Mike Porter Researches

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Mike Porter Researches

Michael Porter On How To Marry Strategy & Operational Effectiveness
The Harvard management guru argues that operations & strategy must fit to create a sustainable competitive advantage.
For almost two decades, managers have been learning to play by a new set of rules. Companies must be flexible to respond rapidly to competitive and market changes. They must benchmark continuously to achieve best practice. They must outsource aggressively to gain efficiencies. . . Positioning -- once the heart of strategy -- is rejected as too static for today's dynamic markets and changing technologies. According to the new dogma, rivals can quickly copy any market position, and competitive advantage is, at best, temporary. . . But those beliefs are dangerous half-truths, and they are leading more and more companies down the path of mutually destructive competition.
Distinguishing Between Operational Effectiveness and Strategy
Operational effectiveness and strategy are both essential to superior performance, which is the primary goal of any enterprise. But they work in very different ways. . . Operational effectiveness (OE) means performing similar activities better than rivals perform them. Operational effectiveness includes but is not limited to efficiency. It refers to any number of practices that allow a company to better utilize its inputs by, for example, reducing defects in products or developing better products faster. In contrast, strategic positioning means performing different activities from rivals or performing similar activities in different ways. . . Constant improvement in operational effectiveness is necessary to achieve superior profitability. However, it is not usually sufficient. Few companies have competed successfully on the basis of operational effectiveness over an extended period, and staying ahead of rivals gets harder every day.
Strategy is the creation of a unique and valuable position, involving a different set of activities. If there were only one ideal position, there would be no need for strategy. Companies would face a simple imperative -- win the race to discover and preempt it. The essence of strategic positioning is to choose activities that are different from rivals'. If the same set of activities were best to produce all varieties, meet all needs, and access all customers, companies could easily shift among them and operational effectiveness would determine performance.
Developing Strategic Fit Across Activ...

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