Porter offers the following definition of strategy:
- Strategy is the creation of a unique and valuable position, involving a different set of activities.
- Strategy is making trade-offs in competing – choosing what not to do.
- Strategic is creating fit among a company's activities. The success of strategy depends on doing many things well, not just a few, and integrating among them.

OE is performing the same things as your competitors, but doing it better. This leads to hypercompetition and commoditization because nobody is differentiated. Companies will get short-term games from OE, but it doesn't provide sustainable profitability. Competition based on OE is mutually destructive and hurts the entire industry, because everyone is racing down the same path that can't be won because they are continually pushing out the productivity frontier. In the end, the only group that wins from OE is the customer.

On the other hand, strategic positioning is the key to profitability. By doing different things, or doing the same things differently, competitors can differentiate in a sustainable way. His use of Southwest Airlines as an example was perfect, because most people think that they differentiate through OE. They might have great OE, but this is only a result of their strategic positioning – to serve price and convenience sensitive travellers. They have differentiation from their competitors because they have made choices about what they won't do, based on their strategic positioning. They are focused on their strategic position and this is why they are so successful. Continental tried to straddle their strategy to counter Southwest by introducing Continental Lite, but you can't be focused this way. The tradeoffs required to be successful as a low cost carrier can't be comprimised. Continental could not match up to Southwest because continued to fly out of busy hub airports and extended their frequent flyer program to Continental Lite. They did not choose not to do these things, a strategic error.