Weekends seem to bring with them at least one or two good blog debates.  This last one was no different with Chris Dixon’s post titled “SEO is no longer a viable marketing strategy for startups” and Danny Sullivan’s response “SEO remains a viable marketing strategy for anyone.”  I am not going to comment on the merits of SEO per se (check the comments on both posts + twitter for more on that), but rather on the distinction between strategy and tactics.

My own history trying to understand strategy goes back to my undergraduate days where I studied a fair bit of game theory as it formed the central part of my senior thesis.  So my initial take on strategy was a rather technical one.  After college, I went to work for LEK, a smaller consulting company with a very entrepreneurial office in Munich (which appealed to me).  LEK put me through a boot camp in London that had a big “strategy” component, which was essentially based on Michael Porter’s Five Forces, Value Chain and Generic Strategies frameworks.  While this work may seem dated, it is still excellent and anybody thinking about strategy should read it for inspiration and background.

I am writing this on the train in this morning, so I am not sure if someone has tried to update Porter’s frameworks for Internet companies, but that would be a very worthwhile endeavor.  But if they had done so, a strategy that probably would have emerged from that might be labeled “information arbitrage” (hat tip to Roger!).  The thrust of that strategy is broadly to exploit asymmetries between how much information is made available by some entity (e.g. a business) and how much information others are looking for about that entity.  Businesses such as TripAdvisor and Yelp are prime examples of that strategy.

If Chris had titled his post as “information arbitrage is no longer a viable strategy for startups” it might still have been controversial but not led to a fight about SEO.  I am not convinced that information arbitrage is no longer viable today, but it will not be viable forever.  The reason is the same as for most (all?) arbitrage strategies including those in the financial markets – they go away over time as more people pursue the same strategy and the arbitrage opportunity closes up.  In addition, on the web, there is a natural tendency for more and more information to be produced by entities themselves and others writing about them (even without explicitly pursuing this strategy) thus reducing the information arbitrage opportunity.

Now what about tactics?  Well tactics are the things you do to implement your strategy.  So if you have an information arbitrage strategy, then SEO is likely to be one of your key tactics.  Where it gets a bit confusing is that strategy and tactics are really fractal concepts, because what is tactics at one level is strategy at the next level of “resolution” (translate roughly as “at the next level down”). Meaning if you are in charge of getting SEO right, then you will have a strategy for that and your tactics will likely involve getting more inbound links, having good markup on your pages, etc.

Hope this helps clarify at least for some.  I might follow up with a post on the defensibility of strategies, something to which Porter made an important contribution much later (have to first find his seminal HBR piece).

Weekends seem to bring with them at least one or two good blog debates.  This last one was no different with Chris Dixon’s post titled “SEO is no longer a viable marketing strategy for startups” and Danny Sullivan’s response “SEO remains a viable marketing strategy for anyone.”  I am not going to comment on the merits of SEO per se (check the comments on both posts + twitter for more on that), but rather on the distinction between strategy and tactics.

My own history trying to understand strategy goes back to my undergraduate days where I studied a fair bit of game theory as it formed the central part of my senior thesis.  So my initial take on strategy was a rather technical one.  After college, I went to work for LEK, a smaller consulting company with a very entrepreneurial office in Munich (which appealed to me).  LEK put me through a boot camp in London that had a big “strategy” component, which was essentially based on Michael Porter’s Five Forces, Value Chain and Generic Strategies frameworks.  While this work may seem dated, it is still excellent and anybody thinking about strategy should read it for inspiration and background.

I am writing this on the train in this morning, so I am not sure if someone has tried to update Porter’s frameworks for Internet companies, but that would be a very worthwhile endeavor.  But if they had done so, a strategy that probably would have emerged from that might be labeled “information arbitrage” (hat tip to Roger!).  The thrust of that strategy is broadly to exploit asymmetries between how much information is made available by some entity (e.g. a business) and how much information others are looking for about that entity.  Businesses such as TripAdvisor and Yelp are prime examples of that strategy.

If Chris had titled his post as “information arbitrage is no longer a viable strategy for startups” it might still have been controversial but not led to a fight about SEO.  I am not convinced that information arbitrage is no longer viable today, but it will not be viable forever.  The reason is the same as for most (all?) arbitrage strategies including those in the financial markets – they go away over time as more people pursue the same strategy and the arbitrage opportunity closes up.  In addition, on the web, there is a natural tendency for more and more information to be produced by entities themselves and others writing about them (even without explicitly pursuing this strategy) thus reducing the information arbitrage opportunity.

Now what about tactics?  Well tactics are the things you do to implement your strategy.  So if you have an information arbitrage strategy, then SEO is likely to be one of your key tactics.  Where it gets a bit confusing is that strategy and tactics are really fractal concepts, because what is tactics at one level is strategy at the next level of “resolution” (translate roughly as “at the next level down”). Meaning if you are in charge of getting SEO right, then you will have a strategy for that and your tactics will likely involve getting more inbound links, having good markup on your pages, etc.

Hope this helps clarify at least for some.  I might follow up with a post on the defensibility of strategies, something to which Porter made an important contribution much later (have to first find his seminal HBR piece).