More than three decades ago, Michael Porter, the Harvard-based professor and strategist, came out with a book “Competitive Advantage,” which resulted in him becoming my personal business guru. Prior to the book’s publication, an article he wrote for Harvard Business Review identified five competitive forces — customer power, supplier power, threat of new entrants, substitute products and rivalries between established companies — that provided an astute analysis of the marketplace in a form that was easy for people in business to comprehend.
I continued to refer to Professor Porter’s book for 20 years after reading it, and some of the questions it raised have proven quite useful in my business decisions (e.g., are you a value added operation and does the margin reflect that?, Or, are you a low cost producer and does your competitive pricing prove it?). So now where is Michael Porter? First, he has been involved in analyzing the globalization phenomenon, an area in which his five competitive forces couldn’t be more relevant and important. Next, he has been studying competitiveness among nations, business clusters that emerge around successful companies, and how environmental progress and economic growth have coalesced. And that last one brings me to the reason for this blog – the renewed excitement I felt when I read about Porter’s latest concept, which he calls “creating shared value” — the idea that corporate activity can and will benefit both society and the environment and, thus provide us with a whole new view of capitalism as a force for positive change (it’s also a concept that, in my view, sounds a lot more embraceable than “sustainability”).
Although he is currently getting pushback from corporate social responsibility executives who consider the “shared value” idea a bit too simplistic, I think it just might offer them the key to keeping the CSR movement alive, which could prove to be the salvation of corporations and ultimately make our planet a better place for all. It gives me some comfort that the Professor Porter whose principals and theories guided my early business career is now coming back to help me in my current endeavors, which are focused on motivating big companies to get involved in social and environmental change. Professor Porter, let’s do lunch.