Operational effectiveness vs. strategic positioning

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Operational effectiveness vs. strategic positioning
Strategic positioning activities make the organisation stand out from the competition. (Jupiterimages/Photos.com/Getty Images)

The terms operational effectiveness and strategic positioning are sometimes used interchangeably, but they do not mean the same thing. Michael E. Porter has written several books and articles on operational effectiveness and strategic positioning. Porter drew a hard line between these two concepts in his 1996 Harvard Business Review article, "What is Strategy?"

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Operational Effectiveness

The basic assembly of products is one example in which an organisation might achieve operational effectiveness. The Business Dictionary website defines operating effectiveness as: "The level of efficiency at which an organisation is currently operating." This typically entails the operation of the organisation at the most efficient level possible with the least amount of effort. According to Porter, operational effectiveness occurs when the organisation performs specific activities better than its competitors. These activities are often similar from one organisation to the next. In other words, the organisation may achieve operational effectiveness by assimilating with others in the same industry, completing the same tasks as competitors, only better.

Strategic Positioning

An example of strategic positioning is a company which has developed a brand name with a devoted following. The company has placed itself in a position where it may price its products at a much higher price point than a company that produces similar quality products under a lesser brand name. Porter says strategic positioning occurs when the organisation engages in either different activities from competitors or in similar activities carried out in a different manner from competitors. Strategic positioning consists of the creation and maintenance of a sustainable long-term advantage over competitors through core competencies not easily copied. Strategic positioning is successful when the organisation has identified and used unique activities which provide added value to its products and services.

Comparison

Operational effectiveness and strategic positioning are essential elements of successful organisations. Both consist of doing specific tasks better than competitors. Both allow the organisation the flexibility to consistently compete in a quickly changing business world. Both use of benchmarking to measure success. Operational effectiveness and strategic positioning also involve the effort to measure the organisation against others in the industry.

Distinctions

According to Porter's research, there is a fundamental distinction between operational effectiveness and strategy. Operational effectiveness consists of "competing to be the best," while strategic positioning consists of "competing to be unique." While operational effectiveness is essential, the maintenance of a sustainable, long-term competitive advantage relies on the organisation's ability to differentiate itself, as well as its products and services, from the competition.

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