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LINK 
TO 
ORIGINAL 
PUBLICATION 
IN 
SPANISH: 
GESTIÓN 
Magazine 
(203), 
16-­‐22: 
http://es.scribd.com/doc/112078534/Ent...
The presenter vehemently affirmed that the key lies in the strategy and he suggested that 
measures be taken not only at t...
how should it move from being a manufacturing economy to one that is innovation-based, 
in order to be competitive in the ...
competitive strategy. In the article published by them in 2006 in Harvard Business 
Review Latin America, they suggest tha...
In that context, the role of the Government is to apply regulations in a different way in order 
to facilitate an environm...
gain access to the fundamental concepts in one single book. One way or another, I don’t want 
to go back. 
Research still ...
STRATEGIC OBJECTIVE 
THE ENTIRE 
SECTOR 
DIFFERENTIATION 
COST LEADERSHIP 
ONLY ONE 
SECTOR 
SEGMENT FOCUS 
LOW COST FOCUS...
By extension, he developed the notion of clusters or production chains, understood as highly 
specialised production units...
“There’s no need to hide behind culture as an excuse for not being competitive, productivity 
is a win-win strategy, whoev...
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‘There is no barrier to be prosperous, but us’

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Porter is considered to be the most influential thinker in the world of business over the last 30 years. He has developed fundamental concepts in areas of management such as strategy, competitive advantage, value chain and clusters. His work escalated from a micro level, which sought to explain business competitiveness, to a framework context that refers to the competitiveness of nations. The following is an extract from his conference held in Port of Spain and an exclusive interview. (This article has been reproduced with the permission of Gestión Magazine for non-commercial purpouses)

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‘There is no barrier to be prosperous, but us’

  1. 1. LINK TO ORIGINAL PUBLICATION IN SPANISH: GESTIÓN Magazine (203), 16-­‐22: http://es.scribd.com/doc/112078534/Entrevista-­‐a-­‐Michael-­‐E-­‐ Porter-­‐Lo-­‐unico-­‐que-­‐nos-­‐impide-­‐ser-­‐prosperos-­‐somos-­‐nosotros-­‐mismos MICHAEL E. PORTER THE FATHER OF THE COMPETITIVE STRATEGY ‘There is no barrier to be prosperous, but us’ Porter is considered to be the most influential thinker in the world of business over the last 30 years. He has developed fundamental concepts in areas of management such as strategy, competitive advantage, value chain and clusters. His work escalated from a micro level, which sought to explain business competitiveness, to a framework context that refers to the competitiveness of nations. The following is an extract from his conference held in Port of Spain and an exclusive interview. By Albertina Navas, from Port of Spain (Trinidad and Tobago) H is discourse involves a convincing logic and his speech is eloquent. He avoids the overuse of technical terms and presents illustrative and appropriate examples. That is how Michael Porter speaks about the complex concepts of competitiveness and productivity, in such a simple tone that he comes across as not saying anything new. Therein lies the profoundness of his contribution, in that art of being able to successfully convey the abstract and transform the strategy into a notion that can be applied not only by a small company, but also by the leading economy in the world. His name is a reference. There is no business school that does not impart his teachings nor is there any manager who has not taken his thoughts into consideration in decision-making. Thus, on March 25, his conference Competitiveness and Development was held in Port of Spain, with almost 600 participants from seven countries, in addition to the hosts (Mexico, Venezuela, Colombia, Ecuador, St. Lucia, St. Vincent and the Grenadines and Suriname). Professor Porter delivered a 70 minute presentation at the annual event Distinguished Leadership and Innovation Conference, organised by the Arthur Lok Jack Graduate School of Business. Formality and protocol were the tone of the event, which was attended by major executives and entrepreneurs from the region, as well as high-ranking officials such as Prime Minister Kamla Persad-Bissessar and various State Secretaries. Following the welcome address delivered by Dr. Arthur Lok Jack, one of the most influential businessmen and entrepreneurs in the Caribbean, the much anticipated conference began with a suggestive invitation to reflection presented by Porter: “There is no barrier to be prosperous, but us. What creates prosperity is how we think, and then how we act”. With slides chock full of statistical diagrams; the Professor began by establishing the differences between competition and competitiveness. He emphasised that competition is a condition in which one party wins and the other loses, while productivity produces value and he assured that whoever is more productive will inevitably be more prosperous. After that definition, he proceeded to fully explain the competitiveness of nations. He began by defining two aspects of prosperity. One is inherited from natural resources, which he described as limited and in which he identified significant involvement from the Government, driven by the desire “to get the biggest piece of the pie”. The second type of prosperity, which is derived from productivity, he qualified as being unlimited, with the capacity to expand the pie and which calls for the Government to play the role of facilitator and creator of a culture of productivity.
