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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.
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.
256 pages, Hardcover
First published November 1, 2011
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October 1, 2022
No business manager should be allowed to hold the title without having a working knowledge of the research and teachings of Harvard Business School Professor, Michael Porter. You can start with On Competition, Updated and Expanded Edition, a dense masterwork. Or you can capture the essence of three decades of research in this essential guide to competition and strategy.
Written by a long-time collaborator at the Harvard Business School, Understanding Michael Porter is divided into two parts: What is Competition? and What is Strategy? After all, if there were no competition, there would be no need for strategy.
Understanding competition begins with understanding The Five Forces:
~ bargaining power of suppliers
~ bargaining power of buyers
~ threat of new entrants
~ threat of substitute products or services
~ rivalry among existing competitors
At its heart, business competition is about the struggle for profits. Competitive advantage is not about trouncing rivals, it's about creating superior value. It means that compared with rivals, you operate at a lower cost, command a premium price, or both. These are the only ways one company can outperform another. Competitive advantage is about superior performance.
Understanding strategy begins with successfully passing the five tests of good strategy:
~ a distinctive value proposition
~ a tailored value chain
~ trade-offs different from rivals
~ fit across value chain
~ continuity over time
The final chapter features an interview with Michael Porter.
Q. What are the most common strategy mistakes you see?
A. The granddaddy of all mistakes is competing to be the best, going down the same path as everybody else and thinking that somehow you can achieve better results.
Strategy means deliberately choosing a different set of activities to deliver a unique mix of value.
Understanding Michael Porter is my early candidate for one of the Best Business Books of 2012.
Access Gene Babon's reviews of books on Business Leadership and Business Strategy at Pinterest.
Written by a long-time collaborator at the Harvard Business School, Understanding Michael Porter is divided into two parts: What is Competition? and What is Strategy? After all, if there were no competition, there would be no need for strategy.
Understanding competition begins with understanding The Five Forces:
~ bargaining power of suppliers
~ bargaining power of buyers
~ threat of new entrants
~ threat of substitute products or services
~ rivalry among existing competitors
At its heart, business competition is about the struggle for profits. Competitive advantage is not about trouncing rivals, it's about creating superior value. It means that compared with rivals, you operate at a lower cost, command a premium price, or both. These are the only ways one company can outperform another. Competitive advantage is about superior performance.
Understanding strategy begins with successfully passing the five tests of good strategy:
~ a distinctive value proposition
~ a tailored value chain
~ trade-offs different from rivals
~ fit across value chain
~ continuity over time
The final chapter features an interview with Michael Porter.
Q. What are the most common strategy mistakes you see?
A. The granddaddy of all mistakes is competing to be the best, going down the same path as everybody else and thinking that somehow you can achieve better results.
Strategy means deliberately choosing a different set of activities to deliver a unique mix of value.
Understanding Michael Porter is my early candidate for one of the Best Business Books of 2012.
Access Gene Babon's reviews of books on Business Leadership and Business Strategy at Pinterest.
May 22, 2020
I judge a book by the amount of text I end up highlighted. Any good nonfiction books = ~20%
I ended up highlighting and saving almost 80% of the book. It is that high in terms of substance
I ended up highlighting and saving almost 80% of the book. It is that high in terms of substance
September 22, 2018
Porter provides a very refreshing and more sophisticated view of business strategy, shattering the idealistic simplicity of things like Jack Welch's view that you have to be number one or two in your business, or that success is creating a better product than others. Porter's view is that success comes from finding your unique value proposition and delivering that well. You don't have to be the biggest. The concept of "the best" product is a mirage, as Southwest airlines represents the best for some people's needs, and a private jet represents the best for others. There is a lot of depth and very helpful nuance in what, despite being loaded with content, is actually a relatively short book from a page-count perspective. For me, this counts as a classic, meaning something that I'll get value out of every time I read it.
April 7, 2015
Strategy, as in Harvard Business School style strategy. In a dynamic modern world how businesses are actually gaining competitive advantages. While rare, it is possible and Porter points the way. This audiobook or book is the broad brush overview of Porters work. If you are interested in business strategy I would call it a must read. If not. Pass.
January 26, 2022
This book is gold. One of my first strategy reads and is almost one of the top 5 recommends on strategy by industry leaders. Learnt so much about what constitutes good strategy and bad strategy, what is competitive advantage, what are the questions one needs to ask themselves when there are disruptive technologies etc. The author also uses examples of companies such as Southwest Airlines, IKEA, Zara etc to explain all concepts making it very easy to understand. Would recommend this to anyone who wants to understand what constitutes good strategy and how companies can deliver value in the long run.
May 20, 2017
A concise summary of Michael Porter's ideas of competition and strategy. Starting with identifying the right mind-set for competition, the concept that being best and getting the largest market share does not guarantee success is emphasized throughout the book. This book does not overwhelm the reader with complicated charts and graphs, choosing instead to use simple terminology and interesting company examples.
January 13, 2020
Góð og heildstæð yfirferð yfir helstu kenningar Michael Porters. Kenningarnar innihalda hagnýta ramma og skilgreiningar til að hugsa skýrar um stefnu og ákvarðanir innan fyrirtækja. Þá eru tekin þónokkur dæmi um góða og slæma stefnumótun sem varpa skýrara ljósi á kjarnann í kenningunum. Bókin er hins vegar dálítið þurr og kenningar Porters eiga einna best við um stærri skipulagsheildir, svo praktískt gildi fyrir smærri fyrirtæki er minna.
July 7, 2012
I'll never see the world the same after reading this book. Not just for understanding business strategy, but for understanding decision-making in general.
Worst audio-book narrator ever. It was that good, that i was able to listen to this guy for 10+ hours. Imagine Steve Erkel reading a not-funny book to you.
Worst audio-book narrator ever. It was that good, that i was able to listen to this guy for 10+ hours. Imagine Steve Erkel reading a not-funny book to you.
