Porter’s Five Forces applied to everyday Life
Management Consultancy and frameworks go hand in hand. These frameworks are used by the consultants in almost every situation, starting from the interview that gets them inside a MC firm to solving practical business problems that helps them advance their career ladder.
But ever wondered if we can apply these frameworks to our everyday life as well?
Conceptually, there is no right or wrong answer. These frameworks were not meant for everyday life but nothing stops them from being true there as well.
Let’s try applying one of them, Porter’s Five Forces and see if we get something concrete.
First of all a quick recap of what the framework is.
This framework helps to understand a particular company’s position in a market in terms of various forces that determine the market dynamics.
A Company, working in a particular market is influenced by the following 5 forces:
· Bargaining Power of Buyers
· Bargaining Power of Suppliers
· Threat of New Entrants
· Threat of Substitutes
· Intensity of Competitive Rivalry
Lets assume we are that company, operating in the market called Corporate Life. How do these 5 forces govern our behavior?
· Bargaining Power of Buyers
Our buyers, that is people who are the recipients of our work, exercise considerable power on us. They can be our immediate manager or skip level managers or even higher up the ladder. The more their bargaining power, less is the freedom that an employee feels. In fact one sign of good corporate culture is that a company allows an employee certain percentage of his time where he is free to work on a project he feels strongly about. The bargaining power of Buyers on that project should be less. However this cannot apply to routine, BAU like work.
· Bargaining Power of Suppliers
Suppliers in this context would be people whom we depend upon for our work. They could be our immediate reportees , indirect reportees, cross functional stakeholders etc. The bargaining power of them can be substantial, especially cross functional stakeholders. It will also depend on your role. For someone who is a Product Manager, this is one of the most strong of all the five forces, if not the strongest.
To persuade the suppliers, your leadership skills come to the forte. You have to command respect and have a healthy working relationship with your suppliers to ensure that delicate balance in this pan.
· Threat of New Entrants
This is the threat that a new person who may join or has joined in a similar or related capacity as you and thus become your direct competitor in the workplace. This is a good force to have in corporate as it keeps you on your toes and looking to be better than yesterday to dwarf out any threat that may come your way.
But you should always keep an eye out for new entrants and never slip in your comfort zone for too long just as the old quote which says that progress happens outside the comfort zone.
· Threat of Substitutes
This is related to the threat of New entrants. The threat is that the new entrant may be so good that it substitutes you in parts or full. Parts maybe certain projects where he gets a preference over you and full is replacement.
However, substitutes can be technologies that make your role redundant.
Thus, the need to stay relevant always.
· Intensity of Competitive Rivalry
How strong is the competition at your workplace? Is it healthy or unhealthy?
Are there due rewards at the end of the competition?
Are runner ups getting rewarded as well?
Few of these questions which help understand this force.
It is important for the HR department in a company to promote this force but in a healthy way.
And that there is no prize for the runner up shouldn’t apply here.
So, I do think that Porter’s Five Forces may apply to a reasonable degree of success to our life as well.
What gets measured gets managed, so its important to measure the impact of the Five Forces and act accordingly.
