Michael Porter
Porter's book "On competition" sparked
my view that business strategy can be studied in a very systematically
and economically manner. He introduced me the idea that the root of
the problem is the failure to distinguish between operational effectiveness
and strategyStrategy is the creation of a unique and valuable position,
involving a different set of activities. Hence, the essence of strategic
positioning is to choose activities that are different from rivals.
But being unique is not enough because possible imitation.
Trade-off and opportunity cost are required to truely
position oneself strategically. Trade-offs occur when activities are
incompatible. It creatse the need for choice and protect against copycat.
Trade-offs can arise from inconsistencies in image or reputation.
He also allowed me to see that in order to be strategic, all sets
of activities must be planned to have strategic fit, i.e. simple consistency,
reinforcing each other and optimization of effort (economies of scales
and scopes) Therefore, competitive advantage grows out of the entire
system of activities. Insight from this idea is that we must becareful
because it's easy to distract from strategy due to growth and opportunity.
Leaders must guide their people in making choices
that arise because of trade-offs in their individual activities and
in day-to-day decision. (in order to remain true to strategy). His
concepts of value chian, cluster and five fources become very useful
as a tools set to think about strategy. The nice thing about Porter's
idea is that it allows me to look at the macroeconomics with respect
to microeconomics and game theory. To summarize his effect on me,
he truely put a economic-oriented systematic mindset in the way I
appraoch different acitivities in my life.
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