What would you possibly describe your entrepreneur career as? An uncharted adventure or a well-mapped-out journey. Many entrepreneurs will tell you that, for them, it is really the first option. But it doesn’t have to be so. In fact, there are a good number of books detailing the entrepreneurship thing, and if books don’t work for you, then how about a compass? Follow us as we learn about the entrepreneurial strategy compass. 

What is the Entrepreneurial Strategy Compass? 

The entrepreneurial strategy compass refers to a graphical tool with a framework and four cardinal directions, which together specify a strategy/approach for entrepreneurs to follow when they consider building relationships or innovations. Using this compass, entrepreneurs can make a North-facing decision considered similar to “building a moat”, a South-facing decision considered similar to “storming a hill”, an East-facing decision considered similar to competing against industry players, and a West-facing decision considered similar to collaborating with industry players. The background of the entrepreneurial strategy compass is also very crucial. It is a four-squared block of strategies. The intellectual property strategy is at the top left corner (the north-west quadrant of the compass). The top right corner of the compass holds the architectural strategy. The bottom left corner holds the value-chain strategy, while the bottom right corner of the block hosts the disruption strategy. 

The Four Strategies of the Entrepreneurial Strategy Compass 

There are four unique strategies associated with the entrepreneurial strategy compass. We will go over each of them, describing how they are read and what they mean to entrepreneurs. 

Intellectual Property Strategy:

The intellectual property strategy exists in the top left quadrant of the entrepreneurial strategy compass. Its North-Western orientation means that entrepreneurs can only arrive at the strategy when they take on a north-facing decision of building a moat alongside a west-facing decision of collaborating with incumbents. In reality, the intellectual property strategy urges the creation and protection of intellectual property such as copyright and patents around business services or products. This helps businesses to attain control over their products and services and regulate entry into a market.  In addition, it sets them as the go-to business for specific products or services, making them visible in the market. The intellectual property strategy also prompts businesses to make relevant collaborations with other businesses.  

Value Chain Strategy:

The value chain strategy lies in the bottom left quadrant of the entrepreneurial strategy compass. This South-Western position means storming a hill while collaborating with incumbents. In line with the tone, businesses that go in this direction are creative and focus on developing unique and original innovations that disrupt conventional systems and add to existing value chains. While at it, they work hand in hand with other businesses, significantly improving service and product end deliveries. 

Architectural Strategy:

Many entrepreneurs and businesses do not tread the North-East direction when using the entrepreneurial strategy compass. The reason? Because it involves competing against industry players while trying to maintain tight control over their products or technology, and startups simply find it challenging to accomplish this. Taking the architectural strategy approach will mean diverting from existing chains to create a new one and further ensuring that this develops into a blooming business market. It is more or less an entrepreneurial adventure or exploration. If you ask us, we will say that such an approach is risky, with a high potential to crumble any business. However, a slight breakthrough using the same system could mean stardom for an entrepreneur and expansive growth for their company. 

The Disruption Strategy:

When you think of the disruption strategy, you think of a part of the entrepreneurial strategy compass that points to solo, highly innovative, and highly responsive entrepreneurship. Represented by the South-Eastern quadrant, businesses that make use of the disruption strategy are vibrant and approach existing markets with the intention to shake things up. They are competitive and they do a lot of product and technology development or commercialization. 

Why is the Entrepreneurial Strategy Compass Important? 

Every business venture these days is expected to have some form of interaction with four key elements: Customers, Technology, Organisation, and Competition. Each of these elements has some human and product/technology essence, for example, businesses interacting with customers meet these real people and also deploy user analytics tools or other forms of technology to smoothen the customer experience.

The importance of the entrepreneurial strategy compass is, therefore, that it practically helps 21st-century entrepreneurs:

•  build the right attitude towards incumbents (by either choosing to collaborate or compete with/against them), and 
• build the right attitude towards innovations (by either choosing to control or execute them). 

In more detail, the tool guides businesses in improving the quality of their strategy and finding the one thing that could lead to exponential growth and returns. 

Real-life Application of the Entrepreneurial Strategy Compass by RapidSOS

One of the most prominent applications of the entrepreneurial strategy compass was made by a technology company known as RapidSOS and founded by Michael Martin and Nick Horelik, an HBS graduate and an MIT engineer respectively. RapidSOS began as any regular startup, but it soon revolutionized how emergency response systems functioned. All it did was simple. It implemented a way of quickly analyzing mobile phone signals to figure out phone caller locations and transmit the same to 911 systems. The RapidSOS technology was a breakthrough not only because it chopped down on the time it took emergency responders to locate and intervene in emergencies, but also because it required little resources for the police and fire service departments to fully adopt it in their operations. Michael Martin and Nick Horelik were certain that their system would work. However, they were stuck when it got to pushing the technology out into the market. The company decided to apply the entrepreneurial strategy compass. As it turned out, they quickly arrived at a conclusion about their;

Target Market: 

Here, RapidSOS was simply looking at serving emergency and first-responder personnel and services.

Technology:

It was clear that their business will be technology-focused. Knowing this, they developed a proprietary technology with the aim of enabling real-time transfer of location information from emergency callers to respondents. There were two other considerations to be made before RapidSOS would successfully find a direction for its product. These included determining their position in the industry and, secondly, figuring out if it was better to compete against or collaborate with industry players. The compass tool led to three major options summarised as follows:

•  Employing innovation and a storming-the-hill approach by creating a new market to completely replace the existing one. Perhaps, by developing an all-in-one system that brings its real-time location technology together on a handheld receiver for respondents. 
•  Maximizing impact by operating in a specific niche and targeting a unique, underserved population of people (such as offering services to air accident victims only). This approach serves to bring huge recognition to a brand just before they decide to expand, offering its services to a larger or different demographic of users. 
•  Diffusing into the market by identifying partnership opportunities with industry players, rather than taking a competitive approach. 

Armed with this array of choices, RapidSOS made what would be a turning-point decision in their;

Brand Identity:

The then-emerging technology company positioned itself as a leader in its target market. It didn’t want anything less and it strategically engaged in activities that would put it on top of the leaderboard. 

Market Stance:

Taking sides with industry players was not in the options. RapidSOS had a promising product. In fact, the company analyzed that the 9-1-1 system existing at the time was inefficient and that its product had the potential to change that. The company, therefore, took on a competitive market stance. 

Conclusion

If you haven’t read through, here’s a quick recap of what this article is all about. Thanks to the entrepreneurial strategy compass, entrepreneurs no longer have to see their careers as uncharted adventures. The tool offers four insightful ways to approach competitors and tech while building your dream business. Here’s a little on each of them:

• Intellectual Property Strategy: This one is for thinkers. It supports a factory of ideas that prioritizes control and collaboration, delivers value, creates holistic innovations, and utilizes functional resources and capabilities. 

• Value Chain Strategy: This one is for the partners. It promotes core competency by building specialized component tech, strengthening functional capabilities, advancing collaboration and execution, and creating value for old and existing customers. 

• Architecture Strategy: This one is for the builders. It details moving from zero to one by building general systems, utilizing integrated resources, expressing competition and control over products and services, and ensuring value to new customers. 

Disruption Strategy: This one is for the hustlers that employ creative disruption through specialized systems innovations, integrated capabilities, market competition, and execution, as well as discovering and piecing together good value for users.

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