[Editor's Note: In difficult and uncertain economic times, it is easy to
get distracted by the very real details of getting through the "economic
day." Sometimes, the development and execution of strategy that leads to a
true competitive advantage can get lost in the tactics of survival. I thought
this article and book might be interesting for those of you whose companies
might have perhaps inadvertently slipped into one of the mistakes about
strategy. I hope you find it useful. -DPM]
Michael Porter is one of the most renowned
authors on the subjects of strategy and competitive advantage. In a new
book, Understanding Michael Porter: The Essential Guide to Competition
and Strategy, Joan Magretta distills Porter's core concepts and
frameworks into a concise guide for business practitioners.
"In this excerpt, Porter discusses common
strategy mistakes. Key concepts include:
Assuming you can do it better than everyone else. One
of the biggest mistakes a manager can make is to assume the best results come
from competing to be the best, going down the same path as everybody else and
thinking that somehow you can achieve better results. Competing to be unique is a much more effective strategy.
Confusing marketing with strategy. It's natural for
strategy to arise from a focus on customers and their needs. So in many
companies, strategy is built around the value proposition, which is the demand
side of the equation. But a robust strategy requires a tailored value
chain-it's about the supply side as well, the unique configuration of activities that delivers
value. Strategy links choices on the demand side with the unique choices about
the value chain (the supply side). You can't have competitive advantage without
both.
Overestimating strengths. There's an
inward-looking bias in many organizations. You might perceive customer service
as a strong area. So that becomes the "strength" on which you attempt
to build a strategy. But a real strength for strategy purposes has to be
something the company can do better than any of its rivals. And
"better" because you are performing different activities than they
perform, because you've chosen a different configuration than they have.
Misunderstanding the definition of business or the
appropriate geographical scope
The worst mistake-but the most common one - is not to have a
strategy at all"
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In addition to these noted, what other mistakes do
companies make about strategy? Please comment.
