# Setting Direction Strategy reduces to two questions: how do you create value, and how do you keep it? Most strategy conversations skip the first question entirely and jump straight to competitive dynamics — moats, positioning, differentiation. But without clarity on value creation, you're optimising the wrong thing. This section starts with value, then works through positioning, trade-offs, and the decisions that determine long-term outcomes. The goal is a clear-eyed view of where advantage comes from and what it takes to sustain it. --- ## Where to start **[[Notes/Value and Moats|Value and Moats]]** — The two questions that define strategy. Start here for the foundation. **[[Notes/The Value Stick|The Value Stick]]** — Strategy's two levers: raise willingness-to-pay or lower willingness-to-sell. The mechanics of value capture. --- ## The strategy core How value gets created, captured, and defended. **[[Notes/Value and Moats|Value and Moats]]** — Creating value is necessary but not sufficient. Keeping it requires moats. The two questions and how they interact. **[[Notes/The Value Stick|The Value Stick]]** — Value has four components: willingness-to-pay, price, cost, willingness-to-sell. Strategy moves the ends; operations moves the middle. **[[Notes/Real Choices|Real Choices]]** — Real strategic choices have rational opposites. If the opposite sounds absurd, you haven't chosen anything. **[[Notes/Complements|Complements]]** — How value pools shift when products work together. The four strategic options when you're not the bottleneck. **[[Notes/Network Effects|Network Effects]]** — Winner-take-most dynamics. How networks tip, and how to attack established ones. **[[Notes/Explore vs Exploit|Explore vs Exploit]]** — The time horizon rule: explore early, exploit late. When to seek new value versus extract existing value. --- ## Positioning Where to compete and how to be different. **[[Notes/Context Beats Category|Context Beats Category]]** — In vertical markets, positioning on consideration attributes (why you're in the running) versus retention attributes (why they stay) makes all the difference. **[[Notes/Depth Before Breadth|Depth Before Breadth]]** — ICP focus first. Sequence expansion around the halo. Why going narrow before going wide usually wins. **[[Notes/Growth Market Traps|Growth Market Traps]]** — Obvious large markets attract capital that destroys economics. The best opportunities often look small. **[[Notes/Vertical Market Playbook|Vertical Market Playbook]]** — The strategic framework for vertical software. From positioning through go-to-market execution. --- ## Trade-offs The decisions that shape long-term outcomes. **[[Notes/Margins vs Growth|Margins vs Growth]]** — Once returns are high enough, reinvestment becomes the lever. When to prioritise each. **[[Notes/Third Lever|Third Lever]]** — Pricing as strategic choice beyond cost and volume. The lever most operators under-use. **[[Notes/Time As Leverage|Time as Leverage]]** — Products add value 0.05–5% of the time. The rest is waiting. Implications for where value actually lives. --- ## Economics The numbers behind strategic choices. **[[Notes/Customer-Funded Growth|Customer-Funded Growth]]** — Businesses that generate cash by growing. When acquisition economics fund expansion. **[[Notes/Payback Period|Payback Period]]** — When customer acquisition becomes self-funding. The timeline that matters. **[[Notes/Payback Over Ratios|Payback Over Ratios]]** — CAC payback matters more than LTV:CAC. Why the timing of cash flows trumps lifetime calculations. --- ## Practices Tools for translating strategy into action. **[[Notes/Four Questions|Four Questions]]** — A decision checklist: what are we doing, how will we prove it works, how will we get it done, how will we know if it worked? **[[Notes/One-Page Annual Operating Plan|One-Page Annual Operating Plan]]** — Compress the year to 7-8 things that matter. Strategy made concrete. --- ## Synthesis **[[Notes/Decision Architecture|Decision Architecture]]** — The full integration: strategy as hypothesis, measurement as decision design, speed through codified logic. --- ## Suggested reading order If you're working through this section systematically: 1. [[Notes/Value and Moats|Value and Moats]] — the two questions 2. [[Notes/The Value Stick|The Value Stick]] — how value gets captured 3. [[Notes/Real Choices|Real Choices]] — what makes a choice strategic 4. [[Notes/Complements|Complements]] → [[Notes/Network Effects|Network Effects]] — competitive dynamics 5. [[Notes/Margins vs Growth|Margins vs Growth]] — the core trade-off 6. [[Notes/Decision Architecture|Decision Architecture]] — bringing it together Then explore positioning or economics based on your context. --- ## Connects to **[[Running the Machine|Running the Machine]]** — Strategy without execution is fantasy. Direction-setting must connect to operational reality. **[[Making Decisions|Making Decisions]]** — Strategy is a hypothesis. The decision-making section covers how to learn whether your strategic bets are paying off. ---