The Godfather

Porter’s article is as close to a holy grail as one will find in the halls of business schools. It remains as relevant to today’s business environment as it did in 1996. Since then, worthwhile contributions to the field of competitive strategy have been made, such as the 2004 title, Blue Ocean Strategy. But even remarkable works like this only expand upon the principles outlined in Porter’s defining article.

In his 1996 classic, Porter dismisses the productivity gains, resulting from Japanese manufacturing techniques, as moot. These “best practice” techniques move quickly through an industry with the help of consultants and employees who move between companies. After a given industry has employed these techniques, he argued that the only beneficiary becomes the consumer, who gets a better product at a lower price. Not a bad thing mind you, but it has nothing to do with competitive strategy. If everybody is doing it, how is that strategy?
Porter argued that such productivity gains, which he termed “operational efficiencies”, are necessary for any company to stay competitive, but that strategy was something entirely different and was being neglected by managers.