If you want to know what went wrong in the past 40 years, just read this

November 23, 2012

Books, I’m told, are going out of fashion.

Not in my house.

But while I’m reading more than I ever have before, most of that reading is on my iPhone and most of it is things people have tweeted.

I’m eternally gratefully for William Perrin for tweeting this fantastic article from Forbes magazine.

It’s called “What Killed Michael Porter’s Monitor Group?” by Steve Denning.

It’s inspired by a book from 2009 “The Management Myth” by Michael Stewart.

If you want to know why we’re in the state we’re in, read it:

…in 1969, when Michael Porter graduated from Harvard Business School and went across the river to get a PhD in Harvard’s Department of Economics, he learned that excess profits were real and persistent in some companies and industries, because of barriers to competition. To the public-spirited economists, the excess profits of these comfortable low-competition situations were a problem to be solved.

Porter saw that what was a problem for the economists was, from a certain business perspective, a solution to be enthusiastically pursued. It was even a silver bullet. An El Dorado of unending above-average profits? That was exactly what executives were looking for—a veritable shortcut to fat city!

Why go through the hassle of actually designing and making better products and services, and offering steadily more value to customers and society, when the firm could simply position its business so that structural barriers ensured endless above-average profits?

Why not call this trick “the discipline of strategy”?


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