Michael Porter

In: Business and Management

Submitted By khya
Words 7414
Pages 30
NOVEMBER-DECEMBER 1996

BR

I. Operational Effectiveness Is Not Strategy
For almost tv^fo decades, managers have been learning to play by a new set of rules. Companies must be flexible to respond rapidly to competitive and market changes. They must benchmark continuously to achieve best practice. They must outsource aggressively to gain efficiencies. And they must nurture a few core eompetencies in the by Michael race to stay ahead of rivals. Positioning-once the heart of strategy-is reject- ! ed as too static for today's dynamic markets and changing technologies. According to the new dogma, rivals can quickly copy any market position, and competitive advantage is, at hest, temporary. But those beliefs are dangerous half-truths, and they are leading more and more companies down the path of mutually destructive competition. True, some barriers to competition are falling as regulation eases and markets become global. True, companies have properly invested energy in beeoming leaner and more nimble. In many industries, however, what some call hypcrcompetition is a self-inflicted wound, not the inevitahle outcome of a changing paradigm of competition. The root of the problem is the failure to distinguish between operational effeetiveness and stratHARVARD BUSINESS REVIEW N,)vt;mbt;r-D(.ct;mbi;r 1996

What Is Strategy r

egy. The quest for productivity, quality, and speed has spawned a remarkable number of management tools and techniques: total quality management, benchmarking, time-based competition, outsourcing, partnering, rcungineer'ing, change management. Although the resulting operational improvements have often E. Porter ^^^^ dramatic, many companies have been frustrated hy their inability to translate those gains into sustainahle profitahility. And hit by bit, almost imperceptibly, management tools have taken the place of strategy. As managers push to…...

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