Michael Porter’s five forces + 1 omission

Michael Porter’s famous 5 forces have been heralded, debated and even extended to 6. But typical barriers to entry for new competitors to an industry consistent with his framework include:

  • patents + proprietary knowledge
  • government regulation
  • economies of scale
  • switching costs + brand identity

Now reading Jay-Z’s Decoded, I say a key barrier to entry that competitive analysis frameworks like Porter’s omit is ignorance: not knowing there’s a market to enter. It’s not obfuscation or some proprietary knowledge either. It’s inability to recognize a market. This will keep you out perfectly. And particularly when there exist cultural blind spots due to things like class and race: It’s dense Iceberg’s unqualified “no” to Jay-Z and leaving him with no choice but to start Rocawear (eventually unloaded to Iconix for more than $200 million); it’s Jay-Z not getting a record deal in the first place. Arguably, it’s greatly how personified monopolies like Jay-Z and Master P can earn monopoly style profits and do so across multiple industries for significant time.

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