[麦克.波特两部经典作品].HBR.-.What.is.Strategy.-.Michael.Por

A R T I C L E What Is Strategy? by Michael E. Porter P R O D U C T N U M B E R 4 1 3 4 New sections to guide you through the article: • The Idea in Brief • The Idea at Work • Exploring Further . . . Rivals can easily copy your improvements in quality and efficiency. But they shouldn’t be able to copy your strategic positioning—what distinguishes your company from all the rest. HBR OnPoint F R O M T H E H A R V A R D B U S I N E S S R E V I E W T myriad activities that go into creating, producing, selling, and delivering a product or service are the basic units of competitive advan- tage. Operational effectiveness means perform- ing 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 con- tinuous 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 out- ward, 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 sus- tainable competitive advantage by preserving what is distinctive about a company. It means performing different activities from rivals, or performing similar activities in different ways. What Is Strategy? T key principles underlie strategic positioning. 1. Strategy is the creation of a unique and valuable position, involving a different set of activities. Strategic position emerges from three distinct sources: • serving few needs of many customers (Jiffy Lube provides only auto lubricants) • serving broad needs of few customers (Bessemer Trust targets only very high-wealth clients) • serving broad needs of many customers in a narrow market (Carmike Cinemas operates only in cities with a population under 200,000) 2. Strategy requires you to make trade-offs in competing—to choose what not to do. Some competitive activities are incompati- ble; thus, gains in one area can be achieved only at the expense of another area. For example, Neutrogena soap is positioned more as a medicinal product than as a cleansing agent. The company says “no” to sales based on deodorizing, gives up large volume, and sacrifices manufacturing efficiencies. By contrast, Maytag’s decision to extend its product line and acquire other brands represented a failure to make difficult trade-offs: the boost in revenues came at the expense of return on sales. 3. Strategy involves creating “fit” among a company’s activities. Fit has to do with the ways a company’s activities interact and reinforce one another. For example, Van- guard Group aligns all of its activities with a low-cost strategy; it distributes funds directly to consumers and minimizes port- folio turnover. Fit drives both competitive advantage and sustainability: when activi- ties mutually reinforce each other, competi- tors can’t easily imitate them. When Conti- nental Lite tried to match a few of South- west Airlines’ activities, but not the whole interlocking system, the results were disastrous. Employees need guidance about how to deepen a strategic position rather than broaden or compromise it. About how to extend the com- pany’s uniqueness while strengthening the fit among its activities. This work of deciding which target group of customers and needs to serve requires discipline, the ability to set lim- its, and forthright communication. Clearly, strategy and leadership are inextricably linked. T H E I D E A I N B R I E F T H E I D E A A T W O R K HBR OnPoint © 2000 President and Fellows of Harvard College. All rights reserved. For almost two decades, managers have been learning to play by a new set of rules. Companies must be flexible to respond rapidly to compet- itive and market changes. They must benchmark continuously to achieve best prac- tice. They must outsource aggres- sively to gain ef- ficiencies. And they must nur- ture a few core competencies in the race to stay ahead of rivals. Positioning – once the heart of strategy – is reject- ed as too static for today’s dynamic markets and changing technologies. According to the new dog- ma, 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 becom- ing 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 distin- guish between operational effectiveness and strat- egy. The quest for productivity, quality, and speed has spawned a remarkable number of management tools and techniques: total quality management, benchmarking, time-based competition, outsourc- ing, partnering, reengineering, change manage- ment. Although the resulting op- erational improve- ments 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 manag- ers 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. HARVARD BUSINESS REVIEW November-December 1996 Copyright © 1996 by the President and Fellows of Harvard College. All rights reserved. HBR NOVEMBER-DECEMBER 1996 I. Operational Effectiveness Is Not Strategy What Is Strategy? Michael E. Porter is the C. Roland Christensen Professor of Business Administration at the Harvard Business School in Boston, Massachusetts. by Michael E. Porter 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 compa- rable value at a lower cost, or do both. The arith- metic of superior profitability then follows: deliver- ing 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 activi- ties more efficiently than competitors. Similarly, differentiation arises from both the choice of activi- ties and how they are performed. Activities, then, are the basic units of competitive advantage. Over- all 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 limit- ed 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 devel- oping better products faster. In contrast, strategic positioning means performing different activities from rivals’ or performing similar activities in dif- ferent 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 