By Melissa Raffoni, CEO, The Raffoni Group
Feeling challenged by the current situation? You are not alone. CEOs around the world are doing their best to navigate one of the most uncertain times in their tenures. If you are striving to get out or stay out of “survival mode” and find ways for your business to thrive, consider embracing the mindset of a “Strategic Entrepreneur."
For an established company, an entrepreneurial approach might seem challenging. Starting new ventures, potentially unlinked to current offerings doesn’t always feel comfortable or seem like the best thing to do. That’s why it’s important to couple entrepreneurial pursuits with a solid dose of good old school strategic thinking aimed at considering how to build sustainable competitive advantage and enterprise value. Combining these two approaches results in Strategic Entrepreneurship. Practically, this means taking a “deep dive” on your company’s unique strengths (often brushed over in a traditional SWOT) and carefully mapping them to newly emerging opportunities with an eye for what is going to be temporary and what is here to stay. When doing this, the outcome will be the prioritization of smart growth initiatives that are relevant to customers while not straying too far from the company’s true core competencies.
My excitement around Strategic Entrepreneurship as a timely concept was inspired by a recent re-read of Michael Porter’s classic piece, ”What Is Strategy?” where he wrote, “New [strategic] positions open up because of change…new needs emerge as societies evolve.” As I began to increasingly convince myself of the importance coupling an entrepreneurial mindset with a focused strategic discipline, particularly in a time of crisis, I felt as if I had embarked upon a novel moment of brilliance! However, a quick search illustrated that I am not the first to preach about the concept. In the article, “A Model for Strategic Entrepreneurship, The Construct and its Dimensions” (published in 2003 by Ireland, Hitt, and Simon in The Journal of Management) the abstract notes that “Strategic entrepreneurship (SE) involves simultaneous opportunity-seeking and advantage-seeking behaviors and results in superior firm performance.”
To simplify, like an entrepreneur, those in established companies need to proactively seek out opportunities, uncover evolving customer needs and develop creative solutions that can be quickly tested and validated. What makes the strategic entrepreneur different from a traditional entrepreneur is that these solutions are prioritized against a backdrop of a list of clearly identified core competencies that the CEO can build on to strengthen the company’s long-term sustainable competitive advantage.
WHY STRATEGIC ENTREPRENEURSHIP IS CRITICAL NOW
Our current situation is unique. We need to rebuild commerce in a lagging economy that also looks quite different from the economy we lived in before. The pandemic has handed us a combination of three distinct factors: hesitancy, a sluggish market, and a new business landscape. Customer needs, expectations and behaviors have and will continue to change. The list is long, but for starters, we can already see that customers want 1) faster and customized delivery 2) the ability to self-serve or “do it themselves” not just home improvement, but in e-commerce, school, and work and 3) attention paid to health and safety.
Consumers undoubtedly will adopt new behaviors and consequently buy new products and services to meet their evolving needs. Businesses, too, will have newly defined needs, with many not wanting to relive the challenges that resulted from their lack of readiness in dealing with the pandemic. Investments in infrastructure to support working from home (WFH), security, access to supply chain materials, safety and crisis management are at the top of growing lists.
Many formidable entrepreneurs will arise. There is no doubt that savvy entrepreneurs will emerge from the woodwork; we are already seeing them. And given that they are not unencumbered by old models, they will be formidable. Investors have cash and are always looking to invest in winners. These companies disrupt and threaten your business if they find new ways to meet the needs of your clients better or faster.
Many CEOs of established companies, regardless of size will get stuck. During this time, I suspect that many companies will get stuck for one of two reasons: 1) They don’t act quickly (or boldly) enough or 2) They are not focused in their approach, grasping at every opportunity to grow revenue. Established companies historically struggle with execution, especially of new products or services because they are encumbered by their legacy business. They find it hard to think out of the box, to imagine services different from what they offer or to figure out how to allocate resources to executing new ideas quickly. Instead, they tend to rely on existing resources to find the time in addition to their regular jobs to make things happen. New entrepreneurs don’t carry these burdens. They can focus 100% on getting their product to market. They don’t have to work through organizational necessities such as aligning all stakeholders. They hear what customers are saying without preconceived notions and they pick up on insights and provide unique solutions that customers often can’t even see. Most importantly, they are nimble enough to test, iterate, test and iterate. CEOs of established companies need to behave this way, but do it with guardrails to ensure that they do not stray too far from the core, not easy.
