messaging and marketing money. The value proposition can hardly ever be copied from one to the other, but will require a total reconsideration.

·??????Perceived value is the ask above price on the basis of customer perceived value including e.g. signalling benefit. How does your value proposition justify for the increment. If you justify a price-point higher than the market it’s time to start layering your value/ service stack - reward heavy and friction light. It’s a good thing to think of your proposition/ attributes as basic, performance and delight. Reinvent these every six months - depending on targeted customer profile and margins, your attributes should distribute accordingly e.g. GUCCI will be skew towards delight attributes mostly with zero failure accepted in terms of hygiene (basic) attributes; ‘servitisation’/ ‘clientelling’ will be key to GUCCI. Ensure alignment with who you are in terms of your proposition with your margins/ return economics. Extremely high margins absent ‘perceived value’ is ?begging for an upstart to eat your lunch. An Innovators Dilemma of sorts!

·??????Hire the best people possible. Employee’s 2 and 3 should be less employees than partners. Give away equity, whilst still maintaining voting rights and control in the short term, until you can prove run rate and so enterprise value/ extrapolate. Percentages are often nebulous.

·??????Don’t create elaborate speciality functions until you have moved beyond market: product fit and can prove MAU/ DAU’s etc. and a revenue road map. The leader needs to prove the sales process, whether B2C or B2B before you handover to a head of sales/ reps or AE’s. Learn before you earn.

·??????Decide upon the role of partnerships - you won’t be functionally adept at precisely everything. Nothing is permanent but on the basis of your success hypothesis, choose well. Partnerships include consideration on the go-to-market/ distribution as well as product build fronts, where speciality skills are required e.g. IT architecture; Digital Marketing etc.

8.????Use the opportunity to ask whether company policies align to getting the strategy implemented - ensure every job is infused by the strategy i.e. if you are not doing the strategy what else are you doing? Don’t worry about culture at this point - it is way too early in the game to truly decide who you are as the leader and by extension an organisation. The culture must accrete or sublimate from how you do what you do. Culture is an ‘is’ and not an ought. How you act in the moment of build is your culture. Look to imbue quality into every aspect of your business - starting with the customer in mind and including for sales and marketing. Build assets and dimensions that are both sellable and marketable in addition to the core proposition.

9.????Think tight feedback loops - days as opposed weeks; weeks as opposed months. A digital epoch has created surface for animated thinking. Test and iterate constantly without becoming paranoid. But then again ‘only the paranoid survive’ (Andy Grove). Observe lead indicators e.g. return users; ADU’s etc. Keep an eye on the market - spent time defining how you are different as well as distinct in relationship to the competitive market. Read customer reviews from other like/ similar businesses. Define your quality cues in relation the market. ‘Ladder’ your brand traits in relation the competition. If you were to ‘diss’ the competition what would you be saying.

·??????Quality Cues? - ‘a product characteristics that serve as a shortcut to signal value to consumers’ (ref. Section4)

·??????Laddering? - ‘focusing on a brand trait of yours that highlights a weakness of the competition, in turn making your brand look even better’ (ref. Section4)

10.??Create an MVP/ prototype if required - or lean into paper tests. This step may need to take place earlier if funding is contingent upon a prototype??

11.??Ship constantly - iterate at regular cadence whether in the proposition, the model, the product, marketing, internal process etc. always be outwardly or customer focussed as opposed caught up with iterating ‘organisation’ only. Don’t create BS jobs - everyone working for you should be working to deliver value to the customer. Think organism as opposed just organisation. Think fitness. Embellish for rewards and reduce for frictions constantly. Keep a register of rewards and frictions to derive an index.

·??????Fitness? - some intrinsic property that propels you ahead of the pack. Fitness is the gift to turn a random encounter into a lasting friendship. A function of innovativeness, quality and even content. It’s about ‘complex adaptive skills’, necessary to succeed in a domain. The aim is ultimately to achieve ‘preferential attachment’. You can look that one up on your own!

12. Wash, Rinse and Repeat - think not in totem pole terms but in a circularity.