The Four Strategies

There’s really only four competitive strategies:

1. Broad + differentiated
2. Broad + low cost
3. Niche + differentiated 
4. Niche + low cost

Of course, this might strike you as a wild oversimplification. But I want to convince you that it’s not.

In fact, I believe this lens is one of the most powerful tools that any founder, operator, or investor can have. Because it cuts to the core of the two most important challenges every business has to overcome in order to succeed: why would anyone buy your product, and how can you make money selling it?

Understand that, and everything else a business needs to do clicks into place. Overlook them, you’re in grave danger of losing your way.

It’s important to know that this “four strategies” framework wasn’t just something I made up. It was created by the most cited author in the fields of business and economics, Michael Porter. He introduced it in his book, Competitive Advantage, and it’s been a staple in business schools and in practice ever since.

Navigating the market without this framework is like trying to navigate the world with no concept of north, south, east, and west. It’s possible — our ancestors certainly did it! — but those equipped with a compass can go much further and faster without getting lost.