Strategy
In essence: Strategy is about making difficult choices regarding resource allocation to create sustainable competitive advantage. It requires a clear understanding of second-order effects and an honest assessment of constraints.
Core Ideas
- Strategy requires deliberate trade-offs
- Second-order thinking reveals hidden consequences
- Resource allocation defines strategic priorities
- Sustainable advantage comes from integrated activities
Examples & Insights
"Strategy is about making choices, trade-offs; it's about deliberately choosing to be different."
— Michael Porter
True strategy requires deciding what not to do as much as what to do.
"The essence of strategy is choosing what not to do."
— Michael Porter
Attempting to do everything for everyone usually results in doing nothing particularly well.
"First-order thinkers look for things that are simple, easy, and direct. Second-order thinkers ask, 'And then what?'"
— Howard Marks
Second-order thinking considers the long-term, indirect consequences of decisions and actions.