Asking for help is so hard for me. I shared it with my therapist last week and he encouraged me to practice it until our next appointment. In fact, over the next three weeks, my assignment is to ask for help.
Asking for help makes me feel uncomfortable, mostly because I’m afraid of being rejected. As a result, I prefer to avoid it and do things on my own. It pays to ask for help, whether we’re searching for a mentor or just looking for feedback on our work.
I’m sure I’m not the only one who is uncomfortable asking for help, therefore I’d want to share the solutions I’ve found.
Here are my takeaways from Dr. Heidi Grant, a social psychologist who studies, writes about, and speaks on leadership and motivation science. Heidi Grant provides four basic rules to follow when asking for help in order to maximize our chances of receiving it:
Be very specific
Avoid apologies and bribes
Do it in person
Follow up afterward with people who say yes
Be very specific
Be very specific about the help you need and why. When someone doesn’t know what you’re asking for, they can’t tell if they can help you. That’s because people are afraid of offering bad help. So, say exactly what you want and allow them to determine whether or not they are able and willing to do so. Even if they can’t help you directly, they may connect you to someone who can.
Avoid disclaimers, apologies, and bribes
It is a natural part of a relationship for people to help one another. It’s how we show our care. So, stay away from disclaimers, apologies, and incentives. Your connection becomes less personal and more transactional as a result of these actions.
Do it in person
Do not request help by email or text; in-person requests are more likely to be granted. According to a study, requests for help made in person are 30 times more likely to get a yes than ones made by email.
Follow up afterward, that’s crucial
What is rewarding about helping is knowing that you were effective. Giving help only feels good when you know it had an impact. If you want people to continue to help you in the long run, take the time to tell them clearly how much they helped you.
These ideas may be simple, but they really do work. Give them a try and Please let me know if this works and if you have any suggestions or comments.
When we make a mistake in our creative work, we tend to hide it from others or even from ourselves. Overall, people see failure as an unpleasant experience. But isn’t it true that failure is all about the human mindset and thought patterns?
What if we gave our team a new definition of failure?
Failure means you’ve reached a new goal, and you are ready for your next attempt. Failure indicates that you have had the chance to learn about the skills that you need to develop. And failing means you’ve proven dedication to something important to you.
In fact, if you fail rarely, you may lose motivation. According to University of Arizona research, there is an optimal failure rate: if you fail 15% of the time, you will improve your learning, keep trying, and stay motivated.
Working on important and risky projects makes individuals naturally uncomfortable. If you want to make your team comfortable and achieve great results, encourage them to think outside the box and make failure a cause for celebration. So, create a learning environment for your team that celebrates the positive aspects of failure and promotes growth.
Astro Teller, CEO of X (formerly Google X), focuses on great dreams, visions, and strategies in a TED Talk, and put things in a shockingly new perspective. He shares how, by celebrating failure, his team, the “moonshot factory,” is able to enjoy working on risky and innovative ideas to tackle some of the world’s most challenging problems by attempting outlandish experiments and daring to fail.
If there’s an Achilles’ heel in one of our projects, we want to know it now, upfront, not way down the road.
Astro Teller
how failure can be positive?
People who fail frequently learn perseverance in the face of adversity. Thomas Edison is well known for inventing the incandescent light bulb, among many other important achievements during the Age of Electricity. He is claimed to have tried a thousand different filaments before finding one that worked.
People who are successful continue to do the same thing. They are obliged to adapt and alter when they fail.
Bounce back after failing makes you mentally stronger and those who come back from failure gain a deeper understanding of why they failed.
Failure challenges you to rethink your strategy and explore something different by ‘thinking outside the box.’
Admitting that you have failed, allows you to cancel a project early enough to save time and money. It may also allow you to choose an alternative path to achieve your goal.
Never underestimate failure’s magical power. You can’t be afraid of failure if you want to reach your full potential and become your personal best. Fear will only keep you from giving all that you have.
