4 Successful Business Strategies: An In-depth Explanation. While strategy frameworks help gauge the attractiveness of an opportunity or the viability of a proposed strategy, they seldom aid in the first stages of opportunity identification or strategy formulation. “The dirty little secret of the strategy industry is that it doesn’t have any theory of strategy creation,” said the renowned strategy guru Gary Hamel.
To address this knowledge vacuum, this article presents a taxonomy of possible strategies derived from a comprehensive literature review on strategy and creativity. Here, we rank the techniques from most basic to most innovative, but they all boil down to four categories.
Adaptations of Successful Strategies from Your Industry
Shein, a Chinese brand that has taken the quick fashion concept to new heights, is a prime illustration of this strategy. Compared to more conventional fast fashion brands like Zara and H&M, Shein releases 1,000 new things daily. In addition, Shein offers things that are 30–50% less expensive compared to its rivals. In contrast to those businesses, Shein does not operate any “brick and mortar” retail locations. Apps and websites are the only channels by which it distributes its wares. Additionally, AI is used increasingly frequently in upstream (to identify patterns) and downstream (to optimize production) processes. With this recipe, Shein increased its American fast fashion market share from 18% in 2020 to 40% in 2022.
The most severe case in point is Rocket Internet. This business out of Germany “creatively imitates” popular e-commerce sites. More than 100 new businesses have been launched through it. Their primary areas of operation include the regions above: India, China, Africa, and Southeast Asia. One of them is Jumia, a web store in eleven African nations. The company’s executives prioritised adapting Amazon’s “everything store” model for the African market.
The deputy head of customer service who presented this plan said we strive to achieve Amazon-like things because they are our target. However, the local business climate and hurdles hinder us from fully implementing Amazon’s business model, so we’ve had to make many changes. As an example, Africa faces numerous infrastructural issues. Jumia had to build its fleet of trucks as there weren’t any dependable third-party logistics companies. Due to restricted Internet access in rural areas, Jumia hired tablet-equipped sales associates to help customers place orders.
Importing Strategies from Other Industries
People in executive and entrepreneurial roles seldom consider opportunities beyond their core business. This is unfortunate because ideas can frequently be sparked by studying strategies that have been successful in other industries in capitalizing on opportunities or avoiding threats. When two industries share many characteristics, it’s natural to draw parallels between them. The American retailer Best Buy was precarious when Hubert Joly was named CEO in 2012. Customers would still visit its stores for product guidance and information, but they would shop on Amazon instead. Profits and sales for Best Buy plummeted after it became Amazon’s showroom.
The Wall Street Journal reported that Best Buy had accomplished the impossible four years later. It efficiently prevented Amazon.com’s attack. Joly’s 2013 “store-within-a-store” plan helped turn things around. The concept came from Best Buy being the US’s only national consumer electronics retailer. Microsoft, LG, Sony, HP, and Samsung needed a store to sell their products and communicate with customers, even without Apple’s retail presence. Using the “store-within-a-store” idea, they opened branded stores in Best Buy locations for a fee.
Although leasing storefronts changed the consumer electronics sector, department stores do it too. French department store Le Bon Marché created the idea in 1852. Frenchman Hubert Joly must have noticed the resemblance. Drawing connections across vastly diverse industries is harder. Hilti makes tools in Europe. The tool market was vulnerable in the mid-2000s due to commoditization. Its management quickly realized that lowering costs or improving tool quality would not boost profitability.
Their idea was inspired by leasing, a routine for large cars and equipment unheard of in retail. Users paid a monthly membership fee to use tools whenever they required them. Hilti’s products On Demand initiative lets customers try the latest products without spending much.
Combining Strategies from Multiple Different Industries
It is also possible to generate new strategies by adding elements from other strategies to an existing one. Spotify is a great illustration of this. After launching in 2008, it has risen to 500 million users in 2023, which is five times more than Apple Music. The Swedish streaming service offers music on demand and facilitates user-to-user and artist-to-user connections. They have the ability to follow musicians and share playlists. Simply said, Spotify is a service that combines traditional music streaming with social networking. Although its main function is streaming music, the social network feature makes users feel connected in other ways.
On the other hand, there are cases where entrepreneurs combine elements of multiple methods, removing some to create something entirely new. The Huffington Post, for example, first went up in 2005. “The Post is a new Internet publishing venture that will combine a breaking news section with an innovative group blog where some of the country’s most creative minds will weigh in on topics great and small, political and cultural, important or just plain entertaining,” wrote Arianna Huffington, the site’s founder, back in 2008.
So, the Huffington Post was born out of a merger of blogging and traditional journalism. Many essential aspects of newspapers were maintained, such as trained journalists, fresh stories, and thorough verification of facts. Its moniker and typeface are reminiscent of prominent American publications. However, it acquired some blog traits (like constant updating) while renouncing others associated with newspapers (like a print version). Newspaper websites were rather static in the early 2000s. Their interactivity with readers was severely limited, and they were only updated once daily. Compared to that, blogs were a lot livelier and more participatory. The Post was a hybrid that drew from both traditions.
Strategies Created from Scratch
All three of the previously discussed strategies rely on incorporating preexisting strategic elements. Novel tactics derived from fundamental ideas make up the last and fourth group. Elon Musk once said, “as opposed to reasoning by analogy, boil things down to their fundamental truths and reason up from there.”
To do this, one must first question established thinking methods, break down problems into their simplest components and create new solutions from scratch. Musk used this strategy to design Space X’s cheap, reusable rockets. His first choice was to use missiles from Russia, but he couldn’t justify the enormous cost. He started with the first principles to work out rocket prices. Disassembling them into their bits in Step 2 revealed that materials cost only 2%. Step three involves buying titanium, carbon fibre, and aluminium alloys from the commodity market to build rockets.
First-principles thinking goes beyond products. Airbnb changed the hotel industry by letting people rent their homes to strangers. The game shifted when hosts offered their homes to strangers, and guests accepted. At first, they doubted. Seven major investors rejected the concept. “The potential market opportunity does not seem large enough,” one informed Airbnb’s founders. The media initially contrasted Airbnb’s unique approach to others to comprehend it. The Financial Times called Airbnb “functioning as an eBay-style intermediary.”
Airbnb wasn’t founded on analogy. In the late 2000s, industry guidelines (step 1) regarded hotels as the only permitted lodging type. Airbnb founders questioned this concept and found two facts. The first need for travellers is lodging. Step 2: Find out if someone has an additional room or a home. Based on these two principles, they created a platform that transformed the hotel industry by connecting hosts with customers who want a more authentic (and sometimes cheaper) stay with those ready to rent spare rooms or complete properties (step 3). Ironically, CEOs and entrepreneurs worldwide are now comparing their methods to Airbnb’s (the fashion industry’s Airbnb).
Bottom Line
Different categories have different requirements. If you are comfortable with one industry, you can quickly adapt your strategy to another. Knowing various contexts is essential for successfully importing or combining methods. The more industries you’re familiar with, the more probable you’ll find strategies that can inspire you. The ability to think thoroughly about one’s knowledge is necessary for the fourth category of creativity, though.
