What is Strategy?

Horizon Line Group

I recently re-read Michael Porter’s excellent article from HBR by this title. His insights remain as relevant today as when they were penned 18 years ago. He clearly explains strategy in a way that supports how I like to challenge customers to think about it. In this article, Porter eloquently address how a company can stake out competitive differentiation and align all it’s processes to deliver that differentiation.

Porter makes a clear distinction between

  • Operational effectiveness: performing similar activities better than rivals, and
  • Strategic positioning: performing different activities from a rivals’ or performing similar activities in different ways.

To me, strategy is about differentiating between these to allow focus on strategic positioning. As Porter states, operational effectiveness can be quickly copied through benchmarking and sharing of best practices. This encourages the opposite of differentiation and leads to hyper competition. Through strategic positioning however, an enterprise can stake out differences…

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