Thank for reading! Please leave a comment below and let me know what you think about failure.
Why do we say yes to so many meetings when not all of them are useful? How many of you have been at a meeting and then returned to your desk wishing you had those hours back? Do you have any idea how many hours of mindless time-wasting take place in the meeting room? You’re not alone!
According to Wolf Management Consultants, unproductive meetings cost professionals 31 hours per month or nearly four workdays per month. According to research, half of the 11 million meetings that occur in the United States every day are a waste of time.
“Every day we allow our co-workers, who are otherwise very, very nice people, to steal from us, and I’m talking about something far more valuable than office furniture,” said David Grady. “I’m talking about time. Your time.”
In his talk, How to save the world (or at least yourself) from bad meetings, David invites you to consider a simple situation: imagine it’s Monday morning. You’ve just arrived at work. This guy, who you’ve seen around, goes straight into your desk and steals your chair.
He doesn’t say anything. Simply grab your chair and move with it. He doesn’t even acknowledge the possibility that you could need the chair. That you might need it to finish some tasks. It’s a situation you probably wouldn’t stand. What you would do, is follow that guy back to his cubicle and claim the chair back. You wouldn’t even consider otherwise.
Now, on Tuesday morning, a meeting invitation pops up in your calendar. It’s from this woman that you kind of know from down the hall and this meeting subject is something you’ve heard a little about. There’s no agenda, no clear explanation of why you should be included. Yet, you accept the invitation, and you go.
When the very unproductive meeting ends, you return to your desk and wish you could get the 2 hours back.
You should be concerned with how productive you and your team are. And the key to doing so is to define your priorities and then stick to them every day so that you can conclude your week feeling you couldn’t have done much more to help the team reach its goals.
Grady says this is part of a “global epidemic” known as MAS – Mindless Accept Syndrome, which he defines as “an involuntary reflex in which a person accepts a meeting invitation without even thinking why. A common illness among office workers worldwide.”
MAS (noun): Mindless Accept Syndrome. An involuntary reflex in which a person accepts a meeting invitation without even thinking why. A common illness among office workers worldwide.
David Grady
How can we stop automatically saying yes to unproductive meetings?
Here is two responses Grady highlighted:
Push the maybe button on meeting invitations that don’t have a lot of information in them at all.
Get in touch with the person who asked you to come to the meeting. Ask them what the goal of the meeting is and how you can help them achieve the goal.
And if we do this frequently and respectfully enough, people might start to be a little more attentive about how they put together meeting invitations.
People just might start to change their behavior because you changed yours.
So, make sure that the number of things you have to accomplish throughout the day matches the amount of time you have to do them, not the timeframe you’re awake during the day. and say NO to the unrelated and unproductive meetings!
Thanks for reading! Please leave a comment below, and let me know what you think!
Have you ever heard of Parkinson’s law? Every time I have a deadline, I think about it.
It’s one of the thousands of time management tools that are supposed to help us get more done in less time and increase our productivity. In other words, Parkinson’s law says that work expands to fill the available time.
For example, if a professor gives a project deadline, we usually begin working on it seriously a week or two before the deadline and stay up late at night with a lot of stress. The interesting thing is that our brain’s ability to analyze and learn, as well as our body’s function, will increase significantly during these remaining hours, resulting in quick results, but not necessarily the best quality results.
Parkinson’s law is the adage that “work expands so as to fill the time available for its completion.” It is sometimes applied to the growth of bureaucracy in an organization but can be applicable to all forms of work.
Parkinson, Cyril Northcote (19 November 1955). “Parkinson’s Law”. The Economist. London.
Parkinson’s Law is the old adage that work expands to fill the time allotted for its completion. Cyril Northcote Parkinson invented the word in the opening line of an essay in “The Economist” in 1955.
