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BoSUSA23 | Jason Cohen | Building your Permanent Defensible Strategy

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Business of Software Conference
Business of Software Conference

BoS USA 2023

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Mach 2 Creating your individualized, defensible strategy Jason Cohen, founder of WP Engine & Smart Bear https://asmartbear.com T: @asmartbear Business of Software, Fall 2023 Slides: https://asmartbear.com/mach2
@asmartbear 1300 mph / 2000 kph (Mach 2)
@asmartbear 1300 mph / 2000 kph (Mach 2)
@asmartbear
@asmartbear small large P Q
@asmartbear small The hard problem
@asmartbear ? ? ? The really hard problem
@asmartbear Practical “Mach 2” Strategy: How we will win
@asmartbear Integrating complex systems… Company: strengths, weaknesses, values Customers: requests, complaints, faster horses vs. cars Market: competition, industry trends, future state Execution: capacity, financing, skillset, risk-tolerance Why is strategy difficult?
@asmartbear Mach 2 Strategy: How we will win
@asmartbear Mach 2 Strategy: How we will win
@asmartbear Reverse-engineering the Status Quo
@asmartbear
@asmartbear To cover this area exactly: Size & Rotation Height = 3.65 Width = anything; can let it go off the right edge Position X-position = 7.00 Y-position = 1.00 Prompts for introspection We’re so ___, even competitors admit it. I’m tired of losing sales due to ___. Customers consistently complain/complement us for ____. I’m really proud of how we ____. I’m jealous that a competitor has ____. Our tech architecture makes ___ easy/hard. We wish/say we’re great at ____, but we’re not. Our company philosophy, a hill we’ll die on, is ___.
@asmartbear Extract Choices
@asmartbear “Our affordable software does only a few things, but does them well, with outstanding tech support.” Extract Choices: List as attributes Low price Few features Great support
@asmartbear Extract Choices: Pair with opposites Status Quo Alternative Low price Few features Great support
@asmartbear Extract Choices: Pair with opposites Status Quo Alternative Low price Over-priced Few features Many features Great support Garbage support
@asmartbear Extract Choices: Refine into intelligent choices Status Quo Alternative Low price Over-priced Few features Many features Great support Garbage support
@asmartbear Extract Choices: Refine into intelligent choices Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Few features Many features Great support Garbage support
@asmartbear Stop saying “strengths” and “weaknesses” “Competitive”
@asmartbear Extract Choices: Refine into intelligent choices Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Few features Many features Great support Garbage support
@asmartbear Extract Choices: Refine into intelligent choices Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Great support Garbage support
@asmartbear Extract Choices: Refine into intelligent choices Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Service White-glove + thrills customers, creating advocates + at-scale companies can’t compete – experts with people skills are expensive Self-service + customers prefer visibility/control w/o chat + inexpensive to deliver, even at scale
@asmartbear Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Service White-glove + thrills customers, creating advocates + at-scale companies can’t compete – experts with people skills are expensive Self-service + customers prefer visibility/control w/o chat + inexpensive to deliver, even at scale Extract Choices: Refine into intelligent choices Status Quo Alternative Talent Hire only the best Hire poorly? Hire idiots? Hire assholes?