ad- vanced technology, motivate employees better, or have greater insight into managing particular activ- ities or sets of activities. Such differences in opera- tional effectiveness are an important source of dif- ferences in profitability among competitors be- cause they directly affect relative cost positions and levels of differentiation. Differences in operational effectiveness were at the heart of the Japanese challenge to Western com- panies 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, be- cause so much recent thinking about competition depends on it. Imagine for a moment a productivity frontier that constitutes the sum of all existing best practices at any giv- en time. Think of it as the maximum value that a company delivering a particular product or service can cre- ate at a given cost, using the best available technologies, skills, man- agement techniques, and purchased inputs. The productivity frontier can apply to individual activities, to groups of linked activities such as order processing and manufactur- ing, and to an entire company’s activities. When a company improves its operational effectiveness, it moves toward the frontier. Doing so may require capital investment, different personnel, or simply new ways of managing. The productivity frontier is constantly shifting outward as new technologies and management ap- proaches are developed and as new inputs become available. Laptop computers, mobile communica- tions, the Internet, and software such as Lotus Notes, for example, have redefined the productivity 62 HARVARD BUSINESS REVIEW November-December 1996 Operational Effectiveness Versus Strategic Positioning N on pr ic e bu ye r v al ue d el iv er ed Relative cost position low lowhigh high Productivity Frontier (state of best practice) A company can outperform rivals only if it can establish a difference that it can preserve. This article has benefited greatly from the assistance of many individuals and companies. The author gives special thanks to Jan Rivkin, the coauthor of a related paper. Substantial research contributions have been made by Nicolaj Siggelkow, Dawn Sylvester, and Lucia Marshall. Tarun Khanna, Roger Martin, and Anita Mc- Gahan have provided especially extensive comments. Japanese Companies Rarely Have Strategies frontier for sales-force operations and created rich possibilities for linking sales with such activities as order processing and after-sales support. Similarly, lean production, which involves a family of activi- ties, has allowed substantial improvements in manufacturing productivity and asset utilization. For at least the past decade, managers have been preoccupied with improving operational effective- ness. Through programs such as TQM, time-based competition, and benchmarking, they have changed how they perform activities in order to eliminate inefficiencies, improve customer satisfaction, and achieve best practice. Hoping to keep up with shifts in the productivity frontier, managers have embraced continuous improvement, empowerment, change management, and the so-called learning organization. The popularity of outsourcing and the virtual corporation reflect the growing recogni- tion that it is difficult to perform all activities as productively as specialists. As companies move to the frontier, they can often improve on multiple dimensions of performance at the same time. For example, manufacturers that adopted the Japanese practice of rapid changeovers in the 1980s were able to lower cost and improve differentiation simultaneously. What were once be- lieved to be real trade-offs – between defects and costs, for example – turned out to be illusions cre- ated by poor operational effectiveness. Managers have learned to reject such false trade-offs. Constant improvement in operational effective- ness is necessary to achieve superior profitability. However, it is not usually sufficient. Few compa- nies have competed successfully on the basis of op- erational effectiveness over an extended period, and staying ahead of rivals gets harder every day. The most obvious reason for that is the rapid diffusion of best practices. Competitors can quickly imitate management techniques, new technologies, input improvements, and superior ways of meeting cus- tomers’ needs. The most generic solutions – those that can be used in multiple settings – diffuse the fastest. Witness the proliferation of OE techniques accelerated by support from consultants. OE competition shifts the productivity frontier outward, effectively raising the bar for everyone. But although such competition produces absolute improvement in operational effectiveness, it leads to relative improvement for no one. Consider the $5 billion-plus U.S. commercial-printing industry. The major players – R.R. Donnelley & Sons Com- pany, Quebecor, World Color Press, and Big Flower Press–are competing head to head, serving all types of customers, offering the same array of printing technologies (gravure and web offset), investing heavily in the same new equipment, running their presses faster, and reducing crew sizes. But the re- sulting major productivity gains are being captured by customers and equipment suppliers, not re- tained in superior profitability. Even industry- WHAT IS STRATEGY? HARVARD BUSINESS REVIEW November-December 1996 63 The Japanese triggered a global revolution in opera- tional effectiveness in the 1970s and 1980s, pioneering practices such as total quality management and con- tinuous improvement. As a result, Japanese manufac- turers enjoyed substantial cost and quality advantages for many years. But Japanese companies rarely developed distinct strategic