Parkinson uses the example of an old lady whose only job for the day is to send a postcard to her niece. a task that would take a busy person around three minutes to do. However, the woman spends an hour hunting for the card, another half hour looking for her glasses, 90 minutes writing the card, and 20 minutes deciding whether or not to bring an umbrella with her on her walk to the mailbox… Because she has nothing better to do, the simple task consumes her entire day.
We plan based on how much time we have, and when the deadline is, if something needs to be done next week, we will do it next week. If it has to be done tomorrow, it will be done tomorrow. We begin to make choices and tradeoffs in order to finish the assignment before the deadline.
How can we make Parkinson’s work for us?
Decide on three important tasks for the day. Remember that while you’re making a list of three activities, choose the three that have the highest priority and will have the greatest impact on your ultimate goal.
Calculate the time required to complete these three tasks based on previous experience and expected workload.
Divide the time allotted in the second phase for each task by two. For example, instead of devoting 12 hours to completing a task, devote only 6 hours to completing it.
Start doing the task and, at the end of the day, evaluate if the timing was enough or unrealistic, how much of each task was done, and how much of our productivity was reached. This analysis will assist us in making plans for tomorrow.
When we set limitations for ourselves, our thoughts will adjust to the situation. Our minds do tasks that would normally take 12 hours in 6 hours by paying less attention to notifications or spending less time on social media.
According to Eldar Shafir, a Princeton professor, and Scarcity co-author, “When you have a deadline it’s like a storm ahead of you or having a truck around the corner. It’s menacing and it’s approaching, so you focus heavily on the task.” And “If you’re focusing so heavily on a big project you may at the same time forget to pick up your kid from school, your mom’s birthday, to feed the dog, etc. That may be the price you pay for the success you’re achieving with your focus.”
So, if Parkinson’s hypothetical old lady had set a deadline for herself, she would have completed writing letters faster. But, because she had nothing else to do for the rest of the day, she completed it just in time.
Are there any areas of your life that are open-ended, without any sort of limitation? Leave your comment below.
In 1973, Johns Hopkins sociologist Mark Granovetter published “The Strength of Weak Ties,” a famous study in which he surveyed hundreds of job finders in the United States. Granovetter considers networking as a critical link between economists’ studies of labor mobility and more focused studies of a people’s motivation to find a job. People are more prone to adopt new ideas from strangers than from close friends, according to Granovetter’s research. The same is true during a job search.
Mark Granovetter developed the strength-of-weak-ties hypothesis (SWT), and the findings show that people are more likely to receive a job through one of their weak ties – acquaintances, or a stranger with a common cultural background – rather than their strong ties – their father, mother, and significant others.
What’s a Weak Tie?
It’s someone you know casually or perhaps simply through a friend network. Someone you used to work with years ago, an old school friend, or a former neighbor. A weak tie can be anyone you don’t know well.
These are bonds formed by people who know each other but not particularly well. In real life, these are the people you interact with once a month and presumably do not see very often. You may not have much in common with your weak ties, and the majority of your weak ties will be strangers to one another.
Why Do Weak Ties Matter?
We tend to be close friends with people who are demographically, culturally, and professionally similar to us. For example, if we are searching for a job, we know of any positions that our close friends know.
We’re more likely to express what we need to a weak tie. When we are communicating with weak ties, we are forced to clarify precisely what we want and why.
Without weak ties, People would be deprived of knowledge relevant to the global system and they miss out on trends that did not originate in their own community.
Without weak ties, there would not be connections between different communities.
Weak ties can also exponentially expand your network.
According to Mark Granovetter’s survey, over 17 percent found about the job through a strong tie… People, however, were significantly more likely to benefit from weak ties. Almost 28% found about the job through a weak tie. Strong ties build bonds, but weak ties work like bridges, allowing for more efficient access to new information.
How Can We Establish Weak Ties?
We now have easy access to weak ties and their information thanks to the Internet. We can promote ourselves on social media by posting content and ideas relating to our area of expertise; someone in our social network may recognize us as a good candidate for a position at their institution.
