Michael Porter’s Diamond Model is also known as the Theory of National Competitive Advantage of Industries. It is a diamond-shaped framework that focuses on explaining why certain industries within a particular nation are competitive internationally, whereas many are not.

To maintain a country’s standard of living, organizations and citizens must learn to compete in an ever tougher world market which is called the VUCA (Vulnerable, Uncertain, Complex and Ambiguous) world. Organizations will sustain the competition in world with help of higher productivity and good product quality. The standard of living of a nation is measured by things that are easily quantified, such as income, employment opportunities, cost of goods and services, inflation rate, infrastructure, quality of education, poverty, life expectancy, and quality of healthcare etc. The government plays a big role in improving standard of living in a country.

The Diamond Model also talks why certain companies in certain countries are capable of consistent innovation, whereas others are not. Porter argues that any company’s ability to compete in the international field is based mainly on an interconnected set of location advantages.

Firm Strategy, Structure and Rivalry; Factor Conditions; Demand Conditions; and Related and Supporting Industries are the four conditions which if are favourable, they force domestic companies to continuously innovate and upgrade. The competitiveness that results from the above conditions is helpful and even necessary when an organization wants to go international and when it is battles world’s largest competitors.

Firm’s strategy, structure, and rivalry

This refers to the basic fact that competition leads to businesses finding ways to increase production and to development of technological innovations. The concentration of market power, degree of competition, and ability of rival firms to enter a nation’s market are influential here. This point is related to the forces of competitors and barriers to new market entrants. From the national context, the industries in which companies operate largely determine how companies are created, organized and managed. When firms face tough domestic rivalry, it becomes instrumental in fighting international competitiveness, since it forces companies to develop unique and sustainable strengths and capabilities. 

The more intense domestic rivalry becomes, the more companies get pushed to innovate and improve in order to maintain their competitive advantage. In the end, this helps companies to enter the international market. Porter believes that domestic competition is critical to spurring innovation within a nation and that monopolies impede this from happening.

Japanese automobile industry consists of intense rivalry among players such as Nissan, Honda, Toyota, Suzuki, Mitsubishi and Subaru. Because of their own fierce domestic competition, they have become competent to fight in foreign markets as well.

Factor Conditions

Focuses on the domestic buyers of the country; the target market is the local buyers. Factor conditions in a certain country refer to the natural resources; for example Saudi Arabia has the second-largest proven petroleum reserves, and is the largest exporter of petroleum in the world. It also has the fifth-largest proven natural gas reserves and is considered an energy superpower. The economy of Saudi Arabia is heavily dependent on oil, and the country is a member of OPEC (Organization of Petroleum Exporting Countries). This nation controls about one-third of OPEC’s total oil reserves, plays a leading role in the organization.

Factor conditions relate to the different types of resources that are present or absent within a nation. Resources can be typed into basic and advanced ones. The basic ones include useful natural resources and the availability of skilled labor, technology advancement, specialization and skilled knowledge and expertise, availability of capital, infrastructure, etc.

Porter does not give too much importance to natural resources as compared to the created resources because he observes that competitive advantage develops in industries in particular nations which are able to create these advanced and specialized factors.

It is important that these created factor conditions are continuously upgraded through the development of skills and the creation of new knowledge. Competitive advantage results from the presence of world-class institutions that first create specialized factors and then continually work to upgrade them. Nations thus succeed in industries where they are particularly good at factor creation. Singapore has achieved an extraordinary level of prosperity. The country has maintained a remarkably open and corruption-free environment, stable prices, and a per capita GDP higher than that of most developed countries.

Demand Condition

Demand conditions invariably talk about the domestic demand which indicates how successful a particular industry within a certain nation is. A strong home demand of industries in their own nations creates a large market for them and therefore, creates opportunities for them to grow. When a country experiences presence of sophisticated demand conditions from local customers it pushes the organizations to grow, innovate and improve quality. When organizations strive to satisfy their domestic demands and when they face challenges to satisfy domestic demand the condition drives companies to scale new heights and possibly gain early insights into the future needs of customers in international market.

Nations thus gain competitive advantage in industries where the local customers are demanding and pressure companies to innovate faster and achieve more sustainable competitive advantages than their foreign rivals.

Singapore Airlines has a range of subsidiaries and associate companies in diverse fields of the aviation industry to support its operations. For instance, it wholly-owns three airline subsidiaries, namely SilkAir which operates regional flights to secondary cities, and Scoot and Tigerair which operate in the low-cost carrier sector. The world-famous company is acclaimed for the stellar service standards of its kebaya-clad flight attendants.  The airline is also famous for luxurious flight experiences across cabin classes, with state-of-the-art entertainment options, spacious cabins and a commitment to making flying a personal experience.

