(This is the 7th and final post of a series I’m doing on business strategy. My focus is the work of strategy guru Michael Porter via a book he cooperated on titled - Understanding Michael Porter: The Essential Guide to Competition and Strategy - by author Joan Magretta.)
I found a couple bright spots in Michael Porter’s writings on strategy. For instance, I love that he teaches this…
“The essence of strategy is choosing what not to do.”
We discussed this topic in post #90 - Deciding What Not To Do. Where I pointed out that trying to be everything to everyone is a guaranteed path to mediocrity. Oatmeal.
So you need to learn to say no. But that doesn’t mean you have to live in a tiny box. Here’s more goodness from Magretta/Porter.
“Continuity of strategy does not mean that an organization should stand still. As long as there is stability in the core value proposition, there can, and should, be enormous innovation in how it’s delivered.”
So if I wrap these couple points together I would say the following. You must start with a well thought out value proposition - a rock solid nucleus. Then you can embrace change, as needed, everywhere else.
I like that advice. It’s simple and it describes the conditions surrounding the most intense growth periods of my life and career.
PORTER AND STRATEGY: THE LESS GOOD
In prior posts I already complained, in detail, about the following couple points. So I’ll be brief.
First off, every example of strategy that I’ve seen him share is a business-to-consumer example. So it’s easy to assume he has nothing to offer the business-to-business companies that I focus on.
Second, his definition of strategy is so narrow. You’re either trying to increase profit MARGINS or, in his world, it ain’t a strategy. Which means all the folks I described in the middle of post #88 (B-to-B Competitive Advantage) - the folks that have good reasons to prioritize something other than margins - would probably ignore his work.
And that would be a mistake because he makes some good points. A couple I already addressed above, and there’s another biggie he kind of hit and kind of missed.
PORTER AND STRATEGY: THE MISSED OPPORTUNITY
In Porter's eyes, operational efficiency is important, but it only gets you a seat at the table. Your competitors can do the same lean, 6 sigma, kaizen, process stuff.
So to really kill it, to get those above average profit margins, you have to get creative. You have to perform a different set of integrated activities than your competitors. Unique activities that require trade-offs. His favorite example of this is IKEA, and I shared details of their strategy with you in post #89 Be Different Or Be Average.
And if you dive into this and other examples, you’ll see that there are really two parts to a great Porter strategy.
1) Define your unique set of integrated cross-functional activities.
2) Master cross-functional implementation.
And by cross-functional he just means working across departmental boundaries. So, for instance, sales cooperating with accounting to make sure you get paid on time.
Now I’ve already pointed out, up above and throughout this entire series on Porter, that I’m not aware of many business-to-business companies that have been able to figure out number one. When you’re shipping cardboard boxes it’s hard to find unique activities that differentiate.
But what about number two? Regardless of whether your activities are unique, can you differentiate by nailing cross-functional implementation?
Hell yes you can!
I was briefly the president of a lean consulting firm, and that business is all about getting folks to play well with others. And the challenge is especially hard when you're working across departmental boundaries. Things go great while the consultants are there driving the efficient behaviors. But then the high dollar experts leave. And, over time, folks tend to drift back to their pre-existing departmental allegiances. It’s like a slow reflex that’s incredibly hard to stop.
So Porter, and all the strategy gurus for that matter, are taking the easy way out. They’re focused on point number one, building that unique plan on paper. But that expensive document might as well be toilet paper if you aren’t good at point number two - nailing the cross-functional implementation.
And here's what management guru Peter Drucker has to say on this topic…
“Strategy is a commodity, execution is an art.”
Drucker has obviously spent some time in the trenches. He's probably watched amazing strategies go down in flames because Susy the CFO and Jerry the VP of Sales can't get it together. He knows this is where the magic lies.
Which is why I argue that, if you can pull off this cross-functional cooperation miracle, you've achieved sustainable competitive advantage.
Your competitors won't be able to touch you. And, as a special bonus, you won't spend your days refereeing drama. And I don't care that Porter wouldn't consider this to be a “real” strategy.
So, in summary, I thank Michael Porter for his insight. It's been fun. But my biggest takeaway is that he's shining his light in the wrong place. He missed a chance to direct folks to the real pot of gold - harmonious human to human implementation.
(This site is all about building a Map that will help me do work and life better. So at the end of each post I check in to see if any changes / insights come to mind.)
Now you know, in great detail, why I passed on the word Strategy when building my Maps.
Instead, I chose the word IF. My IF’s are the ideas banging around in my head that I believe can lead me to a better place personally and professionally. And as simple as that might sound, it works for me.
I challenge you to figure out what works for you.
***NOTE: I've added a new section to the website titled SPEAKING. Here you'll find brief examples of my public speaking, and information on how to get hold of me if you're looking for a speaker.