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Choice, trade-offs and differentiation

“Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different.”

- Michael Porter

Image of one pea in a pod that is different

In my previous post, I talked about the importance of focus. See Don't chase two rabbits.

Focus requires making choices. For example, the choice to do one thing rather than another. Or to do one thing before another.

Of course, the actual choices you make are incredibly important.

Chase the other rabbit

Going back to our rabbits - if you choose to chase the same rabbit everyone else is chasing, you’re much less likely to catch it.

So, chase the other one.

If you have to chase the same one, don’t follow the pack. Find a different way to chase and trap it.

Business strategy is not about being trying to be a little better. It’s about trying to be different. And in being different, being 10X better.

No one wants another Amazon or another Google or another Apple. Or even just another strategy consultant. Because we already have all of that.

-est and -er words can be the enemy of good strategy

Every time your strategy includes a word that ends in -est (biggest, best, fastest, etc.) (or even -er: bigger, better, faster), or anything similar, stop. Take a step back and think of Wayne Gretsky (see Skate to where the puck is going to be, not where it has been). He wasn't the biggest or the fastest or the strongest player. He was just in a different place.

Competing on price or features rarely ends well. It just starts a price or features war. To truly differentiate on price, I think the research says that you need to be at least half the prevailing price, maybe more. A similar statement could be made about features.

I remember working with a company that was losing market share. I asked them what they’d tried. They’d reduced prices. How did that go? It worked great for a few weeks until all their competitors followed suit. And then they were back to square one but with narrower margin. So then what? Well, then they added some product features. That also worked for a while until their competitors copied that too. Now they were back to square one but with a more expensive product still at a reduced price. Eventually we were able to find a completely different aspect of the business to focus on, and the business recovered the ground it had lost and then some.

Don't just be better. Be different.


Trade-offs provide a great way to deter your competitors from simply copying you.

When Southwest Airlines launched the world's first low cost airline, they deliberately chose not to do certain things. They didn't offer in-flight meals or allocated seats. They only flew point-to-point and to secondary airports. And they only used one type of airplane.

As a result, they were significantly cheaper. And for those people who did not care for the things Southwest didn't offer, they were perfect.

Their competitors could have copied them, of course. But that would have meant stopping doing those things also. And that could have lost them a lot of their existing loyal customers. The trade-off was too great for them. So they left Southwest Airlines alone.

Similarly, Ikea choose not to assemble or deliver the furniture they sold. And they chose large well-stocked stores with plenty of onsite parking. Again, this appealed to many customers. But the trade-off for traditional furniture stores was too large.

Unique and valuable

Where does that leave you?

In very simple terms, business strategy is about choosing to focus on only that which:

  • is different
  • your (target) customers value
  • can't already get anywhere else
  • which you are uniquely well placed to deliver.
If you can tick those 4 boxes, then you're in a strategically good space!

And so, as business strategists, we should constantly be asking: How will you differentiate yourself in the market in a way that enables you to create and capture value?

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