32 Top-Notch Michael Porter Quotes

Michael Porter is an American academic best known and recognized for his theories on business strategy and economics. Contributor to the Porter four corners model and founder of the consulting firm The Monitor Group, here are some of the most influential Michael Porter quotes to know.

“A firm may achieve differentiation, yet this differentiation will usually sustain only so much of a price differential.”

“About half of employer-provided health plans in the United States are self-insured plans, giving employers even more latitude in designing and administering such plans.”

“All of the well-intended reform movements have failed because they did not address the underlying nature of competition.”

“An industry can be fragmented because of only one of the factors listed in the previous section.”

“Another key strategic concept deriving from competitor analysis is creating a situation of mixed motives or conflicting goals for competitors.”

“At the most basic level, competition in health care must take place where value is actually created.”

“But history tells us that monopolies that are truly benevolent and effective are rare.”

“Competition does not reward the best providers, nor do weaker providers go out of business.”

“Competition has taken place at the wrong levels, and on the wrong things. It has gravitated to a zero-sum competition, in which the gains of one system participant come at the expense of others.”

“Competition in the current system is at the same time too broad, too narrow, and too local.”

“Consumers tend to be more price sensitive if they are purchasing products that are undifferentiated, expensive relative to their incomes, or of a sort where quality is not particularly important to them.”

“Consumers will only be able to play a bigger role in their care, and make better choices, if providers and health plans realign competition around patient results and disseminate the relevant information and advice.”

“Finding a situation that catches the key competitor or competitors with conflicting goals is at the heart of many company success stories.”

“From a strategic perspective, however, the issues in health care can be divided into three broad areas. The first is the cost of and access to health insurance.”

“Good quality is less costly because of more accurate diagnoses, fewer treatment errors, lower complication rates, faster recovery, less invasive treatment, and the minimization of the need for treatment.”

“If a firm can spot an industry in which the fragmented structure does not reflect the underlying economics of competition, this can provide a most significant strategic opportunity. A company can enter such an industry cheaply because of its initial structure.”

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“If close local control and supervision of operations is essential to success the small firm may have an edge. In some industries, particularly services like nightclubs and eating places, an intense amount of close, personal supervision seems to be required.”

“Overcoming fragmentation can be a very significant strategic opportunity.”

“Participants compete to shift costs to one another, accumulate bargaining power, and limit services.”

“Pay-for-performance will only raise costs if providers get higher pay for process compliance but do not have to compete on results.”

“Quality differentials have a tendency to erode as an industry matures.”

“Rather than measuring results and rewarding excellent providers with more patients, the focus has been on lifting all boats by attempting to raise all providers of a service to an acceptable level.”

“Standardized process guidelines belie the complexity of individual patient circumstances, and freeze care delivery processes rather than foster innovation.”

“The earliest markets purchasing a new product, other things being equal, are usually those in which the advantage is one of performance.”

“The essence of strategy is choosing what not to do.”

“The failure of competition is evident in the large and inexplicable differences in cost and quality for the same type of care across providers and across geographic areas.”

“The local bias in health care means that many providers offer services in which they lack the volume and experience to be truly excellent, and that excess capacity and the tendency for supply to create demand are almost guaranteed.”

“The only way to truly reform health care is to reform the nature of competition itself.”

“The quality of personal service and the customer’s perception that individualized, responsive service is being provided often seem to decline with the size of the firm once a threshold is reached.”

“This is analogous to the situation in which the robber says, “stick ’em up, I want your money,” and the deranged-looking victim says “If you take it, I will explode this bomb and kill us both.”

“What is needed is competition on results, not standardized care. What is needed is competition on results, not just evidence-based medicine. There should be no presumption that good quality is more costly.”

“When providers have to compete on results, the problem of supply-driven demand, in which available capacity leads to care with questionable benefits, will largely disappear.”

Here is a great video on shared value in extractives presented by Michael E. Porter.