[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"
To read the rest of the entire December 21, 2011 article, see The Most Common Strategy Mistakes
------------------------------In addition to these noted, what other mistakes do companies make about strategy? Please comment.