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Michael Porter

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Michael Porter, 2012.

Michael Eugene Porter (born May 23, 1947) is an American academic known for his theories on economics, business strategy, and social causes. He is the Bishop William Lawrence University Professor at Harvard Business School, and he was one of the founders of the consulting firm The Monitor Group (now part of Deloitte) and FSG, a social impact consultancy. He is credited for creating Porter's five forces analysis, which is instrumental in business strategy development today.

Quotes

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  • If people in the organization don't understand how a company is supposed to be different, how it creates value compared to its rivals, then how can they possibly make all of the myriad choices they have to make? Every salesman has to know the strategy — otherwise, he won't know who to call on. Every engineer has to understand it, or she won't know what to build.
    • Michael Porter, "The CEO as strategist," in: Henry Mintzberg, Bruce W. Ahlstrand, and Joseph Lampel (eds.). Strategy bites back: It is a lot more, and less, than you ever imagined. Pearson Education, 2005. p. 45
  • The best CEOs I know are teachers, and at the core of what they teach is strategy.
    • Michael Porter, "The CEO as strategist," in: Henry Mintzberg, Bruce W. Ahlstrand, and Joseph Lampel (eds.). Strategy bites back: It is a lot more, and less, than you ever imagined. Pearson Education, 2005. p. 45

Competitive strategy, 1980

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Michael E. Porter, Competitive strategy: Techniques for analyzing industries and competitors (1980)

  • The essence of formulating strategy is relating a company to its environment.
    • p. 3
  • Low cost relative to competitors becomes the theme running through the entire strategy, though quality, service and other areas cannot be ignored.
    • p. 35
  • The firm achieving focus may also potentially earn above-average returns for its industry. Its focus means that the firm either has a low cost position with its strategic target, high differentiation, or both.
    • p. 39
  • The grandfather of concepts for predicting the probable course of industry evolution is the familiar product life cycle.
    • p. 157
  • Early entry is appropriate when the following general circumstances hold:
- Image and reputation of the firm are important to the buyer, and the firm can develop an enhanced reputation by being a pioneer.
- Early entry can initiate the learning process in a business in which the learning curve is important, experience is difficult to imitate, and it will not be nullified by successive technological generations.
- Customer loyalty will be great, so that benefits will accrue to the firm that sells to the customer first.
- Absolute cost advantages can be gained by early commitment to supplies of raw materials, distribution channels, and so on.
  • 2008 edition, p. 248
  • Quasi-integration is to use debt or equity investments and other means to create alliances between vertically related firms without full ownership.
    • p. 301

Competitive Advantage, 1985

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Michael E. Porter. Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, 1985; 1998.

  • The essential complement to the path-breaking book Competitive Strategy, Michael E. Porter’s Competitive Advantage explores the underpinnings of competitive advantage in the individual firm.

 Competitive Advantage introduces a whole new way of understanding what a firm does. Porter’s groundbreaking concept of the value chain disaggregates a company into “activities,” or the discrete functions or processes that represent the elemental building blocks of competitive advantage.


Now an essential part of international business thinking, Competitive Advantage takes strategy from broad vision to an internally consistent configuration of activities. Its powerful framework provides the tools to understand the drivers of cost and a company's relative cost position. Porter's value chain enables managers to isolate the underlying sources of buyer value that will command a premium price, and the reasons why one product or service substitutes for another. He shows how competitive advantage lies not only in activities themselves but in the way activities relate to each other, to supplier activities, and to customer activities.
  • Book abstract

"What is strategy?," 1996

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Michael Porter, "What is strategy?." In: Harvard Business Review, November (1996).

  • The essence of strategy is choosing what not to do.
    • p. 70
  • There's a fundamental distinction between strategy and operational effectiveness. Strategy is about making choices, trade-offs; it's about deliberately choosing to be different. Operational effectiveness is about things that you really shouldn't have to make choices on; it's about what's good for everybody and about what every business should be doing.
  • The success of a strategy depends on doing many things well – not just a few – and integrating among them.

Quotes about Michael E. Porter

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  • Business strategy probably predates Michael Porter. Probably. But today, it is hard to imagine confronting the discipline without reckoning with the Harvard Business School professor, perhaps the world's best-known business academic. His first book, Competitive Strategy: Techniques for Analyzing Industries and Competitors (Free Press, 1980), is in its 53rd printing and has been translated into 17 languages. For years, excerpts from that and other Porter works have been required reading in "Competition and Strategy," the first-year course that every Harvard MBA student must take. Porter's strategy frameworks have suffered some ambivalence over the years in academic circles — yet they have proved wildly compelling among business leaders around the world.
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