positions of the kind discussed in this article. Those that did – Sony, Canon, and Sega, for example – were the exception rather than the rule. Most Japanese companies imitate and emulate one another. All rivals offer most if not all product varieties, features, and ser- vices; they employ all channels and match one anoth- ers’ plant configurations. The dangers of Japanese-style competition are now becoming easier to recognize. In the 1980s, with rivals operating far from the productivity frontier, it seemed possible to win on both cost and quality indefinitely. Japanese companies were all able to grow in an ex- panding domestic economy and by penetrating global markets. They appeared unstoppable. But as the gap in operational effectiveness narrows, Japanese compa- nies are increasingly caught in a trap of their own making. If they are to escape the mutually destructive battles now ravaging their performance, Japanese companies will have to learn strategy. To do so, they may have to overcome strong cultural barriers. Japan is notoriously consensus oriented, and companies have a strong tendency to mediate differ- ences among individuals rather than accentuate them. Strategy, on the other hand, requires hard choices. The Japanese also have a deeply ingrained service tradition that predisposes them to go to great lengths to satisfy any need a customer expresses. Companies that com- pete in that way end up blurring their distinct posi- tioning, becoming all things to all customers. This discussion of Japan is drawn from the author’s research with Hirotaka Takeuchi, with help from Mariko Sakakibara. leader Donnelley’s profit margin, consistently higher than 7% in the 1980s, fell to less than 4.6% in 1995. This pattern is playing itself out in indus- try after industry. Even the Japanese, pioneers of the new competition, suffer from persistently low profits. (See the insert “Japanese Companies Rarely Have Strategies.”) The second reason that improved operational effectiveness is insufficient – competitive conver- gence – is more subtle and insidious. The more benchmarking companies do, the more they look alike. The more that rivals outsource activities to efficient third parties, often the same ones, the more generic those activities become. As rivals im- itate one another’s improvements in quality, cycle times, or supplier partnerships, strategies converge and competition becomes a series of races down identical paths that no one can win. Competition based on operational effectiveness alone is mutu- ally destructive, leading to wars of attrition that can be arrested only by limiting competition. The recent wave of industry consolidation through mergers makes sense in the context of OE competition. Driven by performance pressures but lacking strategic vision, company after company has had no better idea than to buy up its rivals. The competitors left standing are often those that out- lasted others, not companies with real advantage. After a decade of impressive gains in operational effectiveness, many companies are facing dimin- ishing returns. Continuous improvement has been etched on managers’ brains. But its tools unwitting- ly draw companies toward imitation and homo- geneity. Gradually, managers have let operational effectiveness supplant strategy. The result is zero- sum competition, static or declining prices, and pressures on costs that compromise companies’ ability to invest in the business for the long term. WHAT IS STRATEGY? 64 HARVARD BUSINESS REVIEW November-December 1996 II. Strategy Rests on Unique Activities Competitive strategy is about being different. It means deliberately choosing a different set of activ- ities to deliver a unique mix of value. Southwest Airlines Company, for example, offers short-haul, low-cost, point-to-point service be- tween midsize cities and secondary airports in large cities. Southwest avoids large airports and does not fly great distances. Its customers include busi- ness travelers, families, and students. Southwest’s frequent departures and low fares attract price- sensitive customers who otherwise would travel by bus or car, and convenience-oriented travelers who would choose a full-service airline on other routes. Most managers describe strategic positioning in terms of their customers: “Southwest Airlines serves price- and convenience-sensitive travelers,” for example. But the essence of strategy is in the ac- tivities – choosing to perform activities differently or to perform different activities than rivals. Other- wise, a strategy is nothing more than a marketing slogan that will not withstand competition. A full-service airline is configured to get passen- gers from almost any point A to any point B. To reach a large number of destinations and serve pas- sengers with connecting flights, full-service air- lines employ a hub-and-spoke system centered on major airports. To attract passengers who desire more comfort, they offer first-class or business- class service. To accommodate passengers who must change planes, they coordinate schedules and check and transfer baggage. Because some passen- gers will be traveling for many hours, full-service airlines serve meals. Southwest, in contrast, tailors all its activities to deliver low-cost, convenient service on its par- ticular type of route. Through fast turnarounds at the gate of only 15 minutes, Southwest is able to keep planes flying longer hours than rivals and provide frequent de- partures with fewer aircraft. South- west does not offer meals, assigned seats, interline baggage checking, or premium classes of service. Auto- mated ticketing at the gate encour- ages customers to bypa