Cognification of Everything

Our traditional perceived model of competition is the ‘us against them’ scenario; them being a few or many competitors that offer similar products or services.?

Michael Porter, researcher and economist at the Harvard Business School challenges this myopic notion by making us consider other forces at play that will determine a company’s and an industry’s profitability.??

According to Porter, in order to really understand market competition you have to go beyond just head-to-head competition and look at the determinants of profitability from a macro standpoint.?

There are other forces at play when it comes to generating a return on investment that goes beyond the basic us versus them paradigm.

• Force 1: Companies compete with existing rivals to win business in the market.
• Force 2: Companies must anticipate new entrants who will enter the market.
• Force 3: Companies compete with customers who offer a substitute solution to their products.
• Force 4: Companies must also deal with buyers who are always looking for a better deal in terms of quality and price (i.e., pay less for more)
• Force 5: Companies must also contend with suppliers who want to raise their prices while lowering the value they deliver so they can be more profitable.

These five forces determine the industry’s structure and in turn its profitability over time whether the industry itself is in a high or low growth mode.

The AI Factor

Porter's model is pre-AI, at least in the form we know it today with Deep Learning and the Use of Large Language Models (LMM).

In the context of the rising power of Artificial Intelligence (AI), one would have to conclude that the barrier to entry of new entrants and substitutes just got lower which in turn means more competition in the future. Companies will have to adopt, not adapt, or die.

All 5 competitive forces (entities) will leverage AI; further inflicting pricing and profitability pressure on your company going forward.

That means that your cost structures must be streamlined and/or re-aligned through the use of AI to provide more competitive pricing in the market. Sales and marketing strategies have to be re-imagined!

In short, your company's ability to leverage AI will determine if you will explode (grow) or implode (shrink) under these 5 pressure points.

Electrification of everything was the goal when the true power of electricity was recognized.

Cognification of everything IS the goal with the true power of AI being recognized!

Victor Antonio

Download my free book, "Sales Ex Machina: How AI is Transforming the World of Selling" It provides a great intro/summary to AI and its daily uses with examples.