On the topic of small business strategy, many of you know what it is and how to implement them. So, I have tasked myself with creating the simplest guide to small business strategy by explaining 5 essential approaches to strategy in the quickest way possible — dot points!

Every small business environment is different and each can be conquered with a certain small business strategy. Here are 5 important approaches to strategy to consider:

• Classical: Be big.
• Adaptive: Be fast.
• Visionary: Be first.
• Shaping: Be the orchestrator.
• Renewal: Be viable.

Classical: Be big

• Most familiar strategy. Taught in business schools.
• Believe that the world is predictable, competition is stable, and advantage is sustainable.
• Involves dog-eat-dog competition and red ocean strategies where firms seek to position themselves optimally within their market.
• Positioning is based on superior size, differentiation, or capabilities. Achieving all is extremely difficult.
• Brief strategy process:
  • Analyse competitive advantage and the fit between firm’s capabilities and the market, and forecast how these will develop over time.
  • Design a plan to build and sustain advantageous positions, and execute it efficiently.

Adaptive: Be fast

• Business environment is neither predictable nor flexible.
• Predictions are difficult to make, and advantages are short-lived.
• Only defence against continuous disruption is readiness and adaptability.
• Winning comes from constantly experimenting and identifying newer options faster than others.
• Less analysing, predicting, and optimising.
• Brief strategy process:
  • Success through experimentation.
  • Vary your approach and create a range of strategic options to test
  • Select the most successful ones to scale up and exploit.
  • When the environment changes, rapidly repeat the process in order to find the most advantageous option, and renew the advantage.

Visionary: Be first

• About imagination, realisation, and creativity.
• Win by being the first to introduce a revolutionary new product or business model.
• Look to create a new market segment or disrupt an existing one.
• Can be the first to apply a new technology, or identify and address a significant consumer dissatisfaction or need. Can even create a new need!
• Also, can innovate to revitalise an old industry business model, or recognise a trend before others.
• Brief strategy process:
  • Envisage a valuable possibility that is achievable.
  • Be the first to build it.
  • Persist in executing and scaling the vision to its full potential.

Shaping: Be the orchestrator

• Environment is unpredictable but mouldable.
• Shape or reshape an entire industry in its early stages of development.
• Need to collaborate with others, share the risk, contribute capabilities, and build the new market before competitors mobilise.
• Rely on collaboration more than competition.
• Brief strategy process:
  • Engage stakeholders with a shared vision.
  • Build and evolve a platform which collaboration can be orchestrated, by scaling and maintaining its flexibility and diversity.

Renewal: Be viable

• Aims to restore the vitality and competitiveness of a small business in a harsh environment.
• Can be caused by a mismatch between the small business’s approach to a strategy and its environment, or by an external or internal shock.
• Need to change the way of doing business, if the current one continues to fail.
• Business strategy process:
  • Recognise and react to the deteriorating environment ASAP, by restoring your viability: refocusing the business, cutting costs, preserving capital, essentially freeing up resources for the next chapter of your small business.
  • Look to one of the other four strategies to rebuild the business’s advantages.

Based on: Reeves S., Haanaes k., & Sinha J. (2015). “Your Strategy Needs A Strategy: How to Choose and Execute the Right Approach”. Harvard Business Review.