According to the number of texts read that refer to strategy as a fundamental part of the direction of a company and as one of the main activities to be developed by the CEO, we try to define and differentiate it.
Currently, companies have to carry out a number of activities that support growth in terms of profits, this is a consequence of the rapid movement in the markets, the changing environment in which they are, which is often caused by those CEOs who have very clear visions that touch points that make the market change radically.
In the current business environment, there are very fashionable terms such as cost reduction, profit increase, process improvement, reorganization, use of the best technology, which are mainly oriented to the operation, which are basically very good since make the support of the company really strong against the competition, trying to make the product with better quality and speed generates intangibles in the consumer that are difficult to be surpassed by other companies, this is what is called operational efficiency. In theoretical terms, operational efficiency means performing similar activities better than rivals.
When a company works to improve its operational efficiency, it faces a problem that is the frontier, in which it no longer only depends on improving the way the company works but on other factors such as strategy, the design of joint activities that I will mention later. Hoping to keep pace with changes on the productivity frontier, managers have adopted methods of management by improvement, by empowerment, by change, and the so-called learning organization.
Operational operational efficiency is not enough for the proper functioning of a company, it is complemented by strategy, competitive strategy has to do with being different. It means deliberately choosing a different set of activities to offer an inimitable mix of value. The position of the strategy is defined according to the changing needs of the environment or according to the market segment in which the company focuses, these can be:
Positioning based on variety
Positioning based on needs
Positioning based on segmenting customers
Each one has characteristics based on the focus of the market, for example positioning based on segmenting customers refers to the market being attacked, access can be a function of customer geography or customer scale, or whatever something that requires a group of activities to reach customers in the best way.
The concept of trade off should not be lost sight of, a trade off is a variable such as cost, service, benefits, with which you can play to make or create a strategic position in the market, that is, trade of means: " more of one thing requires less of another ”for example I want my product cheaper, so we put fewer colors on the packaging. This can be confused with a bad operation because if the company reduces its costs it can say that it is playing with the trade off, but in reality it has a bad operational efficiency, reducing by reducing can be a factor that leads a company to have serious problems.
Trade offs are part of the strategy, the essence of the strategy is deciding what not to do. Without trade offs there would be no need to decide, and therefore there would be no need for strategy.
Being able to develop a strategy that is innovative and appropriate for the company generates many success factors in addition to being able to stay in the market, adequacy is a much more central component of competitive advantage than most people can perceive. Although some adjustments between activities are generic and apply to many companies, the most valuable adaptation is the specific adaptation of a strategy, since it increases the inimitable nature of a position and amplifies trade-offs. Having the activities closely related to each other makes the competition have problems trying to copy the model.
Being able to have a complete strategy means taking risks, in order to get ahead, many of the CEOs confuse that improving the operation will get them ahead or that copying their opponents will keep them in the market, but this is an attitude of fear of decision making.
In summary, the strategy is composed of many factors such as risk, decision-making, trade-offs, but it is mainly based on the vision and value of the entrepreneur, the strategy is a fundamental part for growth beyond improvement in the operational part.