May 16, 2017
Although I found this book very interesting I am giving it 3 Stars. I am almost certain that I am selling it short. Joan Margretta's job of summarizing, deferring, and simplifying has given me a renewed interest in finishing the original Porter. If you take into account that she roamed the grounds when the seminal work was being derived you will appreciate it more.
December 30, 2017
"The key to competitive success: aim to be unique, not best."
“Strategy is making trade-offs in competing. The essence of strategy is choosing what not to do.”
“Strategy is making trade-offs in competing. The essence of strategy is choosing what not to do.”
May 17, 2022
"Micheal Porter but served with copy which is possible to read". That value proposition sounds both super attractive and scary. I was very doubtful whether such a project could be successful. But it was. Book impacted how I am going to think about the strategy. It shows what it really means to have a clear direction at your company. If your company is like "our customer is everyone who is going to pay us" the definitely you should read it.
Before you read remember that:
1) Porter represents one of the main approaches to strategy. The book sometimes sounds like other approaches to strategy are wrong. In my opinion there no such a thing like "100% correct" or "100% wrong" approach to strategy. Each approach gives some point of view that broadens horizons and help look at the business from another dimension.
2)Porter gives a framework. Book won't tell you what strategy at your company should look like. Book tells what should you analyze to create a good strategy. He doesn't describe the route. He gives a map and a compass.
My favorite chapter was about "trade-offs". A simplified definition of a trade-off is: if your company really wants to do XYZ then your company cannot simultaneously distract itself with doing A, B and C (if they don't amplify XYZ). This is the thing that most entrepreneurs intuitively feel but usually won't do. It is a common situation, but I lacked a word that gives it one name.
Before you read remember that:
1) Porter represents one of the main approaches to strategy. The book sometimes sounds like other approaches to strategy are wrong. In my opinion there no such a thing like "100% correct" or "100% wrong" approach to strategy. Each approach gives some point of view that broadens horizons and help look at the business from another dimension.
2)Porter gives a framework. Book won't tell you what strategy at your company should look like. Book tells what should you analyze to create a good strategy. He doesn't describe the route. He gives a map and a compass.
My favorite chapter was about "trade-offs". A simplified definition of a trade-off is: if your company really wants to do XYZ then your company cannot simultaneously distract itself with doing A, B and C (if they don't amplify XYZ). This is the thing that most entrepreneurs intuitively feel but usually won't do. It is a common situation, but I lacked a word that gives it one name.
May 8, 2021
Chock-full of distilled wisdom on strategy and competition, containing endless examples, this one is worth the short time commitment for those interested in creating value. A one sentence summary: identify a unique “value proposition” and tailor your organization to provide that value.
April 25, 2019
Very compelling and surprisingly simple. Required reading!
November 28, 2022
(The English review is placed beneath the Russian one)
Мне не очень понравилось, как перевели название книги на русский язык. В оригинале книга называется Understanding Michael Porter: The Essential Guide to Competition and Strategy. Название книги на английском обещает разъяснить всё то, о чём писал Майкл Портер в своих толстых академических книгах. Т.е. цель Джоан, помочь читателю понять Майкла Портера и почему Портера считают одним из ключевых авторов литературы по бизнесу. Что касается второй части названия книги, то смысл его в том, чтобы дать читателю примерный шаблон, по которому должна строиться стратегия любого предприятия, цель которого – победа в конкурентной гонке за кошелёк потребителя. В итоге, книга даёт и инструмент управления бизнесом и философию управления бизнесом. Но, разумеется, не только этим славится книга. Я думаю, столь высокие оценки от англоязычной аудитории книга получила не только за идеи, что описываются в книге, а благодаря тому, что автор смогла донести всё то, о чём писал и что предлагал реализовать на практике Майкл Портер. Именно благодаря тому, что идеи Портера стали намного ясней и понятней, книга и получила такой высокий рейтинг. Плюс, если страниц у двух знаменитых книг Портера насчитывают в сумме около 600-800 страниц академического текста, то у Джоан в её книге, их всего лишь около 200.
Что касается содержания книги. Во-первых, Джоан каждую идею Портера, каждую главу, снабжает специальной вставкой, в которой даётся пример того, как идея Портера была реализована на практике. Подобный подход всегда играет в плюс книге, в которой объясняются такие важные и фундаментальные вещи. Всё же одно дело – построение абстрактных теорий и совсем другое – их воплощение на практике.
Во-вторых, и в главных, сами методы Портера по построению стратегии и создании на этом основании конкурентных возможностей. Тут нужно сразу сказать, что читая книгу, невольно вспоминаешь и Эла Райса и Джека Траута, которые во всех своих книгах писали, в общем-то, том же самом о чём пишет и Джоан в своей этой книге, т.е. о важности нахождения уникального положения, уникальной позиции, которой больше не располагает ни один конкурент. «Урок Портера – пишет Джоан – не стремитесь стать лучшими, надо быть уникальными» - точь в точь, о чём всегда говорили и писали вышеназванные два автора. И этот принцип мы находим в любом бизнесе (хороший пример, IKEA). Или вот другая цитата из книги: «Стратегическая конкуренция означает выбор пути, отличающегося от пути, которым идут другие». Собственно, это ничем не отличается от призывов Траута и Райса быть уникальными. Да и Сет Годин, в своей книге «Фиолетовая корова» (Purple Cow: Transform Your Business by Being Remarkable), пишет о том же самом. Более того, в этом суть всей стратегии как таковой. Хотя читатель может найти в книжных магазинах книги, написанные о стратегии, насчитывающие 800 и более страниц, но на самом деле все эти 800 страниц можно свести к одной строчке – «Стратегия объясняет, как организация, сталкивающаяся с конкуренцией, достигает высшей эффективности». Вот и всё. И не нужно тут мудрить и усложнять. Посмотрите на любой успешно работающий бизнес, и вы непременно увидите, что в его основе, ядре располагается простая идея. Разумеется, эту простую идеи нужно ещё реализовать на практике и она не должна быть занята конкурентами, но это уже второй вопрос. Главное в том, что суть вашего бизнеса, т.е. почему вы должны стать успешными или почему клиенты должны покупать именно у вас, а не у другой фирмы напротив, должно объясняться просто и понятно, без каких-либо сложных конструкций (и уж точно, без каких-либо математических формул).
