"Strategy and the
Michael E. Porter
Harvard Business Review, March 2001.
Many of the pioneers of Internet business, both dot-coms and established
companies, have competed in ways that violate nearly every precept of good
strategy. Rather than focus on profits, they have chased customers
indiscriminately through discounting, channel incentives, and advertising.
Rather than concentrate on delivering value that earns an attractive price
from customers, they have pursued indirect revenues such as advertising
and click-through fees. Rather than make trade-offs, they have rushed to
offer every conceivable product or service.
It did not have to be this way-and it does not have to be in the future.
When it comes to reinforcing a distinctive strategy, Michael Porter
argues, the Internet provides a better technological platform than
previous generations of IT. Gaining competitive advantage does not require
a radically new approach to business; it requires building on the proven
principles of effective strategy.
Porter argues that, contrary to recent thought, the Internet is not
disruptive to most existing industries and established companies. It
rarely nullifies important sources of competitive advantage in an
industry; it often makes them even more valuable. And as all companies
embrace Internet technology, the Internet itself will be neutralized as a
source of advantage. Robust competitive advantages will arise instead from
traditional strengths such as unique products, proprietary content, and
distinctive physical activities. Internet technology may be able to
fortify those advantages, but it is unlikely to supplant them.
Porter debunks such Internet myths as first-mover advantage, the power of
virtual companies, and the multiplying rewards of network effects. He
disentangles the distorted signals from the marketplace, explains why the
Internet complements rather than cannibalizes existing ways of doing
business, and outlines strategic imperatives for dot-coms and traditional
to related article at HBS Working Knowledge
This article earned the 2001
McKinsey Award (pdf).
article at Harvard Business Online
Caught in the Net"
John A. Byrne
BusinessWeek, August 27, 2001.
Harvard Business School's Michael Porter reflects on how companies
misread the first great dot-com wave-and suggests ways the New Economy
"How Information Gives You Competitive Advantage"
Michael E. Porter and Victor E. Millar
Addresses the role of information technology in affecting competition.
Information technology plays a roll in both industry structure and competitive
advantage. The five-forces framework provides the structure for analyzing
the industry effect, while activities and the value chain provide the structure
for examining the competitive advantage effect. Although this article was
written more than ten years ago, the issues remain current. Today's
concerns include the role of the Internet, new computer-aided design and
manufacturing technologies, and enterprise-wide information systems. The
tools in this article provide an approach to understanding the competitive
significance of the latest generation of information systems and software.
"Strategy and the Internet"
(New to the 2008 edition)
See chapter/article description in the framework publication