Thread by @ShaneAgronomy

“What is Strategy?” by Michael Porter is one of the most foundational pieces on #strategy for every one to read.

I created a thread and highlighted some of my favourite quotes and take aways from it.

hbr.org/1996/11/what-i…

“Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.”

“The essence of strategy is choosing to perform activities differently than rivals do.”

“Strategic competition can be thought of as the process of perceiving new positions that woo customers from established positions or draw new customers into the market”

“Strategic positionings are often not obvious, and finding them requires creativity and insight. New entrants often discover unique positions that have been available but simply overlooked by established competitors.”

“New positions open up because of change. New customer groups or purchase occasions arise; new needs emerge as societies evolve; new distribution channels appear; new technologies are developed; new machinery or information systems become available.”

3 Types of Position:

1. “Positioning can be based on producing a subset of an industry’s products or services. I call this variety-based positioning because it is based on the choice of product or service varieties rather than customer segments.”

2. “Serving most or all the needs of a particular group of customers. I call this needs-based positioning, which comes closer to traditional thinking about targeting a segment of customers.”

Cont’d: “Differences in needs will not translate into meaningful positions unless the best set of activities to satisfy them also differs.”

3. “Segmenting customers who are accessible in different ways. Although their needs are similar to those of other customers, the best configuration of activities to reach them is different. I call this access-based positioning.”

So what is strategy?

“Strategy is the creation of a unique and valuable position, involving a different set of activities....The essence of strategic positioning is to choose activities that are different from rivals”

“Strategic position is not sustainable unless there are trade-offs with other positions.”

“Trade off means that more of one thing necessitates less of another. An airline can choose to serve meals—adding cost and slowing turnaround time at the gate—or it can choose not to, but it cannot do both without bearing major inefficiencies.”

Trade offs take shape in 3 ways:
1.
“inconsistencies in image or reputation. A company known for delivering one kind of value may lack credibility and confuse customers”

2. “trade-offs arise from activities themselves. Different positions require different product configurations, different equipment, different employee behavior, different skills, & different mgmt systems. Many trade-offs reflect inflexibilities in machinery, people, or systems.”

3. “limits on internal coordination and control. By clearly choosing to compete in one way and not another, senior management makes organizational priorities clear.”

“Positioning trade-offs are pervasive in competition and essential to strategy. They create the need for choice and purposefully limit what a company offers.”

“competitive advantage comes from the way activities fit and reinforce one another.”

“Unnerved by forecasts of hypercompetition, managers increase its likelihood by imitating everything about their competitors. Exhorted to think in terms of revolution, managers chase every new technology for its own sake.”

“managers mistake “customer focus” to mean they must serve all customer needs or respond to every request from distribution channels. Others cite the desire to preserve flexibility.”

“Trade-offs are frightening, and making no choice is sometimes preferred to risking blame for a bad choice. Companies imitate one another in a type of herd behavior, each assuming rivals know something they do not.”

“At general management’s core is strategy: defining a company’s position, making trade-offs, and forging fit among activities.”

If you read and understand strategy, “disruption” and competition as a whole begin to make a lot more sense in regards to what drives it.

I wrote a bit on competition in @UpstreamAg this weekend regarding #agretail (here: upstreamaginsights.substack.com/p/upstream-ag-… )
and even applied my favourite quote from The Lessons of History:

..and what makes it so hard to overcome!