  2. 2. The presenter vehemently affirmed that the key lies in the strategy and he suggested that measures be taken not only at the macro level (fiscal and monetary policies, social infrastructure, political institutionality, human development…) but at the micro level as well (environment for conducting business, cluster development; sophistication of company operations…). Porter’s style is reiterative and sharp. Accustomed to giving lectures, he insisted that: “Only business can create wealth and profit”. On that basis, he recommended that Governments not waste time on matters that fail to generate value. He cited as an example, the money used to fight crime, which he called a burden on a country’s prosperity. “Don’t waste time in things that don’t create value, it is a tax to the prosperity of the country”. He underscored the notion that there is no single policy for being competitive and, among other alternatives; he cited clusters coupled with an option to diversify the economy of a nation. He advised that a cluster map be produced and strategic support given to those that create more value and provide more wealth. He put forward a proposal to small economies that they focus on niches and invited them to use Singapore as a reference, since it produces nothing but it created infrastructure and an environment that facilitates business with the rest of Asia. According to this thinker of the economy and management, it is fundamental for each country to have its growth plan and he was adamant in insisting that the competitiveness of a nation is not a task that falls exclusively on the shoulders of the Government, but instead it requires coordination between the public and private, and he made an appeal to the academia to participate as a bridge between these worlds. Michael Porter fervently defends the role of private enterprise as the generator of a country’s wealth and categorically declares that Governments do not produce prosperity. He insistently condemned protectionism and was harsh with those who hide behind culture in order to delay their route toward competitiveness. He maintained that political cycles run for 4 or 5 years, while competitiveness extends for 10 or 15 years. Therefore, competitiveness should be an issue that goes beyond a Government and he stressed that the true challenge of the political sector is to provide continuity and to plant these ideas among citizens. In keeping with his opening, he closed by making an appeal for a positive attitude: “If we focus on the fact that we are small and that we don’t have natural resources, no one is going to help us. If Singapore had thought like that, it would not be where it is today”. For many it was an enjoyable and brilliant lecture, while others considered his thinking to be diluted with generalities. What is certain is that one cannot expect tailor-made recipes or formulas from a great thinker, his mission is only to present guidelines so that each player involved would take the “what” deemed applicable and seek out the “how” on their own. Following a lengthy applause at the end of his intervention, in pure celebrity style, he invested time and patience in front of dozens of cameras, signing one autograph after the other. Even though he does not usually attend private meetings, he accepted the invitation to a brief exclusive interview with openness and courtesy. With a smile and accepting “the risk of answering questions”, he shared the following reflections: Professor Porter, your competitive strategy model, represented in the Diamond that bears your name (diagram 1), which was originally applied at the business level, is now the framework that explains the competitiveness of regions and nations. Based on the factors that you indicate for a country’s competitiveness , how do you think China should move from the ‘made in China’ model to ‘invented by China’, in other words,
  3. 3. how should it move from being a manufacturing economy to one that is innovation-based, in order to be competitive in the long term? China is very quickly building innovation systems and infrastructures and is generating pools of scientists and technologists, in addition to which it is developing many research activities and is strengthening its university system. I am certain that China is moving rapidly toward an innovation economy. The real problem is that China is not playing by the rules. On the contrary, it is following various policies that are creating distortions that affect other countries, for example, in matters associated with intellectual property. There are Chinese companies that use intellectual property in an unfair manner, they do not pay author’s royalties nor do they pay for user licences. Due to its size, China is exerting pressure on foreign companies to carry their research centres to that country and from there they could have access to the Chinese market. In several different ways, China is breaching the principles of the World Trade Organisation (WTO) and the global economic community. I believe that China will begin to suffer severe problems in the context of a global economy. It is undoubtedly progressing, but the way in which it is doing so is damaging companies in other countries. Therefore, the international community must initiate dialogue with China so that it could, hopefully, begin to create fair competition with the rest of the world. This reminds me a little about the case of Japan during the eighties. At that time, Japan was creating substantial concern in other countries over the protectionism that it was promoting, but years later; Japan changed many of its policies and was once again part of the world economy. Now