Class 6: What is Strategy?

Question 1

Who is Michael Porter?

Answer 1

HBS, simplified the concepts of competitive advantage and created frameworks on how to achieve it

Question 2

What is operational effectiveness not?

Answer 2

operational effectiveness is not strategy

Question 3

What is operational effectiveness?

Answer 3

performing similar activities better than rivals perform them

Question 4

What is strategic positioning?

Answer 4

Performing different activities from rivals or performing similar activities in different ways

Question 5

What is a sustainable strategy?

Answer 5

A set of reinforcing activities (horizon of a decade or more)

Question 6

How does a company outperform rivals?

Answer 6

If it can establish a difference that it can sustain

Question 7

What is the result of benchmarking?

Answer 7

The more benchmarking companies do, the more they look alike

• The more that rivals outsource activities to efficient 3rd parties, often the same ones, the more generic those activities generally become
• the competitors left standing are often those that outlasted others, not companies with real advantage

Question 8

What is the productivity frontier?

Answer 8

Sum of best practices, including: product features, service features, enabling technology, and low cost production

Question 9

What is the essence of strategic positioning?

Answer 9

To choose activities that are different from rivals

Question 10

What are common management practices? are those strategy?

Answer 10

CRM. surveys and benchmarking are used by 40%+ of companies, the things that everyone does are not differentiators

Question 11

What is supercell’s strategy?

Answer 11

-best quality work comes from small teams in which every member is passionate about what they do
-supercell is a collection of these cells
-create game services with longevity
-made the tradeoff of platform flexibility
tradition of celebrating failures

Question 12

What are the three origins of strategic positions?

Answer 12

Variety-based, Needs-based, Access-based

Question 13

What is a variety-based strategic position and give me an example

Answer 13

(lack of) based on product, service, not customer segment.

vanguard and jiffy lube

Question 14

What is a needs-based strategic position and give me an example

Answer 14

Based on most or all of the needs of a particular group, same customer can have different needs based on occasion
Ikea and Bessemer Trust

Question 15

What is an access-based strategic position

Answer 15

Based on access to customers (geography or scale)

Carmike Cinemas

Question 16

What is fit?

Answer 16

strategy involves a whole system of activities which reinforces a strategic position

Question 17

What does fit drive?

Answer 17

Both competitive advantage and sustainability

• Virtuous cycle: consistency, reinforcement, optimization of activities with each other “well-oiled machine”
• locks out imitators: when activities complement one another, rivals will get little benefit from imitation unless they successfully match the whole system. difficult to replicate

Question 18

What are southwest’s system of activities?

Answer 18

• Limited Service
• Short haul, point-to-point, mid-sized cities, secondary airports
• Low ticket prices
• High aircraft utilization
• Lean, highly productive ground and gate crews
• Frequent, reliable departures

Question 19

Which is the first “domino” for southwest?

Answer 19

Short haul, point-to-point, mid-sized cities, secondary airports

Question 20

What do straddlers do?

Answer 20

often try to imitate success without making necessary tradeoffs, and fail

Question 21

What did southwest imitators fail at?

Answer 21

• inconsistency to reputation and image
• inability to match service levels
• no reduction in fixed costs
• culture, bureaucracy and confusion

Question 22

Why do companies fail to choose, stick with a strategy?

Answer 22

failure to choose: far from the productivity frontier, tradeoffs appear unneccessary
the growth trap: pressure to grow leads managers to broaden the position

Question 23

WHAT IS STRATEGY!!!!!!

Answer 23

A set of self-reinforcing actions a firm takes to create and sustain a competitive advantage

Question 24

What are the parts of strategy?

Answer 24

performing different activities
same activities differently
goal-oriented; creating tradeoffs
economic moat that protects profits, difficult to imitate