The Fundamental Forces
View economic activity as shaped by two naturally-emerging forces.
Some History and Context
Michael Porter: Competitive Forces
“The first fundamental determinant of a firm’s profitability is industry attractiveness. Competitive strategy must grow out of a sophisticated understanding of the rules of competition that determine an industry’s attractiveness. The ultimate aim of competitive strategy is to cope with and, ideally, to change those rules in the firm’s favor. In any industry, whether it is domestic or international or produces a product or a service, the rules of competition are embodied in five competitive forces: the entry of new competitors, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, and the rivalry among the existing competitors.”
— Excerpted from Michael Porter’s “Competitive Advantage: Creating and Sustaining Superior Performance” (1985)
Clayton Christensen: Disruptive Innovation
“Disruption is a theory: a conceptual model of cause and effect that makes it possible to better predict the outcomes of competitive battles in different circumstances. The asymmetries of motivation chronicled in this chapter are natural economic forces that act on all businesspeople, all the time. Historically, these forces almost always have toppled the industry leaders when an attacker has harnessed them, because disruptive strategies are predicated upon competitors doing what is in their best and most urgent interest: satisfying their most important customers and investing where profits are most attractive. In a profit-seeking world, this is a pretty good bet.”
— Excerpted from Clayton Christensen’s “The Innovator’s Solution: Creating and Sustaining Successful Growth” (2003)
The Ofmos Lens
Use the Ofmos perspective to understand how human nature, which characterizes every individual, gives rise to two and only two fundamental forces that shape the business and economic landscape in larger communities, markets, or societies: Commoditization and Innovation.
Directly tied to the natural process of learning, at the individual and the group level, the force of Commoditization is always stronger acting as a force of gravity in the business and economic world. Acquire a deeper insight into these dynamics, and the definition and boundaries of a product.
Two Fundamental Forces
Virtual Spaces
Define your offering-market cosmos (ofmos) to include the customers who have the same need-addressing behavior and perceived value relative to the offering.
Commoditization and Innovation
Observe the emergence of the two fundamental forces in populations, both driven by the same human nature, but on the opposite sides of the transaction.
Model in Action
What Is Commoditization?
Understand the workings of Commoditization — the gravitational force of the business and economic world.
Build Your Own Cognitive Computing Thingy
Apply the Ofmos view on the behavior of living things to any information-processing system, like artificial intelligence.
Deep Dive
Needs and Value
The article “A Natural Theory of Needs and Value” describes the new view on human nature.
Business Success
The picture book “Spointra and the Secret of Business Success” details the new worldview in a fun way.
Beyond the Fun
The 49-page (draft) letter to the readers places the new theories inside the broader literature.
Explore:
Why Theories?
The Ofmos Worldview
How Humans Behave
The Fundamental Forces
How Economies Work
How Companies Work
Insights Library