It’s necessary to make sure that our online social network includes people who can influence employment choices at schools and institutions, not simply close friends.
Tanya Menon, an organizational psychologist, explains that expanding our weak ties can expand our chances in ways we often underestimate. Menon offers an activity in which you “identify the most irritating person you see… and engage with them to push yourself to see what you don’t want to see, connect with who you don’t want to connect with, and expand your social world.”
When Menon teaches, she does not let her students sit at the same seat week after week. She moves them around and encourages them to collaborate with different students, causing further unexpected bumps in the network.
Tanya Menon is fascinated that in a time when we can instantaneously connect with nearly the whole world, we often instead filter our relationships even more narrowly. As such, we often get stuck in dead ends, missing out on new people, ideas and opportunities.
Watch her talk to understand how innocuous daily habits cause people to remain in their social comfort zone and learn about ways that we can be more intentional about navigating the social world.
The secret to great opportunities? The person you haven’t met yet | Tanya Menon
Fortunately, modern social networks allow us to strengthen these weak ties by meeting new people, doing new activities, and broadening our perspectives. This is how people can easily expand their exposure to global events by using platforms like Twitter, LinkedIn, and Facebook.
Photo by Pixabay from Pexels
Do you think that these weak ties lead to new opportunities? Well, you’ll only know if you try.
We all have unconscious biases that influence how we judge others. Even the smartest people make decisions and make judgments with biases.
Unconscious biases influence how we think, act, and behave, and they have a bigger impact on us than we know. It’s unrealistic to think we’ll be able to overcome them quickly. However, by educating ourselves when we need to make a decision, we can anticipate and outsmart them.
Let’s take a closer look at some of the sources of biases.
Decision-making, according to psychologist Daniel Kahneman, is not totally dependent on conscious, rational thought. Kahneman describes two ways of thinking in his book Thinking Fast and Slow.
System 1 makes automatic judgments based on instinct, past learning, and connections stored in memory Instead of cognitively thinking through the given information. No doubt, System 1 is necessary for survival. It’s what saved us from being attacked by saber-toothed tigers, killed by a member of a foreign tribe, or led us to turn to avoid a car accident.
However, as psychologist Daniel Kahneman has shown, it is also a common source of bias that can lead to poor decision-making since our intuitions often lead us wrongly.
System 2
System 2 is essentially deliberate thinking that is slower and motivated by logic and deliberation. Even when we believe we are making rational decisions, our System 1 biases influence many of our choices. We rely more on intuitive, System 1 judgments and less on logical thinking, especially in unexpected situations. System 1 makes Decision-making faster and simpler, but quality usually decreases as a result.
What are exercises to outsmart your own biases?
The good news is that we have the ability to outsmart our own biases. We can start by understanding where they are coming from excessive reliance on intuition, defective reasoning, or both.
According to Jack Soll, Katherine Milkman, and John Payne, tunnel vision of future scenarios, objectives, and options, are some of the most stubborn biases out there.
They highlight how, in order to “debias” our judgments, we need to extend our perspective on all three fronts.
Thinking About the Future
Almost everyone thinks of possible outcomes too narrowly. some people make a single best guess and stop there, while others want to keep their options open. Because most of us are overconfident in our assumptions, it’s critical to encourage ourselves to account for risk and uncertainty. The solutions listed below are highly helpful.
Make three estimates
Make at least three estimates—low, medium, and high—to increase your accuracy. With this strategy, you’re less likely to be caught off guard by extreme events—and you can plan for them. Your middle estimate will certainly get you closer to reality than a two-number range.
Think twice
This exercise is to make two forecasts and take the average. According to research, when people think about a topic more than once, they often approach it from a different angle, adding valuable information. So, listen to your inner crowd and give yourself time to think about it, envision one result, take a break and then project another. Don’t go back to your previous estimate since it will just serve to anchor you and limit your potential to get fresh insights. If you can’t stop thinking about your previous estimate, assume it was incorrect and investigate the reasons why.
