| Birth Name: | Michael Eugene Porter |
| Birth Date: | 23 May 1947 |
| Birth Place: | Ann Arbor, Michigan, US |
| Contributions: | Porter hypothesis Porter's five forces[1] Porter's four corners model |
Michael Eugene Porter (born May 23, 1947)[2] is an American businessman and professor at Harvard Business School. He was one of the founders of the consulting firm The Monitor Group (now part of Deloitte) and FSG, a social impact consultancy. He is credited with creating Porter's five forces analysis, which is instrumental in business strategy development at present. He is generally regarded as the father of the modern strategy field.[3] He is also regarded as one of the world's most influential thinkers on management and competitiveness as well as one of the most influential business strategists.[4] [5] His work has been recognized by governments, non-governmental organizations and universities.[6]
Michael Porter's father was a civil engineer and Georgia Tech graduate who had also gone on to a career as an army officer. During Porter's childhood, his family moved around the United States, and to France and Canada. This contributed to Porter's interest in understanding the economic development of regions and countries, and the differences in economic outcomes and competitiveness across different regions.
Porter said in an interview that he first became interested in competition through sports. He was on the NCAA championship golf squad at Princeton and also played football, baseball and basketball growing up.[7]
Porter received a BSE with high honors in aerospace and mechanical engineering from Princeton University in 1969, where he graduated first in his class and was elected to Phi Beta Kappa and Tau Beta Pi. He received an MBA with high distinction in 1971 from Harvard Business School (HBS), where he was a George F. Baker Scholar, and a PhD in business economics from Harvard University in 1973. Porter credits Harvard professor Roland "Chris" Christensen with inspiring him and encouraging him to speak up during class. Porter reached the top of his class by his second year at HBS.
Porter developed the Porter five forces analysis framework for analyzing industries, inspired by classes in industrial organization economics that he took at Harvard.
During his career, Porter has emphasized that the essence of strategy is about making choices.[8] [9] He has delivered public speaking based on the importance of strategy formulation and has served as a consultant to many governments and NGOs devising strategy formulations.
Porter is the author of 20 books and numerous articles including Competitive Strategy, Competitive Advantage, Competitive Advantage of Nations, and On Competition, and is the most cited author in business and economics.[10]
Porter wrote The Competitive Advantage of Nations in 1990. The book is based on studies of ten nations and argues that a key to national wealth and advantage was the productivity of firms and workers collectively, and that the national and regional environment supports that productivity.[11] He proposed the "diamond" framework, a mutually-reinforcing system of four factors that determine national advantage: factor conditions; demand conditions; related or supporting industries; and firm strategy, structure and rivalry. Information, incentives, and infrastructure were also key to that productivity.[12]
During April 2014, Porter discussed how the US ranks relative to other countries on a comprehensive scorecard called "The Social Progress Index", an effort which he co-authored.[13] This scorecard rated the US on a comprehensive set of metrics; overall, the US placed 16th.[14]
Michael Porter defined the two ways in which an organization can achieve competitive advantage over its rivals: cost advantage and differentiation advantage. Cost advantage is when a business provides the same products and services as its competitors, albeit at a lesser cost. Differentiation advantage is when a business provides better products and services as its competitors. In Porter's view, strategic management should be concerned with building and sustaining competitive advantage.[15] He originally developed the Porter's Five Forces in 1979 which is still widely used as a model to analyse the industry and to estimate whether it would be profitable and ideal enough to enter the industry after carefully examining the bargaining power of buyers, bargaining power of suppliers, threat of new entrants, competition among existing firms and threat of substitutes.[16] He first wrote and published about Porter's Five Forces in a 1979 article How Competitive Forces Shape Strategy and has further explained about the Five Forces in his 1980 article Competitive Strategy: Techniques for Analyzing Industries and Competitors.[17]
Porter introduced the concept of competitive advantage in 1985. which later went onto become one of the key concepts in management science at present.[18] He also published a book titled Competitive Advantage: Creating and Sustaining Superior Performance in order to explain the concept of competitive advantage and the book which later went onto become a bestseller also focuses on value chain concept.[19]
Porter coined the term and introduced the concept of value chain analysis, a groundbreaking approach that changed the dynamics of how business activities are conducted.[20]
Porter has focused on addressing pressing problems in health care delivery in the US and other countries. His book, Redefining Health Care (written with Elizabeth Teisberg), develops a new strategic framework for transforming the value delivered by the health care system, with implications for providers, health plans, employers, and government, among other actors. The book received the James A. Hamilton award of the American College of Healthcare Executives in 2007 for book of the year. His New England Journal of Medicine research article, "A Strategy for Health Care ReformToward a Value-Based System" (July 2009), lays out a health reform strategy for the US. His work on health care is employed to address the health care delivery problems in developing countries, in collaboration with Dr. Jim Yong Kim, Dr. Kevin J. Bozic, and others at the Harvard Medical School and Harvard School of Public Health.