It is worth noting that aviation in Singapore is a key component of the Singaporean economy in its quest to be a transport hub of the Asian region. Besides currently the sixth busiest airport and the fourth busiest air cargo hub in Asia, the Singaporean aviation industry is also a significant aerospace maintenance, repair and overhaul centre. More demands inevitably mean more challenges, but these challenges turn the companies toward innovation and improvement. The size of the market, the growth rate of the market, etc. are some indicators of the home demand.

Related and supporting industries

According to Porter, the level of success of one industry can be related to the success of related and supporting industries. The role of suppliers is equally important. The suppliers help in advancing innovation processes through shared resources- technical and other types of aids. A reputable supplier should have a history of supplying acceptable product and value-added service, as evidenced by the number of years in business, customers’ opinions, financial stability and past audit results. Organizations are often dependent on alliances and partnerships with other companies in order to create additional value for customers and become more competitive. 

The automobile industry is one of the most important drivers of economic growth of India and one with high participation in global value chains. The growth of this sector has been on the back of strong government support which has helped it carve a unique path among the manufacturing sectors of India. The auto components manufacturers have backed the automobile industry to a great extent. The timely upgradation of syllabus of automobile engineering has also added essence to industry. Lastly, automobile manufacturers could invest and collaborate in joint R&D and other innovation.

Government

Governments should encourage and push companies to raise their aspirations and move to even higher levels of competitiveness. This can be done by stimulating early demand for advanced products by focusing on specialized factor creations such as infrastructure, the education system and the health sector (factor conditions); promoting domestic rivalry by enforcing anti-trust laws; and encouraging change. The government can thus assist the development of the four aforementioned factors in the way that should benefit the industries in a certain country.  The major functions of governments in market economies are: the governments provide the legal and social framework, maintain competition, provide public goods and services, redistribute income, correct for externalities, and stabilize the economy.

Chance

Even though Porter originally didn’t write anything about chance or luck in his papers, the role of chance is often included in the Diamond Model as the likelihood that external events such as war and natural disasters can negatively affect or benefit a country or industry. However, it also includes random events such as where and when fundamental scientific breakthroughs occur. These events are beyond the control of the government or individual companies. 

COVAXIN®, India’s indigenous COVID-19 vaccine by Bharat Biotech is developed in collaboration with the Indian Council of Medical Research (ICMR) – National Institute of Virology (NIV). The coronavirus disease 2019 (COVID-19) pandemic continues to bring in its wake not only morbidity and mortality but also an unprecedented challenge to public health, food systems, human dignity, and work across the world. This is an apt example of chance.  India celebrated the milestone of administering 1 billion COVID-19 vaccine doses on Thursday, 22^nd October 2021. Covaxin has helped the nation in achieving the one billion mark.

To reinvent something means to change it so that it seems different and new; to redo, to make completely.

The year 2020 will be remembered in history for a long while. Until February, most companies were busy planning their long-term business strategies, busy setting ambitious growth targets, strategizing their value chains and adding new products to their portfolios. However, an unpredicted calamity Covid19 brought the entire world to standstill. The sudden event has forced governments and organizations to hit a pause and reset button. While uncertainty prevails over what the future would cause, what is clear is that it would be starkly different from the world we have known. Until a vaccine is made available to counter the virus, the requirements of social distancing, wearing masks, connecting socially online, in short, the need for restricted movement will continue.

We have seen a tremendous shift in mind-set of people. Though physical distancing is forced on us and we are connected electronically the need to stay relevant is all the more propelling. And, this is major transformation. Organizations are preparing for the new normal by changing their core organizational hierarchies, structure and their operation. While work from home has become the new normal, organizations have invented functional strategies to make distant working and remote client servicing a reality. It’s amazing to note that many small, medium and large organizations have quickly reconfigured their product and service offerings and have transformed their business models. Remote working is further expanding the scope of remote access to everything and greater security against cybercrimes.

With the on-going upheaval many organizations have seen opportunities and are reinventing themselves to rise over Covid19. Electronic gadgets are ruling our lives like never before. We are forced to keep with a lot of technology shifts and companies have had to evolve along with them. The companies that have survived are the ones that know this important lesson of listening to the customer always. The print industry has been the most affected industries since the technology boom. Many newspapers and magazines have either closed up shop or have gone in fully digital. National Geographic, however, has embraced technology – its magazine is still in print and the brand has millions of loyal Instagram, Twitter and Facebook followers, both for its account and its photographers’ accounts. Specifically, National Geographic has over 65 million followers. National Geographic realized that to stay firmly planted in its print ways would have killed its business. So, it went to where its customers were, which is online.

