What Is Strategy

“What is Strategy?” Summary and Integration

SUMMARY: “What is Strategy?” – Michael E. Porter

Michael E. Porter utilizes many engineered terms and principles to formulate his view of strategy in “What is Strategy?”.  He illustrates how the last quarter-century saw managers believing corporate strategy is the nature of a firm’s operational effectiveness – or business activity efficiencies.  However, he immediately offers that effectiveness and activities can easily be emulated and are thus, not sound strategy. The actual product of effectiveness with strategy is that activities are emulated causing the industry’s productivity frontier to expand – lowering costs and increasing value – causing competitive convergence where competitors become indistinguishable.

Porter demonstrates that true strategy has a few chief merits. Summing up strategy in Porter’s terms: Strategy is the creation of a unique position characterized by a distinct set of unique activities that fit driving competitive advantage and sustainability.  A terrific example of complete strategy Porter offers is that of Southwest Airlines.  The airline industry, systematic and bland, is characterized by big carriers relenting to get any and all passengers (no uniqueness) from any airport to any other airport (serving broad market) with long flights, short flights, and connections.  SA decided to focus their efforts through many activities: only offering “short-haul, low-cost, point-to-point service between midsize cities”, one-size of airplane throughout entire fleet, no food service, and no assigned seats. These truly unique activities fit its strategy of low-cost carrier.  Like many strategic firms, SA decided to trade-off long-trips, first-class, and the other activities undertaken by the entire industry to position itself in a profitable, sustainable position.

Tools like Activity System Maps and definitions of Types of Fit from Porter allow leaders to better define the activities that will lead...