Porter acting as a consultant to business, government, and the social sector. He has been a strategy advisor to US and international companies, including Caterpillar, Procter & Gamble,[21] Scotts Miracle-Gro, Royal Dutch Shell, and Taiwan Semiconductor. The Instituto de Estudios Superiores de Administración of Venezuela was influenced under the guidance of Porter, taught American business administration. Porter has served on two public boards of directors, those of Thermo Fisher Scientific and Parametric Technology Corporation. He influence economic policy, working with the Executive Branch and with Congress, and has led national economic-strategy programs in other countries., he was working with the presidents of Rwanda and South Korea.
In 1983, Porter co-founded the Monitor Group, a strategy-consulting firm acquired by Deloitte Consulting in 2013 through a structured bankruptcy proceeding.[22]
Michael Porter has founded four major non-profit organizations: Initiative for a Competitive Inner City – ICIC, founded in 1994,[23] and which he still chairs,[24] which addresses economic development in distressed urban communities; the Center for Effective Philanthropy, which creates rigorous tools for measuring foundation effectiveness; FSG Social Impact Advisors, a leading non-profit strategy firm which he co-founded with Mark Kramer,[25] serving NGOs, corporations, and foundations in the area of creating social value; and International Consortium for Health Outcomes Measurements (ICHOM), which he co-founded in 2012 with Stefan Larsson and Martin Ingvar. ICHOM supports the key strategic agenda items in Porter's Value-Based Health Care Delivery framework by working with patients and leading healthcare providers to create a global standard for measuring health outcomes.[26] He also currently serves on the Board of Trustees of Princeton University.
An analysis by Porter in collaboration with Katherine Gehl frames the US two-party system as a duopoly, a business best described as a "political industry", that competes in ways that serve the parties' interests rather than the public good. Gehl and Porter published a Harvard Business School report on the topic, "Why Competition in the Politics Industry is Failing America" (2017),[27] and later a book, The Politics Industry: How Political Innovation Can Break Partisan Gridlock and Save Our Democracy (2020).
In 2000, Michael Porter was appointed Bishop William Lawrence University Professor at Harvard, the university's highest recognition awarded to Harvard faculty.[28] He is a six-time winner of the McKinsey Award for the best Harvard Business Review article of the year.
Porter's work has received criticism from peers within academia for inconsistent logical argument in his assertions.[29] Porter's conclusions have been critiqued as "lacking in empirical support" and as "justified with selective case studies". In these analysis of his work it is asserted that Porter fails to credit original creators of his postulates originating from pure microeconomic theory.[10] [30] [31] [32]
He has written numerous books on modern competitive strategy for business. His concepts and theories with regards to strategic management, such as Porter's Five Forces, Porter's Diamond model, Porter's Generic Strategies and Porter's Value Chain, are widely taught in universities.
Porter stated in a 2010 interview: "What I've come to see as probably my greatest gift is the ability to take an extraordinarily complex, integrated, multidimensional problem and get arms around it conceptually in a way that helps, that informs and empowers practitioners to actually do things."