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Monday, November 06, 2006

Strategy Execution - Part IV

From the Wharton School comes this article on strategy formulation, from Michael E. Porter, director of Harvard's Institute for Strategy and Competitiveness."

His premise?

  • Errors in corporate strategy are often self-inflicted, and a singular focus on shareholder value is the "Bermuda Triangle" of strategy.
  • Managers need to develop a clear strategy around their company's unique place in the market (and not worry as much about creating strategy to compete head-on with other companies.)
  • Many, if not most, strategic errors come from within. The company does it to itself.
  • "The worst error is to compete with your competition on the same things."
  • "Strategy' is a word that gets used in so many ways with so many meanings that it can end up being meaningless. Often corporate executives will confuse strategy with aspiration.
  • Companies hoping to build a successful strategy need to define the right industry and the right products and services. Bad strategy often flows from a bad definition of the business, said Porter.
  • Continuity is critical to successful strategy. "If you don't do it often, it's not strategy,"
    said Porter. "If you don't pursue a direction for two or three years, it's meaningless.
  • "Strategy is not something that is done in a bottom-up consensus process. The companies with really good strategy almost universally have a very strong CEO, somebody who is not afraid to lead, to make choices, to make decisions." Strategy is challenged every day, and only a strong leader can remain on course when confronted with well-intentioned ideas that would deviate from the company's strategy. "You need a leader with a lot of
    confidence, a lot of conviction and a leader who is really good at communication."

BOTTOMLINE: "Years ago, corporate strategy was considered a secret known only by top executives for fear competitors might use the information to their advantage, said Porter. Now it is important for everyone in the organization to understand the strategy and align everything they do with that strategy every day."

Hmm...seems to me that is what Six Disciplines' "strategy-driven execution" all about!

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