Strategy is the glue that aims to build and deliver a consistent anddistinctive value proposition to your target market. Bruce Henderson,
founder of the Boston Consulting Group, warned: “Unless a
business has a unique advantage over its rivals, it has no reason
to exist.” If you have the same strategy as your competitors, you don’t
have a strategy. If the strategy is different, but easily copied, it is a
weak strategy. If the strategy is uniquely different and difficult to
copy, you have a strong and sustainable strategy.
Harvard’s Michael Porter drew a clear distinction between operational
excellence and strategic positioning.57 Too many companies
think they have a strategy by pursuing operational excellence. They
work hard at “benchmarking” the “best-of-class performers” to stay
ahead of their competition. But if they are running the same race as
their competitors, their competitors may catch up. Their real need is
to run a different race. Companies that target a specific group of customers
and needs and deliver a different bundle of benefits can be
said to have a strategy.
Several companies can be cited as having distinctive strategies. • Southwest Airlines, the most profitable U.S. airline, is run differently
than other airlines in dozens of ways: It targets pricesensitive,
short-trip passengers; it flies point-to-point rather
than through hubs; it uses only 737s, thus reducing spare
parts inventory and pilot training costs; it sells only economy
class and doesn’t give seat assignments; it doesn’t serve food;
it doesn’t move baggage to other carriers; and so on. The net
results are that Southwest can take off after landing in 20 minutes
compared to the average of 60 minutes for competitors,
and its equipment is in the air longer and yields a higher return
on its investment.
• IKEA, the world’s largest furniture retailer, searches for lowcost
real estate in a major city, builds a giant store with a
restaurant and day care center, sells good quality furniture at a
lower price that customers take home in their cars and put together,
offers membership privileges leading to even lower
prices, and in a dozen ways remains hard to copy by any
would-be imitators.
• Harley Davidson not only sells motorcycles but provides entry
into a social community that rides together, has races, and
shares the Harley Davidson lifestyle with its HD leather jackets
and clothing, watches, pens, watches, and restaurants.
Companies have a unique strategy when (1) they have defined
a clear target market and need, (2) developed a distinctive and
winning value proposition for that market, and (3) arranged a
distinctive supply network to deliver the value proposition to the
target market. Nirmalya Kumar calls this the 3Vs: value target,
value proposition, and value network. Such companies cannot easily
be copied because of the unique fit of their business processes and
activities.