You might think I’m announcing that today there is strategy in the United States. Such a discovery would indeed be welcome but it’s not what I mean. I mean that you can see strategy in almost every newspaper article. All you need is to want to see it!

We tend to think strategy, in the sense of unique positioning, is for large companies with large strategic-planning staffs and large strategy-consulting firms presenting large bills. It might be that the opposite is true.

In large companies strategy is mostly tactical tweaks to the master plan that made them big to begin with. That strategy was the founder’s dream. It succeeded, and made the company large. The rest, as they say, is history, with a bit of tinkering at the margins.

The number of large firms that changed strategy or created strategy once they were big can be counted on one hand with perhaps four fingers left over. IBM (under Gerstner). (Apropos IBM, see also my co-editor Mark Chussil’s “The Holy Grail of Competing.”)

Did I say IBM?

Since small businesses are typically run by their founders, and since they haven’t yet accumulated the fat to sustain them for decades like large firms, if they are to survive they must have some unique positioning. If the business is local, we often don’t see “strategy,” but even a slight difference in activities can make, well, a big difference.

Read More →
When it comes to corporate advertising, being unique creates a competitive advantage. See how these companies decided to be unique, resulting in “the best ad ever.”


According to Michael Porter, competing effectively means providing some customers with unique value, where “unique” means not offered by competitors and “value” means of worth to some customers. To do that, a company must design its set of activities in a unique way as well, or it will be imitated quickly and its uniqueness will evaporate.

Part of the activity chain, and therefore part of competing, is a company’s message delivered via its advertising. Many advertising agencies just spit out commoditized ads. (Where’s their unique value?) Once a year, in honor of the Super Bowl delirium, they try to be funny. The goal isn’t unique and the formula isn’t unique. Film a cute dog or a cute toddler or a cute dog with a cute toddler, and you have it. The cuteness and humor needn’t have anything to do with the other activities of, say, Budweiser or Pepsi. Or with sales, as Darth Vader can testify against VW. So, the activity chain is not internally very consistent.

They can all learn from Las Vegas and Cirque du Soleil.

Read More →

Starbucks is BIG. But it used to be BIGGER. The Onion satirized (in 1998!) that Starbucks had opened a new Starbucks in the rest room of an existing Starbucks.

When it all started to fall apart in 2007, Howard Schultz, the founder and leader who left Starbucks in 2000, took back the reins and downsized quite mercilessly, shuttering 1000 stores, laying off thousands and eliminating unprofitable products. His turnaround of Starbucks is documented in his 2011 book, Onward: How Starbucks Fought for Its Life without Losing Its Soul.

As turnarounds go, there are more fascinating tales, such as Lou Gerstner at IBM and Steve Jobs in his second stint at Apple. Starbucks does not produce earth-shattering products. Its coffee is overpriced and leaves grand burned aftertaste (also known as Grande).

What is interesting in Starbucks’ turnaround is how faithfully Schultz followed strategy theory. Those who focus on implementation and execution over competitive-strategy decisions, consider this a wake-up jolt of caffeine: it’s not how you execute; it is, first and foremost, what you execute.

Read More →

In “VCs aren’t [the] only ones able to show you the money” John Shinal, USA Today’s New Tech Economy columnist, reported that US venture-capital (VC) investment in 2012 fell to $29.7 bil­lion from $35.1 billion in 2011. Three years after the financial collapse, VC-backed investments haven’t returned to pre-great-recession levels.

In itself, this is not surprising. Some signs of recovery notwithstanding, little has returned to pre-recession levels in the US economy. The more-troubling news, though, is that the number of acquisitions of VC-backed companies declined by a whopping 21% last year. As Mr. Shinal ob­served, this is the second-lowest total in the past seven years, exceeding the lowest (in 2009) by only six deals. That cannot be attributed to the effects of the financial crisis alone.

Most readers are probably raising their eyebrows right now. Didn’t VC-backed Facebook go public last year in the largest IPO in US history? But Facebook was the exception. The most-dismal news for VCs is that the average internal rate of return for US VC funds over the past ten years strained to reach a dreary 6.1%. In comparison, the Nasdaq rose 10.3% and the Dow Jones, 8.6%. True, a lot of the rise happened in the last three years only as the stock market took off, but one would still expect the masters of the universe to beat stodgy old public corpora­tions!

Read More →

Do you know Pictet? No, you don’t. And they don’t care. You are not their client. That makes them strategy geniuses since 1805. Then again, the standard against which one would measure them – their peers in the banking community – is very low.

Pictet & Cie, in its full name, is a Swiss bank. It is the third largest Swiss bank that you never heard about. It manages more than 300 billion dollars in assets. You have heard a lot about the other, larger Swiss banks, UBS and Credit Suisse. UBS got close to collapse in the 2008 financial crisis and had to be bailed out by the Swiss government. Credit Suisse was not hurt as badly. In 2008 it merely lost 8.1 billion Swiss francs (about $8.5 billion).

Read More →

Have you ever wondered about the secret behind successful competitors? Well, wonder no more. The secret has been revealed in a recent Fox News report about a true miracle drug “powering” Wall Streeters, performance-oriented athletes, pilots, doctors and students (April 9, 2013, interview with Dr. Samadi). The drug is called Provigil, and its original use was to treat narcolepsy. Its off-label use, however, has skyrocketed since the release of the movie “Limitless” which apparently was loosely based on it.

Read More →

In 1987, Michael Porter, then a young academic from Harvard Business School, published a piece called “From Competitive Advantage to Corporate Strategy” (HBR, May-June 1987). While business unit strategy deals with achieving competitive advantage in a given industry (the hallmark of successful competing skill), corporate strategy deals with the question of what industries/businesses the company should be in, and how to manage the portfolio of businesses. These are two very different competing skills.

Read More →