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Posts Tagged ‘Porter’

The Essential Startup Reader

Posted by vishalsinghal on March 31, 2010

The Essential Startup Reader: 10 Lessons in Entrepreneurship

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Strategy as understood by Many

Posted by vishalsinghal on November 4, 2008

People and companies both in some way or the other are facing atleast some sort of hit by the global melt down. And it’s interesting to see that some companies around the world are adjusting their strategies to compensate for the current economic conditions, but if “strategy” is the long-term blueprint for an organization, why change it for temporary insecurity?

Michael Porter, Harvard Business School professor and Strategy Guru, recently told the senior-level executive audience at school’s World Business Forum that many leaders are misinformed about how to develop long-term competitive strategy plans for their companies. They often confuse strategy with some type of action, such as merging, internationalizing or outsourcing. Other flawed concepts are strategy as aspiration (becoming the “tech leader” or to “grow”), and strategy as mission/ vision statement. “Companies spend days arguing over which six words go in the sentence. It’s a concept. Don’t confuse it with strategy,” said Porter.

A simple, yet accurate, way to test whether your organization is on the right strategic track is to see if your entire management team would be able to independently articulate the same thing. If they can’t, Porter said, you don’t have a true strategy.

There are five tests of a good strategy, Porter outlined:

  1. A unique value proposition. “If you don’t have one, you’re competing on operational excellence but unlikely to achieve superiority.”
  2. A different, tailored value chain. “If not, you are competing on operational excellence — who can do the same thing better?”
  3. Clear tradeoffs, and choosing what not to do. “If you choose what to do, you have to also choose what not to do because they are incompatible. It’s very hard because tradeoffs limit opportunity.”
  4. Activities that fit together and reinforce each other. Porter said to harness the synergies across the value chain instead of discrete advantages.
  5. Strategic continuity with continual improvement in realization. “Strategy takes about three years to kick in. If you shift strategy every year, year and a half, you’ll never get there.”

As the economic markets fluctuate by the moment, the senior leaders who presented at another CEO Leadership Forum in early October also had long-term strategy on their minds, and one CEO summed it up best:

“If you are not in a crisis, assume you are.”

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