Sixth Force
Title: Surviving a 10x force
Author(s): Andrew S. Grove
Source: Strategy & Leadership. 25.1 (January-February 1997): p35.
Document Type: Article
Copyright: COPYRIGHT 1997 Emerald Group Publishing, Ltd. http://www.emeraldinsight.com.ezproxy.sunway.edu.my/ Full Text:
Every business operates under forces that affect its competitive standing. Michael Porter has given us a model that describes five of these forces: existing competitors, customers, suppliers, possible substitutes or other ways of doing business, and potential competitors who, if you are very successful, want to get into your business and take a chunk away from you. Recent modifications in competitive theory have added a sixth force to this model: complementors. A complementor is a company or an industry whose product works with your product and without which your product would lose much of its value. For example, Microsoft and Intel are complementors. Intel's microprocessors and Microsoft's software would be much less valuable alone than they are together. I have used this model often to analyze situations, to understand how these forces balance and shape our existence.
But an important question to always ask is what happens when one of the forces becomes disproportionately large - an order of magnitude larger than the other forces. I call it a 10X force - shorthand for a tenfold impact. What happens to Intel if a new microprocessor technique comes out that is 10 times more powerful than our microprocessor? What happens to a retailer in a small town in America when Wal-Mart arrives? Wal-Mart is not just a competitor, it's a 10X competitor.
Under these circumstances, change occurs in the very way a business operates, and strategic analysis goes out the window. Strategic analysis using the five or six forces can deal with incremental changes in the competitive picture, but it cannot help when the whole competitive map is changing. When a 10X force hits, you end up with a completely new
Author(s): Andrew S. Grove
Source: Strategy & Leadership. 25.1 (January-February 1997): p35.
Document Type: Article
Copyright: COPYRIGHT 1997 Emerald Group Publishing, Ltd. http://www.emeraldinsight.com.ezproxy.sunway.edu.my/ Full Text:
Every business operates under forces that affect its competitive standing. Michael Porter has given us a model that describes five of these forces: existing competitors, customers, suppliers, possible substitutes or other ways of doing business, and potential competitors who, if you are very successful, want to get into your business and take a chunk away from you. Recent modifications in competitive theory have added a sixth force to this model: complementors. A complementor is a company or an industry whose product works with your product and without which your product would lose much of its value. For example, Microsoft and Intel are complementors. Intel's microprocessors and Microsoft's software would be much less valuable alone than they are together. I have used this model often to analyze situations, to understand how these forces balance and shape our existence.
But an important question to always ask is what happens when one of the forces becomes disproportionately large - an order of magnitude larger than the other forces. I call it a 10X force - shorthand for a tenfold impact. What happens to Intel if a new microprocessor technique comes out that is 10 times more powerful than our microprocessor? What happens to a retailer in a small town in America when Wal-Mart arrives? Wal-Mart is not just a competitor, it's a 10X competitor.
Under these circumstances, change occurs in the very way a business operates, and strategic analysis goes out the window. Strategic analysis using the five or six forces can deal with incremental changes in the competitive picture, but it cannot help when the whole competitive map is changing. When a 10X force hits, you end up with a completely new