Michael Porter facts for kids

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Quick facts for kids Michael Porter
Porter in 2017
Born	Michael Eugene Porter (1947-05-23) May 23, 1947 (age 78) Ann Arbor, Michigan, US

Contributions	Porter hypothesis Porter's five forces Porter's four corners model

Michael Eugene Porter (born May 23, 1947) is an American businessman and a professor at Harvard Business School. He helped start important companies that give advice to businesses and groups working for good causes.

He is famous for creating a special way to understand how businesses compete, called 'Porter's Five Forces.' This idea is still used a lot today by companies and in schools. Many people see him as the 'father' of modern business strategy. He's one of the most important thinkers about how businesses can be successful and compete well. Governments, non-profit groups, and universities have all recognized his important work.

Early Life and School
Michael Porter's Career
Awards and Honors
Criticisms
Michael Porter's Legacy
Books and Articles
See also

Early Life and School

Michael Porter's father was an engineer and an army officer. Because of his father's job, Michael's family moved around a lot when he was a kid. They lived in different parts of the United States, and even in France and Canada. This made Michael interested in how different regions and countries grow their economies and why some are more successful than others.

Michael said that he first learned about competition through sports. He played football, baseball, and basketball when he was growing up. He was even on the championship golf team at Princeton University.

He went to Princeton University and earned a degree in engineering in 1969. He was the top student in his class. Later, he went to Harvard Business School and then Harvard University, where he earned his MBA and a PhD in business economics. A professor named Roland "Chris" Christensen inspired him to speak up and share his ideas in class.

Michael Porter's Career

Michael Porter created his famous "Five Forces" idea after taking classes about how industries work at Harvard.

Throughout his career, Porter has always said that being strategic means making clear choices. He has given many speeches about how important it is for businesses to plan their strategies. He has also advised many governments and non-profit groups on how to create their own plans.

Porter has written 20 books and many articles. Some of his well-known books include Competitive Strategy and The Competitive Advantage of Nations. He is the most often quoted author in the world of business and economics.

How Nations Compete

Understanding Competitive Advantage

In 1990, Porter wrote a book called The Competitive Advantage of Nations. This book was based on studies of ten different countries. He argued that for a country to be wealthy and successful, its companies and workers need to be very productive. He believed that the environment in a country or region helps this productivity.

Porter came up with the "diamond" framework. This idea shows four main things that work together to make a country successful:

Factor conditions: Things like skilled workers or good natural resources.
Demand conditions: What local customers want and how demanding they are.
Related and supporting industries: Having other successful businesses nearby that help each other.
Firm strategy, structure, and rivalry: How companies are run and how much they compete with each other.

Information, good reasons to work hard, and strong infrastructure (like roads and communication) were also key to a country's success.

In April 2014, Porter talked about how the US compares to other countries using something called "The Social Progress Index." He helped create this scorecard, which measures many different things about a country's well-being. Overall, the US was ranked 16th.

Michael Porter explained that a business can gain an advantage over its rivals in two main ways:

Cost advantage: This is when a business offers the same products or services as its competitors, but at a lower price.
Differentiation advantage: This is when a business offers better or unique products and services compared to its competitors.

Porter believed that good business management should focus on building and keeping these advantages. He first developed his "Porter's Five Forces" in 1979. This model is still widely used to figure out if an industry is a good place to start a business and if it will be profitable. It looks at:

The power of buyers (customers).
The power of suppliers.
The threat of new companies joining the industry.
The competition among existing companies.
The threat of other products or services that could replace what's being offered.

He first wrote about the Five Forces in a 1979 article and explained it more in his 1980 book, Competitive Strategy.

In 1985, Porter introduced the idea of competitive advantage, which became a very important concept in business management. He also published a bestselling book called Competitive Advantage: Creating and Sustaining Superior Performance. This book also talks about the value chain concept.

The Value Chain

Porter introduced the idea of value chain analysis in his 1985 book. The value chain looks at all the steps a company takes to make a product, from designing it to getting it to customers. These steps are seen as the basic parts that create a company's competitive advantage.