Japan no longer instils fear as an economy, it is simply an important member of the international economic community. During the conference Competitiveness and Development that you just presented, on several occasions you stressed that a fundamental role of Governments in the competitiveness of their countries is to encourage private companies to boost their productivity and improve their efficiency. To what extent is this concept applicable to realities that are politically unstable, are prisoners of economic uncertainly and suffer serious problems of corruption, as is the case in some Latin American countries? Corruption is one of the most destructive situations for developing countries since it breaks the natural link between success and productivity. Corruption makes you think that success can be achieved by breaking the system or asking for special favours, and that is totally contrary to competitiveness. It is clear that countries that cannot control corruption are marooned, they don’t grow, they don’t progress, they are inefficient and have poor public policies. Now, with respect to instability, I believe that we must be aware that it is a condition that will always exist. There will always be changes; there will always be problems stemming from natural disasters or financial crises, etc. The only way to manage all of this is, precisely, by generating competitiveness and productivity so as to be able to react quickly when these scenarios arise. We must stop thinking that the day would come when everything would be stable and secure. We must understand that this condition of continuous change is the only thing that will lead us to face the economic future with competitiveness strategies. The concept of Strategic Orchestration, which proposes connecting nodes (different companies) in order to generate a proposal of value for the client, is created by its authors (Alejandro Ruelas-Gossi and David Sull) as an evolution of the concept of
  4. 4. competitive strategy. In the article published by them in 2006 in Harvard Business Review Latin America, they suggest that value is not added, but is instead orchestrated. In your opinion, is strategic orchestration one step ahead of the competitive strategy? Strategic orchestration? Honestly… I am not familiar with that concept. In any event, there are many ways of seeking out and achieving competitive advantages. This is a process that is in continuous development. If that notion helps companies to move, to strive toward setting themselves apart from the rest and creating a unique position in the market, providing their clients with value, in a way that is different from their rivals, then that notion is useful. What is important is the essence of the strategy, which is to discover a unique position in the market, providing value in a way that differs from that of the rivals. This requires new types of competition, but how is that accomplished? … There are many approaches. While that is the objective, any notion is useful. In one of your recent articles, published in January of this year in Harvard Business Review entitled ‘Creating shared value: How to reinvent capitalism and unleash a wave of innovation and growth’, you presented the concept of Shared Value, understood as a formula for creating value for shareholders by providing the society with value. Do you believe that this is the happy medium between the avarice of companies that only seek to maximise profits and the charity of non-profit organisations? Ultimately, an artificial divide has been created between the social and the economic. This has occurred since the legitimacy of business has come into question and there is also the belief that business hurts the society. As a result, I believed that the time had come to try to better understand the purpose of business. There are those who believe that turning a profit is the single goal of companies, but that is not the case. I believe that it is indeed possible to adopt a new way of thinking and addressing social problems. Of course business strives to generate profit, but there are also ways of obtaining economic benefits while having a fundamental impact on social areas such as health, education, the environment, the use of natural resources, among others. However, I would not say that the concept of Shared Value that I propose would be the happy medium, since the word medium suggests the idea of being in the middle of the road between one thing and another. Shared Value is a philosophy. In the past, it was the belief that business is a way of generating profit and nothing more, and that social and charitable organisations are the only appeals for something good to be done for the society. It’s a very narrow vision. This is my point: we don’t need to choose between one or the other, they are not exclusive, it’s not a question of one or the other. What’s interesting is that we can have both without being inconsistent: business can generate profit and can also do something good for the society. In the article that I published in January, which you mentioned, I suggested that some of the most interesting opportunities for business are presented in areas that cover basic necessities such as security, housing, food, health, the environment … We cannot remain trapped in the past, seeing just one economic perspective in business. Neither do I want to say that there is no need for non-profit organisations, obviously they are needed since they must make certain investments in order to raise the level of some social areas. It’s more than that. I believe that if non-profit organisations do their job, private business could generate more shared value.