Another great example is Netflix. It has primarily changed the way TV is consumed. Netflix is in true sense the catalyst that drove the shift toward over-the-top television, helping pave way for many other OTT platforms. People want to watch whatever, whenever and wherever.  Netflix experienced lot of hiccups. Its original business model was subscription based, where people could rent as many movies as they wanted, keep them as long as they wanted and trade them in for new ones after mailing them back. Netflix included streaming video, which even further encouraged its popularity. But, in 2011, when it split into two companies, Netflix and Qwickster, its spin-off continued delivering only DVDs by mail and increased its prices, people were put off. Netflix quickly realized its mistake, and reverted back to providing both digitally streaming videos and DVD-by-mail under one roof, and under one bill. The message is give the customers what they want. 

It’s a perpetual fact that all businesses even the most successful ones slack. They lose their hold in market when they start stagnating. Organizations are compelled to reinvent themselves periodically. What matters is their ability to pull off from decline stage of business and jump back at growth stage. Organizations therefore have to be very adaptable. The world is changing at a faster pace; innovation must be a regular function in an organization. The ability of both stimulates and harnesses human imagination.

Domino’s had to make drastic changes; they considered their core competence in fast delivery, pizza in 30 minutes or less. If they delayed the delivery, the pizza would be given free. Domino’s was less concerned about taste or quality; but as people started debating on social media, Domino’s realized gravity of the issue. People were condemning its pizza quality leading to lesser order and tremendous financial repercussions. Domino’s went into action. Taking to the wave, it made an enormous announcement: ‘we hear you, our pizzas are suck and we promise to improve them.’ They improved their pizza quality. Domino’s rolled out its new campaign and new recipe, sales skyrocketed. Companies need to absorb all tip-offs thrown by their customers time and again.  

Few years down the line, many organizations will restyle jobs enabling their employees to work alongside smart machines, robots, and new forms of technology. Already robots have entered households’ cleaning, mopping, cutting and chopping. Organizational leaders must start rethinking their plans. For the past century organisations consisted of jobs, the job profiles were designed to match specified outputs; work methods were devised for performing jobs. But, many present jobs are absurd in nature, they don’t sound normal in nature, they demand unrealistic workloads which leave many job hunters shaking heads in disbelief.

Most people sense that the way organizations are run today has been stretched to its limits and things are and will change shortly. In numerous surveys businesspeople make it clear that in their view, companies are places of anxiety and drudgery, not passion or purpose. Organizational cynicism affects government agencies, non-profits, schools, and hospitals just as much. Further, it applies not just to the powerless at the bottom of the hierarchy. Behind a facade of success, many top leaders are tired of the power games and infighting; despite their desperately overloaded schedules, they feel a vague sense of bareness. People yearn for better ways to work together; for more soulful workplaces where their talents are nurtured and their deepest aspirations are honoured.

So, I conclude that as technology continues to improve, companies will be forced to adapt, change or die. They need to remain customer centric. Big or small all organizations need to be ready to roll out products and services as per the demand of their customers. Change is inevitable, therefore reinventing from time to time is a necessity.

To survive the completion and to expand organizations need to restructure people, structure, culture, knowledge, policies, legalities, processes, technologies, product designs, marketing practices, pricing etc. A CEO may see change in terms of organizational structure and strategy, a manager in operations may see change in terms of processes, a manager in technology may see change in terms of systems & tools, a manager in HR may see in terms of training and development or recruitment of new staff, clerical staff may find it difficult to change the paper work format, peons and helpers may find it absurd to see each one stressed in the organization or find new bosses with new thinking.  In some cases a change is so complex that no one person has a true end-to-end assessment of it. The McKinsey 7-S model is based on the theory that, for an organization to perform well, to change from time to time, it need to look at the 7 Ss:  Strategy, Structure, Systems, Shared Values, Skills, Style and Staff.  These seven elements need to be aligned and reciprocally reinforced. The model helps in realigning and identifying problems that need to be worked on to improve performance of the organization. While some models of organizational effectiveness have been outdated, one that has persevered its continuity is the McKinsey 7-S Model framework. It was developed in the early 1980s by Tom Peters and Robert Waterman, two consultants working at the McKinsey & Company consulting firm, the basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful.

