Strategy is all about making tough choices

January 28, 2010

In an article from Fast Company, Michael Porter, noted professor and management guru shreds his perspective on strategy. Some really good stuff…

There’s a fundamental distinction between strategy and operational effectiveness. Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different. Operational effectiveness is about things that you really shouldn’t have to make choices on; it’s about what’s good for everybody and about what every business should be doing.

So how are you choosing to be DIFFERENT?

Are you content continuing to look, act and represent yourself as merely a microscopic  shift from what your competitors look like?  Or are you determining, in advance, where you want to take a stand. Listen again to Porter.

And strategy must start with a different value proposition. A strategy delineates a territory in which a company seeks to be unique. Strategy 101 is about choices: You can’t be all things to all people.

Easier said than done. When clients are saying “will you do this?” and ready to pay you… it’s certainly easy to want to be everything to them. But it can also dilute your position.

The essence of strategy is that you must set limits on what you’re trying to accomplish. The company without a strategy is willing to try anything. If all you’re trying to do is essentially the same thing as your rivals, then it’s unlikely that you’ll be very successful. It’s incredibly arrogant for a company to believe that it can deliver the same sort of product that its rivals do and actually do better for very long. That’s especially true today, when the flow of information and capital is incredibly fast. It’s extremely dangerous to bet on the incompetence of your competitors — and that’s what you’re doing when you’re competing on operational effectiveness.

Read that last paragraph again. especially the part about “dangerous to bet on the incompetence of your competitors.” How often do you trash your competitor in your head, all the while positioning yourself exactly the same as them?

What’s worse, a focus on operational effectiveness alone tends to create a mutually destructive form of competition. If everyone’s trying to get to the same place, then, almost inevitably, that causes customers to choose on price. This is a bit of a metaphor for the past five years, when we’ve seen widespread cratering of prices.

Here’s a biggie. if you complain about being in a “commodity business” and always having to lower your price to win, then maybe you have forgotten about strategy.

There have been those who argue that in this new millennium, with all of this change and new information, such a form of destructive competition is simply the way competition has to be. I believe very strongly that that is not the case. There are many opportunities for strategic differences in nearly every industry; the more dynamism there is in an economy, in fact, the greater the opportunity. And a much more positive kind of competition could emerge if managers thought about strategy in the right way.

Some great things to think about. Are you willing to do the hard work to create significantly obvious differences?  Yes, you might lose some clients here and there, but you’ll also gain ones more readily that want what it is that you have to offer.

Tough Choice Opportunity

I believe one incredibly powerful way to strategically distinguish yourself is by choosing to position yourself at the forefront of  your marketing. Talk about a unique point of difference.  You become the very visible difference – the reason someone should choose to business with you.

After all, no one can copy that. No one can be you, with your story, your experiences. I guarantee it.

In the days and weeks ahead, I want to explore this area a lot more thoroughly.

Keep coming back.

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