Strategy comes from the greek word “Strategoes” which means military general. Therefore the word dates back to directing the troops in battle. This analogy is quite useful in describing a leaders role in guiding their business in a competitive environment.

Why worry about Strategy if you own/run a small business?

• Strategy provides direction, essentially its a plan.
• Strategy gives staff something to follow.
• Allows the owners to step back and take a helicopter view, work on rather than the business

The process of creating a strategy will provide an owner a great insight. Often small business owners don’t think they need a “strategy” because they know exactly where they are going , great that is a strategy.

What a strategy isn’t!

• not done every three years for the next three years.
• not fixed in any way.
• not a document – although writing down strategy is beneficial
• not done without involving staff, customers and competitors in some way.
• not only long term goals

Most definitions of strategy based around “plan for the future” but they are also “patterns from the past”.

Over the past few years there has been a number of theories on the best way to develop strategies. I think the best way to develop strategy depends on the situation.

• Micheal Porters developed the five forces model which is an external view of how to develop strategy. Look at your externally to find a place in the market which you can dominate. This method is useful in static industry where competitors are well known.

• Barney, Collis and Montogomery  (resources based view) and others believed that strategy was best formulated by looking internally at what is your core competitive advantage. This view is better where resources are the key to success.

• Teece, Pisano et all – described that strategy should be engineered into the business in the form of “dynamic capabilities” that are able to adapt to rapidly changing environments. This view is better is rapidly changing industries like technology.

The point is it does not matter how you think about strategy, its only important that you do.

Have created another post with a small business guide to developing a strategy