MBP Book Discussion #3: Chapter 2 - Strategy and resources

Impact: the first word in startup strategy

If you haven’t already - get the second edition of the MBP here.

The first few chapters of the MBP are intended to lay the foundation for a way of thinking. Chapter 1 speaks to the notion that startups must be bought, and are exceedingly hard to sell. We expanded on this thinking in the MBP.co post on Chapter 1: The cure for the sale process infection. Chapter 2 lays down an equally important part of this foundation, that acquisition is one of many ways for startups to access the resources they need for growth.

Startups often have a hard time harmonizing the notion of independent growth with potential M&A opportunities. How can you answer “yes” when asked if you are open to being acquired while also still projecting confidence to your investors and team about your prospects as an independent company?

Quite easily actually. In fact, it’s just one word: Impact.

Your mission is to have the biggest possible impact on the world. To meaningfully advance your field of interest. Yes, you want to create a positive economic return, but the mission is the impact. To achieve your mission, you may go on to raise more growth capital; you might establish commercial partnerships such that you can leverage existing channels and resources; and if it makes sense, you might even fully combine with a larger player through an acquisition. The point is that you can unify every conversation by emphasizing impact. In the name of impact every possible growth strategy is on the table, all the time.

Well, then how do we consider different paths for making this impact?

Product, distribution, and monetization

The MBP’s product, distribution, and monetization framework is designed to help you consider the interplay between the vectors of startup strategic thinking. There’s probably another book in the product, distribution, and monetization triad - and it only received a bit more than a page’s worth of attention in the MBP! So let’s expand on it a bit, and then tie it back to the notion of impact.

Competition is often the shaping force in business strategy frameworks. For example three of Porter’s Five Forces relate to competition (direct competition, new entrants, substitutes). However, I’d argue that in most cases, when it comes to launching new ventures, competition doesn’t make the podium.

When you’re pioneering into a new market your top priority is to rapidly establish the dominant position. That doesn’t always mean getting into the market “first,” but it does mean getting into the market “best.” There are many, many cases of fast-followers passing up early-leaders. The fast-follower having mixed just the right blend of product, distribution, and monetization to enable them to jump way out in front. In these races it’s more about leapfrogging than it is about incremental competitive moves. The eventual winner just blew the doors off the others through compelling product capabilities, effective distribution, and clever monetization. Establishing the dominant position in a new category is more about pressing forward into the emerging market than it is about pressing sideways against competitors. 

In the language of sports I would say launching new ventures is less like football, soccer, or even tennis - where every action is met with an immediate reaction, which then influences your next action. Instead, launching new ventures is a bit more like golf, where it’s you against the course and the winner is the one who designs and executes the most efficient way through the obstacles. Competition is out there, but it isn’t throwing your golf ball back in your face after every shot. You control much of your own destiny. 

How best to navigate the obstacles?