Michael Porter: Aligning Strategy and Management
Why Strategy Professionals Rewatch This 69-Minute Michael Porter Masterclass Annually Porter dismantles the most dangerous strategic delusion: "Our strategy is to be the best." His response? "There is no best. The whole idea doesn't make sense." This fundamental misunderstanding—that competition means doing the same things better—destroys more companies than any other strategic mistake. The IKEA breakdown at 46:30 reveals strategy's power: deliberately making customers unhappy. When someone complains about no sales help, IKEA shouldn't care—"that's not what they do." Yet most companies spend enormous energy pleasing everyone, diluting competitive advantage. The operational effectiveness trap at 36:51 exposes why best practice adoption isn't strategy. "If it's a best practice, everybody else is going to do it"—vendors will "be frothing at the mouth to spread this to every customer including your competitors." Most valuable for project managers: your work is "inevitably embedded in strategy." Without understanding it, you can't know if you're executing the right project at all. 5 Key Timestamps: [05:56] The "Being the Best" Delusion That Destroys Companies – CEOs instinctively say "we want to be the best company in our business." Porter's response: "There is no best...it all depends on who the car is meant to serve." Strategy isn't about being the best—it's "how are we unique, how can we deliver some unique value" [11:11] Three Fatal Strategy Confusions – Confusing strategy with goals ("my strategy is to be number one"), with actions ("my strategy is to internationalize"), or with mission statements. Strategy is "holistic understanding of how company positions itself...involving all functions...not about parts but about the whole" [19:13] Decomposing Profitability Into Two Parts – If you have 12% ROI in 8% average industry: 8% comes from industry attractiveness, 4% comes from competitive advantage. "Part of performance has to do with are you in good or bad industry, part has to do with are you better or worse than rivals" [36:51] Why Best Practice Adoption Isn't Strategy – Operational effectiveness is "doing things well...operating at best practice." But "just being operationally effective...usually doesn't allow you to get competitive advantage...if it's a best practice, everybody else is going to do it. Vendors will be frothing at the mouth to spread this to every customer including competitors" [56:28] The Trade-Offs Principle and Making Customers Unhappy – "Great strategy involves making customers unhappy...essence of strategy is knowing which customers you want to make really happy...then not worrying you can't please everybody." When someone wants sales help at IKEA and writes angry comment card, "should IKEA care? Of course not. That's not what they do"
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