I recently read this article from the Harvard Business School Working Knowledge newsletter. It is an excerpt of an interview between the author (Joan Magretta) and Michael E. Porter, renowned authority on competition and strategy.
Even though it is an excerpt, the Q & A format touches on the key mistakes we all can relate to as business operators. They are the sort of missteps we wish we could avoid. They are wasteful of time and other resources; yet we appear unable (perhaps unwilling) to remedy the situation.
According to the interview, businesses make several common strategy mistakes, including the following:
- The biggest of all mistakes is competing to be the best, going down the same path as everybody else and thinking that somehow you can achieve better results. This is a hard race to win. So many managers confuse operational effectiveness with strategy.
- Another common mistake is confusing marketing with strategy. It’s natural for strategy to arise from a focus on customers and their needs. So in many companies, strategy is built around the value proposition, which is the demand side of the equation. But a robust strategy requires a tailored value chain — it’s about the supply side as well, the unique configuration of activities that delivers value.
- It is a mistake to overestimate strengths. This is indicative of an inward-looking bias observed in many organizations.
- A common mistake is getting the definition of the business wrong, or getting the geographic scope wrong. Are you really a global operation?
- The worst mistake — and the most common one — is not having a strategy at all. Most executives think they have a strategy when they really don’t, at least not a strategy that meets any kind of rigorous, economically grounded definition.
As I indicated in the opening paragraph, these mistakes are familiar. We are guilty of committing some, or all, and know of businesses in the same trap. Why then do these mistakes persist? What is responsible for the failure to strategize –in the economically meaningful sense?
According to Porter, many barriers distract, deter, and divert managers from making clear strategic choices. Some of the most significant barriers come from the many hidden biases embedded in internal systems, organizational structures, and decision-making processes.
He sums things up as follows: “Strategy links choices on the demand side with the unique choices about the value chain (the supply side). You can’t have competitive advantage without both” – Michael E. Porter.
CLICK HERE to read the article. There is a link to information about Joan Magretta’s book, which distills Porter’s core concepts and frameworks into a concise guide for business practitioners.
© Rachel Agheyisi, Report Content Writer, Report Content Writer’s Bolg, 2012
Filed under: Miscellaneous Articles, Our Freelance Beat, Third-Party Posts | Tagged: business strategy, competitive advantage, HBS Working Knowledge, operational effectiveness, Value chain, value proposition | Leave a Comment »
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