The wisdom of ‘no’
While it is most common to focus on what to do, of equal importance is to answer the inverse question of what not to do, which markets to NOT penetrate, which demographics to NOT target. Like the yin-yang, these questions represent two parts of the whole that comprise a company’s strategic landscape. Just as any artist or composer will tell you the silence is as important as the lines or notes, so too is it with strategy.
Michael Porter, the famous Harvard strategist, provides 3 key ideas regarding strategy:
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
• serving broad needs of few customers
• serving broad needs of many customers in a narrow market
2. Strategy requires you to make trade-offs in competing—to choose what not to do.
3. Strategy involves creating “fit” among a company’s activities.
In other words the company reinforces it’s strategic position by leveraging its core competencies and general activities rather than spreading itself thin to ‘hit all the targets’. An example he provides is when Continental Lite tried to compete on price with Southwest airlines – with poor outcome.
The lesson?
…. still no free lunch!
