Strategic positioning and operational positioning
What is strategy
Strategy is the creation of a unique and valuable position, involving a different set of activities. Fit and Sustainability Strategic fit is fundamental not only to competitive advantage but also to the sustainability of that advantage because it is harder for a competitor to match an array of interlocked activities than it is merely to replicate an individual activity. If we did would it position our delivery differently to our competitors? Whatever the basis variety, needs, access, or some combination of the three , positioning requires a tailored set of activities because it is always a function of differences in activities or differences on the supply side. Further, consistency makes it easier to communicate the strategy to customers, employees, and shareholders, and improves implementation through single-mindedness in the corporation. However Michael Porter explains that operational effectiveness is NOT a strategy, and should not be seen as a strategy. Operational Effectiveness Is Not Strategy According to Porter, various management tools like total quality management, benchmarking, time-based competition, outsourcing, partnering, reengineering, that are used today, do enhance and dramatically improve the operational effectiveness of a company but fail to provide the company with sustainable profitability. Operational Effectiveness: Performing similar activities better than rivals perform them. Moreover, according to Porter, companies should think in terms of themes that pervade many activities i. It provides a completely different purpose to the work you do. But that is not the same as having a strategy for positioning and differentiating yourself in a market. But such competition only produces absolute improvement in operational effectiveness and no relative improvement for anyone. Trade-offs arise from limits on internal coordination and control.
This concept of competition based on operational effectiveness is illustrated via the productivity frontier, depicted in the figure below. Strategic positions should have a horizon of a decade or more, not of a single planning cycle, as continuity promotes improvements in individual activities and the fit across activities, allowing an organization to build unique capabilities and skills custom-fitted to its strategy.
Thus, "positions built on systems of activities are far more sustainable than those built on individual activities" p.
Operational efficiency strategy
A company known for delivering one kind of value may lack credibility and confuse customers or undermine its own reputation by delivering another kind of value or attempting to deliver two inconsistent things at the same time. Thus, strategy can also be defined as making trade-offs in competing. This is an important distinction. Industries seize on new management tools and embrace them, so it's unlikely that yours is the only organization using them. This concept of competition based on operational effectiveness is illustrated via the productivity frontier, depicted in the figure below. Strategic positioning is just as important to your branding and marketing. Moreover, trade-offs create the need for choice and protect against repositioners and straddlers. Strategic positioning requires asking a different set of questions: What can we do differently from the competition? Alternate Views of Strategy. If we did would it position our delivery differently to our competitors? Further, a competitor benefits very little by imitating only a few activities within the whole system. Operational effectiveness includes but is not limited to efficiency. Although their needs are similar to those of other customers, the best configuration of activities to reach them is different. Frequent shifts in strategy are not only costly but inevitably leads to hedged activity configurations, inconsistencies across functions, and organizational dissonance. Defining Operational Effectiveness If your business isn't efficient, wastes money or produces defective goods, your operations aren't effective.
If there is no fit among activities, there is no distinctive strategy and little sustainability. A series of strategy questions includes About doing similar activities in different ways: Should these be activities we aim to do differently? Submit a Comment Your email address will not be published.
Although companies improve on multiple dimensions of performance at the same time as they move toward the frontier, most of them fail to compete successfully on the basis of operational effectiveness over an extended period.
Strategic positioning is important for most organizations, not just for-profit businesses. It has four components: Controlling and managing how well your team performs Measuring the processes your company uses Improving the processes Automating the processes What Strategic Positioning Means Strategic positioning is about influencing how others see you: establishing yourself as the big dog in your industry or as the most fashionable, most cutting-edge player in the field.
Most customers won't care how efficient or effective your manufacturing or design teams are. Operational Effectiveness and Strategy Examples Strategic positioning and operational effectiveness are familiar principles in the business world.
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