The Walt Disney Corporation was adrift when Michael Eisner took over in 1984. His first attempt to save the company, Touchstone Pictures, released films more for adult audiences then Disney’s traditional family entertainment. While it performed adequately, Touchstone was not very different than other major film studios, and it strayed from Disney’s distinctive capabilities.

Eisner turned the company around by unlocking Disney’s unique
strategic assets. He developed the land around its theme parks, and released the Disney classics on video. He also exploited the company’s reputation for children’s entertainment and it’s distinctive capability for innovation in animation by overseeing a steady stream of new
state-of-the-art animated films.

The French government dreamed of creating a European IBM capable of competing across the full range of the computer market. Its attempt, Groupe Bull, simply lacked the distinctive capabilities that would allow it to achieve that vision. These included IBM’s reputation, product leadership, economies of scale, and control of industry standards.

Groupe Bull was using a wish-driven strategy, based on what the company would like to be. An effective strategy builds on what the company is distinctively good at doing, not on trying to imitate the unique strengths of another firm such as IBM. Even if Groupe Bull could copy the capabilities of IBM, its competitive advantages would be limited, because the capabilities would not be distinctive. Anything that other companies can do just as well as you is unlikely to be a long-term source of added value. Ask this question: “Why will we be better at doing this than others?”

The most successful Hudson Valley organizations add maximum value when they create a set of business processes, products and relationships that competitors are not able to reproduce.

All too often, discussions of strategy begin with the question, “What business are we in?” But the question is rarely explored completely, because a company’s business combines three things.

First is the market that it serves, which includes the needs of its customers and potential customers. For example, American Airlines and Cunard Cruise Line serve the same market, people who want to cross the Atlantic Ocean, but they are in very different industries.

Next is the industry that it is in, which involves a group of products linked by common technology or distribution channels. Singapore Airlines is in the same industry as Southwest Airlines, but they are in different markets because they do not compete for the same routes.

Finally the strategic group, which encompasses the firms that are the company’s direct competitors. Coke, Pepsi and local French soft drink companies are in the same industry and market in France, but only Coke and Pepsi belong to the same strategic group, because they are global brands.

By identifying your uniqueness and distinctive capabilities you can turn them into a competitive advantage. Answer the question: What can we do better than anyone in our market, industry and strategic group?

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