BPTrends recently pointed out a book by Michael Porter called Competitive Advantage that he wrote in the mid-eighties. In that book, Porter discusses ideas like the ‘value chain’ and ‘competitive advantage’. People have been talking about these topics for years, but now seem serious enough to throw money at them.
Porter’s Thoughts
He says that achieving a competitive advantage should be the goal of every leading company. He points out Wal-Mart as an example of a company that dominates retail sales. [You have heard that before from me.]
He asks how we can distinguish between the losers, the winners and those rare winners that achieve real dominance. ‘Ultimately’, Porter concludes, ‘all differences between companies in cost or price derive from the hundreds of activities required to create, produce, sell and deliver their products or services such as calling on customers, assembling final products and training employees…’ In other words, ‘Activities… are the basic units of competitive advantage.’
Today, we are more likely to substitute the word ‘processes’ for ‘activities’. He concluded by saying - companies succeed because they understand what their customers will buy and proceed to generate the product or service their customers want by means of a set of activities [processes] that create, produce, sell and deliver the product or service.
He says, ‘Competitive advantage grows out of the entire system of activities [processes]. The fit among activities [processes] substantially reduces cost or increases differentiation.’
Our Thoughts…
Porter recognized that processes can be your competitive advantage years ago. You have received previous ‘ideas’ from me touting this concept.
He makes another important observation: ‘Positions built on systems of activities [processes] are far more sustainable than those built on individual activities.’ In other words, everyone can see when a single activity is improved and copy it, but they will have a much harder time figuring out how you have orchestrated all of your processes to work together.
Your Thoughts…
Porter’s Thoughts
He says that achieving a competitive advantage should be the goal of every leading company. He points out Wal-Mart as an example of a company that dominates retail sales. [You have heard that before from me.]
He asks how we can distinguish between the losers, the winners and those rare winners that achieve real dominance. ‘Ultimately’, Porter concludes, ‘all differences between companies in cost or price derive from the hundreds of activities required to create, produce, sell and deliver their products or services such as calling on customers, assembling final products and training employees…’ In other words, ‘Activities… are the basic units of competitive advantage.’
Today, we are more likely to substitute the word ‘processes’ for ‘activities’. He concluded by saying - companies succeed because they understand what their customers will buy and proceed to generate the product or service their customers want by means of a set of activities [processes] that create, produce, sell and deliver the product or service.
He says, ‘Competitive advantage grows out of the entire system of activities [processes]. The fit among activities [processes] substantially reduces cost or increases differentiation.’
Our Thoughts…
Porter recognized that processes can be your competitive advantage years ago. You have received previous ‘ideas’ from me touting this concept.
He makes another important observation: ‘Positions built on systems of activities [processes] are far more sustainable than those built on individual activities.’ In other words, everyone can see when a single activity is improved and copy it, but they will have a much harder time figuring out how you have orchestrated all of your processes to work together.
Your Thoughts…
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