Should I still be teaching Michael Porter’s strategy stuff?

OK, I was asleep at the switch on this one … completely missed that Monitor – the consulting outfit started by strategy guru Michael Porter – went bankrupt last year and got acquired by Deloitte.

How ironic … an uber-strategist’s own company goes belly up.

 

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Here’s the scoop …

 

According to a Boston Globe recap :

For nearly three decades, Monitor Group, an elite Cambridge-based consulting firm, sold expensive advice to companies and governments all over the world. In the ecosystem of the industry, Monitor was not a cost-cutter or bean-counter. It was made up of “big ideas” gurus who devised winning strategies; the ones who helped you spot an opportunity on the horizon, miles away.

So it shocked the business world when Monitor’s own strategy came apart. This fall, the company filed for bankruptcy.  Monitor was officially acquired by the auditing firm Deloitte. It was the end of an era.

What happened?

According to the Globe …

1. The firm had appalling financial controls … and often failed to filed required legal registrations … it was a firm that “didn’t have enough people paying attention to details of running a business”

2.  The firm hyper-expanded into areas far afield from it’s competitive advantage …  “A dizzying array of affiliated companies that do work far afield from traditional consulting …. including a service providing bodyguards for billionaires”. Particularly odd since Porter “got famous by arguing that corporations should specialize in areas where they have a competitive advantage.”

3.  A relationship with a client Hallmark Cards — went haywire. “Hallmark accused Monitor of using confidential data shared during that job for its own benefit in speeches, trainings, and finally, to help Monitor’s investment arm to purchase a Hallmark competitor. That’s as close to malpractice as you can get in an industry with no set rules.”

4.  One of Monitor’s projects — a consulting contract with Libya — was the final nail in the firm’s coffin.  “What began as an effort to help reform Libya’s economy turned into a stealth public relations campaign to burnish Moammar Khadafy’s image.”  Ouch.

Holy smokes … how did I miss this one?

And, back to my question: should I keep preaching Porter’s gospel in my courses?

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Flashback: This isn’t the first instance of  academia’s gurus seeing their ideas crash in the real world.

Anybody remember Nobel Prize winners Myron Scholes and Robert Merton and the Long Term Capital Management financial fiasco in the early 2000’s?

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One Response to “Should I still be teaching Michael Porter’s strategy stuff?”

  1. Brad Smith Says:

    Yes, keep teaching it. Regardless of Monitor’s performance, Porter’s strategic material is useful for two reasons:

    1) It introduces a common vocabulary that facilitates conversation between individuals of varying experience and knowledge, and,

    2) It stimulates thinking, which, if you’ve been in the meeting room of a large corporation recently, is a very, very rare activity.

    If anything, look to the cliche du jour of Breaking Bad: Walter White was a brilliant chemist who couldn’t run his own life. Porter is a brilliant strategist that couldn’t run his own consulting company.

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