  5. 5. In that context, the role of the Government is to apply regulations in a different way in order to facilitate an environment in which business could generate even more shared value than at present. It’s a new way of thinking that creates new roles and opens up new opportunities. In some of your public interventions years ago, you were asked about the Internet being a source of competitive advantages. Your argument usually is that although the Internet seems to establish new game rules, at the end of the day, the old rules of competition will re-surface and nullify the status of the Internet as a source of competitive advantage on its own. In light of the evidence of the great success of Internet-based business, such as Google, Twitter and Facebook, do you maintain that position? Definitely. The Internet on its own is not the creator of competitive advantage in any of these cases. The point is the way in which the Internet was used as a tool for creating products and services that did not exist previously. If we look at it closely, the competitive advantage was not the Internet, but rather the way in which the intelligent people who were behind that business decided to use this technology to be more productive. My opinion on this matter is that the Internet is not a competitive advantage by itself, but instead the advantage lies in using this tool innovatively so as to generate value. Therefore, the Internet does not generate value only for companies that are based on this technology, but for any type of company ranging from automobile companies to those providing financial services. The Internet is merely technology, while competitive advantage is a unique way of developing tools, such as this technology for example, in order to create distinctive advantages. If we focus on the examples that you cited, Google’s business is different from that of Facebook and, in turn, they both differ from Amazon. Each one uses the technology in a different way. What is authentic is not the technology, but rather the way in which each company uses said technology. I have one final question that is somewhat personal. Professor, your concepts in the world of business have been so relevant and influential that they became generic. From the perspective of your personal branding, my question is: Since your differentiating factors have become generic, what is your competitive advantage now in your capacity as a thinker in the areas of management and business? (Pensive) I think I prefer to leave this for the others to decide, but I’d like to add something. My work has evolved over these years and now I am exploring new frontiers. For example, my recent articles focus on Social Security. I am very much excited about this attempt to think about an approach for transforming the way in which we have seen up to now. Also, I have stopped quite a bit to reflect on the role of co-operation in the society with the concept of Shared Value, which you mentioned in an earlier question. What I’m trying to do, and if there’s anything that I am proud of it’s that my ideas have been disseminated extensively. What I’m doing now is moving toward new areas, but there is always a link between some and others. My contribution was, first of all, to focus on highly complex issues such as competition, from an extremely simple perspective, with an approach that helped managers to take decisions. Those were the 4 forces or the value chain and I have encountered complicated issues like the competitiveness of nations. I believe that this is important, having seen things from a perspective that is more systemic, more extensive, since we academics are sometimes guilty of being very profound, yet very narrow in our reflections. In time to come, I will publish more on Social Security and one of my editors is currently working on a book that summarises all of my work on strategy, since not everyone has had the opportunity to read all of my books. In this way they will be able to
  6. 6. gain access to the fundamental concepts in one single book. One way or another, I don’t want to go back. Research still fills me with energy and coming to things like this (he says pointing to the podium where he presented his conference). I don’t know if I answered the question, but I want to say that I’m not here just to deliver a presentation, I’m trying to help effect change. Therefore, my presence here would have been worthwhile if I could somehow serve as a catalyst for change. ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: His thinking defined the area of business over the last 30 years Ann Arbor, Michigan (United States), 1947 Michael Eugene Porter is a leading authority on matters associated with competitive strategy, competitiveness and economic development of nations. He is considered to be the world’s most influential thinker on management and competitiveness. He has been the recipient of numerous awards, including the highest professional recognition (Bishop William Lawrence) conferred on a lecturer by the Harvard Business School. Professor Porter has received more than a dozen honoris causa doctorates at universities around the world. He is the author of 18 books and more than 125 articles and is currently the head of the Harvard Institute for Strategy and Competitiveness, in addition to which he is offering a course at said University. His first great contribution was the article ‘How competitive forces shape strategy’, published in 1979 in Harvard Business Review. This presented the Five Forces Model (diagram 1), based on which the attraction of an industrial sector hinges on the movement in the market by the following factors: competitors, substitutes, clients, providers and new entrants. Threat of new competitors Bargaining power of suppliers Rivalry among existing competitors Bargaining power of clients Threat of substitute products and services His masterpiece was Competitive Strategy: Techniques for analysing industries and competitors, which is undergoing its 63rd reprint and has been translated into 19 languages. In that piece he proposed two possible and mutually exclusive types of leaderships: cost or differentiation (diagram 2). Another important book was Competitive Advantage: Creating and Sustaining Superior Performance (1985), which has had 38 reprints. This provided the theoretical value chain model, which categorises the activities that add value in an organisation.
