Deliberate and Emergent Corporate Strategy in Startups

One of the hardest tasks for a startup company is to develop a comprehensive corporate strategy in the face of vast uncertainty ahead. Another challenge for startup executives is the question of whether or not to alter this strategy to exploit new opportunities that are presented along the way. As such, leaders at a startup company can find themselves evaluating the benefits and drawbacks of both deliberate and emergent corporate strategy. Unfortunately, the solution is never straightforward, but we’ve included a guide that walks you through the considerations every startup executive should take into account when deciding between maintaining deliberate strategy or shifting toward an emergent corporate strategy.

The Basics of Corporate Strategy

What is Corporate Strategy? Depending on who you ask, and what their occupation is, you could receive a broad array of answers. The “textbook definition” corporate strategy is given as “an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage”. Now, that is a very wordy way of stating essentially nothing. It is much simpler and more effective to think of corporate strategy as the mix of long- and short-term goals of a company, combined with its mission and vision, that together make up the direction of that firm going forward.

As such, corporate strategy at a startup company is typically not something that anyone thinks about on a daily basis. Instead, it tends to be a long-term construct set forth by top level management, which in turn determines the decision-making at regular intervals, whether it be on daily, quarterly, or annual basis.

Deliberate Corporate Strategy

Your deliberate strategy is just that: deliberate. This is the direction in which management intends for the startup to go. Those who define the deliberate corporate strategy of a startup must balance having an ambitious goal against making sure to not over-exploit the limited resources of the firm in the pursuit of that strategic goal. As such, developing a strong deliberate strategy is often very time consuming and requires creative ideas and problem solving.

Emergent Corporate Strategy

An emergent strategy for a firm is one which presents itself as a pattern of decisions that occur as a result of responses to changing business environments. In the case of a startup, an emergent strategy often presents itself as the result of a new threat or opportunity that is introduced. For example, a client might approach the startup with a request for a service that they don’t typically provide. The startup in this hypothetical situation might choose to decline the offer of business, agree to do the service as part of a one-time deal, or potentially may choose to pivot and make that service a mainstream offering. As such, a startup can choose to depend much more heavily on the development of an emergent strategy, as opposed to the imposition of a deliberate one.

Making the Decision

Startup companies face the decision between sticking with deliberate strategy and pivoting toward an emergent strategy in a much different light than large, established firms. Startups tend to be lean, operating with few employees and relatively little in the way of large fixed assets. As such, the presentation of new threats or opportunities can prompt the firm to reevaluate their current strategy and make changes. Therefore, it can be very tempting to constantly pivot toward the most appealing opportunities at any given point in time. It is important to carefully consider the different strategies that can be pursued, since startups have an ability to pivot toward addressing emerging conditions in a way that large established firms are unable to do. This is the root of the startup’s agility advantage.

However, while these opportunities may offer profits and exposure, there is considerable risk in muddying the core business of your firm. Startups must be careful to not change strategies at short intervals. It harms the creation of a coherent brand, and can cause a startup to incur costs as a result of constantly re-purposing the firm’s assets. Instead, when the firm does decide to make a strategic pivot toward emergent conditions, it should do so with the clear intent of incorporating this strategy into the long-term direction of the firm. As such, strategic moves toward emergent conditions should be considered in light of the investment that it will require and the implications it will have on the firm as a whole on the long term. The typical startup is remarkably agile and can re-position itself to take advantage of new opportunities or avoid new threats, but these moves must be evaluated with the utmost care.

Part of a startup? Tell us about how you evaluate different strategic opportunities in the comments below!