michael e. porter what is strategy

1、Passage 2What is Strategy?Michael E. PorterHarvard Business Review, NOVEMBER-DECEMBER 1996I. Operational Effectiveness Is Not StrategyFor almost two decades, managers have been learning to play by a new set of rules. Com

2、panies 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. And they must nurture a few

3、core competencies in the race to stay ahead of rivals.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

4、 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. Tr

5、ue, some barriers to competition are falling as regulation eases and markets become global. True, companies have properly invested energy in becoming leaner and more nimble. In many industries, however, what some call hy

6、percompetition is a self-inflicted wound, not the inevitable outcome of a changing paradigm of competition.The root of the problem is the failure to distinguish between operational effectiveness and strategy. The quest f

7、or productivity, quality, and speed has spawned a remarkable number of management tools and techniques: total quality management, benchmarking, time-based competition, outsourcing, partnering, reengineering, change manag

8、e-the resulting operational improvements have often been dramatic, many companies have been frustrated by their inability to translate those gains into sustainable profitability. And bit by bit, almost imperceptibly, man

9、agement tools have taken the place of strategy. As managers push to improve on all fronts, they move farther away from viable competitive positions.Operational Effectiveness: Necessary but Not Sufficient Operational eff

10、ectiveness and strategy are both essential to superior performance, which, after all, is the primary goal of any enterprise. But they work in very different ways. A company can outperform rivals only if it can establish

11、a difference that it can preserve. It must deliver greater value to customers or create comparable value at a lower cost, or do both. The arithmetic of superior profitability then follows: delivering greater value allows

12、 a company to charge higher average unit prices; greater efficiency results in lower average unit costs.Ultimately, all differences between companies in cost or price derive from the hundreds of activities required to cr

13、eate, produce, sell, and deliver their products or services, such as calling on customers, assembling final products, and training employees. Cost is generated by performing activities, and cost advantage arises from per

14、forming particular activities more efficiently than competitors. Similarly, differentiation arises from both the choice of activities and how they are performed. Activities, then, are the basic units of competitive advan

15、tage. Over-all advantage or disadvantage results from all a company’s activities, not only a few.1Operational effectiveness (OE) means performing similar activities better than rivals perform them. Operational effectiven

16、ess 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 Competitors can quickly imitate management techni

17、ques, new technologies, input improvements, and superior ways of meeting customers’ needs. The most generic solutions – those that can be used in multiple settings – diffuse the fastest. Witness the proliferation of OE t

18、echniques accelerated by support from consultants. OE competition shifts the productivity frontier outward, effectively raising the bar for everyone. But although such competition produces absolute improvement in operati

19、onal effectiveness, it leads to relative improvement for no one. Consider the$5 billion-plus U.S. commercial-printing industry. The major players – R.R. Donnelley & Sons Company, Quebecor, World Color Press, and Big

20、Flower Press–are competing head to head, serving all types of customers, offering the same array of printing technologies (gravure and web offset), investing heavily in the same new equipment, running their presses faste

21、r, and reducing crew sizes. But the resulting major productivity gains are being captured by customers and equipment suppliers, not retained in superior profitability. Even industry-leader Donnelley’s profit margin, cons

22、istently higher than 7% in the 1980s, fell to less than 4.6%in 1995. This pattern is playing itself out in industry after industry. Even the Japanese, pioneers of the new competition, suffer from persistently low profits

23、. The second reason that improved operational effectiveness is insufficient – competitive convergence – is more subtle and insidious. The more benchmarking companies do, the more they look alike. The more that rivals out

24、source activities to efficient third parties, often the same ones, the more generic those activities become. As rivals imitate one another’s improvements in quality, cycle times, or supplier partnerships, strategies conv

25、erge and competition becomes a series of races down identical paths that no one can win. Competition based on operational effectiveness alone is mutually destructive, leading to wars of attrition that can be arrested onl

26、y by limiting competition. The recent wave of industry consolidation through mergers makes sense in the context of OE competition. Driven by performance pressures but lacking strategic vision, company after company has h

27、ad no better idea than to buy up its rivals. The competitors left standing are often those that out-lasted others, not companies with real advantage. After a decade of impressive gains in operational effectiveness, many

28、companies are facing diminishing returns. Continuous improvement has been etched on managers’ brains. But its tools unwittingly draw companies toward imitation and homogeneity. Gradually, managers have let operational ef

29、fectiveness supplant strategy. The result is zero-sum competition, static or declining prices, and pressures on costs that compromise companies’ ability to invest in the business for the long term.II. Strategy Rests on U

30、nique ActivitiesCompetitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value. Southwest Airlines Company, for example, offers short-haul, lo

31、w-cost, point-to-point service between midsize cities and secondary airports in large cities. Southwest avoids large airports and does not fly great distances. Its customers include business travelers, families, and stud

32、ents. Southwest’s frequent departures and low fares attract price-sensitive customers who otherwise would travel by bus or car, and convenience-oriented travelers who would choose a full-service airline on other routes.