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Michael Porter, the father of modern strategy, said "The essence of strategy is choosing what not to do." Experiencing stagnant growth or facing a tough competitive scenario is a reality many Fortune 500 companies grapple with. In such cases, one remedy often considered is a Breakout Strategy.




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Flevy Management Insights: Breakout Strategy


Michael Porter, the father of modern strategy, said "The essence of strategy is choosing what not to do." Experiencing stagnant growth or facing a tough competitive scenario is a reality many Fortune 500 companies grapple with. In such cases, one remedy often considered is a Breakout Strategy.

A Breakout Strategy allows companies to overcome challenges and redefine their market positions by exploiting previously untapped avenues for growth.

A Breakout Strategy is essentially a method that enables companies to outperform competitors and break away from their current status quo. It invigorates a company's Strategic Planning processes and enhances competitive differentiation by focusing on creating uncontested market space, rather than competing in an existing environment.

Principles of a Breakout Strategy

Effective Breakout Strategies are built upon three core principles: Discovery, Decision, and Delivery.

  1. Discovery: This initial phase involves finding under-exploited opportunities in existing markets, or identifying completely new market spaces. It requires a thorough SWOT analysis—involving the assessment of internal strengths and weaknesses, as well as external opportunities and threats.
  2. Decision: Here, strategic choices are made based on the discoveries. The key is to invest in opportunities that align with the company's core competencies and where the rewards outweigh the risks associated with pursuing them.
  3. Delivery: In this last phase, management focuses on delivering the identified strategy. This involves managing change, deploying resources, establishing partnerships, and overseeing execution to ensure the strategy delivers the intended results.

Factors to Consider When Developing a Breakout Strategy

Several factors contribute to a successful Breakout Strategy. Some of the most crucial ones include:

Real-world Applications of the Breakout Strategy

Apple Inc. sets an excellent example of a successful Breakout Strategy. In the late 1990s, the company capitalized on the emerging trend of digital music, combined it with their design prowess and brand prestige, and thus created the iPod and iTunes business. This strategy pushed Apple far ahead of competitors and into uncontested market space.

Netflix, too, is notable for its Breakout Strategy. By transitioning from physical DVD rentals to online streaming, and later to creating its platform-specific content, Netflix has managed to redefine the media and entertainment industry.

Breakout Strategy can be a significant booster for businesses struggling to get ahead or looking to define their future growth paths. It requires rigorous research, careful decision making, penetrative communication, and robust performance management. It's a high-risk, high-reward strategy and can prove to be a game-changer when executed well.

For effective implementation, take a look at these Breakout Strategy best practices:


Explore related management topics: Performance Management Core Competencies Decision Making SWOT Analysis Key Performance Indicators Strategic Planning Growth Strategy Pricing Strategy Product Strategy Strategy Development Competitive Advantage Market Entry Plan Competitive Analysis Strategic Plan Example Strategic Analysis Marketing Strategy Frameworks Compilation




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