There are two ways to become superior in your industry the first is excelling in operational effectiveness, and the second is strategic positioning.
In every industry, there are standards and best practices. A company must continually get better at those best practices to become superior. “To get better at getting better.”
The CEO’s primary role is to keep aware of how the industry is changing and what new technologies, tools, and methods are making the industry more efficient and attractive.
It’s Not Enough
While being effective operational needs to be a priority, it simply isn’t enough to maintain lasting superiority. Industry competitors will also be better at being better, leaving little to no advantage.
Going head to head on operational effectiveness alone leads to zero-sum competition. When businesses of the same industry compete on the same products and services with the same features while using the same jargon, the only differentiation becomes the price. Who can sell it cheaper! This is a race to the bottom and why winning in operational effectiveness isn’t enough to be superior long term.
“Although a necessity operational effectiveness is not sufficient to achieve superior performance, especially for long.”Michael Porter
Next week will discuss the second way to superiority, strategic positioning.