Use premortems
The goal of a postmortem is often to determine the root cause of a previous failure. A premortem involves imagining a future failure and then explaining the cause. This approach, also known as prospective hindsight, helps you in identifying possible problems that common foresight would not discover. There are various advantages to thinking in this manner. For example, it lessens optimism by encouraging a more realistic evaluation of risk. Second, it helps you in developing backup plans and exit strategies. Third, it can highlight elements that will impact success or failure, thereby increasing your ability to influence the outcome.
Take an outside view
This is what Dan Lovallo and Daniel Kahneman refer to as getting an “inside view” of the project, which usually leads to excessive optimism. You need to supplement this perspective with an outside perspective—one that evaluates what has happened in similar ventures and what advice you would give someone else if you weren’t participating in the venture.
Thinking About Objectives
It’s also important to have a broad perspective on your goals. This will help you focus when it comes time to choose your best selections.
Seek advice
Look for suggestions from others to get the most out of your perspective.
Cycle through your objectives
Looking at objectives one at a time rather than all at once allows people to generate additional possibilities.
Thinking About Options
Although a critical mass of possibilities is required to make smart decisions, you must also discover strong contenders—at least two, but ideally three to five. People rarely think about more than one thing at a time.
Use joint evaluation
The problem with evaluating possibilities separately is that you can’t guarantee the best results. Consider what you’ll be missing if you select a certain choice. This forces you to consider different options.
Try the “vanishing options” test
People usually prefer to move on once they have a good option, so they forget to investigate alternatives that may be better. Chip and Dan Heath, decision experts, recommend a mental trick to solve this problem: Assume you can’t pick any of the alternatives you’re considering and ask yourself, “What else could I do?” This question will set off a chain of events that will lead to the exploration of alternatives.
Take a moment this week to think. See if you can identify any of your unconscious biases and the sources of them, as well as what could be hiding in your workplace. Bringing this into attention can alter your future approach to things and help you to be more open to differences.
Watch this amazing talk by Valerie Alexander about How to Outsmart Your Own Unconscious Bias:
How to Outsmart Your Own Unconscious Bias | Valerie Alexander | TEDxPasade
References:
Outsmart Your Own Biases, How to broaden your thinking and make better decisions by Jack B. Soll, Katherine L. Milkman, and John W. Payne, Harvard Business Review, 2015
Retailers are no more constrained by shelf space due to the internet revolution, globalization, and unlimited virtual shelf space, and they can stock a large number of products. As a result, consumers now have more choices and sellers can stand out by catering to a niche or micro-niche.
y Chris Andersones can benefit from this approach by stocking a variety of individualized, niche items. This approach is known as the long tail.
The concept of the long tail was introduced by Chris Anderson, editor of Wired magazine, in his book named ‘The Long Tail: How Endless Choice is Creating Unlimited Demand’.
What Is the Long Tail?
The long tail is a statistical distribution pattern in which a higher proportion of occurrences appear further out from the distribution’s center.
This business strategy enables companies to make considerable profits by selling low volumes of hard-to-find merchandise to a large number of customers rather than selling large volumes of a small number of popular items.
The Long Tail: How Endless Choice is Creating Unlimited Demand’ by Chris Anderson
“For too long we’ve been suffering the tyranny of lowest-common-denominator fare, subjected to brain-dead summer blockbusters and manufactured pop. Why? Economics. Many of our assumptions about popular taste are actually artifacts of poor supply-and-demand matching—a market response to inefficient distribution.”
– Chris Anderson
Anderson believes that now that people can find and afford products and services that more closely fit their unique interests and needs, they will move away from homogenized hits.
Sellers can create more demand for a greater number of unique items. They can focus their efforts on inventory management and sell a variety of less popular products in order to gain as much profit from the long tail as the hit head.
