تسهیل سازی و رفع موانع تولید و کارآفرینی

So ladies and gentlemen, please join me in welcoming Michael Porter.

 

Work Thank you, that was embarrassing.

 

But, but much appreciated. And

 

it's truly a great fun for me to be here. I'm an engineer by training, aerospace engineer, and

 

I love projects.

 

And what you guys do in this field is actually a core discipline of management. It makes things happen.

 

It's particularly important to make change, to get things done in organizations that are non routine.

 

They require new ideas and advancements and innovation.

 

But I think the the reason I'm here, and I think Mark just said it well is that actually any project or any program

 

is just inevitably embedded in a strategy

 

for the overall organization.

 

And ultimately, if we don't understand that strategy, and if that strategy isn't well thought through,

 

then we can't decide whether we've got the right project or the right program.

 

If we don't have clarity on the strategy, we can't decide whether we've got the right goals and specifications

 

for our project or our program, in terms of what we're trying to achieve.

 

And if we don't have a clear sense of the overall strategy, then it's pretty hard to connect a project or a program to what's going on elsewhere in the organization,

 

in a way that ultimately, deliver value and competitive advantage,

 

or good service to the community if you're a government agency, or whatever you do.

 

So fundamentally, strategy and project and portfolio and program management are kind of joined at the hip.

 

And the question is, how do we ensure a very clear and powerful connection and alignment

 

between those things?

 

Now, one way of doing that is to rely on your senior management.

 

They're the ones that have to worry about strategy. And they tell you what the strategy is, and therefore you make sure that the program or the project is aligned.

 

But I will tell you that that's not what I think we need to rely on.

 

I think, ultimately, to do your job, well, you have to have a really good idea and a really good sense of what the strategy is. And what we find over and over again, is often senior management are not necessarily that good at communicating strategy and making it clear, for reasons I'll talk about a little bit later.

 

So I think I think those of us sitting in this room, we have to take responsibility for this too. We have to have the insights and the disciplines to understand a strategy and how to connect it to what we do is really to supplement that kind of top down transmission process.

 

So in this session, what I'd like to do is, is talk a little bit about what are the core concepts of strategy.

 

This is not going to be a whole course.

 

But it's going to be an effort to give you all the tools to think about strategy and thinking about strategy is about thinking about the hole.

 

Rather than thinking about the project,

 

or the function strategy about is about thinking about the whole company.

 

How does the whole company fit together?

 

Strategy is about thinking not about a particular technology or particular competitor strategies about thinking about the whole environment in which the company is operating.

 

The whole the whole circumstances outside that the company is having to respond to that's what strategic thinking is all about.

 

What I find still today, despite the fact that this is a well established discipline, and there's lots of courses on it, it still strategy is relatively misunderstood in a lot of organizations.

 

There's a lot of misuse of the word strategy. There's a lot of sort of mistaken simplicity that people use when they talk about strategy. So hopefully in the session today, we don't have a lot of time.

 

But I'm very confident that in one hour

 

We can all get on the same page and really understand these these fundamental principles. And hopefully, these will give each of you an opportunity to not just try to figure out what the top management wants done.

 

But actually be involved in that discussion in a very proactive way many of you already are. But my goal today is you're going to teach your bosses about strategy.

 

Because you're going to know more about it than they do.

 

That's hopefully what we can achieve today.

 

Now, the starting point for thinking about strategy is, you know, what

 

is the fundamental?

 

What are we really trying to do with strategy?

 

And what I find when I, when I work with companies, when I get a chance to work with a lot of them in virtually every part of the economy, what I find is that the very the instinctive gut reaction about what are we trying to accomplish in this company? How do we win

 

is the idea of being the best.

 

You hear so many CEOs say we want to be the best company in our business, we're going to be the best bank, we're going to be the best auto company, we're going to be the best toothpaste manufacturer, the best IT vendor, we're going to be the best. That's our goal, our, our, our, our purpose is to be the best in our industry. And if we're the best we'll win will succeed, we'll do well, we'll get it we'll earn a good return. That's kind of a very typical way of thinking about competition and also about strategy.

