“What I’ve always tried to do, for better or for worse, is to get at the underlying, fundamental, structural elements of competition and of how firms compete, in a way that’s really invariant to whatever best practices happen to exist or whatever trends are,” he claims. “So you can do a five forces analysis in 1985 and you can come to one conclusion based on the circumstances of the day, and you can take the same industry in 2010 and it’s going to look very different.”
In 2008, Prof. Porter revisited and revised his five forces article, reviewing the “vast literature” that had emerged around it and concluding that the original theory was robust.
He has also not rested on his prominently displayed laurels. Having outlined the five forces’ impact on strategy, he became interested in the competitiveness of locations and nations, as well as in the business clusters that emerge around successful companies. He parlayed this into analyses of inner cities, the compatibility of environmental progress and economic growth, and his latest headline concept: “creating shared value” – the idea that corporate activity which advances society will contribute to a positive cycle that allows everyone to grow faster.
Prof. Porter insists “CSV” will underpin the creation of “a next and more sophisticated view of what capitalism is all about,” but it has stirred up some resentment in the established corporate social responsibility community. Advocates of CSR see Prof. Porter’s concept as neither new nor different. “It’s fundamentally different,” he retorts, pointing to the many e-mails he receives from companies “energized by the idea that they could think about all of these social issues in this different way.”
It is also different from his earlier work, which was grounded in data-based research. The Economist, for example, criticized “the paucity of evidence.” The HBR article Prof. Porter co-authored in January cites a series of examples of best practice, such as Nestlé’s support for coffee growers in Latin America and construction company Urbi’s “rent-to-own” mortgage-financing plan in Mexico. But as Prof. Porter himself says, most examples of best practice are “constantly changing, so that means a lot of management literature after a while starts to look a little bit stale.”
Could that be the fate of his work on CSV? He admits that finding empirical evidence and support for the concept “is the preoccupation now.” But “if companies can start to show the growth in market share [and]profit improvements that they get from pursuing these strategies, I think capital markets will become the biggest cheerleaders.”
Eventually, he says, the world will look back and consider the development of CSV alongside China, globalization and the economic downturn as “one of the big discontinuities of this particular point of economic history.”
Given Prof. Porter’s obvious desire to leave his mark on history, I wonder to what extent recent reversals of history have left their mark on his carefully burnished reputation – particularly his work with the Libyan government of Colonel Moammar Gadhafi. Monitor, the consultancy he co-founded, has admitted it failed to register as a lobbyist for the now-disgraced regime. Prof. Porter himself helped prepare reports, including a 2006 study heralding “the dawn of a new era” as the country integrated itself into the global economy.
For the first time, the verbal onrush of his thoughts slows. The invitation came at a particularly exciting point in Libyan history, he says, when the country “had essentially settled its disputes with the rest of the world” and it was official U.S. policy to support the country as it edged towards reform. He stopped work in Libya in 2007, when it became clear the hopes for reform had died. He has since become more cynical about invitations to attach his substantial kudos to companies or governments: “I am now probably even more careful in all of my work – and it’s not even in funky places any more.”
As it happens, he says, one of the Libyans who worked with him on the original study is now de facto prime minister of the transitional council. The report he helped write, and others, are, to Prof. Porter’s credit, still available on his institute’s website. What is more, he says, they will be “incredibly useful and valid for where Libya goes from here.”
As the former university sports star makes a dash for the airport, the difference between him and a chief executive suddenly becomes clear. Few business people would expect to see their strategies outlast them. Prof. Porter, by contrast, has no doubt that his ideas will still be fuelling corporate, economic and political strategy long after he has left his institute for the last time.Report Typo/Error
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