The Essence of Strategy: The unique linkage of Strategic Positions locks-in advantage
October 1, 2002 By Pulp & Paper Canada
Within an industry sector, many companies do similar things. They invest in the same technology, benchmark each other, form alliances, focus efforts in “best practices,” outsource to the same third pa…
Within an industry sector, many companies do similar things. They invest in the same technology, benchmark each other, form alliances, focus efforts in “best practices,” outsource to the same third parties, rely on supplier partnerships, imitate moves of competitors. If everyone is doing the same thing, how can any one company achieve a sustained competitive advantage? It is a rat race where only some rats survive! The essence of a successful strategy is to be different. An innovative strategy is created out of a unique linkage of synergistic Strategic Positions or Activities that is difficult to copy.
The starting point for innovative strategy development is identification of the Critical Issue. This should be vital, lucid, and represent a focal vision for the development of a competitive Business Strategy. Achieving operational effectiveness, while necessary, is not a Strategy — not everyone can be in the lowest quartile of cost!
Strategic Elements are the building blocks for Strategy; they can be based on customer needs, or on a variety of products or services. The innovation in Strategy Development rests in identifying unique Activities or Strategic Positions, different from competitors, for each Strategic Element. Finding new Strategic Positions requires creativity and insight; it is frequently found by new market entrants. Newcomers are more flexible because they face no trade-offs with an existing culture and can more easily perceive new opportunities.
Trade-Offs are important for any strategy development; they create the need for choice and purposely limit what a company offers. Trade-Offs mean taking different positions with tailored offerings that require different configurations, skills and technology. It is choosing not to be all things to all people. Starbucks chose not to sell a cheap coffee or give refills. Southwest Airlines chose not to offer reserve seating or checked baggage.
The final step in defining an overall Strategy is about finding a consistent fit for the various Strategic Positions or Activities and combining them into a “strong network.”
This “Strategic Fit” locks out imitators by creating a chain that is as strong as its strongest link; this is the overall Strategy Blueprint that drives both competitive advantage and sustainability. It may be envisaged as finding the unique combination that unlocks a successful competitive strategy.
Why is this important?
The “best in class” examples of successful strategy in well-trodden sectors are illustrated by the examples above. They are difficult to copy because competitors cannot or will not make the necessary trade-offs; witness the many failed attempts by full-service air carriers to duplicate low-cost carriers like Southwest Airlines. Critical questions in thinking of your own organization’s strategy:
How are we different?
How do we exploit our differences?
Can we preserve these differences?
Are differences linked throughout the organization?
Are we continually building on our linked differences?
For more detailed information on this topic, including a unique software supported process for strategy discussion and development, please contact the author.
Alan R. Procter is an international consultant helping organizations exploit the future in their business strategies. He can be reached through email@example.com
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