 

Now, what does that mean for for strategy? Well, if you if you're trying to be the best, and you have to figure out what's the best product?

 

What's the best manufacturing process? What's the best supply chain? What's the best Salesforce structure, what's the best IT platform and and the job of management. And those of you that are implementing, is actually to figure that out and get there.

 

And the assumption is that if you can do all those things, and be the best you will win,

 

what we come to understand is that's kind of a disastrous way of thinking about strategy.

 

Why is it disastrous? Well, the first thing, and probably the most obvious thing about that way of looking at the world is

 

there is no best.

 

There is no best auto company. The whole idea doesn't make any sense.

 

What's the best car?

 

Is there a best car?

 

No, it all depends. It all depends on who the car is meant to serve.

 

I mean, if the car is is meant to serve a very high net worth person that's very tech savvy and is full of themselves. You know, that's a different kind of car, than a car utilitarian car. For somebody who doesn't have a lot of money, who wants to have good gas mileage, there's lots of good cars, there's lots of Best Cars, it all depends on the need, and the customer you're trying to meet.

 

So the idea that there's one way to compete in any business is just simply not true. There's often many ways to compete. There's many different ways of delivering value

 

for the customers you choose to serve, and the job of the strategist is to figure out how you're going to do that.

 

Better and uniquely, well, the essence of strategy is not about being the best. It's about how do we, how are we unique? How can we deliver some unique value.

 

And we'll talk about value a little bit later, to the customers that we in our organization are trying to serve. And one of the truisms of competition and strategy is, you can't meet the needs of every customer.

 

You can't do that. It's impossible. If you try to meet everybody's needs, the chances are, you'll not be very good at meeting anybody's needs. And that's a very powerful idea and strategy. Strategy is essentially about competing to be unique.

 

And if you find yourself in a situation where you're competing with your competitors, on the same stuff, you're in trouble.

 

Because if you're trying to produce the lowest price, and they're trying to produce the lowest price, and you're in a race to produce the lowest price, what's going to happen that's that's what we call a zero sum competition.

 

You're just gonna have a race to the bottom and see whose returns are the lowest.

 

Whereas if you think about how to be unique you can we find that there's, that's more of a positive

 

have some competition, where if you find the ways you can distinguish yourself and creative advantage, and really double down on those, ultimately, you'll be able to succeed. And your competitor might even be able to succeed as well because they're doing something else.

 

So these are some of the kind of animating fundamental ideas in thinking about strategy that we need to start with as we enter this discussion.

 

And these are questions that each of you needs to, you know, be asking,

 

as you think about the work that you're asked to do,

 

you know, and where are we going with this?

 

Where do we ultimately want to end up relative to our competitors in terms of meeting the needs that our business is trying to meet?

 

Now, in addition to kind of the way we think about competition, another very important starting point for thinking about strategy is to understand what we mean by a strategy.

 

You think this would be pretty clear at this point, but it's not. People use strategy to mean a lot of different things.

 

And what we found is we've got to get on the same page, we've got to understand strategy in the same way, if we're going to have a productive discussion, and that's whether it's your project team, or whether it's your company.

 

There, there are three common mistakes in thinking about strategy that I see over and over again, one is to confuse the strategy with the goal.

 

How many times have I heard my strategy is to be number one, or number two in the business?

 

Is that a strategy?

 

No, that's actually a goal. That's an aspiration, that's where you'd like to get. The strategy is how, what set of choices you make,

 

which will produce their competitive advantage that will enable you to be in whatever ultimate, you know, market position, or growth rate you hope to achieve. So we got to make sure that when we separate the strategy from the goal,

 

think about strategy, we also have to recognize that strategy is ultimately holistic.

 

It's not about any single action that you might want to take. So I hear people say all the time, my strategy is to internationalize,

 

or my strategy is to be the technological leader.

 

And those things may be terrific things to do. But those aren't strategies, those are actions.

 

That flow out of a strategy, the strategy is kind of the holistic understanding of how the company is going to position itself in the business in order to get a sustainable, hopefully competitive advantage. And that involves all the functions.

