Enjoyed a very good day at the Liverpool Summit today, another major Capital of Culture coup for the city and another perk of being on an MBA course (tickets were £1,700!).

My time on the MBA has given me a thorough introduction to the work of Michael Porter, and despite the presence of big UK names like Sir Terry Leahy, Chris Patten and Will Hutton, it was his contribution I was particularly looking forward to. He pretty much invented strategy in its current form, and has achieved more than it’s decent to for a man in a single lifetime (his biography alone stretched to five pages). I’m glad to say he didn’t disappoint.

Although this is veering slightly off my usual online marketing related ramblings, his words hold considerable truths for all kinds of business, big or small. His first talk was entitled “Strategies for Profit Maximisation”, about as pertinent a subject as you can get in the current climate.

He spoke (very engagingly, in a walking-up-and-down, frantically-waving-hands-about manner) for almost 90 minutes, so I thought I’d just pick out some of his most salient points:

• Strategy is not about competing to be the best - it’s about competing to be UNIQUE. Whose unique needs are you trying to meet? It’s a big error to try and compete with your rivals on the same dimensions.
• The whole concept of strategy is often misunderstood. It’s not about what you want to do as a company (outsourcing, internationalising, merging etc). It’s got nothing to do with a mission statement (to be the best at, to be number one, to provide ROI etc). And it’s not some woolly vision (to satisfy our customers’ needs etc).
• The fundamental goal of a company is superior long-term return on investment. Growth is only good if this is achieved and sustained.
• Pleasing shareholders is not the goal. Creating sustained economic performance is.
• It’s crucial to be clear about the level of your industry performance. Is your company above or below this level?
• If your industry is experiencing poor growth, you need to identify a sector of customers that you can get into that is best insulated from those problems.
• Your company’s health is more important than market share. Many businesses are far too obsessed with market share.
• You have to be really clear about how you’re going to be superior in terms of profitability.
• Achieving superior performance is not about doing the same things as well as your competitors; it’s about doing things differently to achieve a unique outcome. Otherwise you create a competition that is destructive, and the customer will ultimately choose on price.
• The Five Tests of a Good Strategy are: a unique value proposition to your competitors; a different, tailored value chain; clear trade-offs (choosing what not to do); activities that fit together and reinforce each other; strategic continuity.
• Enterprise Rent-a-Car, Ikea and Zara are three examples of companies that have great strategies.
• The value proposition can be defined as: defining your customers, their needs, and their price.
• An essential part of a strategy is choosing what NOT to do, to avoid incompatible products or services, image or reputation inconsistencies, limits on coordination and control etc. Ikea, for example, have traded off good customer service in the interests of maintaining low price for their target market.
• Companies with great strategies are always coming up with new ideas, but they all have a very clear sense of who they are.
• Outsourcing makes a company’s activities homogenous and less distinctive.
• Most companies don’t have strategies woth the name.
• Within each industry there are multiple strategies that can work alongside each other.
• Things that may be important but do not constitute a strategy: best practice improvement, execution, aspirations, a vision, a brand, learning, agility, flexibility, innovation, technology, downsizing, restructuring, mergers/consolidation, alliances/partnering, outsourcing, internationalising, networking.
• A strategy does not get built by consensus - it has to be driven by a leader. The choice of strategy cannot be entirely democratic.
• You have got to expect that a strategy will be tested every single day. It should be the leader’s responsibility to keep serving reminders of that strategy.