Porter's five forces analysis

And I think, well, I talk a lot these days about how a lot of our original ideas about strategy have needed to evolve.

And, of course, one of the most famous ones would be Porter's Five Forces, which was popularized right around that time.

I mean, it was, I think, Competitive Strategy came out in 1980.

1980, yep,

We did 12 case studies in five days, and it was just, like, case study after case study, and what I learned was that every case study had a solution that was a framework.

So Porter's Five Forces, you know, other, like, frameworks that we have, like, developed, and I walked out of Harvard and I thought, "Shoot, I need a framework." So we built it.

So we have a three-by-three model.

The first is the kind of methodology, so share good news, track interest, follow up.

Exactly.

Exact- And then you p- you pull a piece in, you say, "Okay, what does this mean to us? Which pieces are we gonna use?" And the re- reason why I remember Porter's Five Forces is because it's just so fundamental to really identifying kind of the core of a strategy, and I wouldn't say it does everything, but it's, it's pretty good.

Um, and you can apply it to not just businesses, but, uh, even government organizations and other things.

It's, it's pretty useful.

Yeah.

And, you know, we always start with PESTEL, and then I go into Porter's Five Forces, maybe something like, something like that, where you're looking at the industry, and then you go into the company.

You look at a SWOT analysis and just see what are our strengths and weaknesses, opportunities, threats.

So you're looking at multiple levels of strategy, but that's what board level strategy is.

And, and I, I heard my view a-and I heard some of that this morning about customer intimacy and trust, which feeds into my view.

So I was trained on, on coming up with a, a business strategy by starting with Porter's Five Forces and a SWOT analysis.

Any-anybody else in here, right? Right.

Well, when, when you peel those tools back, it sounds a lot like you're going into battle, right? It's rivalry, it's power, it's opportunities, threats, and y-you know, my question is, who are you going into battle wi- against?

And so you need to know that about these entrepreneurs because a lot of times what consultants will do is they're trying to consult survival-based business over here.

They're trying to say, well, you need to create a four-year business plan and we need to have an industry analysis report and a Porter's Five Forces and we need to subsection this.

No, this doesn't work for them.

Number one, they don't understand that.

Definitely.

To understand why it shifted so fast, the report uses Michael Porter's Five Forces framework.

Okay, for anyone unfamiliar, Porter's Five Forces is a classic business strategy tool used to analyze an industry's structure and figure out where the power lies to extract profit.

Exactly.

It looks at competitive rivalry, the threat of new entrants, the threat of substitutes, buyer power, and supplier power.

Well, what if I can prove you don't need to?

Yeah, so y- y- your Porter's Five Forces, uh, diagrams are gonna be pretty, pretty, uh, chaotic and, and cluttered, aren't they? [laughs]

Spicy.

Yeah, they are.