If your competitor has to lose for you to win, then you are in trouble. It’s not about war!

1. Leaders make the choices that great strategies arise from.
2. They then defend assaults on that strategy from ideas that do not fit it.
3. Strategy used to be a secret, locked away. Leaders now know everyone has to know the strategy, because everyone is charged with executing it. So, leaders communicate and act consistently with the strategy all the time.
4. Never copy anything. Think instead ‘How could you make this come alive in your organisation?’
5. Most companies do not have a strategy, even if they think they do.


· Aspiration. Aiming to be or stay number one or two in a market is not a strategy.
· Action. Merging and buying other companies is not a strategy.
· Anything important. Too many companies say ‘we need an outsourcing strategy, a customer strategy, a supply chain strategy…anything important has a strategy’. These things do not magically add up to an overall strategy. The overall strategy comes first and has to be holistic.
· Vision: Most of the vision and mission stuff isn’t about strategy, it’s about principles. Strategy is ‘what’s our advantage?’
· Experimentation. Least common now. But, there are some companies that think everything moves so fast now all you can do is try new things constantly and stick with ones that work. Being flexible and agile on its own is not strategy!


There are two sides of this you have to keep on top of. One is the industry structure itself – pharmaceuticals is inherently more profitable than the airline industry, for example. The other is your relative position within your industry. You have to be clear how much of your performance is because of the industry you are in and how much is down to you.

You need to be clear on the difference between OPERATIONAL EFFECTIVENESS and STRATEGIC POSITIONING. Operational efficiency means being better than the competition at deploying ‘best practices’. In other words, you are saying ‘we are the same but better’. This is just running the same race and betting you can run it faster than the competition. Strategic positioning, by contrast, means choosing which race to run. It involves creating a unique and sustainable position.


The problem with best practices is that everyone else is trying to implement them. Yes, you need to do that, but it is not enough to give you a competitive advantage that can’t be imitated. The single biggest characteristic of Operational Efficiency, in fact, is that it obliterates differences in strategy.

So, you improve, but you don’t get ahead. Productivity goes up, but profitability stays the same. The benefit goes to the customer. This is Competitive Convergence – the more you and your competitors pursue ‘best practice’ the more you all look alike and the customer ends up choosing on price. It is the story of the 1990s in industry after industry. It’s a zero sum game. For you to succeed, your competitor must fail.


If your competitor has to lose for you to win, then you are in trouble. It’s not about war!

We still use these old warfare metaphors for business, quoting ancient Chinese generals and applying them to business. But ‘beat the enemy’ doesn’t work. You need to compete to be unique, not to be the best.


To finish, four questions to test whether you have a sustainable strategy:

1. Have you picked a different customer value proposition from your rivals?

A product example would be Neutrogena soap, which has since declined because Johnson & Johnson, which bought it, diluted the strategy by going for a mass market. Neutrogena is formulated to meet a specific set of needs. Other soaps perform other needs. This is the way to go, so why do managers want to always be “the best we possibly can” across too many fronts?

2. Do you have a different value chain to support your different value proposition?
If your proposition is different, but supported by the same value chain as your competitor, then you do not have a sustainable strategy. To understand this, think about your company as a series of activities. You have to tailor your activities to the value proposition.

3. Have you made trade-offs or are you trying to be all things to all people?
If you have not made trade-offs – choices – you do not have a strategy. If some customers don’t like what you are doing, that is good. It’s the sign you have made choices about who your customers will be.

It means you have chosen to do one thing particularly well and deliberately chosen not to do something else. Strategy is about making some customers unhappy (deciding which ones, obviously…).It needs courage and clarity of thinking to carry this off.

4. What’s the ‘Fit’?
A good strategy is a system of interdependent activities that are, because of their interdependence, difficult to copy. Southwest Airlines’ system is an example. Herb Kelleher designed it as a point-to-point travel business between mid-sized cities not too far apart. They avoided hub and spoke. They offer a barebones service: no meals (so less cleaning to hold up plane turnarounds), no baggage transfers, and no seat assignments. So, this concept of FIT says a competitor has to copy everything you do to take you on. They can’t just copy one innovation of yours.

SOURCE: This five-minute strategy and leadership masterclass is based on two interviews between Michael Porter and Phil Dourado, author of “Taking The Lead” email newsletters.