# What Is Strategy?

> Strategy creates unique value through deliberate trade-offs, not operational effectiveness alone.
- Title: What Is Strategy? · Harvard Business Review | Shortify
- Summary: Strategy creates unique value through deliberate trade-offs, not operational effectiveness alone. True strategy involves choosing what not to do to create…
- Keywords: strategy, operational effectiveness, competitive advantage, strategic positioning, trade-offs, southwest airlines, ikea, jiffy lub, vanguard, contingent lite, neutrogena, bessemer trust
- Source: Harvard Business Review — https://hbr.org/1996/11/what-is-strategy
- Published: 1996-11-01T05:00:00+00:00
- Read time: 1 min
- Topics: strategy, operational effectiveness, competitive advantage, strategic positioning, trade-offs, southwest airlines, ikea, jiffy lub, vanguard, contingent lite, neutrogena, bessemer trust
## Operational Effectiveness vs Strategy
Managers focus on operational effectiveness but ignore strategic positioning, leading to mutual destruction.
## Operational Effectiveness Definition
Performing similar activities better than rivals, but not sufficient for sustainable competitive advantage.
## Strategic Positioning Definition
Performing different activities from rivals or similar activities in different ways to create unique value.
## Southwest Airlines Example
Southwest Airlines offers low-cost, point-to-point service with fast turnarounds and automated ticketing.
## Ikea Strategic Positioning
Ikea targets young customers with self-service, modular furniture, and low-cost assembly.
## Trade-Offs in Strategy
True strategy requires trade-offs between activities to prevent imitation and ensure sustainability.
## Contingent Lite Failure
Continental Airlines tried to be both low-cost and full-service, leading to financial losses and job cuts.
## Neutrogena's Trade-Offs
Neutrogena sacrificed large-volume potential and price promotions for medical-grade soap quality.
## Vanguard's Cost Leadership
Vanguard provides low-cost, predictable mutual fund performance with minimal fees.
## Jiffy Lube's Niche Focus
Jiffy Lube specializes in automotive lubricants without offering other repair services.
## Bessemer Trust's Customization
Bessemer Trust offers personalized banking services for high-net-worth clients with minimal loans.
## Carmike Cinemas Access Strategy
Carmike operates small-town theaters with low-cost structures and personalized marketing.
## Strategic Positioning Sources
Positioning emerges from product variety, customer needs, or access differences.
## Trade-Offs Prevent Imitation
Trade-offs between activities deter competitors from copying successful strategies.
## Strategy Requires Trade-Offs
True strategy involves making trade-offs to create sustainable competitive advantage.
## Conclusion: Strategy Definition
Strategy is creating a unique and valuable position through deliberate trade-offs.
## Key takeaway

True strategy involves choosing what not to do to create sustainable competitive advantage.