Разумеется, книга Джоан одной этой идеей не ограничивается. Я не буду пересказывать все идеи, но упомяну ещё одну, которая показалась мне такой же важной, как и самая основная идея Портера. В книге даётся очень хороший графический план деятельности IKEA. К сожалению, я не могу воспроизвести его тут, поэтому постараюсь пересказать это словами. Суть в том, что каждая кампания имеет своё, как я это понял, уникальное взаимодействие со всеми своими контрагентами, а также свой способ реализации поставленных задач или бизнес-процессы. У IKEA мы находим такие элементы как низкие цены, стиль IKEA, мгновенное удовлетворение покупателей, сборка товаров покупателями, демонстрация продукции в интерьере, более дешёвые материалы, модульные конструкции, вывоз товаров покупателями, плоские упаковки, массовое производство и так далее. Повторю, у каждого бизнеса свои элементы или свои бизнес-процессы, т.е. со своей особой спецификой, которая может и не быть радикально отличимой от конкурентов. Но именно это становится преградой для попыток скопировать успешную бизнес-модель. Как пишет далее Джоан, «Предположим, у вас есть 90% вероятности, что вам удастся в точности повторить некое действие. Но если вам надо в точности воспроизвести систему, состоящую из двух действий, вероятность успеха составит 81% (0,9 * 0,9). А если система, которую вы стремитесь воспроизвести, состоит из четырёх действий, вероятность её повторения в целом оказывается крайне низкой и падает до 66% (0,9 * 0,9 * 0,9 * 0,9). И так далее». Как мы видим, с помощью построения уникальной стратегии, в которой имеется множество уникальных элементов, которые свойственны именно вашей основной идеи, ядру всей стратегии, создаётся защита от конкурентов, которая способна нейтрализовать любую угрозу с их стороны. Именно в этом успех McDonald's, ибо, ну неужели только McDonald's умеет жарить картошку и разогревать гамбургеры? Разумеется, нет, но он имеет множество элементов, которые в сумме, создают ту уникальную стратегию, которую имеет McDonald's, которая и защищает его от всех конкурентов во всём мире. Именно об этом инструмент создания работающей конкурентной стратегии и пишет Портер, а в данной книге, Джоан переводит это с академического языка на более простой и доступный, плюс снабжает это всё примерами из реальной жизни.
И последний момент, ибо в ином случаи рецензия станет похожа на саму книгу, это важность постоянства. Как пишет автор, «Когда стратегию подменяют гибкостью, организации никогда не стать символом чего-либо и никогда не добиться совершенства в чём либо». Если Volvo позиционировала себя как производитель самых безопасных автомобилей, то ей следовало и дальше работать в этом направлении, а не переходить на выпуск спортивных моделей. К сожалению, многие компании думают, что успешно действовавшая стратегия может быть успешной и в совершенно новой парадигме. В реальности же, такое редко когда случается. Более того, такая гибкость в стратегии ведёт не к успеху, а скорее к закату, ибо расшатывает и разрушает всю конструкцию, все важные элементы, которые были выстроены вокруг сердцевины основной идеи корпоративной стратегии. Ну, это если бы IKEA в какой-то момент решила продавать эксклюзивную мебель от самых известных итальянских дизайнеров. Каков был бы результат? Полный провал.
I did not like the way the title of the book was translated into Russian. The original title is Understanding Michael Porter: The Essential Guide to Competition and Strategy. The title of the book in English promises to explain everything Michael Porter wrote about in his thick academic books. That is, Joan's goal is to help the reader understand Michael Porter and why Porter is considered one of the key authors of business literature. As for the second part of the book's title, the point of it is to give the reader a rough template by which to build a strategy for any business whose goal is to win the competitive race for the consumer's wallet. In the end, the book gives both a business management tool and a business management philosophy. But, of course, this is not the only thing the book is famous for. I think that the book received such high ratings from the English-speaking audience not only because of the ideas described in the book but because the author was able to convey everything that Michael Porter wrote about and proposed to put into practice. The fact that Porter's ideas became much clearer and more understandable is what gave the book such a high rating. Plus, if the two famous Porter's books have a total of about 600-800 pages of academic text, Joan's book has only about 200 pages.
As for the content of the book. First, Joan supplies each of Porter's ideas, each chapter, with a special insert that gives an example of how Porter's idea has been put into practice. This approach always plays to the advantage of a book that explains such fundamental things. It is one thing to construct abstract theories and quite another to put them into practice.
Secondly, and most importantly, are Porter's methods for building strategy and creating competitive opportunities on this basis. It should be said right off the bat that when you read the book, you cannot help but think of Al Ries and Jack Trout, who, in all their books, wrote the same thing that Joan writes about in this book, which is the importance of finding a unique position, a unique position that no other competitor has. "The lesson of Porter," Joan writes, "don't strive to be the best, you have to be unique" is exactly what the above two authors have always said and written about. And we find this principle in every business (IKEA is a good example). Or here is another quote from the book: "Strategic competition means choosing a path different from the path others take." This is no different from Jack Trout and Al Ries's call to be unique. Yes, and Seth Godin, in his book "Purple Cow: Transform Your Business by Being Remarkable," writes about the same thing. Moreover, this is the essence of the whole strategy as such. Although the reader may find books written about strategy in bookstores numbering 800 pages or more, the reality is that all those 800 pages can be boiled down to one line - "Strategy explains how an organization facing competition achieves superior performance." That's it. And there's no need to get too complicated. Look at any successful business, and you will see that at its core is a simple idea. Of course, this simple idea must still be put into practice and it should not be occupied by competitors, but this is a second issue. The main thing is that the essence of your business, i.e. why you should become successful or why customers should buy exactly from you and not from another firm opposite, should be explained simply and clearly, without any complicated structures (and certainly without any mathematical formulas).
