Denning Buries Lead While Wondering Who Killed Monitor Group

Newspaper writers and editors refer to the first paragraph of a story as the lead paragraph. This paragraph contains the reason why the story exists and, hence, why the reader should care. When a reporter places this reason deeper into the story, the practice is referred to as burying the lead. Steve Danning performs this trick while performing an autopsy on Michael Porter's consulting group specifically and Porter's Five Forces Model in general. The buried money lead:

There was just one snag. What was the intellectual basis of this now vast enterprise of locating sustainable competitive advantage? As Stewart notes, it was “lacking any foundation in fact or logic.” Except where generated by government regulation, sustainable competitive advantage simply doesn’t exist.

This gem - this lead - does not appear until the 16th paragraph.

The buried lead is not surprising though. Even a cursory glance of Porter's 1979 Harvard Business Review piece shows that Porter based his argument on something other than competitive reality. A firm cannot select its industry. In this sense, the Five Forces Model is neither normative or positive. For example, the Five Forces Model would explain nothing about why some New Shoes simulation groups succeed and other groups do not while competing in the athletic shoe market. As shown in class, market orientation as a resource consistent with resource advantage theory does at least explain the relative success of a group.

The Five Forces Model does, though, live on despite all empirical evidence to the contrary. Strategy-oriented instructors like Karl Moore regularly teach the Five Forces Model. I suspect they treat the topic in a very uncritical fashion. Indeed, Moore is very unapologetic in his stance toward Porter.

There are two people, and only two, whose ideas must be taught to every MBA in the world: Michael Porter and Henry Mintzberg. ...Both are still taught, in fact, I taught Porter’s 3 Generic Strategies and his 5 Forces Model not two weeks ago in an undergraduate strategy course at McGill. Which is most useful today?

Neither is more useful today because neither takes a normative or positive view toward competition.

It remains unfortunate that we continue to fill undergraduate and graduate students' curious minds with a strategy that is based on nothing evidenced in reality. If a theory - particularly a theory about strategy - cannot explain and/or predict a phenomenon, then it is not a theory. With so many theories of competition that can explain and/or predict, blind willful ignore becomes the only reason to continue subjecting students to the Five Forces Model.

With the failure of the Monitor Group, the market understands what many instructors fail to grasp. The Five Forces Model lacks explanatory and predictive power because it is not based on any empirical evidence.

As a theory about strategy, it fails to explain and/or predict much but at least it provides a pretty graphic.