Porter's 5 Forces

Those of you with MBA's (or just overachievers with undergraduate degrees) know exactly what I am talking about -- Barriers to Entry, Bargaining Power of Buyers, Bargaining Power of Suppliers, Availability of Substitutes, and Rivalry Among Firms. Anyone involved in MBA schools or in strategic processes is probably very familiar with Michael Porter's 5 Forces and can probably rattle them off from their memory. I just had the chance to read an excellent Fast Company article with some of Porter's more modern view on the world and how strategy is still important in warp speed economies.

The sad thing about the article is the number of truths. Agree with Porter's model or not, he is correct in saying that many companies have abandoned strategy all together for a myriad of reasons. Porter acknowledges that strategy is not easy, and I would certainly agree. In the strategic process, you set up your goals and objectives, formulate your strategy, implement your strategy, and control your strategy. The process is, of course, continuous, but more importantly, the process can yield 95% of the usefulness; the Strategy itself (content), really is only the resulting 5% of the process.

Many, many books during the dotcom boom were written regarding the insane speed of the economy and how agile businesses have to be; that big battleship-size companies were bound to be defeated by the speedboats. What seems to have conveniently slipped from many peoples' minds is that, speedboat or battleship, you still need someone to steer the boat.

Porter points out that many consider technology to be one of the main reasons that strategy has fallen by the wayside -- technology is improving and changing so quickly that strategy cannot keep up. While he acknowledges that technological advance and change is astoundingly quick, strategy endures. When I was consulting back in the Enterprise Resource Planning (ERP) boom, there was an overwhelming temptation by many companies to simply automate processes, to purchase expensive software. The simple fact of the matter is that technology is just that, automation. If the business processes or, at a higher level, the business strategy is not in place, you simply wind up with an automated bad process and bad strategy.

Perhaps, Porters article is best summed up in this quote:

"So companies have to be very schizophrenic. On one hand, they have to maintain continuity of strategy. But they also have to be good at continuously improving."

There's some powerful language about the purpose a leader in an organization at the end of the article. If you are a leader I encourage you to read it (several times, in fact maybe even print it out and hang it on your wall). There is nothing new in what he says in the last section, but maybe it needs to be said again, and again, and again . . . because so many leaders get their jobs so wrong. Don't believe that? I suggest you check out the past few monthly editions of Fast Company regarding the continuing theme of CEO's that should be fired. I'll even start you off with this article to aid you in search