(1) figure out your place of best fit,
(2) create plans to get there.
I believe strategy can be applied to companies and individuals to help find your fit and maximise your value. First lets understand “what is strategy”.
In 1996 as American companies were losing trade to Japan, Harvard University Professor Michael Porter wrote a famous article “What is strategy”. Porter urged American companies to go beyond copying Japanese continuous improvement and to think “different”. Almost 20 years on Apple is beating Sony; the dollar is above the yen; Google, Facebook and Disney are all thriving because of breakthrough innovations.
Porters identified 5 items to be strategically competitive
1. Establish points of difference.
To be strategically competitive, you have to be willing to be different in some way.
“A company can outperform rivals only if it can establish a difference it can preserve… The essence of strategy is choosing to perform activities differently than rivals do.” (Porter, 1996, “What is Strategy”, p.62 & 64)
2. Identify valuable positions and be the best at these: customer / industry focus, regional focus, or “one stop shop”.
Porter encouraged the identification of valuable customer / market areas you can realistically be best at. He saw three key “market” directions from which to choose:
“Strategic positions can be based on customers’ needs (e.g. understanding and servicing an industry or customer), customers’ accessibility (e.g. local knowledge and availability), or the variety of a company’s products or services (e.g. one stop shop).” (Porter, 1996, “What is Strategy”, p.66)
Commit on an “edge” of being industry or customer specific; to have deep local knowledge; or to be the jack of all trades through a wide breadth of offerings.
3. Focus and Trade Offs – Decide what do to and what not to do.
“Trade-offs are essential to strategy. They create the need for choice and purposely limit what a company offers” (Porter, 1996, “What is Strategy”, p.69)
Porter encouraged it was important to have some product / service focus – limit how many things you do, and rule some things out. Some advantages of product / service focus:
- Reputation: It’s easier for “buyers” to understand and trust what you do.
- More excellence, less waste: Skills, talents and resources can be deeply honed to build these products or services without waste from rarely used capabilities.
- Easier to manage: Clearer priorities and less exceptions allows better understanding of participant roles.
4. “Fit” – Consistently layer resources, processes and skills that reinforce.
Porter recognized that “the whole can be greater than the sum of the parts” through activities that fit a “greater strategic purpose” whilst reinforcing each other.
“The competitive value of individual activities cannot be separated from the whole…. Strategic positions should have a horizon of a decade or more, not a single planning cycle.” (Porter, 1996, “What is Strategy?”, p. 72)
An example of this reinforcing can be seen at Ikea. Ikea is different through design, has a customer focus of “young families”, focuses on low cost. Ikea’s purpose built store layout leads customers through fully decorated rooms removing the need for sales staff. Flat packs allow instant pick up and further reinforce cheap prices. Modern furniture, in store cafe’s, and child care all further appeal to the young family market. These reinforcing capabilities took years to hone and to have all these reinforcing is hard for competitors to copy.
5. Work smart and not just hard
Porter saw American companies in the 1990’s burning themselves out working hard yet still failing against efficiency focussed Japan. He advocated taking time out to consider strategy and therefore work smarter, not just harder.
Have you ever felt like this?
Many of us talk about working smarter not harder, yet most of us struggle to know how.
How to apply Porter’s steps to your career (and ultimately get better jobs).
- Look for and build your own points of difference. Know your most valuable strengths. It’s desirable to be unique and build these deeper.
- Identify your market “position”. Choose an industry / company or deep specialist skill (“master craftswoman”); or maybe focus on a local region to build knowledge and professional networks in (“local”); alternatively build broad “generalist” or “one stop shop” skills to get known for your ability across many different areas (“jack of all trades”).
- Focus, make trade offs, and close some doors. Choose what you’re focussing in on, and let go of what you’re not. Be clear about what you do. This lets you get really good and project a focussed personal brand.
- Over time layer in skills, experience and networks that reinforce each other and deepen your competitiveness in your chosen direction. Get training. Take jobs to reinforce your direction, learn, or meet people. Get involved in industry groups, company networks, or mentor others to layer reinforcing activities.
- Work smart, not just hard. Take time out regularly to think about what you’re doing and where you’re going. Use Porter’s questions to help.
Have you tried these things?
Can I help, provide Porter’s paper, or give more examples?
Please share your thoughts, feedback and examples.