Dr. Scott Hutcheson discusses strategy from the perspective of a fast-growing small business.
looks at strategy from the perspective of a fast-growing small business and makes the case for a much more “try and adjust” framework. This is a lesson that applies to more than just fast-growing small business but is especially important to them. Check out the article to get more of this author’s perspective but the following points are the basics for the argument that is being made.
Fast-growing small businesses, and really most organizations, exist in an environment that is ever changing, making a long drawn-out strategic planning process basically useless. By the time a strategy gets articulated, the dynamics have changed. That does not mean that these enterprises don’t need a strategy. They do need to think strategically; but they also need to pair that strategic thinking with strategic action, or strategic doing, as we would say.
The article makes the point that smaller organizations: (1) Don’t have the management time or resources to invest in traditional approaches to strategy development like strategic planning, (2) Can’t pay the cost because the top team members are often in charge of sales and if they are not selling they are not making money, (3) Usually get small payouts from traditional strategy development efforts, (4) and Get short-lived outcomes from typical strategy development initiatives.
The author offers this alternative advice: (1) Strategy should be done in the hallway instead of the boardroom, (2) Strategy emerges from asking the right questions, questions like ‘Why not?” and (3 )make small, rather than big bets.
That last notion, the one about making small rather than big bets, is especially relevant to our current discussion about how strategy can be designed, tested, and adjusted. A new strategy is typically going to take you into new territory, someplace you’ve never been before. Even if you’ve gathered tons of data and scanned your environment with a fine-toothed comb, a strategy is still merely a guess. A big organization with deep pockets may be able to invest a lot of money on a guess. Small companies need to be more cautious so smaller bets make good sense.
Another word for a guess, especially an informed one, is a “hypothesis.” This is a word that makes take you back to when you first learned about the scientific method. What do we do with a hypothesis? We test it of course. And, that first test is often done on a small scale. A scientist’s first test, for instance, will likely be in a lab. That’s a good way to think about strategy for small enterprises – something leads you to form a hypothesis and you test it out, you make a small bet.
These small bets are a great way to mitigate risk. Make that bet and lose, you’ve not lost much. Make it and win, then you can “up the ante”, to extend the gambling metaphor even further.
One of the skills needed for leaders, especially from smaller organizations, who want to practice a more agile approach to strategy is to help the teams and organizations with which they work to understand the benefit of this “small bet” approach.
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