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Porter

1) Operational effectiveness focuses on improving productivity, quality, speed, and other metrics through tools like benchmarking, outsourcing, and process improvements. While these can drive dramatic gains, they are not a strategy and do not lead to sustainable competitive advantage. 2) Many companies have over-emphasized operational effectiveness at the expense of developing a clear strategy and competitive position. As managers pursue improvements across all areas, they drift away from having a viable strategy. 3) Operational effectiveness is necessary but not sufficient for superior performance. It works differently than strategy - operational improvements do not replace the need for a strategic vision and positioning.

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40 views19 pages

Porter

1) Operational effectiveness focuses on improving productivity, quality, speed, and other metrics through tools like benchmarking, outsourcing, and process improvements. While these can drive dramatic gains, they are not a strategy and do not lead to sustainable competitive advantage. 2) Many companies have over-emphasized operational effectiveness at the expense of developing a clear strategy and competitive position. As managers pursue improvements across all areas, they drift away from having a viable strategy. 3) Operational effectiveness is necessary but not sufficient for superior performance. It works differently than strategy - operational improvements do not replace the need for a strategic vision and positioning.

Uploaded by

tchebrole
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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71340

Reading 1.4

What is Strategy?

Porter, M. (1996). What is strategy? Harvard Business Review 74(6) 61–78.

© Harvard Business School Publishing


HBR
NOVEMBER-DECEMBER 1996

I. Operational Effectiveness Is Not Strategy


For almost two dec�des, managers have been egy. The quest for productivity, quality, and speed
learning to play by a new set of rules. Companies has spawned a remarkable number of management
must be flexible to respond rapidly to compet­ tools and techniques: total quality management,
itive and market changes. They must benchmark benchmarking, time-based competition, outsourc-
continuously to ing, partnering,
achieve best prac­ reeng ine er'i ng,
tice. They must change manage­
outsource aggres­ ment. Although
sively to gain ef­ the resulting op­
ficiencies. And erational improve­
they must nur­ ments have often
ture a few core competencies in the by Michael E. Porter been dramatic, many companies have
race to stay ahead of rivals. been frustrated by their inability to
Positioning-once the heart of strategy-is reject­ translate those gains into sustainable profitability.
ed as too static for today's dynamic markets and And bit by bit, almost imperceptibly, management
changing technologies. According to the new dog­ tools have taken the place of strategy. As manag­
ma, rivals can quickly copy any market position, ers push to improve on all fronts, they move farther
and competitive advantage is, at best, temporary. away from viable competitive positions.
But thos-e beliefs are dangerous half-truths, and
they are leading more and more companies down Operational Effectiveness:
the path of mutually destructive competition. Necessary but Not Sufficient
True, some barriers to competition are falling as
regulation eases and markets become global. True, Operational effectiveness and strategy are both
companies have properly invested energy in becom­ essential to superior performance, which, after all,
ing leaner and more nimble. In many industries, is the primary goal of any enterprise. But they work
however, what some call hypercompetition is a in very different ways.
self-inflicted wound, not the inevitable outcome of
a changing paradigm of competition. Michael E. Porter is the C. Roland Christensen· Professor
The root of the problem is the failure to distin­ of Business Administration at the Harvard Business
guish between operational effectiveness and strat- School in Boston, Massachusetts.

HARVARD BUSINESS REVIEW November-December 1996 61

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