Quotes About Strategy

I start with competition in Part 1 for the simple reason that if there were no competition, there would be no need for strategy. Competitive rivalry is a relentless process working against a company's ability to find and maintain an advantage.

Good strategies depend on the connection among many things, on making interdependent choices.

It takes time to develop real competitive advantage, to understand the value you create, to achieve tailoring, trade-offs, and fit. If you grasp the role of continuity in strategy, it will change your thinking about change itself. Paradoxically, continuity of strategy improves an organization's ability to adapt and to innovate.

Strategy explains how an organization, faced with competition, will achieve superior performance.

The key to competitive success—for businesses and nonprofits alike—lies in an organization's ability to create unique value.

Your cost advantage might come from lower operating costs or from using capital more efficiently (including working capital), or both.

A strategic positioning, especially when it has a high degree of focus, is sometimes seen as carving out a "niche." The implication of that word is that the market opportunity is small. Although this may sometimes be the case, even focused competitors can be very large. In the case of Southwest, what initially looked like a narrow niche has revolutionized the airline industry.

Strategy explains how an organization, faced with competition, will achieve superior performance. The definition is deceptively simple.

a good competitive strategy that will result in sustainably superior performance.

This, says Porter, is competitive convergence. Over time, rivals begin to look alike as one difference after another erodes. Customers are left with nothing but price as the basis for their choices. This has happened in airlines, in many categories of consumer electronics, and in personal computers, with the notable exception of Apple, the one major company in that industry that has consistently marched to its own drummer.

Companies only have to be "big enough," which rarely means they have to dominate. Often "big enough" is just 10 percent of the market. Yet companies under the influence of winner-takes-all thinking tend to pursue illusory scale advantages. In doing so, they are likely to damage their own performance by cutting price to gain volume, by overextending themselves to serve all market segments, and by pursuing overpriced mergers and acquisitions.

If rivals all pursue the "one best way" to compete, they will find themselves on a collision course.

The five forces framework explains the industry's average prices and costs, and therefore the average industry profitability you are trying to beat.

For Porter, strategic competition means choosing a path different from that of others. Instead of competing to be the best, companies can—and should—compete to be unique.

Strategic competition means choosing a path different from that of others.

Competing to be unique is unlike warfare in that one company's success does not require its rivals to fail. It is unlike competition in sports because every company can chose to invent its own game. A better analogy than war or sports might be the performing arts.

The real point of competition is not to beat your rivals. It's not about winning a sale. The point is to earn profits.

Seeing that gate turnarounds are a significant cost driver, you would then dive a level deeper, to the many specific subactivities involved in gate turnarounds. Here you'd be looking for ways to lower your costs without sacrificing customer value. This is how you drive an even greater wedge between your performance and that of your rivals.

than from the product itself.

Precisely because substitutes are not direct rivals, they often come from unexpected places. This makes substitutes difficult to anticipate or even to see once they appear. The threat of substitution is especially tricky when it comes at one remove.

According to company legend, here's how Southwest Airlines was born. Back in the late 1960s, "a couple of guys said, 'Here's an idea. Why don't we start an airline that charges just a few bucks and has lots of flights every day instead of what the other guys are doing—charging a lot of bucks and having just a few flights each day?

Its low fares made flying an attractive alternative for price-sensitive travelers accustomed to driving or taking a bus. In the early years, a shareholder asked CEO Herb Kelleher if Southwest couldn't raise its prices by just a few dollars since its $15 price on the Dallas–San Antonio route was so much lower than Braniff's $62 fare. Kelleher said no, our real competition is ground transportation, not other airlines.

Blue Ocean Strategy

If rivalry is intense, companies compete away the value they create, passing it on