What entrepreneur doesn’t dream of being the “best”? Well that’s fine, but according to an article by Michael Porter, the Director Strategy at Harvard’s Institute of Strategy and Competitiveness, that’s not the right focus.
In quotes from a recent talk, he points out the key principles of strategic positioning, which to him are developing a unique value proposition – Marketing 101 anyone? – an understanding of where you are in your market – the “value chain”, understanding what not to do, and a commitment to ongoing improvement. His best point for me was the note that it isn’t a great strategy to compete on the same things your competitor does – really carve out a unique position.
He’s right on and his laundry list of common strategic errors is also fascinating. Companies confuse “strategy” with operations and best practices, which leads to missing the bigger picture of market position.
He also takes aim at a something I believe is still a problem – stock market pressures that force companies to develop strategies that are not consistent with their companies long term growth, but rather short-term stock surges. Analysts contribute to this problem with the focus on quarterly growth reports and a focus on market capitalization. Porter points out how mergers and acquisitions lead to stock price increases, but are not necessarily good strategies.
A great read!