HBR's 10 Must Reads on Strategy 2-Volume Collection

Harvard Business Review

• Publisher: Harvard Business Review Press
• Year: 2020
• ISBN:
  9781633699403
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

If you read nothing else on strategy, read these definitive articles from Harvard Business Review.

Defining--and executing--the best strategy for your company is fraught with challenge. Do you have the right strategy to lead your company into the future? HBR's 10 Must Reads on Strategy 2-Volume Collection provides enduring ideas and practical advice on how to accelerate your organization's strategy development and execution. Bringing together HBR's 10 Must Reads on Strategy, Vol. 1 and HBR's 10 Must Reads on Strategy, Vol. 2, this collection includes twenty articles selected by HBR's editors and features the indispensable article "What is Strategy?" by Michael E. Porter.

From timeless classics to the latest game-changing ideas from thought leaders W. Chan Kim, Renee Mauborgne, Jim Collins, and more, HBR's 10 Must Reads on Strategy 2-Volume Collection will inspire you to:

• Distinguish your companies from your rivals
• Reinvent your business model to keep you on the competitive map
• Craft a vision for an uncertain future
• Create and capture new markets--and break free from overcrowded ones
• Clarify decision roles for faster decision making
• See the growing relevance of data analytics in your organization
• Transform your products and services into platforms
• Identify the signals of future disruption and take steps to avoid it

HBR's 10 Must Reads paperback series is the definitive collection of books for new and experienced leaders alike. Leaders looking for the inspiration that big ideas provide, both to accelerate their own growth and that of their companies, should look no further. HBR's 10 Must Reads series focuses on the core topics that every ambitious manager needs to know: leadership, strategy, change, managing people, and managing yourself. Harvard Business Review has sorted through hundreds of articles and selected only the most essential reading on each topic. Each title includes timeless advice that will be relevant regardless of an ever?changing business environment.

On
Strategy

HARVARD BUSINESS REVIEW PRESS

Boston, Massachusetts

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Library of Congress Cataloging-in-Publication Data

HBR’s 10 must reads on strategy.

p. cm.

Includes index.

ISBN 978-1-4221-5798-5 (pbk. : alk. paper) 1. Strategic planning. I. Harvard business review. II. Title: HBR’s ten must reads on strategy. III. Title: Harvard business review’s 10 must reads on strategy.

HD30.28.H395 2010

658.4'012—dc22

2010031619

Contents

Copyright

What Is Strategy?

by Michael E. Porter

The Five Competitive Forces That Shape Strategy

by Michael E. Porter

Building Your Company’s Vision

by James C. Collins and Jerry I. Porras

Reinventing Your Business Model

by Mark W. Johnson, Clayton M. Christensen, and Henning Kagermann

Blue Ocean Strategy

by W. Chan Kim and Renée Mauborgne

The Secrets to Successful Strategy Execution

by Gary L. Neilson, Karla L. Martin, and Elizabeth Powers

Using the Balanced Scorecard as a Strategic Management System

by Robert S. Kaplan and David P. Norton

Transforming Corner-Office Strategy into Frontline Action

by Orit Gadiesh and James L. Gilbert

Turning Great Strategy into Great Performance

by Michael C. Mankins and Richard Steele

Who Has the D? How Clear Decision Roles Enhance Organizational Performance

by Paul Rogers and Marcia Blenko

About the Contributors

Index

What Is Strategy?

by Michael E. Porter

I. Operational Effectiveness Is Not Strategy

For almost two decades, managers have been learning to play by a new set of rules. Companies must be flexible to respond rapidly to competitive and market changes. They must benchmark continuously to achieve best practice. They must outsource aggressively to gain efficiencies. And they must nurture a few core competencies in race to stay ahead of rivals.

Positioning—once the heart of strategy—is rejected as too static for today’s dynamic markets and changing technologies. According to the new dogma, rivals can quickly copy any market position, and competitive advantage is, at best, temporary.

But those beliefs are dangerous half-truths, and they are leading more and more companies down the path of mutually destructive competition. True, some barriers to competition are falling as regulation eases and markets become global. True, companies have properly invested energy in becoming leaner and more nimble. In many industries, however, what some call hypercompetition is a self-inflicted wound, not the inevitable outcome of a changing paradigm of competition.

The root of the problem is the failure to distinguish between operational effectiveness and strategy. The quest for productivity, quality, and speed has spawned a remarkable number of management tools and techniques: total quality management, benchmarking, time-based competition, outsourcing, partnering, reengineering, change management. Although the resulting operational improvements have often been dramatic, many companies have been frustrated by their inability to translate those gains into sustainable profitability. And bit by bit, almost imperceptibly, management tools have taken the place of strategy. As managers push to improve on all fronts, they move farther away from viable competitive positions.

Operational effectiveness: necessary but not sufficient

Operational effectiveness and strategy are both essential to superior performance, which, after all, is the primary goal of any enterprise. But they work in very different ways.

A company can outperform rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers or create comparable value at a lower cost, or do both. The arithmetic of superior profitability then follows: delivering greater value allows a company to charge higher average unit prices; greater efficiency results in lower average unit costs.

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.¹

Operational effectiveness (OE) means performing similar activities better than rivals perform them. Operational effectiveness includes but is not limited to efficiency. It refers to any number of practices that allow a company to better utilize its inputs by, for example, reducing defects in products or developing better products faster. In contrast, strategic positioning means performing different activities from rivals’ or performing similar activities in different ways.

Differences in operational effectiveness among companies are pervasive. Some companies are able to get more out of their inputs than others because they eliminate wasted effort, employ more advanced technology, motivate employees better, or have greater insight into managing particular activities or sets of activities. Such differences in operational effectiveness are an important source of differences in profitability among competitors because they directly affect relative cost positions and levels of differentiation.

Idea in Brief

The myriad activities that go into creating, producing, selling, and delivering a product or service are the basic units of competitive advantage. Operational effectiveness means performing these activities better—that is, faster, or with fewer inputs and defects—than rivals. Companies can reap enormous advantages from operational effectiveness, as Japanese firms demonstrated in the 1970s and 1980s with such practices as total quality management and continuous improvement. But from a competitive standpoint, the problem with operational effectiveness is that best practices are easily emulated. As all competitors in an industry adopt them, the productivity frontier—the maximum value a company can deliver at a given cost, given the best available technology, skills, and management techniques—shifts outward, lowering costs and improving value at the same time. Such competition produces absolute improvement in operational effectiveness, but relative improvement for no one. And the more benchmarking that companies do, the more competitive convergence you have—that is, the more indistinguishable companies are from one another.

Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It means performing different activities from rivals, or performing similar activities in different ways.

Differences in operational effectiveness were at the heart of the Japanese challenge to Western companies in the 1980s. The Japanese were so far ahead of rivals in operational effectiveness that they could offer lower cost and superior quality at the same time. It is worth dwelling on this point, because so much recent thinking about competition depends on it. Imagine for a moment a prod...