 

And that's gonna involve many action steps. And many of you are going to be asked to lead efforts around those action steps to actually make things happen, that are critical to make the strategy real. But the action steps aren't the strategy, the action steps are embedded

 

in the strategy,

 

which hopefully is a coherent way of thinking about the company as a whole, in order to distinguish itself in the marketplace and create that advantage, that's going to lead to superior performance.

 

In whatever business you compete in,

 

we also have to be clear that strategy is a lot more than just a mission statement,

 

or a vision statement or, you know, a strategic intent. A strategy is very specific, it's very concrete.

 

It's about a set of choices that the organization is making, about how to compete.

 

And those set of choices have to distinguish that company and separate that company, from other players.

 

That's ultimately what strategy is all about. It's about the whole.

 

It's not about the parts.

 

It's about the position, not about the action steps.

 

And ultimately, it's successful. If it's successful, it's about superiority and uniqueness, which ultimately is what most of us would like to be part of an organization that really distinguishes itself and deliver something really, really

 

unique in the marketplace.

 

Okay, now, with that background, let's again first recognize that when we think about strategy, when you think about strategy, you've got to always understand that that strategy exist on multiple levels in unless the company's only in one business.

 

The core level of strategy is what we call business strategy. That's how do we compete in a distinct

 

Business a single distinct business. How do we, how do we compete in, you know,

 

loose automotive lubricants. If you're in a chemical company,

 

that's business strategy.

 

But then if you're in a diversified company, you might be in more than one business.

 

You might make not only lubricants for automobiles and passenger cars. You also might make Luber lubricants for trucks. And you also might make lubricants that are used in industrial processes. Well, those actually turn out to be different businesses.

 

And what we know is that you need a different strategy for each different business in the company.

 

And that's ultimately business strategy.

 

But if the company is diversified, you also need another level of strategy, which is, okay, how do we bring all these businesses together in a way that adds value?

 

What portfolio businesses do we want to be in? Ideally, that can leverage each other and amplify the advantages that they could create on their own.

 

And that's what we call corporate strategy.

 

And, you know, I find that in many companies, we get these things confused. And we're not clear about what we're really talking about. And that that creates problems, problems in terms of the choices, but also problems in terms of the discussion and the vocabulary and the clarity of the choices that we make.

 

I'm going to talk mostly today about business strategy, because I think that's where most projects emanate, and programs, they emanate out of a business strategy.

 

Corporate Strategy is a topic though, that is important if you're in a diversified firm. And, and there's references here that you can look at if you're interested.

 

I can't give that course today, too. I'm gonna focus on the business strategy course. Okay.

 

Because again, I think that's where most of us are tethered, you know, in terms of what we do, the people in this room.

 

Alright, so So how do we think about business strategy? Well, in business strategy, we've got to recognize that there's really two pieces of the understanding and analysis and thinking, in business strategy, one piece has to do with the business itself.

 

And that's what we call industry structure.

 

Now, if you compete in passenger cars, you're in the passenger car industry.

 

And one important unit of analysis is, what's the nature of that industry? How's it changing? It's getting better or worse? How do we understand the dynamics of the industry?

 

And we find that industries are different in terms of their inherent attractiveness and profitability at any given moment in time.

 

So that's kind of one piece. That's, that's how do we look at the external

 

environment in a kind of holistic way. The second piece of this strategy, of course, is what we call positioning. Positioning has to do with how we decide to compete within the industry,

 

versus the other folks in that industry.

 

And positioning is really fundamentally about how we can get a competitive advantage.

 

If we think about any company's profitability, you can actually decompose that profitability into two parts, one part of the profitability, so you have a profitability at ROI of 12%. One part of that profitability is the profitability of the industry, the average profitability of the industry.

 

So say you're in a really lousy industry say the average profitability is 8%.

 

But the other part of profitability is the difference between your profitability and the industry average.

 

And if you have a 12% ROI and the industry, average profitability is 8% ROI, then you're 4% better. And that's a sign that you have a competitive advantage, you have a superior position, you're outperforming your rivals.

