The Decision Strategist

As I currently run a one man business with no revenue, this is a slightly ludicrous post, but the typical list is a little boring and repetitive. Instead of just repeating that, I’m using decision making errors as the basis for this list of strategies:

1. Be Nimble. Decision making takes time. The bigger a company, the more time it takes. I’d say the relationship is exponential. If as a single owner a given decision takes you T minutes, then it probably takes a bigger company T^N, where N is the number of people working in management (I would absolutely love to research this. Anyone have any ideas how?). A small business can utilize decision making techniques to make smart decisions quickly.
2. Act Obliquely. Capitalize on the confirmation and status quo biases to strike in their blind spots. If a big company is a market leader, their success leads them to overestimate their own importance. Utilize their position as the status quo to position your own company as the alternative.
3. Be Different. Big companies fall prey to risk aversion and conformity. They can’t innovate well because innovation requires risk. Since big companies reward based on success rather than creativity, employees are only motivated to take tried and true approaches. As a small company you can quickly try out new tactics and can them if they don’t work. Don’t be afraid to take risks.
4. Sweat The Small Things. Because big companies have lots of resources, they are referencing a much larger budget when they look at small losses or excesses. As a result they tend to ignore the small costs. As a small business, you feel each penny more acutely and can minimize costs much more effectively.
5. Be Realistic. While excessive optimism is almost necessary for an entrepreneur, don’t let it cloud your judgment. Conversely, Let the self-confidence of the big business lead them down roads that you know won’t work.
6. Use Metaphor. Since much of human thought occurs as metaphor, develop metaphors for your business and your competitors and use those metaphors when communicating with customers and business contacts. Describing big business as a ‘lumbering bull’ while your own business is a ‘cheetah’ is an obvious one, but what other clever metaphors can you come up with?
7. Keep Lean and Specify Your Targets. The endowment effect is when people value things they own more than they would if they didn’t own them. Keep lean by resisting that temptation and exploit the endowment effect in big companies by determining what is valuable and target it (hint: it’s probably not what the big companies are targeting).
8. Cut Sunk Costs. Evaluate opportunities from the point of view of what they will earn in the future. Explicitly remove previous time and money spent on a project from it’s valuation. Big companies will have the same tendency to do this as you will, but you can cut things more quickly and easily.
9. Capitalize on the If-Then Fallacy. People don’t check that an if statement is followed by an appropriate then statement. Use this to create intuitive arguments in favor of your business by beginning with if statements that everyone will accept. Be careful not to abuse this though. Lying or manipulating will backfire, but phrasing can be very positive.

Just for reference, here’s the list you’d usually find:

1. Find a Niche.
2. Focus on Customer Service.
3. Develop Long Term Customer Relationships.
4. Increase Employee Retention.
5. Pursue Professional Excellence.

Not bad suggestions, just a little limited. There are a lot of ways to compete. What strategies do you use?

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This entry was posted on Monday, September 10th, 2007 at 8:02 am and is filed under Decision Making, Entrepreneurship.