A further slowing in growth
Professor Michael Porter of Harvard Business School and Director of the Institute for Strategy and Competitiveness, discusses the world of opportunities available to companies that are willing to recalibrate their thinking around strategy.
It’s time to change your thinking on what strategy is and how it’s applied across your company. Professor Michael Porter of Harvard Business School and Director of the Institute for Strategy and Competitiveness, discusses the world of opportunities available to companies that are willing to recalibrate their thinking around strategy.
Many organisations focus on how to be the best, but the fundamental question should be how do you deliver something unique to the customers you choose to serve? Strategy is more than a goal, a particular action or mission; it’s what defines the company’s distinctive approach to competing and the competitive advantages on which that approach will be based.
Companies often jump too quickly to their position in a marketplace. But the health of your industry determines success just as powerfully as your market position. Industry analysis is very powerful in revealing an opportunity that you might ignore and part of your job is to make sure industry competition is shaping up in the right way so the opportunity for everyone doesn’t erode.
Position starts with higher prices based on a premium product or lower costs based on efficiency – which track are you on? The value chain is crucial in determining your position. Competitive advantage is delivered if you can differentiate along certain parts of the value chain that enable the delivery of additional value to customers. Alternatively, if you use the value chain efficiently you can deliver a lower cost item to the customers you choose to serve. Make a choice.
Operational effectiveness is about best practice – real strategy creates a unique value proposition based on doing things differently to deliver superior value. A very common mistake is focusing so much on effectiveness that there is no strategy. The two are codependent – if you implement best practice you are unlikely to have a competitive advantage but unless you are operationally effective strategy does not matter.
The biggest opportunity going forward will be in creating shared value, where societal needs and challenges are tackled through a for-profit business model that aligns business and community/societal needs.
Read more insights from the 2014 World Business Forum keynote speakers. http://business.nab.com.au/tag/world-business-forum/>
NAB was recently privileged to sponsor the World Business Forum in Sydney – two days of inspiration, collaboration and provocation by some of the world’s leading business innovators. These insights were generated live on the day by NAB and were informed by the guest speakers’ presentations.
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