As a result, the wise company can sell fewer products in bulk rather than a great quantity offered to a limited number of customers.
Anderson forecasts that the many small markets in goods that do not sell well enough for traditional retail and broadcast distribution will collectively exceed the size of the existing market in goods that do cross that economic obstacle. In other words, as time passes, the shaded region beneath the curve will grow larger than the white area.
Chris Anderson explains his theory of “The Long Tail,” in the following videos:
Inspired by Blue Ocean Strategy, How to Create Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim and Renée Mauborgne
Porter’s 5 Forces Strategy
A graphical representation of Porter’s five forces From Wikipedia
Researchers Andrew Burke, André van Stel, and Roy Thurik studied whole industries to determine whether an innovation strategy or a competitive strategy is better.
They examined profitability and numbers of vendors for 41 shop types during a 19-year period (1982–2000). They employed a model that dates back to the 1921 economics study by Harold Hotelling for their research approach.
It argues that as long as there are profits to be made in a certain market, more and more vendors will emerge to serve that market until it reaches a saturation point, at which everyone more or less breaks even. If an industry is successful, additional competitors will enter the market, increasing competition and lowering profits down below the marginal cost.
Looking at entire industries, they discovered that blue-ocean approach would need the creation of a new market. If it attracted consumers in the long term, industry profits and the number of vendors would both continuously increase. As a result, companies win by staking out new markets.
As I said, the study looked at profits and numbers of vendors for 41 shop types over a 19-year period (1982–2000) and they found evidence that the blue-ocean strategy is sustainable. Average company profitability and the number of businesses were positively associated in more than half of the shop categories.
They found evidence that the blue-ocean strategy is sustainable. Average company profitability and the number of businesses were positively associated in more than half of the shop categories.
Andrew Burke, André van Stel, and Roy Thurik
According to their findings, competition gradually erodes the profits from innovation. However, this is a slow process that takes around 15 years, meaning that blue-ocean approach takes the greater part of a generation to yield to a competitive strategy.
According to their research, businesses may want to consider a hybrid of the two strategies. For example, by slowing profit erosion in an existing market with an efficient competitive strategy, they can improve the funds available for blue-ocean investments and hence their chances of finding an untapped market with plenty of consumers.
Thanks for reading! If you enjoyed this post, please be sure to like it and drop me a comment if you have any questions or additions!
In today’s environment, most businesses compete hard for market share and will do anything to get it. The competition is usually so intense that some businesses cannot survive.
Photo by Kaboompics .com
Blue ocean strategy is a strategy that encourages enterprises to think beyond the competition by developing new uncontested market space that makes the existing competition irrelevant.
Blue Ocean is about growing demand and breaking away from the competition.
W. Chan Kim
The terms RedOcean and Blue Oceans were invented by Chan Kim and Renée Mauborgne to describe the market universe in their book Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant (2005).
What Is Blue Ocean?
Blue oceans represent all of the industries that do not exist today. the untapped market area that is free of competition. Demand is created rather than fought for in blue oceans. There is plenty of room for both profitable and quick growth.
The creation of blue oceans, in other words, is a product of strategy and as such is very much a product of managerial action.
W. Chan Kim
What Is Red Ocean?
Red oceans represent all of the industries that exist today. the recognized market space.
According to W. Chan Kim, in red oceans, industry boundaries are specified and accepted, and the competitive rules of the game are well understood. Companies compete to outperform their competitors in order to capture a larger share of the current demand. Profitability and growth opportunities are decreasing as the market becomes increasingly saturated. Products become commodities, and increased rivalry turns the water bloody.
Red Ocean vs Blue Ocean Strategy
RED OCEAN VS BLUE OCEAN STRATEGY by Chan Kim & Renée
The Defining Characteristics
Chan Kim & Renée’s research shows several common characteristics across strategic moves that create blue oceans.
They found that, in contrast to traditional business, blue ocean creators never consider the competition as a benchmark. Instead, they make it irrelevant by producing a value increase for both buyers.
