Good Strategy

• Simple and clear
• Does not shy away from difficult challenges, presenting approaches to overcome them
• Includes guidelines for the actions to be taken
• Targets the weakest points of the adversary with our greatest strengths
• Emphasizes as much on 'what not to do' as on 'what to do'
• Involves diagnosis, guiding policy, and action
• Achievable and within reach
• Focused
• Rides the wave of change

Bad Strategy

• Avoids addressing troublesome issues, neglecting choices and focus, trying to forcefully align conflicting demands and interests
• Uses vague terms like objectives, efforts, visions, values without providing a clear direction
• Appears to discuss strategic planning but lacks substance
• Confuses goals with strategy (e.g., "grow by 20% every year" considered a strategy)
• Essentially unachievable

Chain-Link System

• A chain is only as strong as its weakest link; strengthening other parts won’t make the whole chain stronger.
• Businesses and economies are partially linked like chains.
• In such structures, operating units individually can result in the system failing to function optimally, leading to 'qualitative mismatch.'
• If one unit is willing to invest in improvements, it's meaningless unless other units do the same.
• Identifying the bottleneck is crucial in a chain-link system.
• Solve issues starting from the weakest point.
• Be prepared for short-term losses while investing in the future.
• Strong leadership can cleverly create a chain-link structure that is hard to replicate.

Example of IKEA:

• IKEA’s strategy is a combination of various efficient processes.
• Its unique approach in each aspect forms a chain-link, making it hard for competitors to replicate just one part and be successful.
• Copying the entire model is too costly.
• There's still no second IKEA.

Competitive Advantage

Basic definition of competitive advantage:

• Producing at a lower cost than competitors.
• Providing higher value than competitors.
• Or both.

Four strategies to increase value:

• Deepen competitive advantage.
• Expand competitive advantage.
• Increase demand for advantageous products or services.
• Strengthen isolation mechanisms to prevent imitation by competitors.

Seizing the High Ground

One way to gain unexplored high ground is through innovation.

• Significant technological breakthroughs or revolutionary business models create new high grounds.
• These can flourish for years before competitors catch up.

Riding the Wave of Change

Large waves are like earthquakes, creating new high grounds or leveling existing ones.

• Such dynamic changes can overturn the competitive environment, erasing old advantages and creating new ones.
• They can strengthen the positions of successful companies or lead to their decline.
• When such waves arise, entirely new strategies become viable.

Hints of a Looming Wave

• Increase in fixed costs.
• Deregulation (laws, etc.).
• Biases in future projections.
• Responses of existing companies.
• Convergence state.