  7. 7. STRATEGIC OBJECTIVE THE ENTIRE SECTOR DIFFERENTIATION COST LEADERSHIP ONLY ONE SECTOR SEGMENT FOCUS LOW COST FOCUS Exclusivity enjoyed by the client Low cost positioning STRATEGIC ADVANTAGES Matrix demonstrating Porter’s generic strategies In 1990, Porter applied his business model to countries and regions in the publication The Competitive Advantage of Nations, which made famous the diagram known as the Porter Diamond (diagram 3). This sought to demonstrate that a nation’s competitiveness depended not only on the abundance and quality of the classic factors of production and support industries, but also on the conditions of demand and strategy, as well as the structure and rivalry of the companies belonging to the sector. Company Strategy & Rivalry • A local context and regulation that promotes investment and ongoing improvement Protection of Intellectual Property • Open and vigorous competition among locally rivals Factor Conditions Demand Conditions • Presence of high quality, specialised factors available to firms: • Human Resources • Capital Resources • Physical Infrastructure • Administrative Infrastructure • Information infrastructure • Scientific and Technological Infrastructure • Natural Resources • Sophisticated and demanding local clients • Local clients with needs that are ahead of international needs • Unusual local demand in specialised segments that can be served nationally and internationally Related and Supporting Industries • Access to appropriate local providers and firms in related areas. Presence of clusters instead of isolated companies • Successful regional economic development is a process of successive economic improvement, in which the regional business environment develops and promotes increasingly sophisticated forms of co-operation • Source: Porter (2001)
  8. 8. By extension, he developed the notion of clusters or production chains, understood as highly specialised production units, located in a specific geographic region, which allow high added value products to be provided for the purpose of generating competitive advantages at the global level. In 2008, he published the book On Competition, which contains his most influential articles on strategy and competition. His most recent contribution was the article ‘Creating shared value: How to reinvent capitalism and unleash a wave of innovation and growth’, published in January of this year by Harvard Business Review. In this he presents the notion of Shared Value (CSV), differentiating it from Corporate Social Responsibility (diagram 4), defined as operating policies and practices that raise the competitiveness of a company by simultaneously developing economic and social conditions in those communities where their business is based. CSR CSV Value: Doing good Value: Economic and social benefits related to cost Citizenship, philanthropy, sustainability Creation of joint value between company and community Voluntary or in response to external pressure Part of competitiveness Separate from profit maximisation Incorporated into profit maximisation Actions are determined by reporting requirements and personal preferences Actions are company specific and are determined internally Impact limited to corporate footprint and by the CSR budget Realigns the entire company budget Porter graduated in Mechanical and Aerospace Engineering from Princeton University and has an MBA and a Doctorate in Corporate Economics from Harvard University. As a young man, he lived and travelled around the world since his father was an officer in the United States Navy. He is also an outstanding golfer. Today, he lives in Brookline (Massachusetts) and has two daughters. Phrases “There is no barrier to be prosperous, but us”. “Don’t waste time on things that don’t to create value, it’s a tax on a country’s prosperity”. “Only private business can generate prosperity fairly, that’s the magic”. “Competitiveness is not the sole responsibility of the State, the public and private sectors must work together”.
  9. 9. “There’s no need to hide behind culture as an excuse for not being competitive, productivity is a win-win strategy, whoever is more competitive is more prosperous”. “If we focus on the fact that we are small and that we don’t have natural resources, no one is going to help us. If Singapore had thought like that, it would not be where it is today”. “The socialist governments of Latin America create the false notion that the rich are getting rich at the cost of the poor, so the poor don’t see any hope, only the dark side of capitalism”. “Corruption is one of the most destructive situations for developing countries since it breaks the natural link between success and productivity”. “Business can turn a profit and also do something good for the society”.

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