I’m sampling a preview of a Stanford course, Designing for Disruption. I want to experience another international virtual course from a renowned institution – to learn – and I want to think deeply about disruptions to the library sector. I’m limiting my scope to the public and higher ed library sectors, and not school libraries or information management practices.
The first module is to assess the sector. And guess what the reading is? Michael Porter’s Competitive Strategy. As soon as the professor referenced Porter’s 5 Forces I looked past my screen to my bookshelves. Even though both floor-to-ceiling cases are packed rather haphazardly with myriad texts, I knew immediately where my Porter text sat: at the end of the ‘strategy’ shelf, 2nd from the top on the right. I’ve thought many times about pitching it, since I do have the Harvard Business Review original article. But I just couldn’t bring myself to part with it. It’s well worn and well highlighted.
This week’s assignment is to identify the Barriers to Entry for firms into the library sector. As you review the major sources of Barriers, think of those that apply to the library sector:
- economies of scale
- product or service differentiation
- capital requirements
- switching costs (this may be the cost for the funders (cities, counties, universities, colleges) to switch to a different organization or service model)
- access to distribution channels
- cost disadvantages independent of scale (libraries may have cost advantages potential entrants can’t replicate……or not)
- government policy or, in the case of higher ed, institutional policy
And then there’s the power of the suppliers – squeezing the competitive capability of the sector – and the bargaining power of the consumers (users, students, patrons, members – call them what you want – their ability and interest in switching to a substitute).
So, which of the sources do you see applying to the library sector? What would be the significant barriers to entry that would curtail the Threat of New Entrants or Substitutions?
These are tough questions. I’m taking this course because I believe we must address these questions, prickly as they are and prickly as they may make us.
As Porter wrote:
Many managers concentrate so single-mindedly on their direct antagonists in the fight for market share that they fail to realize that they are also competing with their customers and their suppliers for bargaining power. Meanwhile, they also neglect to keep a wary eye out for new entrants to the contest or fail to recognize the subtle threat of substitute products.
The key to growth—even survival—is to stake out a position that is less vulnerable to attack from head-to-head opponents, whether established or new, and less vulnerable to erosion from the direction of buyers, suppliers, and substitute goods. Establishing such a position can take many forms—solidifying relationships with favorable customers, differentiating the product either substantively or psychologically through marketing, integrating forward or backward, establishing technological leadership.
HBR, March 1979, “How Competitive Forces Shape Strategy.”
Let me know what you think; I’ll post my answer next week.