John Heins is the co-founder and editor of Value Investor Insight.

Harvard Business School Professor Michael Porter needs no introduction to any serious student of business. His seminal work on the competitive dynamics that determine industry profitability and on the strategies companies can employ to positively impact their competitive positions – laid out initially in the books Competitive Strategy and Competitive Advantage – revolutionized managerial thinking. So articulate was his framework for thinking about strategy and competition that it passed quickly into accepted wisdom. As he recently told Fortune, “The highest compliment, I’ve come to understand, is, ‘Oh, that’s obvious.’ I used to take that as criticism, but now I understand that’s the goal – to take a complex problem and make it seem clear and obvious.”

Now 66 and busier than ever writing, teaching and advising, Porter continues to take on a succession of massively complex problems, from reviving inner cities, to making countries more competitive, to transforming the value of healthcare delivery. We caught up with him recently to discuss his latest thinking on competitive dynamics and corporate strategy. To our surprise, he also had plenty on his mind about investing in general, and value investing in particular.

Your “five forces” framework for analyzing industries – Threat of New Entrants, Bargaining Power of Buyers, Threat of Substitutes, Bargaining Power of Suppliers, Rivalry Among Firms – is an important part of many fundamental investors’ research process. Has your thinking on it evolved over the years?

Michael Porter: While the original framework was introduced many years ago, in 2008 I wrote an article in the Harvard Business Review that reexamined and reflected on the application of the concept over time. My basic conclusion is that the five forces are still the five forces. There have been various nominations for a sixth force, such as technology or the influence of government, but my view is that those are best understood in terms of how they affect the five fundamental forces that ultimately drive the division of value among industry participants. For example, government policy can raise barriers to entry or lower barriers to entry. New technology can intensify the rivalry among firms or decrease it.

Industry structure is profoundly relevant to investment analysis, but too much of the analysis looks at industries in a simplistic way, say whether the industry is growing or shrinking, or whether it’s a down cycle or an up cycle. The fundamental investor that uses the five forces to understand what determines the fundamental economic value creation in an industry and how it is changing gains a huge edge.

See full article on Michael Porter on the Fundamental Problem for Investors by John Heins, Advisor Perspectives.