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Michael E. Porter discusses regional, global competitiveness

July 28, 2014 //
At the Union League of Philadelphia, Michael E. Porter   discussed the looming challenges for U.S. competitiveness, with   implications for Philadelphia.
At the Union League of Philadelphia, Michael E. Porter discussed the looming challenges for U.S. competitiveness, with implications for Philadelphia.

In a recent day-long visit to the Fox School of Business, legendary business strategist Michael E. Porter addressed two different audiences – Fox MBAs and Philadelphia executives – on two different topics: creating shared value through business and addressing the looming challenges of U.S. competitiveness.

While his presentations differed in substance, they were unified in a single call to action: Make business, and thereby the world, better.

“Making a profit is the most fundamental, powerful thing on this earth for making life better,” Porter told Fox graduate students in an afternoon presentation March 11, adding later, “If we can get businesses in the business of solving societal problems – as businesses – we truly have something exciting.”

Porter, the Harvard professor most renowned for his Five Forces analysis – a pillar of business strategy globally and taught to nearly every business student – visited Fox as part of the school’s ongoing Innovation Leadership Speaker Series (ILSS).

Mercedes Delgado, assistant professor of strategic management at the Fox School, facilitated Porter’s visit. Delgado, whom Porter called a “stunning young scholar,” is a partner on Porter’s research on innovation clusters and competitiveness as a senior associate of his Institute for Strategy and Competitiveness at Harvard Business School.

In his presentation to Fox MBAs, Porter discussed the role of business in society as creating shared value (CSV), which he described as the next step to corporate philanthropy and social responsibility in that CSV offers more impact because it addresses significant societal needs through scalable business models.

Fox School Dean M. Moshe Porat chats with Porter before his   Union League presentation, which followed an address to Fox MBA students in Alter Hall on March 11.
Fox School Dean M. Moshe Porat chats with Porter before his Union League presentation, which followed an address to Fox MBA students in Alter Hall on March 11.

For example, Porter said CSR would see fair trade as paying a higher price to farmers and certifying the goods as such. This, Porter said, is redistribution of wealth. CSV, meanwhile, would transform procurement and provide more collaboration with farmers, therefore improving quality and yield. Farmers could charge higher prices for higher-quality goods, and higher yield would increase quantity, improving the supply chain.

“These companies aren’t being good guys. They aren’t giving a donation,” Porter said of the CSV approach. “What are they doing? Capitalism.”

And that was his underlying message to the MBAs: Social needs represent the largest underserved market opportunity, and businesses can’t approach profit and societal impact as tradeoffs. They’re one in the same.

“Take the discipline of creating economic value but apply it to a larger aperture – that’s real purpose,” he said.

At an evening event at the Union League of Philadelphia with approximately 200 business leaders, Porter discussed the looming challenges of U.S. competitiveness. A fundamental threat: Living conditions for average Americans aren’t improving. “It’s not the recession,” Porter said. “It’s not temporary. It’s structural.”

America’s weaknesses, Porter said, include its tax code, K-12 education and its divisive political system. The country’s decisive strengths are the protection of property rights, innovation and entrepreneurship, universities, and innovation clusters, such as Wall Street, Hollywood, and Silicon Valley.

“I’m deeply optimistic, because the hard stuff, we’re good at,” Porter said. “But we’ve let the basics be taken over by politics and false divisiveness.”

And that divisiveness is contributing to America losing its competitive edge.

The Fox School’s Department of Strategic Management, Innovation and Entrepreneurship Institute, and Office of Research, Doctoral Programs, and Strategic Initiatives organized Porter’s visit. The Fox Innovation Leadership Speaker Series seeks to transform organizations into innovation-driven industry leaders by turning innovation research into practice. Speakers are internationally acclaimed experts who share their insights in applying proven and effective management tools for firms, large and small.

The next ILSS event, on April 24, will feature Michael E. Raynor discussing Strategy vs. Innovation: A Scientific Approach. For details, visit www.fox.temple.edu/innovation