I was preparing for a meeting with a software company and found myself analyzing their industry using Porter’s five forces. This is a framework for understanding the dynamics within an industry. Also, the rigor of analyzing an industry makes you stop and first define the industry. It sounds simple but can often be complex. If there are multiple audiences or multiple products, you might want to do the analysis on each. Next, it requires that you consider vendors, customers, and competitors. In my first semester at business school, I must have done this exercise at least once a week.
Years later I could not believe that I was still using this framework but I found it useful in preparing for my meetings. One of the questions in the software business is who owns the customer? If the software is sold via a value added reseller (VAR), then they may own the relationship. Knowledge is power and the VARs may have all the power. The VAR may know when the customer is likely to want an upgrade, add new seats or licenses, or purchase additional software for related business processes.
If you are starting to work on a new industry or a new project, consider using the Porter five forces framework. It can help you get to the heart of the strategic challenges within an industry.