The five force fields: the tension your company operates in

What are the five force fields?

No company stands on its own. Five forces act on every one of them, and together they create the tension in which a strategy has to take shape.

The term force field is meant literally. These forces are at work whether you observe them or not, and they work at the same time. That's exactly why it isn't enough to work through them one after another: the interesting findings emerge where two fields reinforce each other.

The first four lie outside your influence, the fifth inside. It's the combination of both that creates the room to act in which a strategy becomes possible at all.

Why isn't a market the same as an industry?

This is the most consequential distinction in the entire step. An industry is a classification by mode of production. A market exists because offerings serve the same customer need from the customer's point of view.

The chemical industry is a sector with a wide range of product markets in different countries. The automotive market, on the other hand, is served by providers from several industries: manufacturers, dealers, insurers, banks. Industry and market rarely coincide.

A market is defined along two dimensions: the similarity of products with respect to the same customer need, and the place where they are offered. Both have to come together.

How far does your competition really reach?

The answer depends on how you define the market, and the definition depends on the customers. The book illustrates this with an example that's easy to remember.

Coca-Cola and Pepsi are direct competitors, globally and locally. Fritz-Kola from Hamburg is one too, though only in a few countries. And Perrier? If customers are looking for a sugary soft drink, no. If they're simply looking for something to quench their thirst, then yes, and along with Perrier every other mineral water brand as well.

A second test for the definition is price. If you raised your price by ten percent, where would customers go instead? The answer names the providers who are genuinely interchangeable with you in the customer's eyes, and it rarely matches the list pinned up in the sales department.

Translated for mid-sized companies: your most dangerous competitor often isn't on your industry list. A manufacturer of testing machines eventually competes with a software provider that performs the same test computationally. No industry directory puts those two side by side.

How you define the market has immediate consequences for every number you calculate afterward. Market share, growth rate, and potential depend entirely on how narrowly you draw the market. If you don't write the definition down, a year later you'll be comparing numbers built on different assumptions.

That's why defining the market starts with the customers, not with you. The most useful question is: what would the customer have bought if we didn't exist?

What belongs to the broader environment?

The forces at the macro level that act on you without your being able to influence them. Overall economic development, social habits, geopolitics, demographics, and legal and regulatory developments.

They tend to fall off the end of the analysis, because they're hard to back up with numbers and because everyone assumes they're sufficiently informed. Yet these are precisely the forces that topple business models, and they come with lead time: a regulation is discussed long before it takes effect.

The practical approach is not forecasting, it's impact assessment. Don't ask how likely a change is. Ask what it would do to you if it happened.

Why is the fifth force field the hardest?

Because you're part of it. Experience and past success create a blind spot, leadership positions are lonely, and while open feedback is often requested, it's rarely truly heard.

There's also a numbers problem. Your own metrics are right there, and yet they're rarely read in a way that could produce an uncomfortable answer. Anyone who calculates by product group, customer group and order size instead of by average almost always finds areas that haven't earned anything in years.

A simple distinction also helps: What do you know, what do you believe, and what do you hope? Three columns side by side on a wall will sort out a leadership discussion faster than any presentation, because they attack no one and still make every soft claim visible.

The antidote is obvious, and it works: someone who disagrees. If that person doesn't exist in-house, bring them in from outside, during the analysis phase and not just for the workshop.

How do you use the force fields in practice?

The force fields aren't an analysis tool in themselves. They're the map the tools sit on: market analysis, competitive analysis, trend radar and the review of your own numbers. Skip the map and you'll reach for the tool you know and analyze the field you're already familiar with.

They're the structure of your analysis. Each force field becomes a module, each module gets guiding questions, data and, in the end, one to three clearly stated insights.

Assign one person per force field to gather material and propose the insights. Without that assignment, everyone works on the fields that suit them, and the environment module stays empty because it suits no one.

Completeness matters. Leave out a force field because nothing notable is happening there right now, and you lose the ability to see connections between the fields. That's usually exactly where the interesting insights are: a trend in the environment changes a customer need, that shifts the market definition and makes a new competitor relevant.

At the end of each module comes the question that holds it all together: What does this mean for us? A finding without that answer stays an observation about the world and gets noted in the workshop without moving anything.

Phrase the insights so they're understandable outside the room they were created in. "Customers increasingly expect customization" is such a sentence. "Room for improvement at the customer interface" is not.