The authors argue that the most important feature of blue ocean strategy is that it rejects the fundamental tenet of conventional strategy: that a trade-off exists between value and cost. when it comes to creating blue oceans, the evidence shows that successful companies pursue differentiation and low cost simultaneously.
It is important to remember that creating value and innovating are important success factors. Understand the industry in which you compete, as well as new market entries that may threaten your market share.
ABOUT THE AUTHORS W. Chan Kim and Renée Mauborgne (@blueoceanstrtgy) are professors of strategy at INSEAD and codirectors of the INSEAD Blue Ocean Strategy Institute. They are the authors of The New York Times and Wall Street Journal best-seller Blue Ocean Shift: Beyond Competing (Hachette Books, 2017) and the global best-seller Blue Ocean Strategy (Harvard Business Review Press, 2005; expanded edition, 2015).
Learn more about red and blue ocean strategies from the authors of the book on their website.
Thanks for reading! Drop me a comment if you have any questions or additions!
My last blog post discusses the importance of a clear strategy and its elements for a company.
Most businesses use Porter’s Five Forces model as their primary model to understand the dynamics of their market and, as a result, to drive their company strategy.
What is Porter’s Five Forces?
Porter’s Five Forces is a competitive analysis framework based on Michael Porter’s article for the Harvard Business Review. It helps you in examining the competitive market forces in an industry or segment.
An Interview with Michael E. Porter, Professor, Harvard University. Porter’s five competitive forces is the basis for much of modern business strategy.
The Five Competitive Forces
The five forces outlined by Porter in its industry analysis method are:
The Threat of Entry
The Power of Suppliers
The Power of Buyers
The Threat of Substitutes
Rivalry Among Existing Competitors
“the collective strength of these forces determines the ultimate profit potential of an industry.”
Porter
Let’s break down each economic force:
The Threat of Entry
New entrants into a company’s market have an effect on its power. New entrants put pressure on pricing, costs, and the rate of investment necessary to compete. The less time and money it takes a competitor to enter and compete in a company’s market, the weaker an established company’s position.
The Power of Suppliers
The number of suppliers in your market has a direct impact on your company’s ability to control prices. Powerful suppliers gain a larger share of the value for themselves by demanding higher prices, limiting the quality of services offered, or shifting costs to industry players. Profitability can be squeezed out of an industry that is unable to pass on cost increases in its own prices by powerful suppliers.
A supplier group is powerful if:
• It is more concentrated than the industry it sells to.
• The supplier group does not depend heavily on the industry for its revenues.
• Suppliers serving many industries will not hesitate to extract maximum profits from each one.
• Industry participants face switching costs in changing suppliers.
Porter
The Power of Buyers
Your industry’s ability to control pricing is strongly related to the number of consumers.
Powerful customers can capture more value by pushing down prices, demanding higher quality or greater service, and overall putting industry members against one another.
If your industry has only a few customers, they will hold powerful positions.
A substitute offers the same or comparable function as an industry’s product but in a different way, and they have the potential to drastically influence your business.
Videoconferencing is a substitute for travel. Plastic is a substitute for aluminum. E-mail is a substitute for express mail.
When there is a strong threat of substitutes, industry profitability decreases. Substitute products or services limit the profit potential of any industry by putting a price limit in place. If an industry does not differentiate itself from competitors through product performance, marketing, or other ways, it will struggle in terms of profitability.
High rivalry lowers an industry’s profitability. Because customers have more alternatives in industries with a higher number of competing rivals, it is more difficult for a company to secure loyal customers.
The extent to which rivalry reduces an industry’s profit potential is determined by two factors: first, the intensity with which companies compete, and second, the foundation on which they compete.
A strategist keeps the overall structure in mind by examining all five forces rather than leaning to just one element.
If you enjoyed this post, please be sure to like it and drop me a comment if you have any questions or additions!
Nazli Mohammad 