 

Now, if you have a 6% ROI in an 8% industry, then you're doing something wrong, there's some weaknesses there. You're underperforming. So you can see that part of your performance has to do with Are you in a good or bad industry, but part of the performance has to do with Are you better or worse?

 

Are you superior or are behind in that industry? And when we look at performance

 

We have to look at it that way. Again, I find a lot of companies get confused about whether the problem is a bad industry or a bad position.

 

And the remedies to those things are very different.

 

If you've got an industry problem, that's a whole different animal in terms of what to do, then if you've got a positioning problem,

 

but both are very, very critical. And what I what I find over and over again, is there's not enough attention to the industry.

 

people gravitate right to their own position, do we have an advantage? Do we have a disadvantage, rather than is our business healthy? Is our business moving in the right direction, because of the businesses healthy, you know, we'll be healthy.

 

Now, maybe we can be a little healthier than our rivals. But ultimately, what matters is our return on capital or overall performance.

 

So now let's burrow down a little bit into these two pieces. And again, some of these ideas many of you are, are familiar with, but I'm confident that that that kind of talking about this, in this way is is hopefully going to help you see it in a much more powerful light, then whatever you remember, if you if you if you read or studied something about this.

 

Now, on the industry side, of course, a long time ago, I introduced this concept of industry structure and the five forces.

 

And there's been an endless debate about whether there's a sixth force. And if somebody invents one, you know, I'll be very happy to give them a gigantic prize or a reward. So far, we think there's five forces. Whenever you're looking at a business holistically,

 

the way to organize the nature of competition is to recognize that it's taking place through these forces. The most obvious one is the rivalry that you're having with the people in the industry.

 

You know, General Motors versus Ford.

 

Now, Google versus Yahoo, in search engines, that's that's rivalry. That's obvious, that's kind of intuitive. We all know about that kind of competition, what we are less often aware of is actually that our real profitability may not be driven so much by that. But by these other forces of competition, the cloud that our customers have to force down the price

 

to ask for more,

 

that we can't recover the cost of. So that's, that's, that's the bargaining power by the suppliers that we deal with, may have the clout to push up the price of what they sell us and pull the profitability of the industry.

 

Then there's the question of do new companies come in and kind of take market share and kind of drive down the return in the business. And that relates to the concept of barriers to entry, and then hopefully a concept that all you're familiar with

 

the barriers venture high, you can support a very high profit industry, if the barriers to entry are low, you can't.

 

And so this becomes a critical element of thinking about the industry structure in which you're competing. And then there's the substitutes, there are other ways of doing what you do.

 

So if you if you make plastics, then you know you made the substitute maybe metal,

 

or some other material.

 

So even though it's not like you, even though it's not a direct rival, it also competes with you. If the substitute has a favorable price performance,

 

situation versus your product, even if it looks totally different, that's going to limit your profitability. industry structure then is is about seeing what's happening in the broader competitive environment around you, the directions that is taking, and then playing that into your thinking about the question of where you want to compete.

 

And industry analysis then becomes a core discipline of strategy.

 

And every good strategist has to know what's going on in their industry, they have to see it in this holistic way.

 

And, and ideally have to build it into choices that are made, that ultimately are gonna affect you

 

in terms of priorities and programs that you're going to be asked to deliver on.

 

Now, let's let's let's just take a little bit of an example here, just to give us all a chance to kind of see how this thinking can play itself out. So I just thought I'd take very simple industry

 

industrial gases, this is products, companies like Air Air Products Praxair. You've heard of, hopefully, so you've heard of these companies.

 

You know, they supply you know, oxygen,

 

you know, nitrogen

 

gas

 

that are used in various ways in the business operations of many, many industries, sometimes in the production process, sometimes in other ways, okay.

 

Now,

 

by definition, these products are literally commodities, oxygen is oxygen, nitrogen is nitrogen.

 

And, you know, these, the feedstocks for these industrial gases are huge commodity markets. So, the companies in this industry have no control over the raw material price.

