PTW/PI All-Stars Book Club – Chapter One

Michael Porter’s Three Great Strategy Contributions

Welcome to Chapter One of the Playing to Win/Practitioner Insights (PTW/PI) book club. I will do my best to respond to all comments – in the spirit of a book club discussion. Of the 37 ranked all-star pieces drawn from the 260 originals in the series, the randomizer picked Michael Porter’s Three Great Strategy Contributions as the first chapter. This one is from the second biggest category – help on understanding the context for strategy. You can find the whole PTW/PI series here.

My Reflections

I was happy when the randomizer placed this article in the first position. Anyone who wants to understand the context for business strategy needs to understand the contributions of the single greatest contributor to strategy – or at worst the one of strategy’s two greatest contributors, tied with Bruce Henderson, founder of Boston Consulting Group (BCG).

The PTW/PI piece was spurred by a conference held on March 27, 2024, at Harvard Business School (HBS) ‘Celebrating Michael Porter,’ who retired from the faculty in the fall of 2023. Strategy is the area of study for which Mike is most famous, but in addition to the featured session on strategy, the conference celebrated his contributions with sessions on four other areas – CEO leadership, country competitiveness, healthcare, and shared value.

I know it is a bit geeky, but I was truly honored to be asked to give one of the three talks in the strategy session – and one of the two by writers/academics. (The third was by the CEO of Thermo-Electric, on the board of which Mike served.) The other writer/academic was Jay Barney, the co-creator of the view of strategy that competes with Mike’s within the walls of the academy – though no one uses it in the real world. It is the Resource-based View of the Firm (RBV), about which I have written in this series (spoiler alert – not a fan). In any event, it was nice to be recognized as one of the two thinkers who could best reflect on Mike’s impact on the development of strategy principles and concepts.

As is my practice, I didn’t pull any punches in my presentation.

First, I argued that Mike saved the strategy academy. Most people don’t realize it, but in the early days, the business academy trailed decades behind the business world in developing the discipline of strategy. In the 1979-1981 period that I was an MBA student there, HBS still had only a single course on strategy, Mike’s second year elective. By that time, Henderson and BCG had been practicing strategy for almost two decades, and Bain & Company for almost one. Other than that single course, the academy had nothing useful to say about strategy until the 1980 publication of Mike’s seminal Competitive Strategy, which saved the strategy academy from ridicule and irrelevance.

Second, Mike bolstered strategy in the battle against planning – a battle which is still being waged today. Before Henderson and Porter, planning absolutely ruled over strategy. But Mike made it crystal clear that strategy was about making choices, not just creating lists of initiatives. Especially important was his brilliant 1996 article What is Strategy? In it, he argued that a sustainable strategic position requires that a company make trade-offs. It was also a gratifying article for me. I worked with Mike for a decade and a half and he only thanked me for anything once – and it was in-print in the introduction to that article.

Third and finally, he provoked. Prior to Mike, strategy and marketing were distinct and separate disciplines. In Henderson’s strategy world, there were two consequential actors: the company and its competitors. In marketing, the two consequential actors were company and customers. When Mike named and formalized the concept of differentiation, he brought customers formally into the strategy equation. Strategy became about company, competitors, and customers.

In the 1980s, marketing finally figured out that it needed to formally consider competitors into its marketing equation. I know some will argue that had always been the case. It wasn’t and I know because I helped P&G – perhaps the world’s greatest marketing organization – figure that out with the Applied Strategic Management program that I co-designed and (with colleagues) taught to all newly-created category teams across the 1987-1989 period.

Though Mike never argued this, his insights drove the convergence of strategy and marketing into what should be one discipline – a point I made in what will be Chapter Eighteen of this book club – It’s Time to Accept that Marketing and Strategy are One Discipline. Of course, the entrenched marketing and strategy functions and professoriates are resisting – but eventually the convergence will take effect and the silliness will end.

Mike’s positive impact on the field of strategy cannot be overstated. It was a pleasure to have been his colleague and business partner.

On this front, I can’t help going on a bit of a screed. The jealousy-driven attacks on Mike’s work drive me crazy. For example, academics completely closed ranks and adopted RBV as the only acceptable strategy doctrine in the academy, even though it has close to zero usage in the real world of strategy. Researching it and teaching it to unsuspecting students is a terrible waste of time and energy – but it assuages the jealousy of strategy academics.

But the most persistent attack on Mike is that he has a static view of strategy. The critics say that his prescription is to find a structurally attractive market, plop your company down in it, and milk it for as long as you can. I remember vividly at one Thinkers50 award celebration that an acquaintance, who was also named a member of Thinkers50 that evening, made that exact argument to me. I asked her where in Mike’s writings had he suggested that. She said she had no idea, but she had been assured that it was true by yet another member of the Thinkers50 – an insufferable one, BTW. I suggested to her that next time she sets out to slag someone much more senior in her field, she might first read what that person has written.

But she is typical. Critics of Mike don’t care that he never said any such thing and, in fact, said the opposite. He and his colleague (and later my colleague), Professor Anita McGahan, wrote (in 1997) the definitive paper on the relative importance of industry structure versus competitive position: How Much Does Industry Matter, Really? The answer their research generated was that competitive position has almost twice as big an impact on profitability as industry structure. And as Mike always taught, your competitive advantage will always be attacked, and you need to refresh it continuously.

These many academic and quasi-academic weenies shouldn’t spend their time lying about a person in their field simply because they are jealous of their target’s far greater success.

Reader Reactions

From the comments of readers, and there were many, they seemed to value and enjoy the historical context that the piece provided them. I sometimes forget how long ago the early days of strategy were, when the industry spooled up innumerable firms – Strategic Planning Associates, Corporate Decisions, LEK, Parthenon, Oliver Wyman, etc. – and the practice of strategy was just taking shape. When I graduated from HBS, strategy was still very local. Boston was the epicenter thanks to Mike Porter at HBS and BCG and Bain with their head offices, still with probably half their worldwide consultants, in Boston. Strategy consulting was far, far from the gigantic global industry it is today. There weren’t even strategy departments in business schools, versus today when they are typically the biggest or second biggest department of most schools.

Readers seem to have enjoyed a walk down that memory lane and the placement of Mike’s life and work in that context – and a good way to start the book club.

With no further ado, the original article…

Chapter One

Michael E. Porter is a giant in the field of business and last fall retired to Professor Emeritus status. On March 27, 2024, I am speaking at a Harvard Business School (HBS) seminar celebrating his life’s work. I thought I would give a more edgy version of what I will discuss at the seminar in Michael Porter’s Three Great Strategy Contributions: He Saved, He Bolstered, and He Provoked.

Saving his Domain

Mike has been a strategy academic for over half a century. Business strategy began as an academic field in the 1960s, mainly at HBS. The pioneers included HBS professors Alfred Chandler, C. Roland (not Clay) Christensen, and Kenneth Andrews, plus Igor Ansoff of Carnegie-Mellon and Vanderbilt. In 1962, Chandler published Strategy and Structure. In 1965, Andrews and Christensen and colleagues published Business Policy and Ansoff Corporate Strategy. And in 1971, Andrews came back with The Concept of Corporate Strategy. Together these books created the academic field of strategy within business schools.

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