Business competition is different from sports because each team can invent its own game.
Managers want simplification- a simple recipe for success. But there is not just one way to win. Competition is multidimensional. Strategy is about making decisions along many dimensions, not just one.
Things to think about
What is the shape of the industry? In other words, is there one dominant player and a lot of small players? Or several similarly-sized players? Who is the industry? This might sound like an easy question, but it's not always so. The definition of an industry may be left to the people competing: i.e. who everyone considers their competitors. Trade associations, magazines, and conferences enforce this self-selection. But this can lead to an unfortunate myopia in the considering the competitive landscape. At the extreme, consider monopolies. NASCAR has a monopoly on stock-car racing in the United States. Why doesn't the government force NASCAR to break up? Because consumers who purchase NASCAR's product have other potential sources of entertainment.
Competition is not about beating rivals. It's about making profits.
Competitive advantage is relative to other businesses.
One way to classify strategy is by the adjectives: declaratory, actual, and ideal. Declaratory strategy is what you say your strategy is.
Actual strategy is reality.
If there were no gap the declared strategy would be the actual strategy. An ideal strategy is what the business would do if it had free access to all necessary resources.
Joan Margetta in her book Understanding Michael Potter lists five "tests of strategy".
- Unique value proposition
- Tailored value chain
- Trade-offs - the economic lynchpin
- Fit - an amplified enhancing cost and price differences, making it hard to copy.
Margetta also says something we think everyone should remember: "One upmanship is not strategy".