Six Forces Model: Porter's Five Forces Plus Complements

Created by Michael E. Porter, extended by Adam Brandenburger and Barry Nalebuff - https://en.wikipedia.org/wiki/Porter%27s_five_forces_analysis

Overview

The six forces model is an industry analysis that takes Michael Porter's five competitive forces and adds a sixth: complementary products, the goods and services that make your offering more valuable when customers use them together. The six forces model entry lists the forces as competition, new entrants, buyers, suppliers, substitutes and complementary products, and describes the model as a way to find the structural drivers of profitability and competition in an industry. It is a competitive analysis framework for one question: how is value created in this industry, and who gets to keep it?

The first five forces are Porter's. He introduced them in the Harvard Business Review article How Competitive Forces Shape Strategy in 1979 and restated them in The Five Competitive Forces That Shape Strategy in 2008. His argument is that managers define competition too narrowly. Competition for profits includes established rivals plus four other forces: customers, suppliers, potential entrants and substitute products. Harvard's Institute for Strategy and Competitiveness summarizes the claim: the five forces determine an industry's competitive structure and its profitability, and industry structure together with a company's relative position are the two basic drivers of company profitability.

The sixth force did not come from Porter. According to the Wikipedia article on Porter's five forces, Adam Brandenburger (Harvard Business School) and Barry Nalebuff (Yale) used game theory in the mid-1990s to add the concept of complementors, also called the sixth force, and the idea that complementors are the sixth force "has often been credited to Andrew Grove, former CEO of Intel Corporation," a line the article marks as needing a citation. Brandenburger and Nalebuff developed the idea in their book Co-opetition, which Brandenburger's site dates to 1996. People sometimes search for "Porter's six forces", but the label is misleading, because Porter treats complements as a factor that works through the other five forces.

Brandenburger and Nalebuff give the cleanest definition of the new player. In The Added-Value Theory of Business they write that "A complementor is the opposite of a competitor. It is someone who makes your products and services more rather than less valuable." Their example is Microsoft and Intel, where part of Microsoft's added value comes from the existence of Intel's complementary products. The practical consequence for strategic analysis is that the five forces mostly describe how a fixed pool of value is divided, while complements can change the size of the pool.

Complements matter most where a product is useless or weak on its own. Ron Adner's HBR article on innovation ecosystems describes high-definition televisions whose technology was ready by the early 1990s, while "critical complements such as studio production equipment, signal compression technologies, and broadcasting standards were not developed or adopted in time." The sets were, in his phrase, "a Ferrari in a world without gasoline or highways." A five forces analysis of that market would have looked at rival TV makers and buyer power and missed the reason adoption stalled.

The model has limits worth stating early. Porter himself disagreed with adding the sixth force: the six forces model entry reports his view that complements "are not an additional force that determine the competitive intensity or profitability of an industry, but rather can be seen as a factor that influences the other five forces." The same entry notes a common criticism of the framework: it describes pressure on an industry but does not tell you what to do about it. The steps below close that gap by ending in strategic options. Hamster can hold the scope, evidence and force ratings as shared context, so the next analysis starts from the last one.

The output is a structural map: for each force, a rating backed by evidence, a note on where it is heading, and a short narrative of how the forces combine. That map feeds market entry decisions, partnership strategy, pricing and investment cases. The market research process behind it is ordinary market research (secondary sources, interviews, surveys, filings), organized so that every piece of evidence is attached to a force.

Core Principles

Industry structure sets the ceiling on profits

Porter's central claim, as summarized by Harvard's strategy institute, is that industry structure and a company's relative position are the two basic drivers of profitability. Execution still matters, but it operates under a ceiling set by rivals, buyers, suppliers, entrants and substitutes. A team that ignores structure tends to over-invest in product polish in a market where powerful buyers will take the gains. The analysis tells you which ceiling you are under before you decide how hard to push against it.

Complements change the size of the pie

The five forces describe who captures value. Complements affect how much value exists to capture, which is why Brandenburger and Nalebuff define a complementor as someone who makes your products more valuable. Strong complements raise willingness to pay and speed adoption. Missing complements can stall a good product, as Adner's HDTV example shows. Treat the sixth force as a question about demand and adoption, separate from the questions about margin.

Complements work through the other forces

Porter's objection to the sixth force is useful even if you use the model. He sees complements as a factor that acts on the other five forces, according to the Wikipedia summary of his view. A dominant complement provider can become a powerful supplier, a complement bundle can raise switching costs and so reduce buyer power, and a complementor that expands its scope can turn into a rival or a substitute. Record these links explicitly instead of scoring the sixth force as if it stood alone.

Define the industry narrowly enough to mean something

The five forces analysis is meant for a line of business, where an industry is "a market in which similar or closely related products and/or services are sold to buyers," as the five forces article puts it. A scope such as "software" mixes markets with different buyers, rivals and complements, and every rating becomes an average of unlike things. Define the product, customer segment, geography and time horizon first. If the scope feels uncomfortably narrow, run a second analysis at the broader level and compare them.

