What do you see as the strategic essentials for companies employing fewer than 100 people? Recommendations from academics and consultants apply almost exclusively to large corporations, drowning us in a sea of advice that feels irrelevant for small organizations with constrained resources.
We have bad news for you. Strategy is strategy, whether the company is large or small. It’s that killer idea, a “big aha,” as we call it, that gives you a sustainable competitive advantage. Put another way, strategy is just a winning value proposition, a product or service that customers simply want more than the other options out there. Beyond that, strategy is all about execution. And there, small companies actually have something of an advantage.
We don’t blame you for feeling as if most advice on strategy applies mainly to big companies. It’s just so complex, as if strategy were rocket science. In fact, with all the number-crunching and data analysis being promoted as strategy these days, you’d have to be a large company to have the people, time, and money to even contemplate such methodologies.
Don’t bother trying. The more you grind down into details and scenarios, the more you get tied up in knots. Look, once you have your big aha, strategy is just an approximate course of action that you revisit and redefine according to shifting market conditions. It’s got to feel fluid—and alive!
Companies small and large can develop a compelling strategy by answering five key questions. What does the playing field look like? What are our rivals up to? What have we done lately? What keeps us up at night? And given all that, what’s our winning move?
No academic textbooks or consultants are needed.All that’s required is a team of engaged employees who can dream big, debate intensely, and ultimately emerge with a dynamic game plan. Then it’s time to implement, and that’s where small companies really have it made. When there are only a hundred employees, or even a thousand, it is much easier to communicate strategy and ignite a contagious intensity. And once the strategy is launched, small companies, like little powerboats, are able to adjust direction more quickly than corporate ocean liners. They can also hire faster, make decisions with fewer bureaucratic hurdles, and generally see their mistakes (and fix them) faster than hulking competitors.
That said, small isn’t totally beautiful when it comes to strategy. Here’s the rub: With constrained resources, you have to be right more often. Big companies can take a lot of swings and miss a few. By contrast, one big strategy mistake can put a small company out of business.
The imperative for small companies, then, is to hold their value proposition to a higher standard. They have to make sure they’ve got something singular: a new idea with a patent, a breakthrough technology, a super-low-cost process, or a unique service offering. Whatever attracts customers and makes them stick. When a small company gets to that point, it can celebrate a strategy that’s winning without all those consultant reports, graphs, and fat stacks of PowerPoint slides that no one really needs, not even the big guys.
This question and answer originally appeared in Business Week magazine on March 13, 2006.
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