4 min read

Why Porter’s Five Forces still matter (even in a disrupted world)

Why Porter’s Five Forces still matter (even in a disrupted world)
Photo by Siora Photography

In a world obsessed with disruption, it’s easy to dismiss classic strategy tools as relics of the past. But the Porter’s Five Forces framework, created over four decades ago, continues to reveal surprising value - especially when applied with fresh eyes. I've seen firsthand how this model, when used well, can cut through the noise and uncover the real sources of power, pressure, and potential in any market. Here’s why I keep coming back to it, and how I’ve used it to help companies adapt and thrive in industries from energy to tech.

The first time I was formally trained on Porter’s Five Forces, I was a wide-eyed new hire in consulting, trying to absorb every framework like gospel. At the time, it felt clear-cut: a structured way to understand competition and profitability in an industry. But as the years passed and digital disruption became the new normal, many clients - and even colleagues - began to question its relevance. I can’t count how many times I’ve heard variations of, “Lucia, isn’t that a bit old-school?”

And yet, the deeper I’ve gone into complex strategy work, the more I’ve realized: the companies that dismiss this model too quickly often miss something crucial.

Let me share a story.

A few years ago, I was advising a mid-sized fintech firm expanding rapidly in Southeast Asia. Their growth had been organic, fast, and mostly successful - until it wasn’t. Customer churn began rising, margins were squeezed, and suddenly the competitive advantage they’d banked on was under pressure. They believed their product quality and branding would carry them through. But when we took a step back and ran a session using Porter’s Five Forces, some uncomfortable truths emerged.

Rivalry among existing competitors? Extremely high. Five new players had entered their market in the past 12 months, all offering similar features at lower prices.

Bargaining power of buyers? Sky-high. Customers were comparing apps side-by-side and switching in seconds. Loyalty meant almost nothing.

Supplier power? Subtle, but real. They relied heavily on a third-party cloud platform that had just increased its pricing tiers.

Threat of substitutes? Significant. Users were increasingly moving to peer-to-peer platforms that bypassed traditional financial intermediaries entirely.

Threat of new entrants? Constant. With low barriers to entry, a new competitor could pop up with a slicker UI overnight.

None of this was revolutionary - but mapping it this way forced the leadership team to see the market not just from a product lens, but from a structural one. It gave shape to their uncertainty. And most importantly, it gave them a strategy conversation that wasn’t just reactive.

This is what I’ve come to appreciate about Five Forces. It may not tell you what to do, but it makes you ask the right questions:

  • Where does power really lie in our market?
  • Are we focused too much on internal strengths, and too little on external threats?
  • What dynamics are shifting, even if our KPIs look stable?

In today’s world, we’re often told to focus on agility, innovation, and customer obsession. I agree with all of that. But what I’ve seen - again and again - is that companies who ignore structural analysis end up reacting instead of leading. They confuse motion with direction.

Let me give another example, from the consumer goods space.

I worked with a regional food company trying to expand into private-label manufacturing for supermarket chains. On paper, it looked promising: stable demand, cost efficiencies, and lower marketing spend. But when we analyzed the bargaining power of buyers, the alarm bells rang. The large retailers controlled shelf space, dictated pricing, and imposed brutal contract terms. What looked like a smart pivot turned out to be a trap. We helped the client restructure their channel mix and develop a co-branded offering that balanced power more evenly - but it was the Five Forces lens that made them see the risk early enough to adjust course.

You see, Porter’s model is not just about competitive threats. It’s about power. And understanding power - where it sits, how it shifts, and who wields it - is at the heart of strategy.

Of course, the framework isn’t perfect. It assumes reasonably stable industry boundaries, which is a stretch in today’s ecosystem-driven economy. It doesn’t account for rapid innovation cycles or the role of platforms that blur the lines between buyers, suppliers, and competitors. But that’s not a reason to throw it out. It’s a reason to evolve how we use it.

In my work, I often layer it with other tools: customer journey mapping to understand experience gaps, capability mapping to spot internal constraints, or ecosystem analysis to chart alliances and co-opetition. But Five Forces remains the foundation. It keeps the conversation grounded. It protects us from wishful thinking.

When I look at the most resilient companies I’ve worked with, they all have one thing in common: they never stop scanning their environment for shifts in power. Whether it’s a tech startup, a manufacturing firm, or a nonprofit, they ask: what is changing in the structure of our industry - and are we ready?

And that, to me, is the enduring brilliance of Porter’s model. Not that it predicts the future, but that it sharpens our vision in the present.

So next time you feel tempted to skip it, I’d encourage you to slow down and walk through the forces. You might just uncover something the trend decks and dashboards haven’t told you yet.