7. April 2018 10:11 by Megan Kunis
Michael Porter's view is that when businesses speak of strategy, it is their relative competitive position in the marketplace to their competitors, that is the only true strategy. For example it might be taking a cost leadership position or a high end quality position. His view is that if companies try to target a number of strategies, it leads to confusion both for the customers and internally for the business itself.
Porter's view is that to be truly successful, a business should focus on one strategy and nail it. Porter quite rightly argues that all other business initiatives e.g. outsourcing to low cost countries, acquiring a competitor, or eliminating waste, are in fact not strategies, but ways in which businesses achieve their single strategy, which is their "SCA".
Mindshop's "Sustainable Competitive Advantage" or "SCA" tool is a good practical approach to define your businesses competitive position.
A company that is challenging Porters view and is in fact smashing their competitors through a dual approach to strategy is Singapore airlines. Many have said it cant be done, but a study in the July 2010 Harvard Business Review showed not only a company adopting a dual strategy of cost leadership and high quality very well, (one example cites airplanes with the best first class seats in the world, while high level executives work out of an airport hangar in Changi airport), the airline also leads all the key indicators of a successful global airline such as profitability, customer satisfaction, cost per km and so on.
Whether your business model is defined by a single approach to strategy, or dual approach to strategy, make sure that it is clear, and not only resonates with your customers, but also gives your business an edge on your competitors.
Next week in this series of "burying your old business model", we will look at innovation, with some great examples of some businesses who are thriving in some of the toughest industries using innovation.