Porter's 5 Timeless Anchors to Being Strategic

on June 10, 2015 Resilience - Growth & Strength and Tags: , , with 0 comments

Nearly a decade ago Michael Porter wrote a great article entitled “What is Strategy?”, published in HBR.

Here are the timeless, very valuable takeaways:

Operational Effectiveness Is Not Strategy. It’s necessary for success, but not sufficient for long-term survival. A company can outperform rivals only if it can establish a difference that it can preserve.

Strategy Rests on Unique Activities. The essence of strategy is choosing to perform activities differently than rivals do. Strategic positions can be based on customers’ needs, customers’ accessibility, or the variety of a company’s products or services.

A Sustainable Strategic Position Requires Trade-offs. Trade-offs are essential to strategy. They create the need for choice and purposefully limit what a company offers.

Fit Drives Both Competitive Advantage and Sustainability. Fit locks out imitators by creating a chain that is as strong as its strongest link. There are three types of fit, although they are not mutually exclusive:

  • First-order fit is simple consistency between each activity (function) and the overall strategy.
  • Second-order fit occurs when activities are reinforcing.
  • Third-order fit goes beyond activity reinforcement to optimization of effort.

The competitive value of individual activities cannot be separated from the whole. Strategic positions should have a horizon of a decade or more, not of a single planning cycle.

Rediscovering Strategy: The Failure to Choose. At general management’s core is strategy: defining a company’s position, making trade-offs, and forging fit among activities.

The greatest threat to strategy often comes from within. A sound strategy is undermined by a misguided view of competition, by organizational failures, and, especially, by the desire to grow.

Be strategic. Think through the long play. Build your plan and stay the course. Patience and execution prevail.

~ Bill


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