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Embedding and Leverage

    Strategy works when you can embed in and leverage up.

    We covered the pyramid model in detail.

    However, to keep focus, it is helpful to prioritize building an economic moat.

    To land a new market or innovation, and expand the value we bring, it is helpful to keep other competitors out of our space.

    To accomplish this, consider two powerful forces: embedding and leverage.

    Embedding is capturing mindshare and attention. As if we embedded ourselves in the consumer’s brain.


    Network Effects. In general, value increases as more people use our product or service. Pretty easy to understand for a media company… more users mean more content mean more ads mean more content mean more users, etc. But this could work for all brands. For example, more Coke drinkers mean more varieties of Coke mean more channels mean more Coke drinkers, etc.

    Brand. Differentiating and positioning to the point that we are the only solution that addresses a very specific need of the buyer/user. This fosters loyalty. Coke vs. Pepsi. Rolex vs. Casio. Apple vs. Android.

    Switching Costs. I’ve heard this identified as “ingenius distribution channeling” and love that. How do we build so many physical hooks in the customer that it would be painful to leave? Consider Zapier. Build a dozen zaps and recreating that elsewhere becomes a pretty high hurdle.

    Typically, companies spike on one of these. Yet I might offer that planning for all three is beneficial for your strategy.

    Leverage is developing operating power.


    Economies of Scale. This pairs nicely with network effects. How do we leverage technology systems, artificial intelligence, intellectual property, key talent, etc. to create cost savings as we increase production? Lots of levers here around cost… cost of goods sold, certainly; however, also consider payroll, marketing and sales, etc. Specific tactics could be retargeting current customers, expanding to new markets, innovating on the fly, etc.

    Higher Prices. Are our embedding efforts working so well that we can command higher prices than our competitors? Consider Netflix. Raising prices could be difficult, given network effects are not explicit, the brand is being challenged, and switching costs are not that painful.

    Cost Advantage. This is different than economies of scale. This points to an infrastructural advantage. Apple can get their silicon less expensively than their competitors. Costco farms their own chickens. 

    Again, typically companies spike on one of these. Again, I offer that all three could be beneficial for your strategy.

    Your turn.

    Now go spark that revolution.