04 Dec 12 Lessons from Monitor
The bankruptcy of Monitor Group, the consulting firm, has come as a shock to the followers of the strategy gurus who set up the firm – Michael Porter and Mark Fuller. No management education is complete without a cogitation of the Porter’s five force model. How is it possible that the very firm that advised corporations and governments around the world on business strategy was not able to formulate a strategy for its own survival? The Hindi saying ‘Diye Tale Andhera’ (Darkness under a lamp) aptly describes Monitor’s situation. A firm that showed light to the others, lost its own way.
The recession of 2008 dealt the first blow to Monitor and from there it was all downhill for the company. In 2010 it hived off its research arm, Grail Research; and in 2012, it filed for bankruptcy.
There are many views on what went wrong for the Monitor Group. Taking on an assignment for the late Libyan dictator Muammar Khadafy between 2006 and 2008, which Monitor later regretted, may have been one of them, but could not have been the only one. The Economist magazine suggested that its structure had become unwieldy and unaffordable as a results of its entry into multiple areas such as executive education, nonprofit consulting, government work, etc. The Forbes magazine feels that the firm’s customers stopped seeing value in what it was offering.
It is difficult to say who is right. In all likelihood, all the above factors and more, together brought the firm down.
What lesson does the Monitor story have for competitive intelligence and strategy professionals? I feel there are no new lessons to learn, but the saga certainly reinforces the old ones.
Nobody is “safe”
All companies, no matter how knowledgeable, strong and dominant they may seem at a given time, are vulnerable to competitive forces if they remain complacent and take their eye off the ball. All organizations can, and do have blind spots, which they need to proactively be alert to.
There is no such thing as sustainable competitive advantage
Some companies have a competitive advantage arising from government regulation. For example, if companies need to have licenses for operating certain businesses, then those that have got the licenses have a competitive advantage as long as the government does not issue fresh licenses.
Most other companies need to continually innovate to deliver value to their customers in different ways, in order to survive and stay ahead of competition. Any competitive advantage gained is lost very quickly as the competitors counter these with other value propositions.
No-one but you can solve your problems
If customers stopped coming to Monitor, it was because the firm had stopped delivering enough value for the amount it charged its customers. Corporations have learnt over a period of time, that while they need inputs from external consultants, only they can solve their own problems. It is up to them to determine what inputs they need, and seek only those. They cannot expect external consultants to make the problems go away. Is the demise of Monitor a signal to the large global consulting firms?
What lessons have YOU found in the Monitor saga? Do share your views…