The Public Interest – Is it Porter’s Sixth Force?

One of the things we discuss in the class I teach is Porter's Five Forces. The model helps managers understand the strategic forces that come into play in their industry, and how they affect profitability. We study it in the context of various I.T. related business models.

Nicholas Carr wants to add a sixth force, the public. In a paper entitled The Public Wants Your Profits (I've had trouble opening the file), Carr argues that the public now influences the generation and distribution of profits. He cites Wal-Mart as an example. He states that managers need to recognize that the public interest now manifests itself as an economic interest – and hence must be a core concern of business strategy. That is true, but I'm not sure it is as important for most companies as Carr makes it out to be.

My initial reaction to this is that yes, it is a real pheonomenon, but it almost exclusively effects large consumer product companies. I'm not convinced that it matters for small businesses, or for say… IBM. What do you think? Is this a sixth force?

  • Rob,

    ever since Porter’s Five Forces was published, there have been people attempting to add forces to it. I have serious misgivings about this tactic, in general, and with Carr’s recommendation, in particular.

    I had no pRoblem accessing the linked document and, after reading it, I must say that Carr’s core argument doesn’t hold up to careful scutiny. That having been said, he does raise at least one interesting point, i.e. where in Porter’s Model does “public interest” fit.

    One place, quite obviously, is in the realm of “Buyer Power.” But, as you are no doubt aware Porter doesn’t deal with this as explicitly as he could have or would have if he were writing today.

    The issue that Carr raises is one that has come up in several of my classes as well. The way I have dealth with it is to include an additional strategy framework that treats the topic of “public interest” specifically. It is the 4-I’s framework of David Baron, a strategy professor at Stanford. The title of his book is “Business and its Environment.”

    In many ways Baron’s book picks up where Porter leaves off. That is to say, it is devoted to the examination of how firms compete in the non-market sector and how non-market actors influence firm performance.

    The four I’s of Baron’s framework are Issues, Interest, Institution, and Information. I have used it for many strategy cases in the last several years and have found that it complements Porter very well.

    To conclude, my thought regarding 6th forces is this: Let Porter be Porter and find other frameworks to fill in the gaps that we and Porter all know the theory has.


  • Rob

    Excellent comments Starling. I’ll check out Baron. Thanks.