@asmartbear Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Service White-glove + thrills customers, creating advocates + at-scale companies can’t compete – experts with people skills are expensive Self-service + customers prefer visibility/control w/o chat + inexpensive to deliver, even at scale Extract Choices: Refine into intelligent choices Status Quo Alternative Management Style Productivity with minimal coordination Team players: 1+1=3
@asmartbear Consistent Choices: Identify conflicts Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Service White-glove + thrills customers, creating advocates + at-scale companies can’t compete – experts with people skills are expensive Self-service + customers prefer visibility/control w/o chat + inexpensive to deliver, even at scale
@asmartbear Consistent Choices: Resolve conflicts Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Service White-glove + thrills customers, creating advocates + at-scale companies can’t compete – experts with people skills are expensive Self-service + customers prefer visibility/control w/o chat + inexpensive to deliver, even at scale
@asmartbear Consistent Choices: Resolve conflicts Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Service White-glove + thrills customers, creating advocates + at-scale companies can’t compete – experts with people skills are expensive Self-service + customers prefer visibility/control w/o chat + inexpensive to deliver, even at scale ✔ ✔ ✔ A: Low-cost leader
@asmartbear Consistent Choices: Resolve conflicts Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Service White-glove + thrills customers, creating advocates + at-scale companies can’t compete – experts with people skills are expensive Self-service + customers prefer visibility/control w/o chat + inexpensive to deliver, even at scale ✔ ✔ A: Low-cost leader B: Premium Service
@asmartbear Consistent Choices: Resolve conflicts Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Service White-glove + thrills customers, creating advocates + at-scale companies can’t compete – experts with people skills are expensive Self-service + customers prefer visibility/control w/o chat + inexpensive to deliver, even at scale A: Low-cost leader B: Premium Service C: ??? Low Ticket Volume – prioritize ↓tickets over ↑features – treat every ticket like a bug High Quality – prioritize bugs over new features – slower to release new things + fewer tickets + customer happiness A: Low-cost leader B: Premium Service C: Elegant Simplicity Great Design + delights customers beyond utility + intuitive → no support questions – slower to release new things ✔ ✔ ✔ ✔ ✔ ✔
@asmartbear Consistent, mutually-reinforcing choices Status Quo Alternative Price Affordable Premium Features Minimal Feature-rich Service White-glove Self-service Tickets Always helping Low-volume Quality Practical First-rate Design Utilitarian Craftsmanship Lean into what’s working Strategic changes
@asmartbear Decision Circle
@asmartbear Decision Circle
@asmartbear
@asmartbear
@asmartbear
@asmartbear
@asmartbear Strategic Pillar: Elegant Simplicity Conflict: "Human Effort" vs "Affordable"
@asmartbear Strategic Pillar: Elegant Simplicity
@asmartbear Mach 2 Strategy: How we will win
@asmartbear Mach 2 Strategy: How we will win
@asmartbear
@asmartbear Strategic Pillar: Elegant Simplicity
@asmartbear Competitive Differentiation Industry Secular Competitor Competitor Competitive Prompts What are their decisions/consequences? Who is their “perfect customer?” How fast / what direction is product dev? What are their inviolable principles? What is their primary success metric? What makes money / what is a loss-leader? Which moats are they building? You
@asmartbear
@asmartbear
@asmartbear Strategic Pillar: Elegant Simplicity
@asmartbear External Constraints Industry Secular Trends Shift to virtual workforce Consumerization of Enterprise AI everywhere Industry Trends Which segments are growing / shrinking? What are the 3-5 forces this industry is grappling with? Secular You Competitor Competitor
@asmartbear External Constraints Industry Secular You Enabling Constraints Shift to virtual workforce • boom in online collaboration software • lower morale and shallower culture Consumerization of Enterprise • end-users now driving sales • design matters AI is everyone’s next feature • upends consumer assumptions • initial versions suck Competitor Competitor
@asmartbear
@asmartbear
@asmartbear
@asmartbear
@asmartbear Service is the Product Infinitely Extensible
@asmartbear
@asmartbear Mach 2 Strategy: How we will win
@asmartbear Mach 2 Strategy: How we will win
@asmartbear Bad for customers!? Best in the world for customers Coherent Operations Michael Porter, HBR, 1996
@asmartbear
@asmartbear “Creating a superior user experience is more important than making money.” — CEO Jim Buckmaster “The obstacle to sustainability and growth at Craigslist is the company’s strong principles valuing customer-offering over monetization, trusting consistency over innovation." —Harvard Business School case
@asmartbear
@asmartbear Credit: A Crowded Space
@asmartbear Credit: A Crowded Space
@asmartbear Credit: A Crowded Space
@asmartbear
@asmartbear Mach 2 Strategy: How we will win
@asmartbear “Mutually-reinforcing, extreme decisions” is a new type of moat Moat: Permanent competitive advantage ● Network Effect (eBay; Facebook) ● Unique, Secret IP (Coke formula; Google search algorithm) ● System of Record (Salesforce; Workday) ● Mach 2 Strategy (Southwest Airlines; Craigslist)
@asmartbear Mach 2 Strategy: How we will win
@asmartbear Mach 2 Strategy: How we will win
@asmartbear Mach 2 Strategy: How we will win Mutually-reinforcing extreme decisions Slides: https://asmartbear.com/mach2

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BoSUSA23 | Jason Cohen | Building your Permanent Defensible Strategy

  • 1. Mach 2 Creating your individualized, defensible strategy Jason Cohen, founder of WP Engine & Smart Bear https://asmartbear.com T: @asmartbear Business of Software, Fall 2023 Slides: https://asmartbear.com/mach2
  • 2. @asmartbear 1300 mph / 2000 kph (Mach 2)
  • 3. @asmartbear 1300 mph / 2000 kph (Mach 2)
  • 8. @asmartbear Practical “Mach 2” Strategy: How we will win
  • 9. @asmartbear Integrating complex systems… Company: strengths, weaknesses, values Customers: requests, complaints, faster horses vs. cars Market: competition, industry trends, future state Execution: capacity, financing, skillset, risk-tolerance Why is strategy difficult?
