Thinking Strategically
Competing to be the Best vs. Competing to be Unique
Strategy starts with thinking the right way about competition. Many managers compete to be “the best”—but this is a dangerous mindset that leads to a destructive, zero-sum competition that no one can win. Competing to be unique, on the other hand, is the basis of a sound business strategy that leads to a positive-sum competition with multiple winners.
Setting the Right Financial Goals
Managers should also think about setting proper financial goals for the company. Pleasing today’s shareholders is not the right goal. The fundamental goal of a company is superior long-term return on invested capital (ROIC).Only if you achieve strong ROIC are you creating true economic value, which says that you can produce a product for a price that’s greater than the cost of making it (including the cost of capital employed). Revenue growth is good only if superiority in ROIC is achieved and sustained.
