Michael Porter is back
Filed in archive Global Economy by tj on February 18, 2004
I must say I fully agree with his points - intriguing.
"The essence of strategy is that you must set limits on what you're trying to accomplish. The company without a strategy is willing to try anything. If all you're trying to do is essentially the same thing as your rivals, then it's unlikely that you'll be very successful. It's incredibly arrogant for a company to believe that it can deliver the same sort of product that its rivals do and actually do better for very long. That's especially true today, when the flow of information and capital is incredibly fast. It's extremely dangerous to bet on the incompetence of your competitors -- and that's what you're doing when you're competing on operational effectiveness..."
"Sound strategy starts with having the right goal. And I argue that the only goal that can support a sound strategy is superior profitability. If you don't start with that goal and seek it pretty directly, you will quickly be led to actions that will undermine strategy. If your goal is anything but profitability -- if it's to be big, or to grow fast, or to become a technology leader -- you'll hit problems."
"There's a fundamental distinction between strategy and operational effectiveness. Strategy is about making choices, trade-offs; it's about deliberately choosing to be different. Operational effectiveness is about things that you really shouldn't have to make choices on; it's about what's good for everybody and about what every business should be doing."
"The more explicit
you are about setting strategy, about wrestling with trade-offs, the better you can identify new opportunities that support your value proposition. Otherwise, sorting out what's important among a bewildering array of technologies is very difficult. Some managers think, "The world is changing, things are going faster -- so I've got to move faster. Having a strategy seems to slow me down." I argue no, no, no -- having a strategy actually speeds you up.""But those moments occur very infrequently for most companies. Intel's Andy Grove talks about inflection points that force you to revisit your core strategy. The thing is, inflection points are very rare. What managers have done lately is assume that they are everywhere, that disruptive technologies are everywhere."
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Mr Wong