 

And they're just kind of at the whim of what's ever going on in the raw material market in terms of affecting the price.

 

And industrial gas companies sell to many of the biggest companies in the world.

 

So, so you so your first instinct is, well, you know, here's an industry, it's commodity industry, with no power over your key raw material cost, and you're selling to a lot of big, powerful companies. Sounds pretty lousy.

 

That's the kind of thinking that comes out. If you don't think rigorously and systematically about about your business, if you do, what you realize is this actually is a very attractive industry. Why? Because yes, they're dependent on feedstock prices. But the way this industry is figured out the contract,

 

the raw material price swings are built into the contracting, so that just gets passed through.

 

They're not vulnerable to that.

 

It turns out that, although these are commodity products, actually, in many cases, the the gas supply is on site, there's a little tiny little plant that's generating oxygen or generating some gas that you need in your production process. And basically, it's there on your factory site. And in order to kick out one of the competitors, you've got to kick out their whole little mini plant in your production process.

 

And it's often contraction, contractually impossible to do that you have a two three year contractor, before they would put that thing, you know, put that acid onto your facility.

 

And it turns out that to get that you're delivering gases, it's very expensive deliver gases. So the density of your customer

 

is very, very important, how far the truck has to drive between dropping off the next tank of gas.

 

And so if you have tight density of customers, and you can build that up, it's almost impossible for a new company to come in.

 

Because it's just horrendously expensive for them to just serve one customer in a given region. So to make a long story short, here's an industry that if you really understand your industry environment, and think about it in this more rigorous way, you all of a sudden understand, first of all, it's pretty attractive. But you also understand the ways in which your company in your projects and your programs might actually extend that advantage, and deepen that advantage. Because the advantage really comes from delivery efficiency, and embedded on site facilities and things like that, that that that you may be able to invent, you know, better and important improvements and how to do that.

 

So industry analysis becomes a critical dimension. And I think every good project manager has to understand kind of the industry context, that's given rise to the requirements that has then popped up, you know, in in this project that you've been asked to lead.

 

And the results you've been asked to

 

deliver and and if you don't feel like that understanding is there, you got to raise your hand.

 

Wait a minute, boss. You know, this is the way the industry is going. This seems to be what's happening with the customer. Why are we doing this?

 

This is just gonna make us a commodity and take away our opportunity to differentiate ourselves, you know, what, why don't we Why don't we think about this?

 

See, that's that's that ability to have a dialogue between the kind of strategy level and the program and project level rather than have two different

 

see that's that's that ability to have a dialogue between the kind of strategy level and the program and project level rather than have two different worlds, where there's some kind of a handoff at some point. And then you know, it goes off on its own.

 

Without the ability to understand without the ability to get feedback loops without the ability to refine what we're really trying to accomplish here in a dialogue. And I think as a project leader or project manager, you're not going to be very good at that dialogue unless you understand these some of these broader concepts of strategy and the nature of competition in your business.

 

Let me go the right way here. Now let's turn to positioning.

 

How do we position ourselves within the industry?

 

What are the key ideas there?

 

Well, the first idea is that the fundamental purpose of positioning is to get superior performance.

 

We're not positioning for its own sake, we're positioning because we want to do better economically, or in delivering value for the customer. If we're not in a business, then our rivals, okay. And in order to do better, in order to be more profitable.

 

In order to deliver higher economic value, we only really have two ways of doing that. One is we've got to be able to command a higher price.

 

If we can command a premium price for our product, or our service,

 

and we can keep our costs in control, we will be more profitable.

 

That's one route to superior profitability, which ultimately is what strategy is all about.

 

The other way we can be more profitable is we can have lower cost,

 

because we're inherently more efficient and doing the things that are necessary in the business.

 

And if we can have an acceptable product,

 

and we can operate deliver that acceptable product at a lower cost, again, we will be more profitable.

 

These are the two paths to superior profitability, a higher price or a lower relative cost. Once in a while, we can do both. But it turns out to be really hard.

 

Because the things that are that it requires to get superior value and a premium price are often somewhat inconsistent with the t