
What Killed Michael Porter's Monitor Group? The Force That Really Matters (2012) - tortilla
http://www.forbes.com/sites/stevedenning/2012/11/20/what-killed-michael-porters-monitor-group-the-one-force-that-really-matters
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dworin
This is a rant against Michael Porter, his theories, and the practice of
business strategy generally, but has nothing to do with why Monitor actually
failed. Most of the rest of the industry is doing fairly well, especially
since the end of the recession, and Monitor moved away from the five forces
model decades ago to tackle the same types of business strategy projects other
top-tier consulting firms help with.

Monitor failed for A LOT of reasons. It had a strange debt/equity structure
that paid large sums to former partners who were no longer involved in the
business, an issue that has caused other notable firms to struggle as well.
They were a mid-sized player in a market increasingly split between boutiques
and large global firms. They were a pure play strategy firm in a market where
clients were looking for help with implementation. They did brand-damaging
work with former dictators.

The list could go on, but executives wising up that they didn't want to buy
strategy consulting wasn't why Monitor failed. Executives are going to buy the
same projects, probably from the same consultants, they're just going to buy
them from Deloitte now.

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javajosh
This article has more than a little shadenfruede, methinks. But there's an
interesting thesis lurking in there, that Porter's theories have lead directly
to the enshrinement of C-level executives as a kind of upper-class:

    
    
       first, that strategy is a decision-making sport involving
       the selection of markets and products; second, that the
       decisions are responsible for all of the value creation
       of a firm (or at least the “excess profits,” in Porter’s
       model); and, third, that the decider is the CEO. Strategy,
       says Porter, speaking for all the strategists, is thus 
       ‘the ultimate act of choice.’
    

The article doesn't go on to talk about what a C-level exec actually _is_ but
makes an emphatic case that, since Porter is responsible for the crowning of
these kings, and now Porter is proven wrong, then perhaps it's time to take
the crowns away.

I'm terribly biased, but I like this line of argument very much.

~~~
paulsutter
Right so Steve Jobs, Elon Musk, Mark Zuckerberg, Larry Page ... all empty
figureheads, deserving little credit for the success of their companies?

~~~
javajosh
Come to think of it, I think all of those guys get WAY too much individual
credit for the success of their companies. Damn straight.

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robomartin
I don't have an MBA. At one point I felt sorry for myself for not having taken
that route. This was during a time that I was building a business that was
gaining traction. As an engineer I felt my management skills and understanding
of business had serious holes all over the place. I didn't have time to go
back to school. I had to run a business. So, I resorted to reading business
books. At one point My wife made the comment that things had changed because
there were stacks of business books everywhere now instead of engineering
books. It was a really frustrating phase for me. I learned a lot but, at the
same time, a lot of it sounded like highly refined bullshit to me. I was far
more comfortable looking at business from the perspective of mathematical
equations and a series of hypothesis to be tested via a scientific process.

Eventually I got tired of the bullshit. Read three authors and get ten
different opinions. Not one of them ever built anything or risked anything at
all. These people were not my people.

I started to devote more time to getting together with other entrepreneurs and
swapping notes. It was amazing to me how solutions to problems presented
themselves almost without effort in this context. Sure, talk to people who are
really holding a cat by the tail and they might just know a thing or two that
the escapes the consultant's artificial construct. I had some of the most
amazing and revealing conversations with successful entrepreneurs who had
barely finished high-school and hated to read books --any books. Who would
have known?

Look at the history of innovation. Look at some of the most important and
influential companies and products of the last hundred years. How many of
these came out of the minds and work of consultants and MBA's? How many came
out of the efforts of entrepreneurs of all walks of life and levels of
education hell-bent to make it happen?

So, again please, why do we follow these false prophets?

~~~
Retric
Replace the 'business books' category with 'self help v2' and I think you will
see how and why most of that crap is written. It's not about actually helping
people it's about selling books, and because companies / peoples actual
problems are way to complex to deal with in book form you end up with a lot of
empty platitudes and a lot of random ideas.

After all what useful advice apply's to both Bank of America and a local gas
station franchise. Or put another way what book would you hand a 14 year old
genius trying to decide if they should skip a grade and a death row inmate?

