The Importance of Positioning for the Startup

The essence of strategy is choice; choosing where to focus and where not to focus. It’s great wisdom attributed to Michael Porter and the focus of many management consulting books and projects. But for those of us in the middle of our companies, it can be immensely challenging to gain clarity. To me, a core element of a company’s strategy can be boiled down into a positioning statement. It’s not the entire strategy of course, but it does force clarity and focus on market segment and value. And the exercise of devising -and revisiting- one should create alignment with the team and form a foundation for scaling when the time is right.
I was meeting with an entrepreneur a month back and asked him about his positioning. He said they haven’t done that yet because they don’t have a “marketing person” on the team yet. Yikes. To me it’s a real mistake to think that writing a positioning statement is the responsibility of marketing. Anyone can, and should, do it. Even if you’re still building product, a positioning statement can serve as a hypothesis against which to test - so long as the team is aware that it will likely change as product/market fit evolves. A positioning statement is one of several guiding frameworks I believe should exist in any company. The following is the common outline:
  • That... (The value provided by your product to the target segment. Resist the temptation to talk about what the product does or how it works; state why the targeted segment needs it and the value it provides to them. This should capture what your early customers LOVE about using your product or service.)
  • For... (Who are you targeting? Think about other actors around them too, but really concentrate on the main persona who will benefit from your offering. It’s hard to be too narrow as a small company, though many entrepreneurs resist this approach because it feels too limiting. If you try to speak to everyone, you end up appealing to no one. Try to think about how your market is segmented and pick one)
  • Who are dissatisfied with... (The state that the current alternative has created... the source of pain that they will be willing to address.)
  • Our product/solution... (What the product does in language your target segment might use.)
  • Unlike... (The current alternative. This will be a direct competitor or some other alternative for addressing their pains.)
  • We... (How your approach is different. There may be dozens of reasons why you’re different, but boil it down to the most essential... these should be based on what I call “Defensible Differentiators” - the things particular to your architecture, people or systems that will be difficult to replicate quickly.)
Here’s an example of positioning statement I used a few years back during a critical tack in Spotfire’s history. At the time, we were “tacking” the company from being a niche provider of data visualization into the much larger, and more crowded, business intelligence industry. We used a positioning exercise over several months to tighten up our attack plan and entrance into the industry and relied on our core architectural approach (a distributed, user-controlled in-memory data engine that was free of the IT-centric “pre-configuring” that all incumbents required because of their centralized data warehouses.)

Michael Skok, prominent Boston venture capitalist, and I talked through this case study at the Harvard iLab a few years months back if you’d like additional background on the framework’s development and use.

This all may feel academic, but it’s not. Do the exercise with your team and you’ll quickly figure out how aligned you are. If you’re at an early stage I think it’s ok if you don’t have perfect alignment; you may still be before product/market fit and it can be useful to form several hypothesized positioning statements. If you’re later on and trying to scale the business, then I highly suggest getting everyone on the same page.

Try replacing your company with your competitors name. Could they make the same claim or does it fall apart? If it falls apart with another company, then you’ve landed on something unique and tied to your product/company execution.

When you feel good about the statement capturing the essence of your position, test it, test it again, then test it some more. Personally, I use every opportunity to get feedback from people in or around my target market. Customers and prospects are obviously most valuable for feedback since they ultimately must find your claims valuable enough to purchase. Revisit the statement after customer wins and losses. Interview your customers and ask for their feedback and if it captures their perceptions of your value and differentiation.

For B2B markets, I also suggest reviewing positioning statements with industry analysts. I know many people, particularly those in startups, have a disdain for industry analysts, but I believe they’re overlooking an opportunity and their potential contributions. If you can find analysts who spend time speaking with your target market, then you must get to them. Not only will they bring you your target market’s general perspective, but also they can deliver your message to the market. They are also pitched by your likely competitors, so they can offer up a perspective on competitive positioning. Treat industry analysts like consultants and you will realize a much more valuable relationship.

Until you’ve achieved some degree of product/market fit yet, I would not spend time or money formatting your positioning statement into pretty posters for the office since the statement is likely to evolve. Some marketing pros try to protect the positioning statement as if it were set in stone. This is a big mistake in my experience, especially in the rapidly evolving startup. Form a solid statement to test and constantly reconfirm, but allow customers and use-cases of consistent traction guide you and evolve the statement. Once you have reached consistency and find the statement stable for more than a quarter or two, then I do think making it part of the culture is smart.

It always amazes me how clarifying the act of creating and refining positioning statements is in practice and I consider it one of the central frameworks every company should establish and evolve... 

I'll explore these other frameworks in future posts:
  • Mission Statement
  • Company Core Values
  • Positioning Statement
  • Value Drivers
  • Defensible Differentiators
  • Branding & Style Guide
How do you use Positioning Statements and what’s been most impactful?