Agility Is an SME’s Leverage

SMEs frequently compete in circumstances of structural disadvantage. Larger competitors may possess deeper capital reserves, wider distribution, larger teams and a far greater capacity to absorb mistakes. It is therefore tempting to assume that scale determines outcome.

History suggests otherwise.

More than two thousand years ago, Hannibal Barca confronted Rome under precisely that kind of asymmetry. Rome possessed vastly greater resources and could replace losses on a scale Carthage could not readily match. Hannibal possessed something different, manoeuvre. He understood that he did not need to defeat Rome on the terms which most favoured Rome.

Where scale is unavailable, agility can become leverage.

Cannae, 216 BC

At Cannae (opens in a new tab) in 216 BC, Rome sought to convert numerical superiority into victory by concentrating an enormous force against Hannibal. Hannibal responded through movement and positioning. He permitted the Roman centre to advance and thereafter enveloped it from the sides and rear. Rome’s numerical advantage had not disappeared. Rather, Hannibal had placed that advantage in circumstances where its utility was substantially diminished.

For an SME, the relevance lies not in treating business as warfare. It lies in appreciating that scale and strategic advantage are not necessarily synonymous. A smaller business will rarely possess the capital, infrastructure, distribution or organisational depth of a major incumbent. It follows that attempting to become a smaller imitation of that incumbent may simply amount to competing from a position of permanent disadvantage.

The better strategic inquiry is whether the SME can alter the terms upon which the competition takes place.

Dollar Shave Club and Gillette

Dollar Shave Club provides a useful modern illustration. When it entered the shaving market, Gillette possessed formidable advantages, enormous brand recognition, established retail distribution, manufacturing scale and substantial marketing resources. Dollar Shave Club could not realistically reproduce those advantages and, importantly, it did not attempt to do so.

Instead, it moved differently.

It went directly to consumers, adopted a subscription model and communicated through digital content in a manner radically removed from traditional razor advertising. The significance was not merely in what it sold, but in where and how it chose to compete. Dollar Shave Club did not need to become better at being Gillette. It changed the terms of engagement.

Where agility becomes leverage

That distinction is fundamental for SMEs. Smallness, without more, is not a competitive advantage. It may simply mean fewer resources. The advantage arises where smaller scale permits greater agility in judgment, process and execution.

• A customer identifies a problem and that information can reach the decision maker directly.
• A commercial opportunity emerges and resources can be redirected without navigating several layers of approval.
• A service ceases to work and the business may be capable of changing course before a larger competitor has finished determining which department owns the problem.

That is where agility becomes leverage.

Governance is not bureaucracy

The danger arises when growing SMEs voluntarily surrender that advantage by importing complexity merely because complexity resembles corporate maturity. Governance and bureaucracy are not the same thing. Good governance improves the quality of a decision. Bureaucracy merely increases the distance between information, judgment and action.

It follows that every process should justify the friction it creates. Controls remain necessary. Compliance remains necessary. Financial oversight remains necessary. However, those controls should remain proportionate to the risk and should not unnecessarily deprive the organisation of the ability to move when movement creates a commercial advantage.

The Pyrrhic warning

There is, however, an important qualification.

Pyrrhus of Epirus fought Rome approximately a generation before Hannibal. He defeated Roman armies, but his victories came at a cost which he could not replace as readily as Rome could. His successes thereafter gave us the expression still used today, a Pyrrhic victory.

For SMEs, the warning is clear. Agility cannot become recklessness.

A smaller business may be capable of moving more quickly, but it may not be capable of surviving as many mistakes. Winning customers through unsustainable pricing, accepting every available project or expanding faster than the organisation can support may produce apparent victories which weaken the business thereafter.

Accordingly, the strategic exercise is not merely to move quickly. It is to determine where movement creates an advantage and where restraint protects one.

A simple proposition

Hannibal

Demonstrates the value of manoeuvre.

Dollar Shave Club

Demonstrates its commercial application.

Pyrrhus

Demonstrates the danger of failing to account for resources.

Taken together, they point to a simple proposition.

Scale gives the larger organisation capacity. Agility gives the smaller organisation leverage.

For SMEs, the real challenge is therefore not merely to grow. It is to grow without surrendering the qualities which made movement possible in the first place. Decisions should remain sufficiently close to the problem to be informed, processes should remain proportionate to the risk and governance should facilitate sound judgment rather than become an obstacle to it.

Rodney Jack BL

Founder, RJ Strategic Advisory

Rodney's background in law, business, cyber-risk and compliance informs RJSA's approach to governance, data risk, communications and crisis response. About the founder

RJ Strategic Advisory, Strategic Positioning, Governance and SME Growth

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