[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. Organizations with a focused strategy can emerge from economic (and health) downturns with distinct competitive advantages. I thought this 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. -Dave Mead, Mead Consulting Group]
Michael Porter is one of the most renowned authors on the
subjects of strategy and competitive advantage. In her 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.
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.
Not having a “What we’re not going to do now” list. The need for trade-offs is a huge barrier. Most managers hate
to make trade-offs; they hate to accept limits. They'd almost always rather try
to serve more customers, offer more features. This prevents them from
being able to focus resources.
Misunderstanding the definition of business. Understanding your business too narrowly
can leave an organization exposed to disruption from “unseen” competitors
(e.g., the record business, Blockbuster video, etc.)
Trying to please everybody - The desire to delight and retain every single customer.
If you listen to every customer and do what they ask you to do,
you can't have a strategy. Strategy is not about making every customer happy.
When you've got your strategist's hat on, you want to decide which customers
and which needs you want to meet.
The worst mistake-but the most common one - is not to have a
strategy at all"
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