  • 10. @asmartbear Mach 2 Strategy: How we will win
  • 11. @asmartbear Mach 2 Strategy: How we will win
  • 14. @asmartbear To cover this area exactly: Size & Rotation Height = 3.65 Width = anything; can let it go off the right edge Position X-position = 7.00 Y-position = 1.00 Prompts for introspection We’re so ___, even competitors admit it. I’m tired of losing sales due to ___. Customers consistently complain/complement us for ____. I’m really proud of how we ____. I’m jealous that a competitor has ____. Our tech architecture makes ___ easy/hard. We wish/say we’re great at ____, but we’re not. Our company philosophy, a hill we’ll die on, is ___.
  • 16. @asmartbear “Our affordable software does only a few things, but does them well, with outstanding tech support.” Extract Choices: List as attributes Low price Few features Great support
  • 17. @asmartbear Extract Choices: Pair with opposites Status Quo Alternative Low price Few features Great support
  • 18. @asmartbear Extract Choices: Pair with opposites Status Quo Alternative Low price Over-priced Few features Many features Great support Garbage support
  • 19. @asmartbear Extract Choices: Refine into intelligent choices Status Quo Alternative Low price Over-priced Few features Many features Great support Garbage support
  • 20. @asmartbear Extract Choices: Refine into intelligent choices Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Few features Many features Great support Garbage support
  • 21. @asmartbear Stop saying “strengths” and “weaknesses” “Competitive”
  • 22. @asmartbear Extract Choices: Refine into intelligent choices Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Few features Many features Great support Garbage support
  • 23. @asmartbear Extract Choices: Refine into intelligent choices Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Great support Garbage support
  • 24. @asmartbear Extract Choices: Refine into intelligent choices Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Service White-glove + thrills customers, creating advocates + at-scale companies can’t compete – experts with people skills are expensive Self-service + customers prefer visibility/control w/o chat + inexpensive to deliver, even at scale
  • 25. @asmartbear Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Service White-glove + thrills customers, creating advocates + at-scale companies can’t compete – experts with people skills are expensive Self-service + customers prefer visibility/control w/o chat + inexpensive to deliver, even at scale Extract Choices: Refine into intelligent choices Status Quo Alternative Talent Hire only the best Hire poorly? Hire idiots? Hire assholes?
