Dev Patnaik

HOW TO UNDERSTAND MICHAEL PORTER Thanks to Paul Lewis for this wonderful summary of ‘Understanding Michael Porter’ by Joan Magretta. I think it will clarify many of the misconceptions about Porter’s view on strategy. ⎯⎯ If competition didn’t exist, there’d be no need for strategy. Strategy is the antidote to competition. Two ways of gaining a competitive advantage: * do different things * do things differently ⎯⎯ Competing to be the best is a destructive, zero-sum game. Competing on price is the business equivalent of mutually assured destruction. ⎯⎯ Strategic competition = choosing a different path, competing to be unique. Uniqueness is the essence of competitive advantage. Run a different race from your rivals. ⎯⎯ A good strategy is like a shelter in a storm. ⎯⎯ Competitive advantage means you operate at a lower cost, command a premium price, or both. To sustain a premium price, you have to offer something that is unique and valuable. ⎯⎯ Improving operational effectiveness does not provide a robust competitive advantage. ‘Best practice’ advantages are rarely sustainable. ⎯⎯ Every good strategy has: * a distinctive value proposition * a tailored value chain * trade-offs different from rivals * interdependent fit across the value chain * continuity over time ⎯⎯ Find a unique way to serve your chosen segment profitably. ⎯⎯ Effective strategy requires: * a set of choices that nobody else has made * trade-offs throughout the value chain, eg, Ikea. * either/or choices – straddling is usually a mistake. ⎯⎯ A stable value proposition can still deliver huge innovation. Lots of things in how Walmart works have changed – it’s value proposition hasn’t. ⎯⎯ When you substitute flexibility for strategy, your organisation doen’t stand for anything. Flexibility without strategy will guarantee mediocrity. ⎯⎯ An effective strategy is dynamic. It’s a path, not a fixed point. ⎯⎯ Sticking with a strategy allows it to emerge and improve. ⎯⎯ Continuity of direction makes effective change more likely. ⎯⎯ Strategy guards against fads. ⎯⎯ Ten practical implications: * Vying to be the best is intuitive but self-destructive. * Competition is about profits, not market share. * Competitive advantage is not about beating rivals but creating unique value for customers. * A strategic value proposition requires a specifically tailored value chain to deliver it. * A good strategy deliberately makes some customers unhappy. * Making trade-offs is the linchpin that makes competitive advantage possible and sustainable. * Without good execution even the most brilliant strategy won’t deliver superior performance. * Good strategies depend on many choices and the connections among them. * Too much change can be just as disastrous for strategy as too little. * Strategy doesn’t require heroic predictions about the future – it does require a point of view.

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💡At Rootical we enjoyed an insightful meeting with two 𝐩𝐨𝐰𝐞𝐫𝐡𝐨𝐮𝐬𝐞𝐬 𝐢𝐧 𝐇𝐮𝐦𝐚𝐧-𝐂𝐞𝐧𝐭𝐫𝐞𝐝 𝐃𝐞𝐬𝐢𝐠𝐧 yesterday, Bob Adams and Nathalie Collins. Both (formerly) at IDEO.org they have been instrumental in shaping (business) ideas that matter around the world! We discussed the ins and outs of human-centred design (HCD) and exchanged on some common challenges: 😴 𝐇𝐂𝐃 𝐅𝐚𝐭𝐢𝐠𝐮𝐞: While too many tools and techniques can be overwhelming, this is mostly about the fact that it is demanding to continue questioning your own assumptions, always working harder to learn more. Even though you're already deep into building a business, there's still a lot to learn. Ideally, we 𝘢𝘭𝘸𝘢𝘺𝘴 keep a group of early customers close to us for direct feedback. 😏 𝐈𝐧𝐭𝐮𝐢𝐭𝐢𝐨𝐧 𝐁𝐢𝐚𝐬: People often prefer to rely on gut feelings instead of data. It takes courage to go out and talk to strangers. Compared to looking for confirmation of your ideas, it takes more effort to ask the uncomfortable questions, listen and proof yourself wrong (many times). 😎 𝐉𝐮𝐦𝐩𝐢𝐧𝐠 𝐭𝐡𝐞 𝐆𝐮𝐧: Rushing to build the idea 𝘺𝘰𝘶 love without proper customer validation. It is tempting to think you know what is needed, throw money at an idea and go and build it. More often than note that doesn't work. Hence the mantra: (intentionally look to) 𝐟𝐚𝐢𝐥 𝐨𝐟𝐭𝐞𝐧, 𝐟𝐚𝐢𝐥 𝐟𝐚𝐬𝐭, 𝐟𝐚𝐢𝐥 𝐞𝐚𝐫𝐥𝐲. Embrace each time you prove yourself wrong as an opportunity to get it right on one of the next attempts. Fear not, we've also discussed solutions: 🛠 Go through the process with an idea you are not attached to first, so you do not let your preferences and attachments take over. 💪🏾 To trust and see its value, you need a good sense of the whole process, before going into it with your own idea. 🔩 Fluency (having a whole bunch of tools at your disposal) and Flexibility (the ability to know when it is fit to use each tool, drawing from your toolkit). 👥 Empathy Exercises: role-playing to practice asking, listening and observation. Observation and in-context immersion are often more powerful than interviews: what people say they do, might be very different from what they feel and think. 𝘙𝘦𝘢𝘥𝘺 𝘵𝘰 𝘭𝘦𝘷𝘦𝘭 𝘶𝘱 𝘺𝘰𝘶𝘳 𝘏𝘊𝘋 𝘨𝘢𝘮𝘦 𝘢𝘯𝘥 𝘣𝘶𝘪𝘭𝘥 𝘢 𝘴𝘰𝘭𝘶𝘵𝘪𝘰𝘯 𝘱𝘦𝘰𝘱𝘭𝘦 𝘳𝘦𝘢𝘭𝘭𝘺 𝘯𝘦𝘦𝘥? We are launching a new Call for Founders later this month. Join Rootical to build products people love! #HCD #Innovation #Design #ProductDevelopment 📸 A Rootical workshop one year ago. Isaac Muhofa, Elivis Omoit

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