7 STEPS FOR EMBRACING STRATEGIC ENTREPRENEURSHIP AS A CEO
Embrace the concept of “pre-planning.” Each year, even the most successful companies don’t allocate enough time to their offsite strategic planning event. While the best do pre-work and dedicate multiple days to the hard work of defining clear strategic goals, there is rarely enough time to drill down on many critical elements of strategy setting. As we enter this tumultuously re-start period, we suggest that now is the time to “pre-plan”. By pre-planning, we mean investing time in those areas which that routinely get neglected, in particular identifying core competencies, analyzing customer needs & segmentation, and assessing the competitive landscape.
Step into the shoes of the customer. Find a creative way to put yourself into the shoes of the customer to more clearly see and understand what they are experiencing right now. There are lots of techniques for doing this, but some to consider are: role playing with your team, creative vision writing exercises, formally interviewing customers, putting customers on thought leader or advisory panels, having them write a success story about their experience with you and why it was valuable, etc. Use this time to not only listen but to uncover both needs and insights. The customers may not always know what they need, but they can provide you with insights so that you are best able to see how you might help. For example, consumers might know that they don’t want to touch things, but they may not think of a door that opens itself. Now is a great time as people are open to talk, open to brainstorm, and open to find new ways, so use this time wisely.
Analyze external trends and forthcoming opportunities. Look outside of your own four walls! What are your customers, competitors, and other businesses (even those not related to yours) doing? How are they responding to changing customer needs, behaviors, and trends? Talk about it with your team. Brainstorm to exercise the part of your brain that may be potentially stuck in the trap of thinking or doing the same thing over and over. Relative to these shifting trends, challenge yourself and your team to make educated guesses or hypotheses on what you think will stick as we move into our new world, and specifically into 2021. Talk to customers, partners, CEO peers, and trusted advisors. Consider a strategic facilitator to guide your team workshops to gain alignment, engagement, and critical out the box thinking.
Deep dive on core competencies and unique differentiators. On your own as CEO, and later with your team, spend commonly deprived time in this area. As you get clearer and clearer on your company’s core competencies and unique differentiators, use them as your guard rails for decision making. Use this clarity to prioritize investments that build on these competencies and de-prioritize those that appear to be driven by short-term opportunistic behavior without an end game.
Lay out hypothesized strategic growth goals and build a short-term test plan. Go back to your customer needs analysis and the newly gathered insights and brainstorm potential new customer solutions. Can you offer a new product or service? Can you address a new market that has a clear need? Can you alter your current offering to appeal to a wider or deeper set of customers? Pick a few (no more) to investigate. Then, like an entrepreneur who needs to demonstrate product-market-fit before raising investment capital, start pre-selling, vetting, promoting, testing and getting feedback on your potential new solutions to see if they resonate. If they do, then, put more resources behind them. The key here is to test, tapping into a more nimble, entrepreneurial approach before putting your more clearly defined 2021 Strategic Goal stakes into the ground.
Let go of hesitancy to sell. I know there is some trepidation right now about selling. We all want to be sensitive to what our customers are going through and not appear too opportunistic, but I’ll make the argument that when you are really listening to what they need, there is even more reason to sell. If you ethically feel as if you are truly helping a customer, you will move faster and with more courage. We need to move forward. We need to reignite our economy and not forget that customers are and will continue to buy things that they need and want.
Don’t blow off your formal Strategic Planning Process, improve on it. Strategic planning processes exist for a reason. They help teams establish clarity of direction, achieve alignment, ensure that clear measures of success are defined, and, most importantly, they allow the team the time to reflect on and improve their governance systems to ensure accountability and follow up. Remember, new entrepreneurs have few people and the luxury of being nimbler. You have an existing business model, a leadership team and an organization. Don’t get sloppy- keep what works in place. Better yet, commit to raising the bar on the process, integrating your “pre-planning” research to make the output stronger.
COIVD-19 has presented us with a crisis. But business and commerce are still being done, customers are purchasing products and services that they need, and their evolving needs are giving rise to new opportunities. Companies strong in strategic planning with a penchant for action are reaping, and will continue to reap, the benefits of investing in this work. If this doesn’t describe your company, it’s not too late to make a shift.
CEOs who embrace the concept of Strategic Entrepreneurship will initiate pre-planning now to provide focus to their more formalized strategic planning process needed to align their leadership teams for 2021. It is these CEOs and their companies who will emerge successfully post-COVID with a strong sense of purpose and direction going into the new year. In this time of challenge, make sure you are one of these CEOs.
Contact Melissa Raffoni at firstname.lastname@example.org