Understanding Michael Porter: The Essential Guide to Competition and Strategy
Competitive advantage. The value chain. Five forces. Industry structure. Differentiation. Relative cost. If you want to understand how companies achieve and sustain competitive success, Michael Porter's frameworks are the foundation. But while everyone in business may know Porter's name, many managers misunderstand and misuse his concepts. "Understanding Michael Porter" sets the record straight, providing the first concise, accessible summary of Porter's revolutionary thinking. Written with Porter's full cooperation by Joan Magretta, his former editor at Harvard Business Review, this new book delivers fresh, clear examples to illustrate and update Porter's ideas. Magretta uses her wide business experience to translate Porter's powerful insights into practice and to correct the most common misconceptions about them-for instance, that competition is about being unique, not being the best; that it is a contest over profits, not a battle between rivals; that strategy is about choosing to make some customers unhappy, not being all things to all customers. An added feature is an original Q&A with Porter himself, which includes answers to managers' FAQs. Eminently readable, this book will enable every manager in your organization to grasp Porter's ideas-and swiftly deploy them to drive your company's success.
MICHAEL Porter is the thought leader in the field of business strategy.
He has single-handedly shaped the way in which the world’s top business leaders think about competitive strategy and success. And his concepts like “competitive advantage”, “value chain” and “five forces” form the bedrock for management thinking about complex business issues.
Unfortunately, his frameworks are often bastardised, misused and misunderstood.
The good news is that there now appears to be a solution to this problem. Understanding Michael Porter.
The book is said to be the first concise, accessible summary of Porter’s revolutionary thinking. To quote the Harvard Business Review:
Magretta uses her wide business experience to translate Porter’s powerful insights into practice and to correct the most common misconceptions … that competition is about being unique, not being the best; that it is a contest over profits, not a battle between rivals; that strategy is about choosing to make some customers unhappy, not being all things to all customers.
How and why organizations can achieve and then sustain competitive advantage, especially in turbulent and uncertain times
Although this book offers – in my opinion — the single best introduction to the major insights of Michael Porter, other than an extended period of one-on-one time with him during which he explains them, Joan Magretta also offers other invaluable business information, insights, and wisdom within a much larger context. Those who have read her earlier business classic, What Management Is: How It Works and Why It’s Everyone’s Business, already know that she possesses highly-developed perspectives on both the scope and depth of business, and, the specific details (and relevance thereof) of what management is and does as well as how its core competencies can be developed and then applied to achieve sustainable high-impact and superior performance.
Her brilliant analysis of Porter and his major contributions includes:
o How to develop the right mind-set for competition
o “The Five Competitive Forces That Shape Strategy”
o How and why a value chain can be a decisive competitive advantage
o What the “core” is and how it can help to create value
o How and why trade-offs are strategy’s “linchpin”
o How and why the value or cost of one activity is affected by how other activities are performed
o How and why continuity enables development of competitive advantage
The coverage of Porter material includes an Epilogue that consists of “A Short List of Implications, followed by Magretta’s interview of Porter and a “A Porter Glossary: Key Concepts.”
All this would be more than sufficient to establish Magretta’s book as a “business classic” but there is more, so much more that she offers. After providing a vigorous and comprehensive discussion of Porter’s major insights, she then calls upon her expertise as a business historian and her skills as an educator to help her reader to select and then apply whatever would be most relevant – and most appropriate — to the reader’s own specific needs, interests, strategic objectives, and resources. This is the “context” for understanding to which I referred earlier.
Here is a partial list of the mini-commentaries that Magretta’s inserts throughout her lively and eloquent narrative:
“One-Upmanship Is Not Strategy” (Page 25)
“The Fundamental Equation: Profit = Price – Cost” (40-41)
“The Five Forces: Competing for Profits” (61)
“Do You Really Have a Competitive Advantage? First You Quantify, and Then You Disaggregate” (82-83)
“Discovering New Positions: Where to Begin” (118-119)
“Keep the Core, Outsource the Rest? Not So Fast” (153)
“Ten Practical Implications” of mastering Porter’s major concepts (184-185)