The Lessons of Strategic Leverage

Many managers are failing to understand and exploit their strategic leverage. They often become obsessed with strategic tactics designed to achieve a short‐term gain and lose sight of the competitive dynamics, industrial economics, and long‐term horizon of their business—in short, the fundamentals behind their strategic leverage. Strategic leverage is defined as a company's maneuver (its ability to change its competitive position in a market) multiplied by its return (changes in revenue, market share, or both that result from any maneuver). If a company can change its position and the market rewards it for the change, its strategic leverage is high; if not, it is low.