The one thing to read
I graduated from Harvard in 1995. I cut my teeth in consulting at a growth company called The Advisory Board Company, later The Corporate Executive Board, then CEB and now a part of Gartner Group. They taught a wonderful “A.M. MBA” for us recent college grads. Later, I got a real MBA at UCLA’s Anderson School. Through all of these years of classes, I learned lots of great things. None stuck with me quite as much as Michael Porter’s seminal article for Harvard Business Review, “What Is Strategy?”
It’s really worth a read, but I can summarize it (and often find myself doing so for company executives) very briefly:
Strategy is a set of operational decisions about what you are going to do and (more importantly) NOT do.
These decisions should be mutually reinforcing.
They should offer value to customers.
And they should give you a long-term competitive advantage versus competitors.
You would think this would be easy, but it’s fantastically difficult. And it’s even harder to be stuck on a strategy that doesn’t work and move to a new strategy that does.
Southwest Airlines for a long time had a successful strategy (vs. recent problems) that can be summed up in four words. Only FOUR! They are: consumer, value, short haul.
Everything flows from these decisions, and they are mutually reinforcing. For example, Southwest chooses suburban airports. These airports are closer to families and casual travelers (consumer), less expensive (value), and easier to get in and out of (short haul).
That last one is a little complicated to understand, but the simple explanation is that a short haul strategy that allows you to turn around the plane faster, giving you more back-and-forth routes between two cities with the same plane and the same crew in a single day. Doing it, however, requires everyone to work hard to turn the plane around quickly. You can’t wait around for a gate to open up. Everyone has to participate in cleaning the plane and herding the passengers on and off quickly. Suburban airports and casually dressed employees (appropriate in the suburban, consumer setting) help to turn the plane around.
If you can find a strategy as cohesive and advantageous as Southwest Airlines did, you can grow for a really long time and consistently make more money (or, in the case of nonprofits, expand and help more people) than you could possibly do without it.
Read the article!