  • 26. @asmartbear Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Service White-glove + thrills customers, creating advocates + at-scale companies can’t compete – experts with people skills are expensive Self-service + customers prefer visibility/control w/o chat + inexpensive to deliver, even at scale Extract Choices: Refine into intelligent choices Status Quo Alternative Management Style Productivity with minimal coordination Team players: 1+1=3
  • 27. @asmartbear Consistent Choices: Identify conflicts Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Service White-glove + thrills customers, creating advocates + at-scale companies can’t compete – experts with people skills are expensive Self-service + customers prefer visibility/control w/o chat + inexpensive to deliver, even at scale
  • 28. @asmartbear Consistent Choices: Resolve conflicts Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Service White-glove + thrills customers, creating advocates + at-scale companies can’t compete – experts with people skills are expensive Self-service + customers prefer visibility/control w/o chat + inexpensive to deliver, even at scale
  • 29. @asmartbear Consistent Choices: Resolve conflicts Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Service White-glove + thrills customers, creating advocates + at-scale companies can’t compete – experts with people skills are expensive Self-service + customers prefer visibility/control w/o chat + inexpensive to deliver, even at scale ✔ ✔ ✔ A: Low-cost leader
  • 30. @asmartbear Consistent Choices: Resolve conflicts Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Service White-glove + thrills customers, creating advocates + at-scale companies can’t compete – experts with people skills are expensive Self-service + customers prefer visibility/control w/o chat + inexpensive to deliver, even at scale ✔ ✔ A: Low-cost leader B: Premium Service
  • 31. @asmartbear Consistent Choices: Resolve conflicts Status Quo Alternative Price Affordable + maximum number of customers + can do self-service / credit-card – must be inexpensive to deliver – perceived as low-quality or untrustworthy Premium + can afford a sales & service org + more profitable, if the high price does not generate proportionately more cost + can position as “the leader” Quantity of Features Minimal + small team can execute well + requires less tech support + straightforward for users w/ simple needs Feature-rich + supports many use-cases for many customers → larger addressable market + justifies higher prices Service White-glove + thrills customers, creating advocates + at-scale companies can’t compete – experts with people skills are expensive Self-service + customers prefer visibility/control w/o chat + inexpensive to deliver, even at scale A: Low-cost leader B: Premium Service C: ??? Low Ticket Volume – prioritize ↓tickets over ↑features – treat every ticket like a bug High Quality – prioritize bugs over new features – slower to release new things + fewer tickets + customer happiness A: Low-cost leader B: Premium Service C: Elegant Simplicity Great Design + delights customers beyond utility + intuitive → no support questions – slower to release new things ✔ ✔ ✔ ✔ ✔ ✔
  • 32. @asmartbear Consistent, mutually-reinforcing choices Status Quo Alternative Price Affordable Premium Features Minimal Feature-rich Service White-glove Self-service Tickets Always helping Low-volume Quality Practical First-rate Design Utilitarian Craftsmanship Lean into what’s working Strategic changes
  • 39. @asmartbear Strategic Pillar: Elegant Simplicity Conflict: "Human Effort" vs "Affordable"
  • 41. @asmartbear Mach 2 Strategy: How we will win
  • 42. @asmartbear Mach 2 Strategy: How we will win
  • 45. @asmartbear Competitive Differentiation Industry Secular Competitor Competitor Competitive Prompts What are their decisions/consequences? Who is their “perfect customer?” How fast / what direction is product dev? What are their inviolable principles? What is their primary success metric? What makes money / what is a loss-leader? Which moats are they building? You
  • 49. @asmartbear External Constraints Industry Secular Trends Shift to virtual workforce Consumerization of Enterprise AI everywhere Industry Trends Which segments are growing / shrinking? What are the 3-5 forces this industry is grappling with? Secular You Competitor Competitor
  • 50. @asmartbear External Constraints Industry Secular You Enabling Constraints Shift to virtual workforce • boom in online collaboration software • lower morale and shallower culture Consumerization of Enterprise • end-users now driving sales • design matters AI is everyone’s next feature • upends consumer assumptions • initial versions suck Competitor Competitor
  • 57. @asmartbear Mach 2 Strategy: How we will win
  • 58. @asmartbear Mach 2 Strategy: How we will win
  • 59. @asmartbear Bad for customers!? Best in the world for customers Coherent Operations Michael Porter, HBR, 1996
  • 61. @asmartbear “Creating a superior user experience is more important than making money.” — CEO Jim Buckmaster “The obstacle to sustainability and growth at Craigslist is the company’s strong principles valuing customer-offering over monetization, trusting consistency over innovation." —Harvard Business School case
  • 67. @asmartbear Mach 2 Strategy: How we will win
  • 68. @asmartbear “Mutually-reinforcing, extreme decisions” is a new type of moat Moat: Permanent competitive advantage ● Network Effect (eBay; Facebook) ● Unique, Secret IP (Coke formula; Google search algorithm) ● System of Record (Salesforce; Workday) ● Mach 2 Strategy (Southwest Airlines; Craigslist)
  • 69. @asmartbear Mach 2 Strategy: How we will win
  • 70. @asmartbear Mach 2 Strategy: How we will win
  • 71. @asmartbear Mach 2 Strategy: How we will win Mutually-reinforcing extreme decisions Slides: https://asmartbear.com/mach2