SMRIG Analysis for Business Strategy by Miguel Gargallo
This article was written with the purpose of providing a structured approach to identifying and mitigating risks in business strategies.
Introduction
The SMRIG Analysis points to critical vulnerabilities when a business model is overly reliant on a single platform or market.
To counteract these vulnerabilities, a company should adopt a dual-strategy approach: maintaining its presence on dominant platforms (like the Apple App Store) while simultaneously building independence through alternative strategies.
Why We Need This
In an era where digital platforms dominate the market, businesses face unprecedented risks if they become overly dependent on a single entity for their success. The SMRIG Analysis is essential because it provides a structured approach to identifying and mitigating these risks.
It encourages businesses to examine their strategies through a critical lens, ensuring they are not vulnerable to sudden changes in platform policies, market dynamics, or other external factors. This analysis fosters resilience, promotes strategic diversification, and helps secure long-term stability and growth in a rapidly evolving digital landscape.
SMRIG Analysis Overview
This analysis was crafted intentionally to dissect and scrutinize business strategies, highlighting the importance of foresight in diversification and independence from dominant market platforms.
The creation of this framework serves as a tool for businesses to evaluate their vulnerability to external risks and to encourage strategic planning that ensures stability and growth amidst the ever-evolving digital landscape. It's a testament to the necessity of anticipating market dynamics and crafting a balanced, resilient approach to business strategy.
Key Vulnerabilities
- Single Point of Failure
- Market Reach Limitation
- Revenue Share Risks
- Innovation Stifling
- Geographical Limitations
Formulas for Strategy
Dependent Strategy Formula (DSF)
This formula represents the initial strategy that relies on external platforms (like app stores) for distribution, revenue generation, and market reach. It's defined by the equation:
DSF = (RevenuePlatform - (RevenuePlatform × FeePlatform))/TotalRevenue
Independent Strategy Formula (ISF)
This formula represents the strategy that seeks to minimize reliance on any single external platform by diversifying income sources, such as direct sales, alternative app stores, or other revenue streams not subject to the same risks as the dependent strategy. It can be expressed as:
ISF = (TotalRevenue - RevenuePlatform)/TotalRevenue
Strategic Implication
The goal for any resilient company should be to optimize both formulas towards achieving greater independence (maximizing ISF) while still leveraging the benefits of platform-specific strategies where they make sense (optimizing DSF for efficiency and profitability).
This dual-strategy approach allows a company to reduce its vulnerability to external factors such as policy changes, platform fees, market reach limitations, innovation stifling, and geographical limitations.
Conclusion
To lead a company effectively, especially when external factors present significant risks, it's crucial to balance our strategies. While it's beneficial to harness the reach and infrastructure of established platforms, we must also cultivate our independent revenue streams.
This balanced approach ensures we're not overly dependent on any single external factor. By diversifying our distribution channels and revenue sources, we can safeguard our business against the SMRIG vulnerabilities, ensuring our company's resilience and long-term success.
The strategic diversification is not just wise; it's a mathematical necessity for maintaining growth and stability in a fluctuating digital marketplace.