Résumé De " What Is Strategy? " De Porter

What is strategy?

Summary

1) Operational Effectiveness is not as important as strategy. For several decades, managers focused on outsourcing, benchmarking and flexibility. They rejected strategy because they thought it was too static, which lead to an hyper-competition. In fact, managers were not able to distinguish Operational Effectiveness and Strategy, which are both essential but different. OE is performing activities better than competitors perform them, for example, better utilize its inputs. Whereas strategy relies on providing unique/different activities. Operational Effectiveness is not sufficient because competitors can imitate it easily and it leads to a saturated market.

2) Competitive strategy is about being different from the competitors. Firms must choose activities that are different from their rivals. They have different ways to reach strategic positions leading to different positioning : The variety-based positioning, which consists in offering subsets of products, subsets of members needs. The need-based positioning, where firms provide all needs of activities of a chosen group of customers, we can underline that the best set of activities to satisfy those customers differs. Finally, there is access-based positioning, which relies on geography, on being close to customers. In involving a different set of activities, firms can reach a unique and efficient position.

3) A firm needs trades-off to have an efficient strategic position. Indeed, people may think that laying out a strategy is choosing what to do, but it is mostly choosing what not to do. Trades-off are important for three reason : first, avoiding trades-off could lead to an inconsistant image, because the brand would promote products aimed at seducing totally different people. Besides, trades-off are at the heart of activities themselves. If you are specialized in something you are usually less efficient in other things. Finally, trades-off arise because internal coordination and control have their limits.

4) It is really important for a firm to create fit between its activities : strategy is about combining efficient activities. There are three types of fit : first, the simple consistency between each activity. Second, the reinforcing activities, consisting in supporting a specific activity. Finally, there is the optimization of effort, where firms coordinate the different activities. We must underline that an interlocked fit is hard to copy. Thus, firms’ positioning should rest on activity system (fit of second and third degree) : it provides a more sustainable competitive advantage.

5) A firm always have to question itself and rediscover strategy. Of course there are external challenges, but the bigger threat comes from the firm itself. Firms are often frightened by trades-off and make no choice at all. This can lead to a growth trap with growth relying on inconsistence while the competitive advantage is weakening. Instead of being obsessed with short-term growth, firms should focus on improving there competitive position. To reach the leadership, firms must define their unique position and communicate on it. A leader provides authority with the ability to say « no » to an idea that is different from the company unique position.

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