WHAT IS STRATEGY7 less than one. The probabilities then quickly com- pound to make matching the entire system highly unlikely(.9x.9=.81;.9x.9x.9x.9= .66, and so on). Existing companies that try to reposition or strad- dle will he forced to reconfigure many activities. Strategic positions should have a horizon ofadecade or more, not ofasingle planning cycle. And even new entrants, though they do not con- front the trade-offs facing estahlished rivals, still face formidahle harriers to imitation. The more a company's positioning rests on activ- ity systems with second- and third-order fit, the more sustainahle its advantage will he. Such sys-tems,hy their very nature, are usually difficult to untangle from outside the company and therefore hard to imitate. And even if rivals can identify the relevant interconnections, they will have difficulty replicating them. Achieving fit is difficult hecauseit requires the integration of decisions and actions across many independent suhunits.A competitor seeking to match an activity sys- tem gains little by imitating only some activities and not matching the whole. Performance does not improve; it can decline. Recall Continental Lite's disastrous attempt to imitate Southwest. Finally, fit among a company's activities creates pressures and incentives to improve operational effectiveness, which makes imitation even harder. Fit means that poor performance in one activity will degrade the performance in others, so that weaknesses are exposed and more prone to get at-tention. Conversely, improvements in one activity will pay dividends in others. Companies with strong fit among their activities are rarely inviting targets. Their superiority in strategy and in execu- tion only compounds their advantages and raises the hurdle for imitators. When activities complement one another, rivals will get httle henefit from imitation unless they success- fully match the whole system. Such situations tend to promote winner- take-all competition. The company that huilds the hest activity system- ToysRUs, for instance-wins, while rivals with similar strategies-Child World and Li- onel Leisure-fall behind. Thus finding a new stra- tegic position is often preferable to heing the second or third imitator of an occupied position. The most viahle positions are those whose ac- tivity systems are incompatihle because of trade- offs.Strategic positioning sets the trade-off rules that define how individual activities will he con- figured and integrated. Seeing strategy in terms of activity systems only makes it clearer why organi- zational structure, systems, and processes need to he strategy-specific. Tailoring organization to strat- egy, in turn, makes complementarities more achiev- able and contributes to sustainahility.
