WHAT IS STRATEGY

Today's dynamic markets and technologies have called into question the sustainability of competitive advantage. Under pressure to improve pr oductivity, duality, and speed, managers have embraced tools such as T QM, benchmarking, and reengineering, Dramatic operational improvements have resulted, but rarely have these gains translated into sustainabl e profitability. And gradually, the tools have taken the place of stra tegy. In his five-part article, Michael Porter explores how that shift has led to the rise of mutually destructive competitive battles that damage the profitability of many companies. As managers push to improv e on all fronts, they move further away from viable competitive positi ons. Porter argues that operational effectiveness, although necessary to superior performance, is not sufficient, because its techniques are easy to imitate. In contrast, the essence of strategy is choosing a u nique and valuable position rooted in systems of activities that are m uch more difficult to match. Porter thus traces the economic basis of competitive advantage down to the level of the specific activities a c ompany performs. Using cases such as Ikea and Vanguard, he shows how m aking trade-offs among activities is critical to the sustainability of a strategy. Whereas managers often focus on individual components of success such as core competencies or critical resources, Porter shows how managing Jit across all of a company's activities enhances both co mpetitive advantage and sustainability. While stressing the role of le adership in making and enforcing clear strategic choices, Porter also offers advice on how companies can reconnect with strategies that have become blurred over time.