Although this book offers - in my opinion -- the single best introduction to the major insights of Michael Porter, other than an extended period of one-on-one time with him during which he explains them himself, Joan Magretta also offers other invaluable business information, insights, and wisdom within a much larger context. Those who have read her earlier business classic, What Management Is: How It Works and Why It's Everyone's Business, already know that she possesses highly-developed perspectives on both the scope and depth of business, and, the specific details (and relevance thereof) of what management is and does as well as how its core competencies can be developed and then applied to achieve sustainable high-impact and superior performance.
Her brilliant analysis of Porter and his major contributions includes:
o How to develop the right mind-set for competition
o "The Five Competitive Forces That Shape Strategy"
o How and why a value chain can be a decisive competitive advantage
o What the "core" is and how it can help to create value
o How and why trade-offs are strategy's "linchpin"
o How and why the value or cost of one activity is affected by how other activities are performed
o How and why continuity enables development of competitive advantage
The coverage of Porter material includes an Epilogue that consists of "A Short List of Implications, followed by Magretta's interview of Porter and a "A Porter Glossary: Key Concepts."
All this would be more than sufficient to establish Magretta's book as a "business classic" but there is more, so much more that she offers. After providing a vigorous and comprehensive discussion of Porter's major insights, she then calls upon her expertise as a business historian and her skills as an educator to help her reader to select and then apply whatever would be most relevant - and most appropriate -- to the reader's own specific needs, interests, strategic objectives, and resources. This is the "context" for understanding to which I referred earlier.
Here is a partial list of the mini-commentaries that Magretta's inserts throughout her lively and eloquent narrative:
"One-Upmanship Is Not Strategy" (Page 25)
"The Fundamental Equation: Profit = Price - Cost" (40-41)
"The Five Forces: Competing for Profits" (61)
"Do You Really Have a Competitive Advantage? First You Quantify, and Then You Disaggregate" (82-83)
"Discovering New Positions: Where to Begin" (118-119)
"Keep the Core, Outsource the Rest? Not So Fast" (153)
"Ten Practical Implications" of mastering Porter's major concepts (184-185)
As indicated, what we have in this immensely valuable book are separate but related, indeed interdependent discussions of "the essential Porter" and how that material can serve as an enduring foundation for decisive competitive advantage, one that almost any organization can achieve and then sustain, whatever its size and nature may be. Congratulations to Joan Magretta on a brilliant achievement. Bravo!
Michael Porter shook up the world of strategy and big business with two books - Competitive Strategy in 1980 and Competitive Advantage in 1985. Since then, he has become the established view and other experts have tried to make their names by misrepresenting his work and arguing against these misrepresentations.
What's covered in the book will be taught in every business school and it certainly was in my MBA studies although, by then, I'd read the original books. He fought back against his critics with a famous article in the Harvard Business Review called "What is Strategy" and also updated his five forces commentary in another article.
This book summarises his main ideas in a very easy to read format that avoids much of the detail that made the original books a chore for all but the most interested or dedicated.
It helps to answer the big question of why consistent profit performance varies across industries and within industries.
His five forces model explains how some industries find their profits competed away by companies they buy from or sell to, by substitute products that achieve the same goals, by new entrants who appear at the first sign of excess profits or by competitive rivalry that forces down prices and forces up costs to serve.
His work on competitive advantage through the value chain analyses how firms can achieve cost advantages or differentiation so that profitability between companies within an industry varies from the strongest to the weakest.
These are explained in the book along with the latest ideas on differentiation and positioning that come from the "What Is Strategy article. It also includes a 20 plus page interview between the author and Michael Porter.
There is no substitute for going back to his original works that still stand up remarkably well except for outdated examples. However those books are demanding to read and this makes the ideas much more approachable.
It's an excellent summary for an MBA student or a senior manager in a good sized business who gets involved in strategic planning sessions. It's also a good refresher for anyone who has formally studied strategy.
I'm less ready to endorse it for entrepreneurs and small business owners. If that's you, then I think you need both a wider context and a deeper understanding of what's involved in finding a niche and differentiating the business from competitors. One option is to go and hire an expert but I'd like to be able to point you towards a book first so that you can properly engage in any debate. At the moment, I can't think of one which is frustrating.
on 23 November 2015
I rarely leave book reviews on Amazon but this book is really beyond excellent! If you have any interest in studying Porter's frameworks and getting a quick and in-depth look on how to use them, this is the book for you. It is very clear and easy to understand, the discussion goes far enough in-depth to give you a strong understanding and more importantly, explains the "so what" of all of Porter's key ideas.
on 1 March 2016
Porters works are not light reading, and as this book points out, they are typically taught from secondary materials rather than the source works. This leads to a number of misconceptions about porters work, chief among these is the misconception of it being a static analysis framework.
Joan Magretta aims to correct these misconceptions in a easily digestible manner