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What is strategy?

Pedro Eliseo Lpez Gil

Definition of Strategy
1 a (1) : the science and art of employing the political, economic, psychological, and military forces of a nation or group of nations to afford the maximum support to adopted policies in peace or war (2) : the science and art of military command exercised to meet the enemy in combat under advantageous conditions b : a variety of or instance of the use of strategy 2 a : a careful plan or method : a clever stratagem b : the art of devising or employing plans or stratagems toward a goal 3: an adaptation or complex of adaptations (as of behavior, metabolism, or structure) that serves or appears to serve an important function in achieving evolutionary success<foraging strategies of insects> Source: m-w.com

Michael E. Porter
!! Michael E. Porter is a leading authority on competitive strategy, the competitiveness and economic development of nations, states, and regions, and the application of competitive principles to social problems such as health care, the environment, and corporate responsibility !! He is generally recognized as the father of the modern strategy field !! He also led the Institute for Strategy and Competitiveness at Harvard Business School !! You can follow him in twitter
!! http://twitter.com/MichaelEPorter

Operational Effectiveness is not Strategy


!! For more than twenty years, managers have been learning to play by a new set of rules !! Outsourcing !! Benchmarking !! Flexibility !! Positioning once the heart of strategy- is rejected as too static !! Hypercompetition !! The root of the problem is the failure to distinguish between Operational Effectiveness (OE) and strategy !! Both essential to superior performance, but working in different ways

Operational Effectiveness is not Strategy


!! OE means performing similar activities better than rivals perform them
!! Better utilize its inputs

!! Strategic positioning means performing different activities from rivals or performing similar activities in different ways !! Reasons why improved OE is insufficient
!! Rapid diffusion of best practices !! Competitive convergence is more subtle

Strategy rests on Unique Activities


!! Its all about being different
!! The essence of strategy is choosing to perform activities different than rivals do

!! Strategic positions emerge from three distinct sources


!! Variety-based !! Needs-based !! Access-based

!! Strategy is the creation of a unique and valuable position, involving a different set of activities

A Sustainable Strategic Position requires Trade-offs


!! Trade-offs are essential to strategy !! The essence of strategy is choosing what not to do !! Trade-offs arise for three reasons
!! Inconsistence in image or reputation !! From activities themselves !! Limits on internal coordination and control

!! Strategy is making trade-offs in competing

Fit drives both Competitive Advantage and Sustainability


!! OE is about achieving excellence in individual activities or functions, strategy is about combining activities !! Three types of fit
!! Simple consistency between each activity and the overall strategy !! Activities are reinforcing !! Optimization to effort

!! Strategy is creating fit among a companys activities !! Right now its all about changing

Rediscovery Strategy
!! The failure to choose
!! Trade-offs are frightening !! Making no choice is sometimes preferred

!! The growth trap !! Profitable growth !! The role of leadership


!! Leader must provide the discipline to decide and make changes

Conclusions
!! Many organizations are confuse when talking about OE and strategy !! Changing is happening to fast, and organizations have to quickly adapt !! Strategy is
!! !! !! !! !! !! Unique competitive position for the company Activities tailored to strategy Clear trade-offs Competitive advantages arises from fit across activities Sustainability comes from the activity system, not the parts Operational Effectiveness (OE) is a given

Thank you for your time!


Q&A

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