Monitor Group, co-founded by Michael Porter, filed for bankruptcy a couple of months ago. That bankruptcy was somewhat puzzling. Like a few financial companies, ones that are expected to know how to manage assets, went bankrupt in 2008, Monitor Group preaching other businesses on strategy and competition, sadly struggled to manage its own strategy and lost to its competitors. While certainly other factors played their roles in Monitor Group bankruptcy, there is an obvious general question – why does division of labor fails here. How much should we trust a consulting company and believe the consulting company is competent enough? In my opinion, that largely depends on how much of moral hazard is involved. If that’s true, consulting as a form of business will become very tricky until consultants take more responsibility for their actions and consequences of those actions.
Today Deloitte has acquired Monitor Group. I hope Deloitte will make better decisions based on Porter’s framework, which I still believe is good, but not as sufficient to achieve success.