Operational Effectiveness vs Strategy part3

a sustainable strategic position requires tradeoffs

If you have a valuable strategic position, you will attract incumbent competitors! The incumbent will then either try to reinvent itself to position itself in the same place, or "straddle" where it tries to match your position as well as maintain its existing position.

Continental Airlines tried straddling to compete with SouthWest. And they're not the only one - Ted (from United), Go from BA (although they tried to compete with Easyjet).

Sustainable strategic positioning requires tradeoffs. Tradeoffs in your strategy can actually help protect you from repositioners or straddlers as they create customer choice.

Tradeoffs arise from image/reputation inconsistency (full service airline or low cost?), as well as from activities themselves, from needing to design activities appropriately, and from practical limits on co-ordination and control.

Companies that try to be all things to all men end up confusing their customers with image and staff with mission.

So thinking back to Porters assertion about quality vs cost tradeoffs, he says that these are false where they occur because there is redundant effort, poor control or weak co-ordination. Once a company is nearing the productivity frontier, trade-off between cost and differentiation is very real.

Porter says that strategy is knowing the right tradeoffs to make - knowing what not to do.

cont...