Michael Porter's Big Ideas

Here is how Michael E. Porter regards the business landscape: Beginning in the mid-1980s, he more or less left the strategy world to its own devices, focusing his attention instead on the question of international competitiveness. He advised foreign governments on their economic policies and headed a U.S. presidential commission. He wrote books and papers on industry dynamics -- from ceramics manufacturing in Italy to the robotics sector in Japan. He spoke everywhere. He was consumed by understanding the competitive advantage of nations.

Then, in the mid-1990s, he resurfaced. "I was reading articles about corporate strategy, too many of which began with 'Porter said . . . and that's wrong.' " Strategy had lost its intellectual currency. It was losing adherents. "People were being tricked and misled by other ideas," he says.

Like a domineering parent, Porter seems both miffed by the betrayal and pleased by his apparent indispensability. I can't turn my back for five minutes. Well, kids, the man is back. Porter seeks to return strategy to its place atop the executive pyramid.

Business strategy probably predates Michael Porter. Probably. But today, it is hard to imagine confronting the discipline without reckoning with the Harvard Business School professor, perhaps the world's best-known business academic. His first book, Competitive Strategy: Techniques for Analyzing Industries and Competitors (Free Press, 1980), is in its 53rd printing and has been translated into 17 languages. For years, excerpts from that and other Porter works have been required reading in "Competition and Strategy," the first-year course that every Harvard MBA student must take. Porter's strategy frameworks have suffered some ambivalence over the years in academic circles -- yet they have proved wildly compelling among business leaders around the world.

This is the paradox that Porter faces. His notions on strategy are more widely disseminated than ever and are preached at business schools and in seminars around the globe. Yet the idea of strategy itself has, in fact, taken a backseat to newfangled notions about competition hatched during the Internet frenzy: Who needs a long-term strategy when everyone's goal is simply to "get big fast"?

With his research group, Porter operates from a suite of offices tucked into a corner of Harvard Business School's main classroom building. At 53, his blond hair graying, he is no longer the wunderkind who, in his early thirties, changed the way CEOs thought about their companies and industries. Yet he's no less passionate about his pursuit -- and no less certain of his ability. In a series of interviews, Porter told Fast Company why strategy still matters.

Business keeps moving faster -- but you better make time for strategy.

It's been a bad decade for strategy. Companies have bought into an extraordinary number of flawed or simplistic ideas about competition -- what I call "intellectual potholes." As a result, many have abandoned strategy almost completely. Executives won't say that, of course. They say, "We have a strategy." But typically, their "strategy" is to produce the highest-quality products at the lowest cost or to consolidate their industry. They're just trying to improve on best practices. That's not a strategy.

Strategy has suffered for three reasons. First, in the 1970s and 1980s, people tried strategy, and they had problems with it. It was difficult. It seemed an artificial exercise. Second, and at the same time, the ascendance of Japan really riveted attention on implementation. People argued that strategy wasn't what was really important -- you just had to produce a higher-quality product than your rival, at a lower cost, and then improve that product relentlessly.

The third reason was the emergence of the notion that in a world of change, you really shouldn't have a strategy. There was a real drumbeat that business was about change and speed and being dynamic and reinventing yourself, that things were moving so fast, you couldn't afford to pause. If you had a strategy, it was rigid and inflexible. And it was outdated by the time you produced it.

That view set up a straw man, and it was a ridiculous straw man. It reflects a deeply flawed view of competition. But that view has become very well entrenched.

The irony, of course, is that when we look at the companies that we agree are successful, we also agree that they all clearly do have strategies. Look at Dell, or Intel, or Wal-Mart. We all agree that change is faster now than it was 10 or 15 years ago. Does that mean you shouldn't have a direction? Well, probably not. For a variety of reasons, though, lots of companies got very confused about strategy and how to think about it.

Of course strategy is hard -- it's about making tough choices.