Summary Of What Is Strategy?

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Summary of “What is Strategy?”
Over the past several years, there has been a trend in the business world – a shift of focus away from strategy and toward operational effectiveness. Companies believe that competitive advantage is created by a greater level of operational effectiveness than competitors, or what Porter describes as “performing similar activities better than rivals perform them.” The competitive advantage created by greater efficiency and operational effectiveness is not sustainable, however, and is actually detrimental in the long-run. This is because steps taken to increase operational effectiveness are easily imitated.
Strategy, on the other hand, can and does lead to sustainable competitive advantage, brining profits and benefits both in the short- and long-run when coupled with operational effectiveness. Porter describes strategy as “performing different activities from rivals’ or performing similar activities in different ways.” The essence of strategy is being different and doing things in a different way – so different, in fact, that competitors find it extremely difficult and costly to imitate those differences.
The reason operational effectiveness is easily imitated and strategy is not results from the existence of trade-offs. To be different, to serve different customers, or to perform different activities requires that tough decisions be made about what to do and what not to do. No company can or should be everything to everyone. Limits on activities and objectives help guide the company and help create sustainable competitive advantage.
Finally, all the activities should fit together into one synergistic whole. A highly-integrated set of activities is much more efficient, more profitable, and harder to duplicate than simple, disconnected activities. Mangers should rediscover and recognize the overwhelming need for clear and flexible strategy in creating sustainable competit...