This document discusses the difference between operational effectiveness and strategy. Operational effectiveness means performing similar activities better than rivals, while strategy means performing different activities or activities in different ways to achieve a unique position. For a strategy to be sustainable, it requires making trade-offs between activities and ensuring fit across the activity system. Strategy is about choosing what not to do and combining unique activities to create competitive advantages through fit, rather than just achieving excellence in individual functions.

1. What is strategy?
Pedro Eliseo López Gil

2. Definition of Strategy
1 a (1) : the science and art of employing the political, economic,
psychological, and military forces of a nation or group of nations to
afford the maximum support to adopted policies in peace or war (2) :
the science and art of military command exercised to meet the enemy in
combat under advantageous conditions
b : a variety of or instance of the use of strategy
2 a : a careful plan or method : a clever stratagem
b : the art of devising or employing plans or stratagems toward a goal
3: an adaptation or complex of adaptations (as of behavior, metabolism, or
structure) that serves or appears to serve an important function in
achieving evolutionary success<foraging strategies of insects>
Source: m-w.com

3. Michael E. Porter
 Michael E. Porter is a leading authority on competitive
strategy, the competitiveness and economic development of
nations, states, and regions, and the application of
competitive principles to social problems such as health care,
the environment, and corporate responsibility
 He is generally recognized as the father of the modern
strategy field
 He also led the Institute for Strategy and Competitiveness at
Harvard Business School
 You can follow him in twitter
 http://twitter.com/MichaelEPorter

4. Operational Effectiveness is not
Strategy
 For more than twenty years, managers have been learning to
play by a new set of rules
 Outsourcing
 Benchmarking
 Flexibility
 Positioning –once the heart of strategy- is rejected as too
static
 Hypercompetition
 The root of the problem is the failure to distinguish between
Operational Effectiveness (OE) and strategy
 Both essential to superior performance, but working in
different ways

5. Operational Effectiveness is not
Strategy
 OE means performing similar activities better than
rivals perform them
 Better utilize its inputs
 Strategic positioning means performing different
activities from rivals or performing similar activities in
different ways
 Reasons why improved OE is insufficient
 Rapid diffusion of best practices
 Competitive convergence is more subtle

6. Strategy rests on Unique
Activities
 It’s all about being different
 “The essence of strategy is choosing to perform activities
different than rivals do”
 Strategic positions emerge from three distinct sources
 Variety-based
 Needs-based
 Access-based
 Strategy is the creation of a unique and valuable
position, involving a different set of activities

7. A Sustainable Strategic Position
requires Trade-offs
 Trade-offs are essential to strategy
 The essence of strategy is choosing what not to do
 Trade-offs arise for three reasons
 Inconsistence in image or reputation
 From activities themselves
 Limits on internal coordination and control
 Strategy is making trade-offs in competing

8. Fit drives both Competitive
Advantage and Sustainability
 OE is about achieving excellence in individual activities
or functions, strategy is about combining activities
 Three types of fit
 Simple consistency between each activity and the overall
strategy
 Activities are reinforcing
 Optimization to effort
 Strategy is creating fit among a company’s activities
 Right now it’s all about changing

9. Rediscovery Strategy
 The failure to choose
 Trade-offs are frightening
 Making no choice is sometimes preferred
 The growth trap
 Profitable growth
 The role of leadership
 Leader must provide the discipline to decide and make
changes

10. Conclusions
 Many organizations are confuse when talking about OE and
strategy
 Changing is happening to fast, and organizations have to
quickly adapt
 Strategy is
 Unique competitive position for the company
 Activities tailored to strategy
 Clear trade-offs
 Competitive advantages arises from fit across activities
 Sustainability comes from the activity system, not the parts
 Operational Effectiveness (OE) is a given

11. Thank you for your time!
Q&A