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

Starting up my strategy course and pitching some stuff from strategy guru Michael Porter.

In the spirit of full disclosure, I feel obligated to remind folks that the consulting outfit started by  Porter – went bankrupt a couple of years ago 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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3 Responses to “Should I still be teaching Michael Porter’s strategy stuff?”

  1. John Carpenter Says:

    Seems to me the concepts are all still valid. Ironically, Porters own failure is evidence of that.

  2. PibeGorilón (@Magilla7) Says:

    Your “alma mater” does not fare that well either:

    McKinsey & Co. Isn’t All Roses in a New Book
    http://dealbook.nytimes.com/2013/09/02/in-a-new-book-mckinsey-co-isnt-all-roses/

  3. Scott S. Says:

    Porter’s Five Forces is still very valid as a general strategic framework in my opinion. However, it tends to be a static 2-dimensional model for framing business strategies. His frameworks lack some nuances of product lifecycle and innovation which tend to get lumped into his broad definition of product differentiation. A company can position itself on the positive end of many of the Porter factors and still lose in the long-term. Business strategy is much more dynamic than the Porter model implies.

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