Avoid These Strategy Mistakes

Joan Magretta is a senior associate at the Institute for Strategy and Competitiveness at Harvard Business School. She is the author Understanding Michael Porter: The Essential Guide to Competition and Strategy--an excellent introduction to Porter's work.  If you make or execute strategy this book is worth your time--very readable and useful.  Critical mistakes include:

Mistake #1. Confusing marketing with strategy. Correction: A value proposition isn't the same thing as a strategy. To establish a competitive advantage, a company must deliver its distinctive value through a distinctive value chain.

Mistake #2. Confusing competitive advantage with "what you're good at." Correction: Building on strength is a good thing, but when it comes to strategy, companies are too often inward looking and therefore likely to overestimate their strengths.
Mistake #3: Pursuing size above all else, because if you're the biggest, you'll be more profitable. Correction: There is at least a grain of truth in this thinking, which is precisely what makes it so dangerous. But before you assume that bigger is always better, it is critical to run the numbers for your business
Mistake #4. Thinking that "growth" or "reaching $1 billion in revenue" is a strategy. Correction: Don't confuse strategy with actions (grow, acquire, divest, etc.) or with goals (reach X billion in sales, Y share of market). Porter's definition: the set of integrated choices that define how you will achieve superior performance in the face of competition. It's not the goal (e.g., be number one or reach $1 billion in top-line revenue), nor is it a specific action (e.g., make acquisitions). It's the positioning you choose that will result in achieving the goal; the actions are the path you take to realize the positioning. Moreover, when Porter defines strategy, he is really talking about what constitutes a good strategy — one that will result in a higher ROIC than the industry average. The real problem here is that you will think you have a strategy when you don't.

Mistake #5. Focusing on high-growth markets, because that's where the money is. Correction: Managers often mistakenly assume that a high-growth industry will be an attractive one. Wrong. Growth is no guarantee that the industry will be profitable.