A market focused approach...
Considering key trade-offs and commitments when you venture
What is Strategy?
Entrepreneurial Strategy takes a slight step back from more action based approaches, nevertheless its an important tool to include your toolkit and differs from traditional strategy.
There are two leading entrepreneurial strategy approaches that can you give actionable and immediate support as you consider your venture ideas.
The key tenant of strategy is that a selection of one approach must involve the rejection of another. For entrepreneurs that means you can't have your business be all things to all people. You must make key decisions in particular about how you proceed with your venture idea.
The research by Joshua Gans, Scott Stern, and Jane Wu establishes two sets of levers on which to consider entrepreneurial market entry decisions.
By making choices among these two dimensions you will enter one of four
strategy quadrants that are outlined here.
Compete or Collaborate?
A key lever to the entrepreneurial decision is deciding to Collaborate or Compete. Imagine you are starting an ice cream shop in central park. Let's explore the benefits of each approach:
What goes better than ice cream after a savory snack? So instead of competing you partner with the hot dog stand nearby and lower your costs for napkins and other supplies by ordering together. Your location also gets known for being the area with food in the park!
On the other hand, for families that only stop for a small snack, the hot dog stand could be a key competitor. If you became the favored food vendor you might double your business.
Storm the Hill
Lean Startup and Effectuation typically emphasize storming the hill. That is, both of these approaches look to fail fast and learning quickly by putting your ideas out there to get quick feedback from your customers. This is what these researchers mean when they are talking about storming the hill. It's a strategy to put your product out there as fast as you can to take the lead as a first mover.
Alternatively, one may consider building a moat. Recognizing you have some key strength (think patent or unique resource or skill), then instead you may want to build out entrance into the market with a little more careful cadence. Why rush in and make mistakes when you might benefit from crossing your T's and dotting your I's.
Entrepreneurs must create value. The Value Lab approach to entrepreneurial strategy is a structured way of understanding the the theory of value that underlies the firm you are building. A key aspect of this strategy is understanding two aspects of what drives your venture:
(1) it's leading Contrarian Belief and
(2) the key problem you are trying to solve.
Try out their worksheets here
Strong value can only be generated by having a venture that works of a unique or novel belief. What's yours?
For Ephemeral Tattoo, the belief was that the nascent science showed promise that an ink could be placed in the skin temporarily. In 2016 this was an uncommon belief. Heck, it's still cutting edge technology.
A more common belief might be that there is value in creating a custom temporary tattoos that people can stick on and try before they buy. Enter various competitors with this idea: Inkbox ; Momentaryink, Tattly
Once you have a strong understanding of what unique stance your venture is taking, only then can you ask yourself very clearly, what core problem are you solving.
Said best here by the authors Felin, Gambardella, & Zenger:
"To create new value, you must either recognize and solve a problem previously unseen by others, or solve a known problem in a new way. And to do that, you must correctly identify some previously unrecognized or unmet customer need or desire, or find a more efficient or inexpensive means of satisfying a need which has already been met."
The last step (not unlike the Lean Startup method) is to test the assumptions outlined on your Value Lab worksheet. The idea is run various experiments to test whether your venture is solving the problem(s) that you identified and adjust your venture accordingly.