Of course, Joan's book is not limited to this idea. I will not recount all the ideas, but I will mention one more that seemed to me to be just as important as Porter's very basic idea. The book gives a very good graphic outline of IKEA's activities. Unfortunately, I can't reproduce it here, so I'll try to put it into words. The bottom line is that each campaign has its own, as I understood it, unique interaction with all of its counterparties, as well as its own way of implementing its tasks or business processes. At IKEA, we find such elements as low prices, IKEA style, instant customer satisfaction, customer assembly, product demonstration in the interior, cheaper materials, modular designs, customer takeout, flat packs, mass production, and so on. Again, each business has its own elements or its own business processes, i.e., with its own specifics, which may not be radically different from the competition. But it is precisely this that becomes an obstacle to attempts to copy a successful business model. As Joan goes on to write, "Suppose you have a 90% probability that you will succeed in exactly repeating an action. But if you have to replicate a system consisting of two actions, you have an 81% chance of success (0.9 * 0.9). But if the system you're trying to reproduce consists of four actions, the probability of repeating the whole system is very low, dropping to 66% (0.9 * 0.9 * 0.9 * 0.9). And so on." As we can see, building a unique strategy, which has many unique elements that are specific to your core idea, the core of the whole strategy, creates a defense against competitors, which can neutralize any threat from their side. That is the success of McDonald's, because we can't say that only McDonald's knows how to fry fries and heat hamburgers, can we? Of course not, but it has many elements that together create that unique strategy that McDonald's has, which protects it from all competitors around the world. This is the tool of creating a workable competitive strategy that Porter writes about, and in this book, Joan translates it from an academic language to a simpler and more accessible one, plus provides it all with real-life examples.
A final point, for otherwise the review would look like the book itself, is the importance of consistency. As the author writes, "When a strategy is substituted for flexibility, an organization can never become a symbol of anything and never be perfect at anything." If Volvo was positioning itself as a manufacturer of the safest cars, it should have continued to work in that direction instead of switching to sports models. Unfortunately, many companies think that a successful strategy can also be successful in a completely new paradigm. In reality, this rarely happens. Moreover, such flexibility in strategy does not lead to success but rather to decline because it undermines and destroys the whole structure, all the important elements that were built around the core idea of the corporate strategy. Well, this would be if IKEA, at some point, decided to sell exclusive furniture from the most famous Italian designers. What would have been the result? Complete failure.
Мне не очень понравилось, как перевели название книги на русский язык. В оригинале книга называется Understanding Michael Porter: The Essential Guide to Competition and Strategy. Название книги на английском обещает разъяснить всё то, о чём писал Майкл Портер в своих толстых академических книгах. Т.е. цель Джоан, помочь читателю понять Майкла Портера и почему Портера считают одним из ключевых авторов литературы по бизнесу. Что касается второй части названия книги, то смысл его в том, чтобы дать читателю примерный шаблон, по которому должна строиться стратегия любого предприятия, цель которого – победа в конкурентной гонке за кошелёк потребителя. В итоге, книга даёт и инструмент управления бизнесом и философию управления бизнесом. Но, разумеется, не только этим славится книга. Я думаю, столь высокие оценки от англоязычной аудитории книга получила не только за идеи, что описываются в книге, а благодаря тому, что автор смогла донести всё то, о чём писал и что предлагал реализовать на практике Майкл Портер. Именно благодаря тому, что идеи Портера стали намного ясней и понятней, книга и получила такой высокий рейтинг. Плюс, если страниц у двух знаменитых книг Портера насчитывают в сумме около 600-800 страниц академического текста, то у Джоан в её книге, их всего лишь около 200.
Что касается содержания книги. Во-первых, Джоан каждую идею Портера, каждую главу, снабжает специальной вставкой, в которой даётся пример того, как идея Портера была реализована на практике. Подобный подход всегда играет в плюс книге, в которой объясняются такие важные и фундаментальные вещи. Всё же одно дело – построение абстрактных теорий и совсем другое – их воплощение на практике.
Во-вторых, и в главных, сами методы Портера по построению стратегии и создании на этом основании конкурентных возможностей. Тут нужно сразу сказать, что читая книгу, невольно вспоминаешь и Эла Райса и Джека Траута, которые во всех своих книгах писали, в общем-то, том же самом о чём пишет и Джоан в своей этой книге, т.е. о важности нахождения уникального положения, уникальной позиции, которой больше не располагает ни один конкурент. «Урок Портера – пишет Джоан – не стремитесь стать лучшими, надо быть уникальными» - точь в точь, о чём всегда говорили и писали вышеназванные два автора. И этот принцип мы находим в любом бизнесе (хороший пример, IKEA). Или вот другая цитата из книги: «Стратегическая конкуренция означает выбор пути, отличающегося от пути, которым идут другие». Собственно, это ничем не отличается от призывов Траута и Райса быть уникальными. Да и Сет Годин, в своей книге «Фиолетовая корова» (Purple Cow: Transform Your Business by Being Remarkable), пишет о том же самом. Более того, в этом суть всей стратегии как таковой. Хотя читатель может найти в книжных магазинах книги, написанные о стратегии, насчитывающие 800 и более страниц, но на самом деле все эти 800 страниц можно свести к одной строчке – «Стратегия объясняет, как организация, сталкивающаяся с конкуренцией, достигает высшей эффективности». Вот и всё. И не нужно тут мудрить и усложнять. Посмотрите на любой успешно работающий бизнес, и вы непременно увидите, что в его основе, ядре располагается простая идея. Разумеется, эту простую идеи нужно ещё реализовать на практике и она не должна быть занята конкурентами, но это уже второй вопрос. Главное в том, что суть вашего бизнеса, т.е. почему вы должны стать успешными или почему клиенты должны покупать именно у вас, а не у другой фирмы напротив, должно объясняться просто и понятно, без каких-либо сложных конструкций (и уж точно, без каких-либо математических формул).
