|Michael Porter (Photo credit: Wikipedia)|
Steve Denning has a scathing take on the fall of the former blue chip strategy consulting firm, Monitor Group. Founded by Strategy uber-guru Michael Porter, who propounded the five forces model. In fact I had questioned the model on this blog way back in 2005 – but of course Steve Denning does a much more detailed analysis.
The shocking part of the analysis is this:
it (Porter’s model) was “lacking any foundation in fact or logic.” Except where generated by government regulation, sustainable competitive advantage simply doesn’t exist.
Hype, spin, impenetrable prose and abstruse mathematics, along with talk of “rigorous analysis”, “tough-minded decisions” and “hard choices” all combined to hide the fact that there was no evidence that sustainable competitive advantage could be created in advance by studying the structure of an industry.
Although Porter’s conceptual framework could help explain excess profits in retrospect, it was almost useless in predicting them in prospect.
Read the full article here.
Also read The Economist’s Schumpeter’s take on Monitor’s demise