Why Apple is so Profitable

Steve Jobs leapfrogged the competition in computers, music, animated film, cell phones and tablets by developing a distinctive strategy, not by focusing on improving operational effectiveness.

Business strategy is all about strategic positioning, providing something unique, and delivering distinctive value to your customers. Once the strategy is formulated, then you work backwards to determine how to achieve it.

This is very different from how most companies do strategic planning. They begin with the current situation and extrapolate it into the future. That approach inevitably ends up with a focus on operational improvement and a “me too” market approach, not a distinctive strategy.

There is a clear difference between operational effectiveness and strategic positioning. You need to be good at operational practices, or strategy doesn’t matter. But operational effectiveness without a distinctive strategy is a commodity approach and results in competition based on price. In contrast, a distinctive strategy enables either higher prices or structurally lower cost. And both result in better profits.

Do you have a distinctive strategy?

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