Разумеется, книга Джоан одной этой идеей не ограничивается. Я не буду пересказывать все идеи, но упомяну ещё одну, которая показалась мне такой же важной, как и самая основная идея Портера. В книге даётся очень хороший графический план деятельности IKEA. К сожалению, я не могу воспроизвести его тут, поэтому постараюсь пересказать это словами. Суть в том, что каждая кампания имеет своё, как я это понял, уникальное взаимодействие со всеми своими контрагентами, а также свой способ реализации поставленных задач или бизнес-процессы. У IKEA мы находим такие элементы как низкие цены, стиль IKEA, мгновенное удовлетворение покупателей, сборка товаров покупателями, демонстрация продукции в интерьере, более дешёвые материалы, модульные конструкции, вывоз товаров покупателями, плоские упаковки, массовое производство и так далее. Повторю, у каждого бизнеса свои элементы или свои бизнес-процессы, т.е. со своей особой спецификой, которая может и не быть радикально отличимой от конкурентов. Но именно это становится преградой для попыток скопировать успешную бизнес-модель. Как пишет далее Джоан, «Предположим, у вас есть 90% вероятности, что вам удастся в точности повторить некое действие. Но если вам надо в точности воспроизвести систему, состоящую из двух действий, вероятность успеха составит 81% (0,9 * 0,9). А если система, которую вы стремитесь воспроизвести, состоит из четырёх действий, вероятность её повторения в целом оказывается крайне низкой и падает до 66% (0,9 * 0,9 * 0,9 * 0,9). И так далее». Как мы видим, с помощью построения уникальной стратегии, в которой имеется множество уникальных элементов, которые свойственны именно вашей основной идеи, ядру всей стратегии, создаётся защита от конкурентов, которая способна нейтрализовать любую угрозу с их стороны. Именно в этом успех McDonald's, ибо, ну неужели только McDonald's умеет жарить картошку и разогревать гамбургеры? Разумеется, нет, но он имеет множество элементов, которые в сумме, создают ту уникальную стратегию, которую имеет McDonald's, которая и защищает его от всех конкурентов во всём мире. Именно об этом инструмент создания работающей конкурентной стратегии и пишет Портер, а в данной книге, Джоан переводит это с академического языка на более простой и доступный, плюс снабжает это всё примерами из реальной жизни.
И последний момент, ибо в ином случаи рецензия станет похожа на саму книгу, это важность постоянства. Как пишет автор, «Когда стратегию подменяют гибкостью, организации никогда не стать символом чего-либо и никогда не добиться совершенства в чём либо». Если Volvo позиционировала себя как производитель самых безопасных автомобилей, то ей следовало и дальше работать в этом направлении, а не переходить на выпуск спортивных моделей. К сожалению, многие компании думают, что успешно действовавшая стратегия может быть успешной и в совершенно новой парадигме. В реальности же, такое редко когда случается. Более того, такая гибкость в стратегии ведёт не к успеху, а скорее к закату, ибо расшатывает и разрушает всю конструкцию, все важные элементы, которые были выстроены вокруг сердцевины основной идеи корпоративной стратегии. Ну, это если бы IKEA в какой-то момент решила продавать эксклюзивную мебель от самых известных итальянских дизайнеров. Каков был бы результат? Полный провал.
I did not like the way the title of the book was translated into Russian. The original title is Understanding Michael Porter: The Essential Guide to Competition and Strategy. The title of the book in English promises to explain everything Michael Porter wrote about in his thick academic books. That is, Joan's goal is to help the reader understand Michael Porter and why Porter is considered one of the key authors of business literature. As for the second part of the book's title, the point of it is to give the reader a rough template by which to build a strategy for any business whose goal is to win the competitive race for the consumer's wallet. In the end, the book gives both a business management tool and a business management philosophy. But, of course, this is not the only thing the book is famous for. I think that the book received such high ratings from the English-speaking audience not only because of the ideas described in the book but because the author was able to convey everything that Michael Porter wrote about and proposed to put into practice. The fact that Porter's ideas became much clearer and more understandable is what gave the book such a high rating. Plus, if the two famous Porter's books have a total of about 600-800 pages of academic text, Joan's book has only about 200 pages.
As for the content of the book. First, Joan supplies each of Porter's ideas, each chapter, with a special insert that gives an example of how Porter's idea has been put into practice. This approach always plays to the advantage of a book that explains such fundamental things. It is one thing to construct abstract theories and quite another to put them into practice.
Secondly, and most importantly, are Porter's methods for building strategy and creating competitive opportunities on this basis. It should be said right off the bat that when you read the book, you cannot help but think of Al Ries and Jack Trout, who, in all their books, wrote the same thing that Joan writes about in this book, which is the importance of finding a unique position, a unique position that no other competitor has. "The lesson of Porter," Joan writes, "don't strive to be the best, you have to be unique" is exactly what the above two authors have always said and written about. And we find this principle in every business (IKEA is a good example). Or here is another quote from the book: "Strategic competition means choosing a path different from the path others take." This is no different from Jack Trout and Al Ries's call to be unique. Yes, and Seth Godin, in his book "Purple Cow: Transform Your Business by Being Remarkable," writes about the same thing. Moreover, this is the essence of the whole strategy as such. Although the reader may find books written about strategy in bookstores numbering 800 pages or more, the reality is that all those 800 pages can be boiled down to one line - "Strategy explains how an organization facing competition achieves superior performance." That's it. And there's no need to get too complicated. Look at any successful business, and you will see that at its core is a simple idea. Of course, this simple idea must still be put into practice and it should not be occupied by competitors, but this is a second issue. The main thing is that the essence of your business, i.e. why you should become successful or why customers should buy exactly from you and not from another firm opposite, should be explained simply and clearly, without any complicated structures (and certainly without any mathematical formulas).
