Strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value. ~Michael Porter
I have found that while the idea of strategy sounds intriguing to many, turning strategy into reality is far more challenging. It becomes easy to start listing what you currently do, and then assume that’s your “strategy.” You might also identify how efficiently you manage your operations and assume that’s your “strategy.”
Michael Porter is the quintessential expert on strategy. The words that Porter emphasizes when he defines strategy are different and unique.
Porter says “the root of the problem is to distinguish between operational effectiveness and strategy.” Things like productivity, quality, speed, customer satisfaction, benchmarks, outcomes, and best practices have created entire industries of tools and techniques, all very helpful for a well-run organization. However, that isn’t strategy.
You might be asking, if operational effectiveness means a well-run organization, then why is strategy even necessary? Here’s where I think leaders in the for-profit sector could learn from the leaders in the nonprofit sector. Nonprofit experts Steve Zimmerman and Jeanne Bell said, “sustainability lies at the intersection of exceptional impact and financial viability.” I would argue that all organizations (nonprofit and for-profit) will discover that intersection through strategy not through efficient operations.
The basic premise of strategy that Porter outlines, I believe, could apply to organizations of any type or size, and even to individuals. Looking for a new job? Consider how you might describe yourself differently in a job interview if you were being strategic.
Here are Porter’s three key principles that underlie strategy.
- Create a unique and valuable position.
- Serving few needs of many
- Serving broad needs of few
- Serving broad needs of many in a narrow market
- Choose what not to do.
- Some activities are incompatible. Gains in one area can be achieved only at the expense of another area.
- Create “fit” among the organization’s activities.
- Fit drives sustainability: when activities mutually reinforce each other, competitors can’t easily imitate them.
3 Questions to Test Your Strategy
- What unique value do you offer/provide?
- Is it clear what you are choosing not to do?
- Do the activities (products, programs, services, delivery systems, staffing, etc.) fit together and reinforce each other?