How can you innovate with Porter's Five Forces?

Take an example in the coffee shop industry: New Entrants Threat & Competitors: new entrants can easily set up shop, but competition among existing players in urban areas is intense. Bargaining Power of Suppliers & Buyers: Coffee bean suppliers hold moderate power, with well-known brands having more influence, while equipment suppliers offer more choices to coffee shops. Customers, especially in areas with numerous coffee shops, possess substantial bargaining power, driving competitive pricing and quality demands. Substitute Threat: the threat of substitutes like tea and soft drinks is moderately present. This example show how Porter's Five Forces evaluate the complex dynamics for strategy to navigate the competitive landscape.

I believe the Porter's Five forces should be one of the first feasibility analysis every startup and small business to undertake before they even draft their business model canvas, I say this because once you carefully answer and research and analyses the answers to these forces will make you understand whether to go ahead with the business idea or you come up with innovative ways to stay relevant in business.

Strategy has a competitive context that involves buyers, sellers, substitutes. This model helps you see this more holistically. It’s a descriptive model, not a prescriptive one. Think about power in which box is either increasing or decreasing and why. Here are the Porter Five Forces 1) Threat of new entrants 2) Buyer bargaining power 3) Threat of substitutes 4) Supplier bargaining power 5) Rivalry from existing competitors

Porter's five forces fits in with the broader context of organizational imperative to think relevance in terms of the broader ecosystem play. Continuing to innovate and remaining competitive is necessary to keep your business edge. The three forces of threat of substitutes, new entrants (not just in your immediate business context but also in substitutes/complementary products/services) and existing competitors are essential to evaluate your value proposition to customers. The remaining two of suppliers and buyers help you look at the value chain of your product and services and evaluate innovation potential. We've used this in concert with value chain to help customers rethink their business models and drive innovation.

As with any other frameworks used to identify both disruptive and incremental innovation, the key is in being able to use the framework to evaluate the business context and opportunities presented expansively. The idea generation process should have certain principles to both contextualise the ideas and also to get people involved thinking without worrying about judgement or right or wrong initially (design thinking has some of these principles well defined). I am always amazed at the richness of ideas when you get a diverse group of individuals together in a safe space to focus on a singular challenge for the business to deliver innovative ideas.

1.Customer-Centric Innovation: Seek feedback, as seen with Amazon's Kindle, Prime, and Amazon Go. 2. Competitor Rivalry: Find innovation through partnerships. Ford, Volkswagen, and BMW collaborate for EV adoption. 3. Impact of New Entrants: Stimulate innovation by adopting a newcomer's perspective. Teladoc and Ro revolutionized healthcare. 4. Supplier Collaborations: Innovate with key suppliers. Apple partners with TSMC and Samsung. 5. Adapting to Substitutes: Instead of fearing substitutes, adapt and innovate. Taxi businesses responded to ride-sharing.

It is always good to have another framework in your kitbag to use to generate innovative ideas. Remember, you have to use the right framework for your context with the innovation challenge in mind. Context is everything in innovation.