Set Strategy And Build Durable, Measurable Advantage
Superior business performance and profitability — from 60 books.
Mike West, Editor · Leading With Data · leadingwithdata.guide/guides/strategy
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Set Strategy And Build Durable, Measurable Advantage
Superior business performance and profitability — from 60 books.
Mike West, Editor · Leading With Data · leadingwithdata.guide/guides/strategy
The problem
Superior Business Performance and Profitability erodes when it is left to instinct instead of method.
You were taught the moves piecemeal, never the whole model.
Set Strategy And Build Durable, Measurable Advantage · Mike West, Editor · Leading With Data
The model
- 01Strategic Choice and Positioning
- 02Differentiation and Distinctive Value
- 03Value Innovation / Uncontested Market Creation
- 04Industry Structure and Competitive Forces
- 05Strategic Focus, Sacrifice, and Trade-offs
- 06Fit, Coherence, and Coordination of Activities
- 07Distinctive Capabilities and Resources
- 08Quality of Diagnosis and Problem Framing
How it grows
- New to the role0–1 yr
- Running the function1–3 yr
- Shaping the whole3+ yr
Set Strategy And Build Durable, Measurable Advantage · Mike West, Editor · Leading With Data
Step 1 of 5 · Strategic Choice and Positioning
A real strategy names the customers and competitors you are choosing to walk away from.
Misconception
Practitioners believe strategy is a set of ambitious goals plus a list of initiatives to pursue.
Reality
Strategy is a chain of explicit, mutually reinforcing choices that necessarily exclude other options; a plan that offends no one and cuts nothing is a budget, not a strategy.
Set Strategy And Build Durable, Measurable Advantage · Mike West, Editor · Leading With Data
Step 2 of 5 · Differentiation and Distinctive Value
A difference is only defensible if it is both valued by buyers and costly for rivals to replicate.
Misconception
Practitioners believe being different in any noticeable way constitutes differentiation.
Reality
Difference only creates value when it lands on an attribute customers actually pay more for and rivals cannot cheaply match; novelty that buyers don't value is just idiosyncrasy that raises your costs.
Set Strategy And Build Durable, Measurable Advantage · Mike West, Editor · Leading With Data
Step 3 of 5 · Value Innovation / Uncontested Market Creation
New demand comes from noncustomers, so benchmarking existing rivals blinds you to the largest opportunity.
Misconception
Managers assume you must choose between higher value at higher cost or lower cost at lower value.
Reality
Value innovation eliminates and reduces factors the industry over-invests in while raising and creating others, achieving differentiation and lower cost simultaneously—the trade-off is a convention, not a law.
Set Strategy And Build Durable, Measurable Advantage · Mike West, Editor · Leading With Data
Step 4 of 5 · Industry Structure and Competitive Forces
Industry structure explains more variance in profitability than firm-level effort in most sectors.
Misconception
Practitioners assume beating direct competitors is the whole game and treat rivalry as the only force that matters.
Reality
Powerful buyers, substitute categories, and supplier leverage can extract your profit even when you dominate your rivals; the five forces jointly determine how much value the industry lets you keep.
Set Strategy And Build Durable, Measurable Advantage · Mike West, Editor · Leading With Data
Step 5 of 5 · Strategic Focus, Sacrifice, and Trade-offs
The choices you refuse define your strategy more than the ones you pursue.
Misconception
Leaders think trade-offs are a sign of resource scarcity that disappears once the firm is big enough to do everything.
Reality
Trade-offs are the source of defensibility, not a symptom of weakness; the moment a rival tries to serve your customers and everyone else's, they inherit incompatible activities and lose the fit that protects you.
Set Strategy And Build Durable, Measurable Advantage · Mike West, Editor · Leading With Data
A framework to use
The DELTA Framework for Analytical Capability
This framework is part of the full guide. See the guide →
Set Strategy And Build Durable, Measurable Advantage · Mike West, Editor · Leading With Data
The cheat sheet
- Strategic Choice and PositioningA real strategy names the customers and competitors you are choosing to walk away from.
- Differentiation and Distinctive ValueA difference is only defensible if it is both valued by buyers and costly for rivals to replicate.
- Industry Structure and Competitive ForcesIndustry structure explains more variance in profitability than firm-level effort in most sectors.
- Strategic Focus, Sacrifice, and Trade-offsThe choices you refuse define your strategy more than the ones you pursue.
- Fit, Coherence, and Coordination of ActivitiesFit multiplies value: the system is worth more than the sum of its optimized parts.
- Distinctive Capabilities and ResourcesA resource confers advantage only if rivals cannot cheaply imitate, substitute, or purchase it.
- Sustainable Competitive AdvantageAn advantage is only sustainable to the degree imitation is expensive, slow, or self-defeating for rivals.
- Superior Business Performance and ProfitabilityReturn on invested capital versus cost of capital is the truest measure of competitive advantage.
Set Strategy And Build Durable, Measurable Advantage · Mike West, Editor · Leading With Data
Sources
- Analytics at Work: Smarter Decisions, Better Results — Thomas H. Davenport, Jeanne G. Harris, Robert Morison
- Antifragile (Incerto)
- Ben Horowitz - The Hard Thing About Hard Things_ Building a Business When There Are No Easy Answers (2014, HarperBusiness)
- Big Data: A Revolution That Will Transform How We Live, Work, and Think — Viktor Mayer-Schönberger, Kenneth Cukier
- Blitzscaling — Reid Hoffman
- Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant — W. Chan Kim, Renée Mauborgne
- Business Adventures — John Brooks
- Business Applications of Operations Research — Bodhibrata Nag
- Company of One: Why Staying Small Is the Next Big Thing for Business — Paul Jarvis
- Competing on Analytics: The New Science of Winning — Thomas H. Davenport, Jeanne G. Harris
+ 52 more sources in the full guide
Set Strategy And Build Durable, Measurable Advantage · Mike West, Editor · Leading With Data