Of course, Joan's book is not limited to this idea. I will not recount all the ideas, but I will mention one more that seemed to me to be just as important as Porter's very basic idea. The book gives a very good graphic outline of IKEA's activities. Unfortunately, I can't reproduce it here, so I'll try to put it into words. The bottom line is that each campaign has its own, as I understood it, unique interaction with all of its counterparties, as well as its own way of implementing its tasks or business processes. At IKEA, we find such elements as low prices, IKEA style, instant customer satisfaction, customer assembly, product demonstration in the interior, cheaper materials, modular designs, customer takeout, flat packs, mass production, and so on. Again, each business has its own elements or its own business processes, i.e., with its own specifics, which may not be radically different from the competition. But it is precisely this that becomes an obstacle to attempts to copy a successful business model. As Joan goes on to write, "Suppose you have a 90% probability that you will succeed in exactly repeating an action. But if you have to replicate a system consisting of two actions, you have an 81% chance of success (0.9 * 0.9). But if the system you're trying to reproduce consists of four actions, the probability of repeating the whole system is very low, dropping to 66% (0.9 * 0.9 * 0.9 * 0.9). And so on." As we can see, building a unique strategy, which has many unique elements that are specific to your core idea, the core of the whole strategy, creates a defense against competitors, which can neutralize any threat from their side. That is the success of McDonald's, because we can't say that only McDonald's knows how to fry fries and heat hamburgers, can we? Of course not, but it has many elements that together create that unique strategy that McDonald's has, which protects it from all competitors around the world. This is the tool of creating a workable competitive strategy that Porter writes about, and in this book, Joan translates it from an academic language to a simpler and more accessible one, plus provides it all with real-life examples.
A final point, for otherwise the review would look like the book itself, is the importance of consistency. As the author writes, "When a strategy is substituted for flexibility, an organization can never become a symbol of anything and never be perfect at anything." If Volvo was positioning itself as a manufacturer of the safest cars, it should have continued to work in that direction instead of switching to sports models. Unfortunately, many companies think that a successful strategy can also be successful in a completely new paradigm. In reality, this rarely happens. Moreover, such flexibility in strategy does not lead to success but rather to decline because it undermines and destroys the whole structure, all the important elements that were built around the core idea of the corporate strategy. Well, this would be if IKEA, at some point, decided to sell exclusive furniture from the most famous Italian designers. What would have been the result? Complete failure.
May 23, 2016
First of all, I would like to say that I am a fan of Peter Drucker. Although, after reading his works, you have a good idea on how to improve efficiency, you don't have a crystallized idea on how to think about a strategy. His books although well-written are more like a collection of wisdom born from an extensive experience of a management consultant, than a general theory on how to position a business (it probably wasn't his goal anyway- his mission was to make people productive).
Michael Porter does exactly what Peter Drucker has missed. I think and underlying question that Michael Porter poses is how to make a company productive (profitable). Porter's works are normative and abstract. There is no question whether something is moral or not, whether an individual is better off or worse-off. His theory is not limited to a particular industry. It reads more like a Euclid's geometry rather than a prose.
To tell the truth, I have stopped reading original Michael Porter's book on competition at about 20%. I did that for 2 reasons: the tone was very dry and sentences were very long. If this book wasn't available, I would not be able to fully appreciate the power of Michael's ideas. Thank you, Joan Magretta.
Key points in no particular order:
Be unique rather than the best
It is not enough to differentiate a product, the set of activities (value-chain) must be difficult to copy
The essence of strategy is knowing what to overlook
It is a mistake to think of strategy only from marketing perspective. Internal considerations are as important
A complex business system to produce a certain kind of value uniquely
The worst thing is not to have a strategy at all
You need to be consistent with your strategy. Don't try to do everything
You need a very broad sense of what customers and needs will be important in the next 5-10 years
A competitive advantage is achieved not by having a single best attribute, but by having an interconnected set of activities delivering unique value
The core of a strategy is a value proposition and a tailored value chain
Great strategies are like complex systems in which all of the parts fit together seamlessly
Having a unique value chain greatly reduces chances of imitation
When deciding on what to outsource. General activities- those that cannot be meaningfully tailored to a company's position. Outsource only generic activities
It is a mistake to choose the same core competencies as everyone else has
Activity map- a diagram showing value propositions and its relationships with activities which produce them. Pay attention to those activities which strengthen each other
Look for enhancing your value propositions
If activity is either overdesigned or underdesigned for its use, value will be destroyed
Only a value proposition that requires a tailored value chain to deliver it can serve as the basis for a robust strategy
More customization results in lower speed and consistency
There are 2 generic strategies- cost leader and differentiation (cost/price)
If you have a competitive advantage it must be reflected in profits
Look for ways to lower costs without sacrificing value
Strategy either shifts relative costs down or relative price up
Value chain- sequence of activities a company performs, design, produce, sell, deliver, and support products
Compare value chain to competition
5 forces: buyers, suppliers, entry, substitutes, rivalry
Evaluate price/performance of substitutes
Switching costs influence buyer's power. This is why there are membership programs in place- to reduce switching costs
The ultimate goal is profit
Understand who captures most of the value
The real objective is not to beat rivals, it is to earn profits
Business is not war or a competition. It is more life performing arts. Each singer is unique and successful in his own way
There is no evidence that industry leaders are the most profitable
Companies only have to be big enough
The best hotel for one customer is not the best for another
Compete on different dimension
Structure of the industry (5 forces). Companies relative position within the industry (relative cost/price). connection between value chain, competitive position and profit
Michael Porter does exactly what Peter Drucker has missed. I think and underlying question that Michael Porter poses is how to make a company productive (profitable). Porter's works are normative and abstract. There is no question whether something is moral or not, whether an individual is better off or worse-off. His theory is not limited to a particular industry. It reads more like a Euclid's geometry rather than a prose.
