Last week, I shared one of Michael Porter’s definitions of strategy from his Harvard Business Review
article, “What is Strategy?”
“Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.”
I had put emphasis on the phrases “being different” and “unique mix of value”, and we focused on what it would mean for customer experience to be a strategic differentiator, especially in contrast to operational effectiveness. This week we’re going to emphasize the activities themselves, specifically how well they do (or don’t) fit together. From later in Porter’s article:
“While operational effectiveness is about achieving excellence in individual activities, or functions, strategy is about combining activities….One activity’s cost, for example, is lowered because of the way other activities are performed. Similarly, one activity’s value to customers can be enhanced by a company’s other activities.”
Notice how he emphasizes activities. This is important, because it becomes the basis by which he talks about strategic fit at a company. From earlier in the article:
“Ultimately, all differences between companies in cost or price derive from the hundreds of activities required to create, produce, sell, and deliver their products or services, such as calling on customers, assembling final products, and training employees. Cost is generated by performing activities, and cost advantage arises from performing particular activities more efficiently than competitors. Similarly, differentiation arises from both the choice of activities and how they are performed. Activities, then are the basic units of competitive advantage. Overall advantage or disadvantage results from all a company’s activities, not only a few.” (emphasis added)
While you can of course achieve a certain level of advantage just by performing individual activities better (e.g. “get better at sales”), real competitive advantage happens when your activities have a strong sense of fit.