Opensourcing my entrepreneurship course notes, the fourth lecture of my course focus on business strategies and rapid growth strategies. In addition, we explained the distinction of business strategy and business model, the kind of performance indicators which will define a successful strategy, and various models in understanding technology markets, for example, Gartner’s Hype Cycle, Moore’s “Crossing the Chasm” and Porter’s 5 Forces. We conclude with a list of rapid strategies based on franchising, joint ventures and mergers & acquisitions. This is a series based on a course “MPS 812: Entrepreneurship” I have been teaching in School of Physical & Mathematical Sciences, Nanyang Technological University.
My Course Slides:
- The difference between business strategy & business model: In any start-up, the founders and their team will work out an overall business strategy, which consists of a series of initiatives or directions in how they will execute. The business model depicts how the company generates revenues to cover the business costs of production, to generate profits for the businesses and attracts investment to grow towards the next stage. In most mobile-web start-ups particularly in the space that relates to consumers, the free-mium model is usually utilized, where the users get to use the service for free (for example, Google search and Facebook), but the monetization comes from a different source (for example, Google Adwords are sold to the advertisers who pays Google and Facebook Credits are sold to consumers to buy credits for online social games).
- Team must have a buy-in with the strategy: It is important that the strategy gets a buy-in from the executive team. Usually, in the real world, the team will have a brainstorming session where they try to take different positions to work out which initiatives would or would not work. If the team does not have a buy-in, executing and implementing the strategy will be difficult. In large corporations, change of management usually leads to change in strategy. However in some cases, the board of directors and stakeholders are too impatient and replace a team with another. This leads to a vicious cycle of a large corporation changing strategy and have no direction to how they can improve the business.
- Scaling a business via rapid growth strategies: Once the entrepreneur has identified the business model that works, the next step is to scale the model across different cultures and geographies. One point of thinking that I like to seed in most Asian entrepreneurs, “Why is it that the US technology companies find it easy to scale from US to the world while Asian companies does not seem to do so well? Is it because of the marketing, the product or the way how US or Asian companies scale?”.
- John O’ Farrell, Building the Global Startup – Part 1, 2 and 3.
- Michael Porter, “The Five Competitive Forces That Shape Strategy”.
- Reference on Gartner Hype Cycle.
- Ben Horowitz, Should you sell your company?.
- Ben Horowitz, Taking the mystery out of scaling a company
- Uzi Shmilovici, The Complete Guide To Freemium Business Models (TechCrunch)