Porter’s generic strategies

Michael E. Porter · 1980

Also known as Cost leadership, differentiation, focus

There are three ways to win a market, and trying to do more than one at a time is how companies end up winning none.

Its place in the frameworkGoal Core›Strategic goals

What it does

Compete on cost, compete on being meaningfully different, or serve a narrow segment better than anyone serving everyone. The famous warning is what makes it a strategy tool rather than a menu: a company that pursues cost and differentiation at once, without being clearly best at either, ends up in what Porter called stuck in the middle — carrying the cost of both and the advantage of neither.

Reach for it when: When strategic goals commit to being cheaper and better and more specialised, all in the same document.
Where it stops: The claim that the three cannot be combined has been argued about for forty years, and several companies have plainly managed it. Read it as a demand to say which one you are betting on, not as a law.

Michael E. Porter, Competitive Strategy, Free Press, 1980.

Why it sits at Strategic goals

The few goals that decide direction. A strategic goal is not simply a large goal — it is one that answers a diagnosed problem and commits the organisation to some paths at the cost of others.

A model is only useful when you reach for it at the right moment. This one answers a question that arises here — so it is filed here, and nowhere else. These are the working areas it serves:

DiagnosisRumelt, Good Strategy / Bad Strategy (2011): diagnosis, guiding policy and coherent action as the kernel of any real strategy.
Strategic themesKaplan & Norton’s strategy maps, where themes connect objectives across perspectives into a causal chain.
Trade-offsPorter, What Is Strategy? (1996): the essence of strategy as choosing what not to do, and the role of trade-offs in making a position defensible.
Horizon and measuresBalanced Scorecard practice on tying each strategic objective to a small number of outcome measures.

All of Strategic goals

What it touches elsewhere

Nothing in a business is decided on its own. A conclusion reached with this model at Strategic goals lands in these other cores, whether or not anyone follows it there.

Vision CoreStrategic goals should be readable as steps towards the stated vision.
Market CoreDiagnosis usually begins here — with competitors, audience and opportunity.
Brand CorePositioning is a strategic choice and belongs among these goals, not after them.
Data CoreWhere the outcome measures are defined, collected and reported.

Filed at the same place

These answer questions that arise at Strategic goals too. Where they disagree with this one, the disagreement is the useful part.

Rumelt’s kernel of good strategyA strategy is a diagnosis, a guiding policy and a set of coherent actions — and anything without all three is a wish list.
The Ansoff MatrixFour directions growth can come from, ordered by how much is unfamiliar in each.

Elsewhere in Goal Core

These are other people’s models, named here so you can go to the source and use them properly. The Omnigoal is not affiliated with their authors and is not endorsed by them; nothing of theirs is reproduced here — no canvas, no diagram, no wording. Each is described in our own words, with the originator credited, because the framework is a place to put thinking, not a replacement for the people who did it. Model names and trademarks belong to their respective owners and are used here only to refer to the work itself.

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