According to Porter, strategy is an assertion of individuality/creativity in an unforgiving environment via the deliberate choice of interlinked activities.
A business maintains optimal competitive advantage by continuously moving towards the ‘productivity frontier’, wherein lies the possibility of its ability to deliver maximum optimal productivity, using the best resources and management tools, and exercising cost effectiveness.
This may be achieved by balancing Operational Effectiveness with Strategic Positioning. One’s ‘difference’, from a unique combination of OE and SP, ensures that rivals will find it harder to steal (not copy, but replicate and improve upon) its product/service and the processes involved in realizing the same.
One can outperform rivals via the 3 principles of Strategic Positioning:
Creating a unique and valuable position, involving a different set of activities: The move towards the productivity frontier engenders greater similarity in the best practices of all competitors (‘hypercompetition’ - as seen with Japanese companies in the 1980’s). OE alone thus endangers one’s survival and achieving an entrepreneurial edge demands the differentiation of all activities, at all levels.
Trading one activity off of another, and retaining those that fit best: This choice addresses 3 strategic positions – variety (Vanguard, Jiffy Lube), needs (Bessemer Trust, Citibank), and access (Carmike Cinemas) based – that are a “function of the differences” of the activities on their supply side. Business therefore must collect knowledge from their markets in order to “preempt discovery” and to stay ahead of the competition curve.
Maintaining and reinforcing this fit as per the situation: To fend off repositioners and straddlers (JC Penney/Sears, Southwest/Continental Lite), one may apply such optimal advantage formulas as will undercut an imitator’s position when partially/wholly replicated (as showcased by Neutrogena). Trade-offs (due to inconsistencies in image/activities/limits on internal coordination+control) help us retain our valuable position by “choosing what not to do” and engendering “interconnectedness” (IKEA) or the best fit of activities (based on consistency, reinforcing, and the optimization of effort).
As per the classical theory of strategy, Porter’s position school emphasizes positioning through choice. In 1999, Ghoshal and Barlett criticized the classical school as simplistic and “obsessing only with value appropriation and not the more useful value creation” (Haugstad, 1999). This recalls the original definition of strategy as “the art or science of shaping means so as to promote ends in any field of conflict” (Bull, 1968).
By 1996, Hax and Majluf had included both the content of strategy and the processes leading to the same under this umbrella. Again, the proliferation of theory (an appropriation of semantic power, as it were) only reaffirmed Ghoshal and Barlett’s statement. The question remains – how can one capture value creating strategies in a globalized economy reveling in its increasing ‘interconnectedness’?
The answer probably lies in knowledge-seeking, using this knowledge as power within organizations, and re-learning strategy. Kunne mentions Honda’s entry into America as an example, first suffering multiple failures but eventually succeeding due to continuous re-assessment and problem-solving. It is interesting to note that Honda had adopted the American approach and yet they had to re-invent their strategy.
Strategy therefore, may not be limited to its peculiarity to one company but also the time, location, and business cycle that a company is posited in. In any case, it is best not to blindly apply strategy but to use information to tailor customized temporary strategic solutions.
© The Sacred Dome (Jan 2013 – current).
© The Sacred Dome (Jan 2013 – current).
No comments:
Post a Comment