~~~
beerglass
Understand your intolerance for self-help category in books... generally, I
detest them too. But once in a while, when the world around looks too complex,
reading simple books like "Jonathan Livingstone Seagull", "Prophet", even "Who
Moved My Cheese?" and "The Magic of Thinking Big" has helped me...

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paulsutter
The author is silly to conclude that strategy is useless because Monitor
failed. Sustainable advantages are absolutely real (think any network effects
business: Dropbox, Airbnb, Craigslist, eBay). But they're also rare, and
baked-in from the beginning.

Monitor's actual flaws:

(a) a consulting business can't capture the value of a successful strategy,
they collect only fees, and

(b) the sorts of customers who are willing to pay for big ticket consulting
projects are big sprawling businesses for whom it's far too late to identify
an effective strategy.

~~~
mtgx
The Porter model also sounds like it would help you develop myopia regarding
disruptive innovations, because it would make you too focused on how to fight
against direct competitors and gain incremental advantages against them.

~~~
SiVal
Not true. One of his five forces was the threat of substitution. In other
words, while many businesses are focused on their direct rivals, they don't
notice the looming alternatives that could make them and their direct
competitors irrelevant. A Porter-style 5-forces analysis would REQUIRE the
business to broaden its view of competitive threats.

~~~
mtgx
Subtitutes may not even be half-way there in understanding disruptions,
though. Water or soda are substitutes for beer, but that doesn't mean they are
disruptive. In some cases, they can be. Like blogs vs newspapers. But in most
cases, substitutes don't refer to disruptive innovations, that's why I think
it's not even "half way there". Which means it's putting too little focus on
disruptions, when disruptions can literally kill your company, no matter how
big it is, within 10 years of appearing.

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damoncali
As someone who sat through Bschool strategy class (which, for those who have
not, is typically a near religious semester-long praise-fest of Porter and his
5 forces), I find strange pleasure in reading this. Can't put my finger on
why.

~~~
ojbyrne
Having sat through a similar course, and despite being a proponent of Porter,
I too was enjoying the article. Until the point where they mentioned Peter
Drucker's "foundational insight," at which point I realized it was just
another "my business guru is better than your business guru" pissing match.
Forbes is crap.

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socalnate1
What utter crap. The version of Michael Porter that this "article" argues
against is a straw man that bears little resemblance to the actual man or his
ideas.

Between Forbe's hosted blogger section (where this article came from) and the
Atlantic's paid content, the quality of mainstream business reporting is
dropping like a stone.

~~~
mindcrime
You basically just said what I came here to say. This guy seems to have a bone
to pick with Porter and this article is flawed on so many levels that it's
ridiculous. Strawmen, faulty logic, unsubstantiated assumptions, this article
has a laundry list of reasons to not take it seriously.

I love the part where he talks about "Porter's Strategy" as though there was
one specific strategy that - in and of itself - encapsulated everything of
Porter's thought. Denning seems clueless here. Yeah, Porter talked about a
handful of "generic strategies" but to claim that Porter's thinking can be
reduced to one simple thing that you adopt or don't adopt, is ludicrous.

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brc
What a terrible article. It starts out OK, but quickly goes wrong.

Yes, the 5 Forces model is the most overused piece of analysis since the 'pro
and con' list. But to wholesale throw it out because the company went
bankrupt, well, this just looks like dancing on the grave of another.

I don't see anything wrong at all with finding a business that has natural
protections from competition. Any decent startup strategy should have
conversations about switching costs, customer lock-in and looking for niches
where competition is less fierce, or at least favourable to early-movers. If
you read Warren Buffets strategies he appears to spend a lot of time
concentrating on companies with natural resistance to competition, which gives
them pricing power and longevity.

The whole article reeks of academic paybacks and _profit is evil_ thinking,
and I didn't bother finishing it.

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neutronicus
I'm amused that the author chooses _Amazon_ and _Apple_ , of all companies, as
one that doesn't rely on structural barriers.

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rayiner
Lots of services firms failed in the recession...

