Strategic Decision-Making by Small Businesses: Enrichment of the Process

Abstract

Strategically managed companies allow a considerable amount of delegation until a change in strategy is made or is called for by events. The decision to change to a new strategy then gravitates to top levels, where maximum information resources are in principle available. For small companies, such occasions frequently arise--so often, in fact, that they may not appear to be strategically managed at all. However, successful smaller company managements may be able to determine by intuition when and why a strategic change should be made. For many small companies--whether in start up stages, approaching new growth opportunities, or facing financial catastrophe--there is often a major lack of information pertinent to evaluating a new strategic direction. Furthermore, management may not appreciate the breadth of knowable information and techniques which could help. Most important, they usually could not afford to seek out and pay for such a varied array of experts needed only for one specific strategy-changing decision. The Center for Economic Development of the University of Minnesota, Duluth has for nearly two years been providing this kind of resource in assisting small regional companies in Northeastern Minnesota. The Center thus provides better insights before strategic decisions are made. This region of the state has been hard hit economically, and both private funds and public funds are available to restore health to this area. The Center is only one of many organizations working for this objective. This paper reports on a process developed by the Center to make available to owners/managers of small businesses a breadth of resources and information, not otherwise available, which are briefly but highly pertinent when facing a strategic decision event. The process is illustrated through the discussion of six case examples. In each case, the implementation of the process was specifically tailored to the situation faced by the small business. The Center process is based on the idea that managers or owners sometimes need to be confronted with a comprehensive and credible evaluation of their businesses and their potential in a nonthreatening context. This allows them the freedom to generate realistic strategic alternatives from which to select. In some cases this can be handled on a personal and relatively informal basis. However, where the situation warrants more depth, the Center conducts an experience compression workshop called a Strategy Forum. This involves a panel of experts selected for their knowledge of relevant features of the particular business involved and their willingness to expose their own ideas in a direct conversation with the owner/manager. One common element in the different embodiments of the process is that they provide a variety of consultants, techniques, approaches and other resources at no cost to the business. The Center operation is made possible by both private and public funding dedicated to the economic development of this region, and by the understanding of its work as a facet of land grant universities' responsibility to serve the community.