Michael Porter, considered the most influential business strategist over the last 30 years, gave a lecture on competitiveness and development in Trinidad and Tobago. In the lecture, he emphasized that governments should focus on facilitating private sector productivity rather than redistributing resources. He also stressed that competitiveness requires coordination between the public and private sectors. In an interview after, Porter discussed China's transition to an innovation-based economy, challenges facing Latin America, the concept of shared value between companies and society, and how the internet on its own is not a source of competitive advantage.

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. 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. 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. 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. 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. 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. 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. 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. “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”.