Profitability, Competitive Advantage and Focus

The single most important element in sustainable, exceptional profitability is a focus on doing something different, rather than something better, than your competitors. Every leading writer and thinker on business strategy has emphasized focus over efficiency, including Peter Drucker and the pre-imminent author of our time on the subject, Michael Porter of the Harvard Business School.

Some quotes from Porter's writing (his best known book is probably Competitive Advantage) and from the work of one of his students, Joan Magretta, (author of Understanding Michael Porter):

The essence of strategy is choosing what not to do. You can't be all things to all people. 

Strategy is about making choices, trade-offs; it's about deliberately choosing to be different. Strategy is about setting yourself apart from the competition. It's not a matter of being better at what you do - it's a matter of being different at what you do.

Unhappy customers are one sign of a good strategy. Make some customers really happy, and let others be unhappy.

Make it clear what you will not do. Trade-offs allow you focus resources to create something unique. Trade-offs create and sustain competitive advantage.

Human nature makes it really hard to make trade-offs. The tendency is always toward more customers, to offer more features. You have to decide which specific customers, and which needs, you want to meet, and not worry about other customers.

“The difference between successful people and really successful people is that really successful people say no to almost everything.”
          - Warren Buffett