Rate each force from evidence

Each force has observable indicators: concentration measures such as the Herfindahl-Hirschman Index for rivalry, switching costs and buyer concentration for buyer power, input differentiation for supplier power, price-performance trends for substitutes, and the health of partner ecosystems for complements. Opinions still enter the analysis, but each one should point to something a colleague could check. A rating with no evidence behind it is a guess, and a guess recorded in a table looks more certain than it is.

Forces interact and change over time

A force rarely matters on its own. High buyer power in a fragmented industry means something different from high buyer power in a concentrated one, and a new substitute can weaken a complement ecosystem at the same time. Structure also shifts as regulation, technology and ownership change; the strategy institute's summary notes that changes in regulation can change the intensity of rivalry or affect barriers to entry. Record the direction each force is moving, and revisit the analysis when a trigger event happens.

Finish with strategic options

The criticism that the model "does not provide any actions to help deal with high or low force threats," recorded in the six forces model entry, is fair when teams stop at the ratings. For each force that works against you, ask how to weaken it, avoid it or position around it. For each force that works for you, ask how to reinforce it. The analysis is finished when it has produced a short list of options with the forces each one addresses.

Five Forces, Six Forces and the Value Net

Three related frameworks cover this ground, and teams often mix them up. The table compares what each one covers and where it comes from.

Use the five forces when complements are minor and the question is about margins. Use the six forces model when adoption depends on products you do not make. Use the Value Net when the decision is about how to cooperate with or bargain against specific players, which is the question Brandenburger and Nalebuff return to in The Rules of Co-opetition.

Steps

1. Define the industry and scope Write down the product category, customer segment, geography and time horizon you are analyzing. Name what is out of scope as well, such as adjacent segments or regions. Check the definition against the line-of-business standard: similar or closely related products sold to the same buyers. If two segments have different buyers or different complements, split them into two analyses. The step is done when a colleague can read the scope and say whether a given company is a rival, a substitute, a complementor or out of scope.

2. Collect evidence for all six forces Build an evidence list per force before rating anything. Use secondary sources first (annual reports, industry data, patent and trademark records, analyst coverage) and then fill gaps with primary research such as interviews and short surveys, the split the SBA's market research guide describes. Record the source and date of every item. Mark each force where the evidence is thin so the rating that follows can say so.

3. Assess rivalry, entrants and substitutes For rivalry, look at the number and size of competitors, concentration, industry growth, differentiation, switching costs and exit barriers. For new entrants, check the barriers Porter lists, from economies of scale and network effects to capital needs, channel access and government policy. For substitutes, look for products outside your category that meet the same need, and compare their price-performance and trajectory. A substitute that is weaker today but improving fast deserves more attention than a mature one.

4. Assess buyer and supplier power Segment buyers and suppliers first, since a few large accounts and many small ones face different power balances. For buyers, look at concentration, switching costs, price sensitivity, information availability and the threat of backward integration. For suppliers, look at concentration, how differentiated and critical their inputs are, the availability of substitute inputs and the threat of forward integration. Rate each segment separately, and note which segment drives most of your revenue or cost.

5. Map the complementary products force List the products, services and partners customers rely on to get full value from your offering. For each, judge how necessary it is, how available and good it is, and who controls it. Note complements that are missing or lagging, since they limit adoption, and complementors that are gaining power, since they may later act like suppliers or rivals. The complementary products force skill covers the mapping in detail.

6. Rate each force and record its direction Give each force a rating on a simple scale, such as low, medium and high, with a written definition of each level. Attach the evidence that justifies the rating and an arrow for where the force is heading over your time horizon. Where the team disagrees, record both positions and the evidence each relies on. Keep the ratings separate; averaging them hides the one force that dominates.

7. Synthesize the forces into strategic options Identify the two or three forces that most constrain or enable profitability and describe how they interact. Look for asymmetries, positions where a force affects you differently from your rivals, since those are where strategy has room to act. Draft a few options that address the dominant forces, each with what it requires and what could go wrong. Set a review date and the trigger events, such as a major acquisition or a regulation change, that would prompt an earlier update.

When to Use

• You are deciding whether to enter a market where adoption depends on partners, integrations or content you do not control, because the sixth force is where those dependencies show up.
• A platform or ecosystem shift is changing your industry, such as a new standard or a dominant marketplace, and you need to see which forces it strengthens and which it weakens.
• You are building an investment case or due diligence memo and need to explain why margins in a market are structurally high or low, beyond revenue projections.
• Your team is split on partnership strategy, and a structured view of complementors and their power would ground the debate in evidence.
• A previous five forces analysis looks stale because complements, such as app stores, integrations or charging networks, now shape demand.

When Not to Use

• The decision is tactical and short-term, such as an ad test or a promotion, because an industry analysis moves too slowly and is too coarse for it.
• The market is so new that there are few rivals, no settled buyer behavior and no complement ecosystem, because the ratings would be guesses; customer discovery work will teach you more.
• The question is about your own capabilities, culture or operations, because the six forces model looks only outward at industry structure.
• You cannot spend time on evidence for each force, because a quick version with gut ratings creates false confidence; a lighter tool used honestly is better.