“Competitive strategy is about being different.” This was the succinct conclusion of the Harvard mastermind Michael Porter. For more than 25 years now, the economist has been urging companies to stabilize their differentiation in competition as an important pillar of their corporate strategy alongside efficiency. At the core of his differentiation strategy is the selection of company activities and their unique design. The reasoning appears plausible: competitors can quickly copy methods and processes for the creation of similar products and services – quite frequently with the collaboration of external corporate consultants. Only a system of differentiating business activities protects the company from the interchangeability of its products and services and the decline of its prices. That is the theory, anyway.... 

But even the constant expansion and refinement of this thought model by the addition of strategy variants and strategy processes could not protect Michael Porter from the final judgment of actual practice. Companies cited as sterling examples in his writings found themselves in serious trouble only a few years later. Other companies were never able to even begin with the realization of his system approach. The accelerating dynamics of the markets and the technologies driving these developments forward turned competitive differentiation into a chain of nonstop sprints during which many companies ran out of breath. Even where elaborate strategy processes were enhanced with feedback, reactions, and revisions, they were generally overtaken on the outside by the results of competitive developments running contrary to strategy. Market and competition dynamics increasingly counteracted the differentiation efforts of companies.

Reality simply refuses to conform to economic strategy models. It is probably intractable no matter what the theoretical model, but it is especially recalcitrant when it comes to economic models.  And as long as economists do not burst the bonds of the narrow reference frameworks of their economic strategy models, their models will continue to be plagued by a similarity to Procrustean beds. Even the famous axiom, “...the competitive strategy is rooted in the economic structure of an industry...”, has long since been left behind by reality. Concepts such as “industry” or “market” are statistical fictions today. Business migrations and the dissolution of market boundaries became common well before the Internet put in an appearance. For example, how does “ALDI” set itself apart? Products? Processes? Costs? Prices? Distribution? Presentation of merchandise? Concentration on specific merchandise? Target groups? Market segments? A little bit of everything, or none of the above? The conventional way of looking at things does not lead to any enlightening insights. ALDI is not oriented to economic differentiation models; ALDI pursues a brand strategy.