The past years have been bad for strategy, especially with the boom of the eBusiness and the New Digital Economy. A lot of industry leaders claimed that the world changes too fast for them to have a strategy, saying: "A strategy in a world that is constantly changing is outdated by the time it will be ready for execution'. That is why in reality, most businesses moved into a simplistic idea about competition and nearly completely abandoned strategy. When you ask the same leaders if they don't have a strategy, a majority says "NO?, pretending "Of course, we have a strategy?. If they really have a strategy what is it then about? They respond with "Giving the highest quality of services, based on best market practices, using top trained, motivated and highly experienced people", or, "Produce the best quality of products at the lowest cost?, or they typically answer, "We are going to merge in order to consolidate our industry?.

Under pressure, to improve productivity, quality, and speed to market, leaders have introduced, often through major consulting firms, management tools (ABC, Benchmarking, BPR?), in order to generate dramatic operational improvements. Rarely these gains have been translated into sustainable profitability. For all different reasons, a lot of leaders and consultants got very confused about strategy and how to think about it. Most of them inverted strategy with short term best practise improvements or operational optimisation, and gradually, the tools have taken the place of strategy. That shift has led to the rise of mutually destructive competitive battles that damage the profitability of many companies. As managers push to improve on all fronts, they move further away from viable competitive positions. The operational effectiveness, although necessary to superior performance, is not sufficient, because its techniques are easy to imitate.

It's very arrogant for a business to pretend it can deliver the same sort of services or products that its rivals and do better on the long term then its competitors. This is a pure fiction that does definitely not work. If all the competitors on a defined market try to get the same place, inevitably the result will be that the customers are focusing more and more on price. To avoid this, businesses have to make strategic differences and think about strategy the right way. They have to seek for new opportunities in a different way based on creativity and dynamism. As a leader of any business, if you want to make a difference, you better have to make time for strategy!

DotCOMs and established companies, both pioneers of the New Digital Economy business, which isn't so new anymore, have competed in ways that violate nearly all theories of good strategy. Rather than focus on profits, they have chased customers through discounting (if you subscribe today, you receive something for free), channel incentives (if you order or execute over the web you pay less), and advertising (banners or hot links). Rather than concentrate on delivering value that generates attractive revenue from customers, they have pursued indirect revenues such as click-through fees and banner advertising. Rather than make trade-offs, they have pushed to offer every conceivable product or service. The error of a lot of New Digital Economy actors was to focus on the changes and technologies and to pretend implementing this will bring the success.

Everybody agrees to say that the Internet provides a better technological platform than all previous generations of IT Systems. But strategy doesn't depend on technology and on the fact that your business is on the Internet or not. As all companies now use the Internet technology, the Internet itself is neutralised as a source of advantage. Crucial is that the entry barriers to your market and industry are high, that customers don't have the power, meaning you are competing on price. By doing so your profitability will be sooner or later negative for ever. Most of the New Digital Economy actors forgot that strategy is about a direction, a distinctive way of doing business and not about optimised imitations. Robust competitive advantages will come from traditional strengths such as proprietary content, distinctive activities or unique products or services. Internet technology may be able to help fortifying these advantages, but it is unlikely to crush them. Integrating the Internet helps the leaders to develop these unique products, proprietary content, distinctive processes, and strong personal service'all the things that create true value, and that have always defined competitive advantage.

Most of the New Digital Economy actors define also the web competition in terms of operational effectiveness (speed, flexibility and efficiency). As competitors can easily copy your advances in these areas, it has no real strategic value on the medium and long term. The strategy for all New Digital Economy actors should be to create an own customised and consolidated IT platform for all the activities of the firm or the administration, based on a unique, integrated systems that reinforce the global strategic among the firm's business functions. By doing so, competitors can't easily imitate such distinctive systems.

Strategy is a headache! Major leading businesses are afraid about the word strategy because it includes the taste of complexity. But normally real leaders don't put in practise simple things, they have to go through a complex process where they try something they are convinced it will work, look if it works and then apply the strategy or adjust it. As Phil Knight, CEO from Nike says, "I can't say that we had a really smart strategy going forward. We had a strategy and when it didn't work, we went back and regrouped until finally we hit on something?. Other businesses are trying to have strategies coming out of the lower levels of the organisation but that doesn't very often work because too many people are involved and no decision or choice can be made. Strategy needs strong leaders who are able to define the right directions, make the right choices, define the trade-offs, make sure that all initiatives are consolidated and understand the overall global strategy. Michael Dell from Dell Computer Corporation resumes as follows: ?The only constant in our business is that everything is changing. We have to take advantage of change and not let it take advantage of us. We have to be ahead of the game?. Just do it with strategy!

Annexe:

Porter, the corporate competition theory  and the strategy framework

Michael Porter from Harvard Business School has written 16 books and more than 75 articles. From the beginning Porter's goal was to integrate two fields:

- economics of markets and

  industrial organisation

- companies and business

  strategy

Porter's first area of interest examines how firms compete in industries and gain competitive advantage and his second area focuses on locations and why some cities, states, or nations can be more competitive or prosperous than others. His third area looks at how you can apply competitive thinking to social problems.

His 1980 volume "Competitive Strategy: Techniques for Analysing Industries and Competitors," which has since been translated into 19 languages, is considered the pioneering treatise on corporate competition and strategy. It presents five competitive forces:

- Entry,

- Threat of substitution,

- Bargaining power of buyers,

- Bargaining power of suppliers,

- Rivalry among current competitors,

and introduces one of the most powerful competitive tools yet developed: Porter's three generic strategies:

- lowest cost (strategy of lower costs than your competitors),

- differentiation (strategy to offer something that is perceived as being unique),

- focus (strategy that a business has to focus on one domain, market segment, geography?).

Porter also explains how competitive advantage can be defined in terms of relative cost and relative prices, thus linking it directly to profitability.

His most recent book,

"Can Japan Compete?," has been published in September 2000. «