To tell the truth, I have stopped reading original Michael Porter's book on competition at about 20%. I did that for 2 reasons: the tone was very dry and sentences were very long. If this book wasn't available, I would not be able to fully appreciate the power of Michael's ideas. Thank you, Joan Magretta.
Key points in no particular order:
Be unique rather than the best
It is not enough to differentiate a product, the set of activities (value-chain) must be difficult to copy
The essence of strategy is knowing what to overlook
It is a mistake to think of strategy only from marketing perspective. Internal considerations are as important
A complex business system to produce a certain kind of value uniquely
The worst thing is not to have a strategy at all
You need to be consistent with your strategy. Don't try to do everything
You need a very broad sense of what customers and needs will be important in the next 5-10 years
A competitive advantage is achieved not by having a single best attribute, but by having an interconnected set of activities delivering unique value
The core of a strategy is a value proposition and a tailored value chain
Great strategies are like complex systems in which all of the parts fit together seamlessly
Having a unique value chain greatly reduces chances of imitation
When deciding on what to outsource. General activities- those that cannot be meaningfully tailored to a company's position. Outsource only generic activities
It is a mistake to choose the same core competencies as everyone else has
Activity map- a diagram showing value propositions and its relationships with activities which produce them. Pay attention to those activities which strengthen each other
Look for enhancing your value propositions
If activity is either overdesigned or underdesigned for its use, value will be destroyed
Only a value proposition that requires a tailored value chain to deliver it can serve as the basis for a robust strategy
More customization results in lower speed and consistency
There are 2 generic strategies- cost leader and differentiation (cost/price)
If you have a competitive advantage it must be reflected in profits
Look for ways to lower costs without sacrificing value
Strategy either shifts relative costs down or relative price up
Value chain- sequence of activities a company performs, design, produce, sell, deliver, and support products
Compare value chain to competition
5 forces: buyers, suppliers, entry, substitutes, rivalry
Evaluate price/performance of substitutes
Switching costs influence buyer's power. This is why there are membership programs in place- to reduce switching costs
The ultimate goal is profit
Understand who captures most of the value
The real objective is not to beat rivals, it is to earn profits
Business is not war or a competition. It is more life performing arts. Each singer is unique and successful in his own way
There is no evidence that industry leaders are the most profitable
Companies only have to be big enough
The best hotel for one customer is not the best for another
Compete on different dimension
Structure of the industry (5 forces). Companies relative position within the industry (relative cost/price). connection between value chain, competitive position and profit
July 12, 2020
Na minha percepção o famigerado 80/20 é super bem feito nesse livro. A autora não tenta fazer os assuntos parecerem mais complexos do que são e ao máximo tenta explicar o racional por trás de todas as ideias do Porter, tomando o tempo pra especificar o que elas NÃO são e o onde elas NÃO deveriam se aplicadas.
Pra maioria das pessoas que já estudou Porter em algum contexto, os primeiros capítulos: 1.A Mentalidade correta; 2. As cinco forças ; 3. Vantagem competitiva; 4. criação de valor. Vão ser uma revisão e aprofundamento no conteúdo, mas nos capítulos finais: 5. Trade offs; 6. Fit; 7. Continuidade. É onde eu acho que o livro é genial. Nessa parte, a autora esclarece como uma empresa não só adquire, mas defende uma vantagem competitiva. Sem cair em truísmos como: ~~eficiência~~ ~~inovação~~
Livro super sensato e sem bullshitagem. Recomendo pra todo mundo que fez Engenharia de produção/ADM ou trabalha na área de consultoria.
Pra maioria das pessoas que já estudou Porter em algum contexto, os primeiros capítulos: 1.A Mentalidade correta; 2. As cinco forças ; 3. Vantagem competitiva; 4. criação de valor. Vão ser uma revisão e aprofundamento no conteúdo, mas nos capítulos finais: 5. Trade offs; 6. Fit; 7. Continuidade. É onde eu acho que o livro é genial. Nessa parte, a autora esclarece como uma empresa não só adquire, mas defende uma vantagem competitiva. Sem cair em truísmos como: ~~eficiência~~ ~~inovação~~
Livro super sensato e sem bullshitagem. Recomendo pra todo mundo que fez Engenharia de produção/ADM ou trabalha na área de consultoria.
Want to read
February 29, 2020"Joan Magretta's book, "Understanding Michael Porter," is terrific and easier to read than the (original) Porter work" - Michael Mauboussin @mjmauboussin
February 28, 2018
I'd read Porter during my management school days, but mostly in the pedantic, self-serving manner. Joan Magretta's synopsis (if I can call it that) of his thought process and definitions in her book has made me realise the value of Porter's works. Every idea becomes greater and clearer when supplicated with an illustration (or better still, a validated example), and that is what this book does. This book is for someone who wants bite sized pieces of Porter to quickly chew on while still gaining flavour. I can assure you, once you read Magretta's book, the next impulse would be to order Porter's books or wipe the dust off them. I know I did. Look forward to reading his timeless wisdom.
October 3, 2013
A lucid account of Professor Michael Porter's significant contributions to the field of business strategy such as the Five Forces Framework, the Value Chain, Activity System and the notion of tradeoffs. A very good book to revisit these frameworks and understand how all these fit together. Porter's frameworks and concepts are also often misunderstood despite being popular. A reading of this book could serve to clear some of the misconceptions and prevent missteps when applying these frameworks and concepts.
July 31, 2015
Пожалуй лучшая книга о стратегиях, которую я читал.
В конкуренции главное - конкуренция за уникальность.
В каждой нише есть 5 основных сил, которые влияют на прибыльность бизнеса.
То, как бизнес производит ценность для клиента - это то, что отличает его от других бизнесов и позволяет зарабатывать больше чем конкуренты.
Отказ от одних факторов в цепочке создания ценности в сторону других факторов - то, что может поможет зарабаывать больше.
Любой бизнес должен или продавать дороже или производить дешевле. Лучше и то и другое
В конкуренции главное - конкуренция за уникальность.
