Yes, I realize this isn’t the exact statement. But as I was putting this post together, two different thoughts converged. Read on and I think it will make sense.
Sometimes having a fresh set of eyes on things changes the perspective. After having been in the same environment chasing the same challenges for any length of time, it is easy to be overwhelmed by the details to the point where it obscures the bigger picture … a situation more commonly referred to as not being able to see the forest for the trees.
So, with a fresh set of eyes, I started with asking why (see my post about Simon Sinek and link to his Ted video for more on this). The exercise quickly became multiple why questions, each focused on the different players or factors influencing my particular domain. During the process, I ended up with a framework that resembled something I learned many moons ago … the Michael Porter’s 5 Forces model.
As I alluded to the framework was familiar, but the reality of a B2B software world indirectly serving consumers is very different than the somewhat ‘industrial’ perspective of Porter’s model. So I began to dig into several articles looking for insights that might be more applicable in my situation. I did find several articles that seemed relevant based on the particular search criteria I used:
- digital transformation/digital business
- electronic payments
- even one on Facebook
- and more generally focused on competition or strategy
But the article that really caught my attention was one titled The Irrelevance of Porter’s Five Forces for the B2B Software Industry. Really?! Irrelevant? But as you read the article, there are several points made that substantiate the rationale. Here are several examples:
I refer to Porter’s model as an “artifact” because it is no longer relevant to today’s markets, if it ever really was. It’s linked to a business context set in the Eighties, when corporate strategy focused on inside-out objectives such as beating competitors and sustaining profitability with no connection to value delivered to customers.
Because Porter’s Five Forces model is based on non-changing market conditions, it is limited or even harmful for dealing with dynamic, ever-changing industries and markets. Well, the software industry never sits still, and this has intensified in recent years. And the customers of software vendors are also facing uncertain and fluctuating markets, which adds further complexity when seeking insight for future trends regarding customer needs and wants.
Other areas where Porter’s model comes up short:
- The value of partner ecosystems including supply chain
- Predicting future trends
- Identifying new customer segments
- Understanding that software solution spaces are commoditized
- When it’s time to sunset solutions and markets
Ok, I get it. And generally I do agree with the premise put forth by the author. BUT the idea that something we learned (whether in undergraduate school, graduate school, or elsewhere) is anything more than a framework or a template can be very dangerous.
If I’ve learned anything over the years, there is no individual tool that works for every industry, or even for multiple companies within an industry. Honestly, I think that is why you see so many Product Management frameworks out there … all of them approach things a bit differently, and each has some value in an of themselves. For me it is really more about the discipline necessary to a) evaluate/modify the usefulness of the template and b) apply it to your specific industry/company.
So as I evaluated the 5 Forces model … as a framework, such that I didn’t get overwhelmed by the specifics (ie – see the forest for the trees) … the argument became congruent to the strategic positioning exercise I was already undertaking.
What’s most important here is the discipline of asking the why questions … why does your organization exist … why do you do what you do? And why should your customer care?