I don't always agree with Michael Porter about strategy. Which, in recent years, is kind of like saying I'm not sure the sun really rises in the East. I won't bore you with the sources of my disagreement (if you're interested you can read this post).
However, I've just read something from Mr. Porter that I agree with 100% and think is truly insightful and useful. It's an excerpt from a new book called Understanding Michael Porter: The Essential Guide to Competition and Strategy. The author, Joan Magretta, includes an excerpt from an interview with Porter in this article on Working Knowledge, the HBS site. My very favorite line in the interview:
The granddaddy of all [strategy] mistakes is competing to be the best, going down the same path as everybody else and thinking that somehow you can achieve better results.
Yes!! I see this all the time. When we were doing a lot of work with Pepsi in the early nineties, their core strategy was, in effect, 'be better than Coke.' It led them down all kinds of short-sighted, unsustainable roads. Porter goes on to say that really robust strategy is based, instead, on delivering unique value on both the customer side and the 'supply' side.
In other words, if a company creates products or services that fulfill their customers' needs in ways not available from others, and designs the organization to meet those needs in uniquely efficient and effective ways...that's good strategy. The key is envisioning and then figuring out how to serve your customer in ways that are substantively different from the competition, rather than simply trying to do what they do, but better (faster, cheaper, slightly better quality, etc.).
He also talks about some of the factors that can distract managers from being strategic, and this is where he says my second favorite line of the interview:
The single-minded pursuit of shareholder value, measured over the short term, has been enormously destructive for strategy and value creation. Managers are chasing the wrong goal.
Again, I couldn't agree more. I can't tell you how many poor, self-destructive decisions I've seen made in the name of 'shareholder return.' It's way too easy to do things that will pump the stock price up this quarter, but will damage the organization long-term. It's the organizational equivalent of downing coffee and uppers and not sleeping for a week to get a bunch of stuff done...you'll definitely pay for it in the long-term; it's not a sustainable approach.
Never thought I'd say this - but you should definitely read this article, and probably the book, too. Mr Porter, I might even become a fan...
