Tuesday, January 13, 2009

On Reading Porter's 'What Is Strategy'

Michael Porter is on of those names that I forever seem to be running across. (He seems to be quoted or referenced in The Economist every single week). But up until now I had never read any of his writings.

I work in a Strategic Brand Consultancy and have been delivering Brand Strategy to my clients for more years than I dare to say. So I am familiar with the broad outlines of the ideas he presents in this article. He is mapping the topography of the business landscape that I inhabit. That said, reading this was like coming home to the source material for me. I have probably encountered ninety per cent of his thinking in other places, filtered through lesser authors. A lot of these are ideas that I have already internalised over the years.

I found myself reading this article with a mix of familiarity (for the core ideas) and novelty (for seeing all of them assembled in this fashion). In noting the salient points then, I am just going to limit myself to those aspects which are new to me.

On first reading, Porter’s ideas in this article seem almost common-sense. But on further reading you see that it is only because of the way he states his points and assembles his arguments and examples. What seems obvious after the fact is often not all that apparent beforehand. Equally it does not mean the implications are any easier to implement or to realise.

Porter presents two interlinked concepts: ‘Operational Effectiveness’, how we perform activities better than our competitors; and ‘Strategy’ which leads us to perform different activities than our rivals or else perform similar activities but in a more effective way. Thus strategy relates to differentiation and being different is the key to success. (Just as brand differentiation is key to successful positioning.)

I really think that he made such an insightful point when he says that if there were only one ideal positioning then there would be no need for strategy. That speaks to me about how you and your business always need to be able to adapt and respond. As he says: “new positions arise because of change”.

He says that strategy is about being very clear about what you do not do as well as what you do. Which relates to my own experience of finding that clients who are absolutely focused on the core proposition of their offering succeed better than those whom are all over the shop and tend to go chasing off after shiny new business ideas or business models that they read about in a one-page magazine article on their last business flight...

I think I have long ago grasped his point about knowing what you do not want to do. However, I do think that I need to work harder at addressing his point about always checking that I and my colleagues are not doing anything contra-indicative to our differentiated strategy and actively not doing such things. Particularly in light of the idea that everything is important: that failure or under-performance in any area drags down our whole organisation, confuses or disappoints our clients and dilutes our positioning and our reputation.

All of this segues into leadership, as the leader needs to make the trade-offs implicit in the reasoning above. Thinking strategically and acting strategically requires hard choices more than it ever requires consensus.

So a number of apparent question arise from this article. The first has has to be how do all of our activities and internal processes fit with our strategic positioning? What is misaligned? Which complement and reinforce each other? What wasted effort can we eliminate and what is redundant?

Then, looking outside of ourselves, what has changed in our industry in, say, the last five years that has opened up opportunities for competitors to define a positional advantage against us? Also then arising from that, what positional opportunities are there for us to capitalise on?