В каждой нише есть 5 основных сил, которые влияют на прибыльность бизнеса.
То, как бизнес производит ценность для клиента - это то, что отличает его от других бизнесов и позволяет зарабатывать больше чем конкуренты.
Отказ от одних факторов в цепочке создания ценности в сторону других факторов - то, что может поможет зарабаывать больше.
Любой бизнес должен или продавать дороже или производить дешевле. Лучше и то и другое
December 21, 2020
Porter’s business strategy models (five forces, etc) remain some of the most useful available and this book is a great summary of his collected works. It discusses what competition is, how to analyze an industry and a company’s performance in that industry, how to define and evaluate a strategy (value, trade-offs, fit, continuity), and how that can create a competitive advantage. Don’t forget to read the interview with Porter at the end of the book. The only thing I missed was more (detailed) case studies, which could have been added as appendix material.
July 30, 2018
Gained a better understanding of what disruptions truly mean, when they matter and how to evaluate/create business models that foster competitive advantage. Very enjoyable read. Highly recommended especially to those who find it fun to think about strategy. I picked up this book as I consider strategy a weakness and I want to be better at it - I'd say this book gave a kickstart to that journey.
February 2, 2015
I read out of order from the the original. This is a great read to clarify, especially if you don't have the benefit of a strong MBA program. Read the original first, though.
July 13, 2015
This book is even better than the original Michael Porter :) . If you really want to understand and apply strategy and competitive analysis/techniques than read this book!
May 4, 2020
Boring overview of strategy. not really helpful with Strategy class.
January 9, 2021
Pretty much the whole MBA in a book.
March 21, 2023
Michael Porter, an author renowned for his works on competition and strategy, including Competitive Strategy (1980) and Competitive Advantage (1985), developed a framework for analyzing industries in the context of competition. He identified the competitive landscape as a set of five forces that impact the industry.
In "Understanding Michael Porter," Joan Magretta, Porter's former editor at Harvard Business Review, presents a comprehensible overview of Porter's framework and ideas. The book is divided into two parts: part one introduces readers to the general terminology and concepts, while part two establishes implementation and fitness criteria for strategy.
Porter's framework emphasizes a firm's value chain, which refers to the distinct economic activities a company performs from end-to-end until it reaches its customers. It is worth noting that readers may find Porter's framework more or less revealing, depending on their industry.
I highly recommend this book to those who do not have adequate time or patience to read all of Porter's works or who need help understanding the intricate relationships between the concepts presented without the academic overhead. I also suggest paying particular attention to the author's notes between chapters and Porter's interview at the end of the book.
In "Understanding Michael Porter," Joan Magretta, Porter's former editor at Harvard Business Review, presents a comprehensible overview of Porter's framework and ideas. The book is divided into two parts: part one introduces readers to the general terminology and concepts, while part two establishes implementation and fitness criteria for strategy.
Porter's framework emphasizes a firm's value chain, which refers to the distinct economic activities a company performs from end-to-end until it reaches its customers. It is worth noting that readers may find Porter's framework more or less revealing, depending on their industry.
I highly recommend this book to those who do not have adequate time or patience to read all of Porter's works or who need help understanding the intricate relationships between the concepts presented without the academic overhead. I also suggest paying particular attention to the author's notes between chapters and Porter's interview at the end of the book.
December 2, 2018
Бизнесийн өрсөлдөөн бол "Хамгийн сайн" нь байж, гагцхүү нэг нь ялахын төлөөх тэмцэл биш. Хэрэвзээ энэ үзлээр урагшилбал нэг, нэгнээ ялахын төлөө байгаа нөөцөө барсаар аль аль нь хүчгүйднэ, эс бөгөөд нэг нь нөгөөгөө барьж идэх "0" үр дүнтэй төгсгөл ирэх нь дамжиггүй хэмээсэн Поттерийн санаа бизнест төдийгүй хувь хүний хөгжлийн хувьд ч, улс гүрний хөгжлийн хувьд ч анхаарвал зохистой санагдлаа. Хувь хүний өрсөлдөөний стратегийн тухайтад хөрвүүлэн буулгавал жам ёсны хуулиа зарчим болгоод гэнэтийн мод болон дэлгэрэх арга хэрэгслүүдэд нүд хуурталгүй тууштай явбал амжилтанд хүрнээ гэж хэлэх шиг санагдлаа.
Үнэ цэнийн хэлхээгээ бүрдүүлсэн IKEA - ийн жишээнүүд, Wallmart - ийн стратегиуд, нийцэл, тууштай байдлын тухайтад өнөөгийн өөрсдийн бизнесийн алдаа оноогоо ажиглах, стратегийн шинэчлэл хийхдээ баримтлал болгоноо.
Эхлээд уншихад хүнд гэж бодоод л цэрвээд байсан чинь үнэндээ Joan Magratta ихий ойр, системтэй сайхан ойлгохоор хялбаршуулан буулгажээ. Мөн сайхан орчуулсан орчуулга нартаа баярлалаа.
Бизнесмен хүн бүрийн ширээний ном байхаар юм.
Үнэ цэнийн хэлхээгээ бүрдүүлсэн IKEA - ийн жишээнүүд, Wallmart - ийн стратегиуд, нийцэл, тууштай байдлын тухайтад өнөөгийн өөрсдийн бизнесийн алдаа оноогоо ажиглах, стратегийн шинэчлэл хийхдээ баримтлал болгоноо.
Эхлээд уншихад хүнд гэж бодоод л цэрвээд байсан чинь үнэндээ Joan Magratta ихий ойр, системтэй сайхан ойлгохоор хялбаршуулан буулгажээ. Мөн сайхан орчуулсан орчуулга нартаа баярлалаа.
Бизнесмен хүн бүрийн ширээний ном байхаар юм.
November 13, 2019
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.
https://www.fahasa.com/
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.
https://www.fahasa.com/
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