Whatever the type of change may be: restructuring, new processes, organizational merger, new systems, change of leadership, new market, recruitment so on – the model can be used to understand how the organizational elements are interconnected. It helps to ensure the wider impact of changes made in one area and how it affects other areas.

McKinsey 7-S Model elements

Strategy

It is a scientific plan devised to maintain and build competitive advantage over the competition. The task involves gaining appropriate budgets and demonstrating, delivering value and ROI from budgets, who is to take charge, who would assist, time frame, what end results expected etc. It helps in annual planning approach. Business strategy is generally created at the upper levels of an organization. Grand corporate strategies can be broken down into objectives and tactics to ensure that the strategy is relevant all the way down the organizational hierarchy. Organizational structure is put into place relatively early in the life of a business, but it can be changed over time as the company evolves. The organizational structure matters in making strategies.

Structure

It clarifies the way the organization is structured and who reports to whom and span of control each person enjoys. The modification of organizational structure is made when it is very essential.  A company’s organizational structure must support its strategy. Employees at all levels of the company must be empowered to effectively complete the tasks necessary to achieve organizational objectives, and company structure can aid or hinder employees in their roles. Especially when reporting relations are not clear, and good employees are made to work under incompetent people, organizational goals and objectives become hazy. Structure can also dictate the means by which strategies are formed. Bureaucratic companies tend to generate a majority of strategic ideas at the top levels of management. Companies with flatter structures, on the other hand, often involve a range of employees in strategy sessions.

Systems

The daily activities and procedures that staff members engage in to get the job done. For example, the HR team is one component, the finance and accounts is a component, the service delivery staff another component. The gate keepers another one, so on. Standard Operating Procedures (SOP) help in running the system smoothly. And, making them easier yet scientifically designed helps a lot.  Whether documentation is important or not – remember it is the first set of deliverables within an organization process. Considering them unimportant is a lackluster attitude.

Shared Values

These are the organization’s stated values and rules of behavior. It is how the members represent the organization both in terms of their behavior and the shared values. Their interpersonal behaviors and their behaviors with outsiders speak volumes. This is expressed in mission, vision, philosophies and values of the organization. It serves as a guide for all of the company’s decision-making. Shareholders, leaders and employees and customers are generally the target of the mission. It projects the future, of what the organizations hopes to become.

Why shared value is placed in the middle of the model? The reason is shared values emphasizes that these values are central to the development of all the other critical elements. The company’s structure, strategy, systems, style, staff and skills all stem from why the organization was originally created, and what it stands for. The original vision of the company was formed from the values of the creators. As the values change, so do all the other elements.

Style

It represents the style of leadership adopted. The style implies a leader’s style of providing direction, implementing plans, and motivating people. There are many different leadership styles proposed by various authors. Organizations flourish with good leadership and they disappear because of leadership. The culture and goals of an organization determine which leadership style fits the firm best. Some companies offer several leadership styles within the organization, dependent upon the necessary tasks to complete and departmental needs. Includes both the way in which key managers behave in achieving the organization’s goals and the cultural style of the organization as a whole.

Staff

It represents the employees and their general capabilities. The success of any organization depends on the employee’s learning spirit. The organizations that continually seek to expand their capacity to create. In today’s highly competitive labor market, the hiring talent is not a joke, organizations have realized that capacities of workers matter a lot. The breakdown of staff in terms of their background, age and sex and characteristics such as IT, finance, marketing needs scientific thinking. Depending on the competitiveness of staff, organizations decide use of contractors and consultants. Many organizations depend on outsourcing. Staff recruitment and retention, and virtual working makes the difference and compels organizations to think about staff development and training.

Skills

The actual skills and competencies of the employees working for the company. It’s critically important that companies develop strategies to manage their people through the crisis if they are to survive and prosper in the long term. Companies need workers who can stay organized and focus on the projects at hand. However, company managers must also organize the work of their employees. Organizational skills in the workplace can include general organizing, planning, and time management, scheduling, coordinating resources and meeting deadlines. Distinctive capabilities of key staff can be interpreted as specific skill-sets of team members.

The above seven elements are divided into Hard and Soft elements:

Hard Elements: are tangible elements. They are Strategy, Structure and Systems.

Soft Elements: are intangible elements. They are Shared Values, Skills, Staff and Style.

One important point to note is that, in the first version of this model which was published in 1982, “systems” was classified as “soft” element. Since 1982, many processes in very many organizations have been meticulously documented or automated, making them relatively easy to analyze and change. They are therefore shown above as “hard”.