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Leader as Strategist
Create a unique position.
by Michael Porter
REAT STRATEGIES ARE
ferent. So, if you have a great strategy, people are fired up about bringing something new to theworld.
Leadership • Preparation
All the 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—faster or with fewer inputs and defects—than rivals. Companies reap enormous advantages from operational effectiveness, but thebest practices are easily emulated. As competitors adopt them, the maximum value a company can deliver at a given cost shifts outward, lowering costs and improving value. The more benchmarking companies do, the more they become indistinguishable from one another. Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It meansperforming different activities from rivals, or performing similar activities in different ways. Three 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 sources: 1) serving few needs of many customers; 2) serving broad needs of few customers; and 3) serving broadneeds of many customers in a narrow market. 2. Strategy requires you to make trade-offs—to choose what not to do. Some competitive activities are incompatible; thus, gains in one area can be achieved only at the expense of another area. A boost in revenues may come at the expense of retum on sales. 3. Strategy involves creating "fit" among a company's activities. Eit has to do with the ways acompany's activities interact and reinforce one another. Fit drives both competitive advantage and sustainability: when activities mutually reinforce each other, competitors can't easily imitate them. People need guidance about how to deepen a strategic position and how to extend the company's uniqueness while strengthening the fit among its activities. Deciding which customers and needs to serverequires discipline, the ability to set limits, and forthright communication. Clearly, strategy and leadership are linked. LE
Michael Porter, a professor at the Harvard Business Sdiooi, is the author i?^ Competitive Advantage. This article has been adapted from Strategy Bites Back with permission.
by Rudy Giuliani
Prepare for the unexpected
causes and the chief executivehas to lead the cause and become the chief strategist. Involvement and empowerment don't apply to the ultimate act of choice. Strong leaders define the tradeoffs and make choices. I find a striking to take seriously correlation between great strategies and strong leaders. dent's personal At some point, there must be an act tatives. At the me, I encouraged of creativity where someone divines havegreat fun in the new activity that no one else is doing. Some leaders are good at that, ignments. but that ability is not universal. The ely the two are more critical job for a leader is not to ually exclusive. r become so con- invent strategy but to provide the discipline to sustain a unique position. y your career hing is left that The leader has to be the guardian of only to you and trade-offs.Daily thousands of ideas mily. Don't allow pour in—from employees, customers, fession to and suppliers. There's all this input, your existence. and 99 percent of it is inconsistent with the strategy. So, great leaders ership is not a enforce the trade-offs: "Yes, we could vilege, titles, or offer that benefit; but it doesn't fit our ility for results. that I sound too strategy. Yet they know...