Improving Health Care

Porter has also worked on solving big problems in health care in the US and other countries. His book, Redefining Health Care, explains a new way to improve the value of health care. This has helped doctors, hospitals, insurance companies, and governments. The book won an award in 2007.

His article in the New England Journal of Medicine in July 2009, "A Strategy for Health Care Reform—Toward a Value-Based System," laid out a plan for health care reform in the US. His ideas are also used to help solve health care problems in developing countries.

Business Consulting

Porter has worked as a consultant, giving advice to businesses, governments, and non-profit groups. He has advised many US and international companies, including Caterpillar and Procter & Gamble. He also served on the boards of directors for two public companies.

He has influenced economic policy, working with the US government. He has also led national economic strategy programs in other countries. For example, in 2009, he was working with the presidents of Rwanda and South Korea.

In 1983, Porter helped start the Monitor Group, a company that gave advice on business strategy. This company later became part of Deloitte Consulting in 2013.

Non-Profit Work

Michael Porter has started four major non-profit organizations:

Initiative for a Competitive Inner City (ICIC): Started in 1994, this group helps with economic growth in struggling city areas. He still leads this organization.
Center for Effective Philanthropy: This group creates ways to measure how well charitable foundations are doing.
FSG Social Impact Advisors: He co-founded this leading non-profit strategy firm. It helps non-profit groups, companies, and foundations create social value.
International Consortium for Health Outcomes Measurements (ICHOM): Co-founded in 2012, this group works with patients and health care providers to create global standards for measuring health outcomes.

He also serves on the Board of Trustees for Princeton University.

Politics

Michael Porter, along with Katherine Gehl, has looked at the US two-party political system. They describe it like a "political industry" where the two main parties compete in ways that help themselves more than the public. They published a report on this topic in 2017 and a book in 2020 called The Politics Industry: How Political Innovation Can Break Partisan Gridlock and Save Our Democracy.

Awards and Honors

In 2000, Michael Porter was given the highest honor for a professor at Harvard University, becoming a University Professor. He has also won the McKinsey Award six times for writing the best article in the Harvard Business Review each year.

Criticisms

Some experts have criticized Porter's work. They say that his arguments are sometimes inconsistent and that his conclusions are not always supported by enough evidence. They also say that he sometimes doesn't give enough credit to others who came up with similar ideas in economics.

Michael Porter's Legacy

Michael Porter has written many books about modern business strategy. His ideas and theories about how to manage a business, like Porter's Five Forces, Porter's Diamond model, Porter's Generic Strategies, and Porter's Value Chain, are widely taught in universities around the world.

In a 2010 interview, Porter said that his greatest skill is being able to take a very complicated problem and understand it in a way that helps people actually solve it.

Books and Articles

Porter, M.E. (1979) "How Competitive Forces Shape Strategy", Harvard Business Review, March/April 1979.
Porter, M.E. (1980) Competitive Strategy, Free Press, New York, 1980. This book was voted the ninth most important management book of the 20th century.
Porter, M.E. (1990, 1998) The Competitive Advantage of Nations, Free Press, New York, 1990.
Porter, M.E. (1996) "What is Strategy", Harvard Business Review, Nov/Dec 1996.
Porter, M.E. (1998) On Competition, Boston: Harvard Business School, 1998.
Porter, M.E. & Teisberg, E.O. (2006) Redefining Health Care: Creating Value-Based Competition On Results, Harvard Business School Press, 2006.
Porter, M.E. (2008) "The Five Competitive Forces That Shape Strategy", Harvard Business Review, January 2008.
Porter, M.E. & Kramer, M.R. (2011) "Creating Shared Value", Harvard Business Review, Jan/Feb 2011.
Gehl, K.M. & Porter, M.E. (2017) "Why Competition in the Politics Industry is Failing America", Harvard Business School, September 2017.
Gehl, K.M. & Porter, M.E. (2020) The Politics Industry: How Political Innovation Can Break Partisan Gridlock and Save Our Democracy, Harvard Business Review Press, 2020.