What is a strategy?

Thèmes abordés

Strategy, face hypercompetition, companies, competitive strategy, positioning choices, manager

Résumé du document

Confusion between operational effectiveness and strategy has led companies to face hypercompetition. Little by little, management tools use to improve productivity have taken the place of strategy. But operational effectiveness (OE) is not strategy. OE means execute a similar activity better than rivals whereas strategy is about doing different activities from rivals or doing similar activities differently. Both are essential for performance, but OE alone is not sufficient. When a company improves its OE, it shifts the productivity frontier outward, but there is a rapid diffusion of best practices and competitors can quickly imitate these techniques.

Extraits

[...] However, many companies fail to have a strategy. Often it comes from within. Managers think trade-offs are unnecessary and are a sign of weakness. Another problem is link with the desire to grow, which often has an undesirable effect on strategy. For many companies, focusing only one group of customers is seen as a limitation on revenue growth. Blinded by that, companies create confusion and erase the competitive advantage of its target customers. Developing a strategy is an organizational challenge. [...]

[...] Positioning choices determine how activities relate to another. A strategy involves a whole system of activities, not a collection of parts. The competitive advantage comes from the ways activities fit and reinforce another, because it makes imitation harder. There are three types of fit. First, fit can be a simple consistency between activities and strategy. The second type of fit occurs when activities are reinforcing by another one. Third-order fit is about optimization of effort, by coordinating activities to minimize wasted efforts. [...]

[...] What is a strategy? Confusion between operational effectiveness and strategy has led companies to face hypercompetition. Little by little, management tools use to improve productivity have taken the place of strategy. But operational effectiveness is not strategy. OE means execute a similar activity better than rivals whereas strategy is about doing different activities from rivals or doing similar activities differently. Both are essential for performance, but OE alone is not sufficient. When a company improves its OE, it shifts the productivity frontier outward, but there is a rapid diffusion of best practices and competitors can quickly imitate these techniques. [...]