Dr Bella Butler is a Strategy specialist. In this article she explains why all businesses need a strategy to succeed. Bella is available to assist you in developing a business strategy through our Experts@CORE program.
One in five start-ups fail in the first year. 90% of start-ups fail. Do you want to be in the remaining 10%? Why should small businesses think of strategy? As an owner of a small business can you afford not to think about strategy by trying to win jobs? Are you just playing in your chosen field or are you playing to win?
Strategy is about making your everyday choices guided by your strategic goals. While this seems simple, in reality managers often are driven by their existing capabilities and admit that it is not their strategy that drives their everyday actions, rather, they operate within and often limited by available capabilities and management systems.
However, if a strong strategy is in place, managers in firms of all sizes are able to navigate everyday actions based on strategic objectives formulated to achieve business success. As an owner of small business, you have your aspirations and have most likely settled on your space - where to play. This question is generally well defined by most managers.
The question How to Win? remains questionable to most managers, not just to managers of start-ups. Strategy will help you to address this question.
Your ability to think strategically will also assist you to consider related questions: What capabilities must we have in place to win? and What management systems are required to support our choices? Without these questions, your firms cannot have a winning strategy: indeed, where to pay should not be considered without how to win.
Airbnb was founded in 2008 as a website to assist people with finding, listing or renting accommodation. The alternative accommodation offered by Airbnb soon became popular and the company demonstrated the fastest growth by disrupting the traditional lodging industry. Where to Play was determined by Airbnb in combination with How to Win. Indeed, Airbnb functions as a marketplace where it links hosts and travellers and empowers transactions without ownership of any accommodation itself. The key winning formula is to empower both travellers and owners of accommodation. The business model adopted by Airbnb challenges traditional industries by new value creation. Unlike traditional industry players, Airbnb adds customer value by increasing the operations between the other market players, namely the hosts and travellers, and by matching their needs. The company started its international operations in 2011 and now it operates in more than 34000 cities and in 190 countries.
What is your winning formula and how is it linked with your playing space?
What capabilities do you have now and can create in near future?
Is there any other strategy question to be considered that you wish you knew?
Let us start this strategy discussion in relation to your business.
Alhstrand, Lampel and Mintzberg, 2005. Strategy bites back: it is far more and less than you ever imagined, Pearson.
Martin and Lafley. 2003. Playing to Win, How Strategy Really Works. Harvard Business Review.