Michael Porter and I

I've read a majority of Michael Porter's books and articles. Several of his articles I've internalized by reading them over and over again. In fact, if Michael Porter has quoted anyone in his article or book, then more often than not, I've read them too. I think Michael Porter is the first real author of business strategy. Therefore, if you find Michael Porter paraphrased in my blogs, then you are certainly right. My blogs are not original, when I talk about his theory. As far as I understand Michael Porter, I also understand that neither I can imitate him, nor I want to. In fact, that is exactly what Porter would tell me.

Porter developed this model for analysis of competition within an industry. I had read Michael Porter several times but I did not really understand him until I attended Vijay Sathe's course on Business Strategy and Corporate Revitalization at Claremont Graduate University. Vijay brought Porter to me. There are very few professors like Vijay Sathe. In fact, the previous sentence is a direct quote from Peter Drucker, who thought very highly of Vijay.

Vijay makes a very simple grid in his class to evaluate competitive advantage of firms within an industry. A firm can get a +1, 0 or -1 depending upon whether the competitive situation is in its favor or not on the five forces model of Michael Porter. On this five point scale, a firm with solid competitive advantage can score +5 and a firm with negligible competitive advantage will score -5. Of course, a firm with a score of -5 will be doomed, unless they can change something pretty drastically, which is tough. Of course, operational viability is a necessary condition for the survival of the firm but it is not sufficient. Competitive advantage in combination with operational viability provide the necessary and sufficient condition for long-time survival and profitability of the firm.

This was a simple and elegant interpretation of Porter's model. However, you have to apply it to a large number of firms in different industries before you can understand its real value. I spent a lot of time reading Porter's books and articles on the elements of corporate strategy, particularly, positioning, strategic consistency, fit, competitive trade-offs, consistency and fit among activities. Therefore, you can blame me for copying Porter's ideas but that would fill me up with pride in the same way as a value investor would feel when accused of copying Warren Buffett.

Finally, a quick word about my blogs. My blogs are in permanent beta, which means that they will change and evolve as I think through the topic. When I write my blogs, I don't prepare rough drafts for editing and finalization before publishing. I publish my blogs as rough drafts and then I may work on them in full public view to edit and finalize. Often, I just leave them the way they are. I believe most of the bloggers work this way. However, that does not mean that I'm not inviting comments on my initial postings. I appreciate your e-mails and comments, which help me in formulating my thoughts and making improvements for the benefit of those who care to read.