What Is Strategy?

What is Strategy?

Michael Porter's "What is Strategy" provides foods for thought about how a company could introduce their business ideas in a different fashion and perform in a way that would make them thrive among others. It is an analytical view on how industry leaders should manage the operations and performance of their company to have high level of survivability in a highly competitive setting without sacrificing other important factors because of too much trade-off.

Porter's main idea revolves around the link between operational efficiency and strategy. However, he also noted that these two should not, and cannot, be used interchangeably.

Operational effectiveness vs. strategy

Operational effectiveness is defined by Porter as a means to perform number of similar practices that aims to do better than its rivals by utilizing its inputs through providing low cost but with a good, if not the best, quality which would make the customer feel satisfied. It could be done by providing services faster, improving the performance of the employers, etc. On the other hand, strategy has a broader scope. It does not only pertain to having an efficient performance from time to time but it is also about how the company make the customers go crazy about their products and services because there is something that they cannot see in other companies which offers the same set of products.

There were managers who have tried to adopt different management tools as replacement to strategy like benchmarking, total quality management, etc as a way to incur the lowest possible cost but still considering the quality of the products. However, many companies still fail because operational effectiveness alone would not be sufficient for the sustainability of profits because the vital key to survive is to make innovations which leads to positioning and strategy.

Strategy and strategic positioning

Strategy and positioning also seems alike but they are also unique with each other just like twins. Strategy is a noun while positioning is a verb. They both have to do with three words -uniqueness, value, and differentiation - but strategy is the art or planning or method while positioning has to do with creating a strong brand that the customers would associate to the company. Hence, strategic positioning means performing unique set of activities that would offer great value to customers. Thus, as mentioned by Porter, strategic positions should be for long-term for the company to be sustainable by choosing a different way to deliver a mix of values and activities.

Main thoughts about the article

Porter stated that managers are having a hard time making choices that when faced with different opportunities, they will just follow what successful companies are doing that makes them deviate