What's the big idea? The five forces

Five is an easy number to remember, add more and it's easy to forget them.

by Nigel Nicholson
Last Updated: 09 Oct 2013

Ah, the wisdom of Michael Porter, sticking to what managers can recite and consultants can trade in, especially around strategy. His Five Forces - five threats to a business's ability to sustain advantage - have become standard (yawn) fare in every management student's company report. They are: 1. New entrants; 2. Competition; 3. Substitutes for your products or services; 4. Customer power; and 5. Supplier power. It's not a bad list, but we might want to add the war for talent and certainly regulation and access to capital. Where is co-operation in this thinking? How are the forces interconnected and how do they change? And does this foster a fortress mentality when thinking about the firm? It would be unfair to reduce Porter's work to this consultant's algorithm, but executives would be well advised to look beyond its limits to consider where value can be created and destroyed in their firms.

Nigel Nicholson is professor of organisational behaviour at the London Business School.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

A mini case study in horizon scanning

Swissgrid has instituted smart risk management systems for spotting things that could go wrong before...

Interview ghosting: Stop treating job seekers like bad dates

Don’t underestimate the business impact of a simple rejection letter.

5 avoidable corporate disasters

And the lessons to learn from them.

Dressing to impress: One for the dustbin of history?

Opinion: Businesswomen are embracing comfort without sacrificing impact. Returning to the office shouldn't change that....

How to motivate people from a distance

Recognising success in a remote or hybrid environment requires a little creativity, says Insight SVP...

What pushy fish can teach you about influence at work

Research into marine power struggles casts light on the role of influence and dominant bosses...