Porter Prize for Exploiting Trade-offs
Trade-offs are essential to strategy. These are choices that make strategies sustainable because they are not easy to match or to neutralize. They create the need for choice and protect against repositioners and straddlers. It purposefully limit what a company offers.
Trade-offs arise for three reasons:
- Inconsistencies in image or reputation
A company known for delivering one kind of value may lack credibility and confuse customers if it delivers another kind of value or attempts to deliver two inconsistent things at the same time.
- Arising from activities themselves
The configuration of activities that best delivers one kind of value cannot equally well deliver another. In general, value is destroyed if an activity is overdesigned or underdesigned for its use.
- Limits on internal coordination or control
Senior management makes organizational priorities clear by deciding to compete in one way and not another.