To create a winning strategy, you must figure out how to create value in a way that is distinct from your competitors. There are only two kinds of competitive advantage: to operate with sustainably lower costs or to differentiate by offering a significantly better product or service. You can choose a low-cost strategy, like Walmart or Southwest Airlines does, where you profit by creating a lower cost structure than rival companies. Or your company might go with a differentiation strategy, like Whole Foods or P&G, and charge a price premium for your products or services, because they’re more valuable to customers.
Whichever you decide on, be sure to clearly choose one. No company can win by attempting do both.
Adapted from the Playing to Win Strategy Toolkit.