Prof Michael 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, a journalist from Ecuador.
There's no barrier to being prosperous but us
This 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 on 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).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 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's no barrier to being 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 attitude of "who gets the best part 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.
Creating wealth/profit
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 things that don't create value. He cited as an example, the money used to fight crime, which he called a tax on the prosperity of a country.
"When a country is more productive, business is better," Porter said.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.
Countries' growth plan
According to this thinker of the economy and management, it is fundamental for each country to have its growth plan. 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. 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 four or five years, while competitiveness extends for ten 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.
To be continued next week...