#48 Understanding Michael Porter - Book Summary đŸ“–
If you listen to every customer and do what they ask you to do, you can't have a strategy.
Strategy explains how an organization, faced with competition, will achieve sustainably superior performance.
A company is not just competing with their rivals for profits, but also with their customers, their suppliers, potential new entrants, and substitutes.
The book does a great job of highlighting some of the popular misconceptions about strategy that causes companies to pursue the wrong strategies, assume that strategy is not required or assuming that they have one.
The two core elements of strategy:
Choosing what kind of value you will offer your customers (competing to be unique)
Tailoring your value chain to deliver your value proposition
Continuity of strategy is necessary for a organization to develop competitive advantage.
While developing your company’s strategy, it is important to think hard about making it difficult for competitors to copy. The list of barriers or deterrents to imitation of strategy:
Tailored value chain
Trade-offs
Fit
Communicating the company's strategy to the entire company is really important. Strategy is useless if it's a secret. You have to find a concise and memorable way to explain your strategy. The purpose of strategy is to align the behavior of everyone in the organisation and to help them make good choices when they are on their own.
The best way to check if a strategy is good is to check if it has the following elements:
A distinctive value proposition
A tailored value chain
Trade-offs that different from rivals
Fit across value chain
Continuity over time
Strategy needs to change if the following conditions are met:
If customer needs change and obsoletes a company's core value proposition
An innovation that invalidates the essential trade-offs on which a strategy relies
A technological or managerial breakthrough that completely trumps a company's existing value proposition
If you want to read chapter summaries of the book - common misconceptions about competition here, the second on five forces, the third on competitive advantage, the fourth on creating value, the fifth on trade-offs, and the sixth on fit, and the seventh on continuity