The downfall of Michael Porter's strategy consulting firm Monitor Group

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

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What is OD?

No, I am not referring to overdose (wipe that smile off, you :-)) but the art and science of Organization Development.

OD is often confused with Training, and sometimes with business strategy. For me, it's all about building the capability of the organization when changes are made to human systems (think of team reorganization, or to intra team issues) or to non-human systems that interact with human systems (structure, job design, people processes).

To understand OD you could read books like Process Consultation Revisited by Edgar Schein or you could head over to the new blog, Learn OD by Gurprriet Siingh, OD leader at a large Indian conglomerate.

The purpose of the blog is to help and educate young OD professionals or other HR professionals who want to get to understand what is Organization Development and what are the skills needed to be successful here. Take a look at some of the posts from the blog and I am sure there are lots more of such useful posts yet to come.

• Capabilities of an OD Professional 
• What's that? 

So go ahead. Learn. Connect.

Why do failed CEOs keep getting chances?

Michael Brisciana asks Does Firing Guarantee Future Success?

why is it that once someone reaches a certain level in an organization, it seems that even if they “fail” repeatedly and get fired (sometimes several times), they seem to re-surface months later in a similar (or better) job at another organization? And what does this say about Boards, CEO’s, and other senior managers that they often put their faith in “re-treads” instead of taking a chance on talented, high-potential (but non-pedigreed) “new blood”?

Case In Point

Last week, Hewlett Packard hired Leo Apotheker as its new CEO — seven months after Mr. Apotheker had been forced out of rival SAP after only seven months at the helm.

One of the reasons for this is that organizations are risk averse systems. It is extremely unlikely that a VP in firm X would be hired as CEO of firm Y. There are two possible scenarios if firm Y is looking for a CEO. They would hire a current CXO to become their CEO or hire a CEO from any other firm to become their CEO.

Heads of internal businesses are often overlooked for top jobs because of internal politics issues or because they are identified too closely with one business - forcing Boards to look externally for a CEO. Successful CEOs are usually not available for hire when organizations need them :-) So organizations make do with average or fired CEOs.

Business benefits of Enterprise 2.0 #e20

If you're still not convinced why organizations should use social technologies within, then you should read this. A study done by the Aberdeen Group that's up at the Socialtext blog: Embrace Social Software and Improve Business Performance

The report surveyed 300 enterprises, and broke them down into three categories based on the maturity and sophistication of their social software adoption (best-in-class, industry average and laggard). I encourage anyone considering the benefits of social software to read the entire report, but here’s a few highlights:

1. Companies that widely harnessed social software (best-in-class) took on average 11 hours to bring a response team together for a key business threat, while industry average companies took 113 hours and laggards 105.
2. Best in class companies took five months to complete key strategic projects, while industry average companies took 8 months and laggards a staggering 14 months.
3. Best-in-class companies saw a 36 percent decrease in time to enact key business changes based on customer feedback, while laggards experienced a 17 percent increase.

So what's stopping your organization to embrace social tools and change into an Organization 2.0 ?

Innovation and HR's quest to be strategic

Peter Drucker is famously quoted for two statements which distill the basic purpose of businesses.
One says that There are two functions of business - innovation and marketing.
The other says The purpose of a business is to create a customer.

If you search for the phrase "HR seat at the table" on a search engine like Google you'll get lots and lots of results.

However it is not possible for any function to be considered strategic unless it impacts directly either of these two outcomes - innovation or creation of a customer.

Traditionally the domain of marketing and creating new customers has been the forte of Sales and Marketing.

And Innovation has been the preserve of the R&D group. In certain organizations that innovation is not about the product but a business model - like doing the things faster, better and cheaper than the product innovator.

So if HR really wants to be strategic - either it should wait for a business leader who believes that the "culture is the brand" or else go and do stuff that will impact the ability of the organization to either innovate or create new customers.

Unless HR leadership in a firm evaluates most of their initiatives - from Talent Acquisition to Leadership Development to Total Rewards on these parameters - of innovation and creating customers - HR will never be seen as strategic.

HR professionals have also got to stop viewing themselves as "only" HR people - and they should preferably do stints in other functions to build knowledge and skill in aspects related to business models and customer relationship and enrich them with knowledge about people processes.

Are you ready to be strategic?

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Reframing is the key to Disruptive Innovation

I have always considered the ability to see things in a new way as the critical aspect of innovation (changing mental models as Peter Senge has said) and this HBR article which looks at three leaders including Ratan Tata shares what are the three aspects of this skill - called "Reframing"

The article is titled How Reframers Unleash Innovation in Their Companies (And Beyond)

First, Reframers dare to question well-ingrained business truisms and industry paradigms. As they experiment with radically new business concepts, Reframers constantly ask themselves "why not?" For instance, Tata shattered the century-old car manufacturing paradigm: rather than completely producing the Nanos in its own factories, Tata Motors will distribute component kits that entrepreneurial small businesses can assemble close to customers. By questioning the conventional wisdom, creative leaders like Ratan Tata help their organizations navigate an increasingly complex business environment that places a premium on leaders with a flexible mindset.

Second, Reframers think not only with their minds but also with their hearts. After all, the heart of change begins with the change of heart; as Mahatma Gandhi eloquently put it: "Be the change you want to see in the world." As such, Reframers are erecting what we call a mental (and heart) barrier to entry for competitors. For example, you can bet that leaders at major food and beverage companies are busily hatching new business models to compete with PepsiCo's wellness strategy. But these rival business models won't be sustainable unless the leaders who developed them sincerely care about the wellness of consumers. In the dawning Web 2.0 world where authenticity is the new source of competitive advantage, a heartfelt business model transformation will be more readily accepted and handsomely rewarded by consumers than a disingenuous me-too competitive offering.

Third, Reframers catalyze massive social innovation. To borrow from chaos theory, the change in the minds and hearts of Reframers is akin to the butterfly flapping its wings over Hong Kong that can unleash a tornado in Texas. Even a minor reframing can yield a disruptive business model that can revolutionize not only an industry but entire societies — a massive chain reaction captured in the following formula:

Mental model innovation → business model innovation → industry innovation → social innovation

The key to business in this century would be creating social innovation - and the focus on sustainability.

What do you think?

How differently do tomorrow's workforce and today's leadership think?

A new study by IBM: Millennials And The New Corporate Leaders - Social Responsibility Is Essential shows how differently tomorrow's workforce (people who are currently students) thinks about larger issues than today's CEOs. Read the full post, it's insightful to note the differences as well as the similarities

Among the nine leadership traits CEOs and students could choose from, students placed a higher emphasis on only two leadership qualities - global thinking and a focus on sustainability. Students were 46 percent more likely than CEOs to view global thinking as a top leadership quality. And they were 35 percent more likely to include sustainability in the top three."
Beliefs about globalization and sustainability were even more defining. We found students were much more concerned with these issues than CEOs, and most importantly, saw them as inherently connected."
...
Based on their comments, it was clear that students view globalization and sustainability as intertwined themes. They believe that a global citizen has responsibilities to others in the world, and that an emphasis on sustainability makes one better appreciate the impact of globalization.

"Students' views were stronger than CEOs on every one of the ten questions relating to these topics, and, as their comments made clear, called for bold and immediate action. They spoke about a new relationship among societies and business, economies and governments, and the need for a new definition of 'value' on what they see as a shared planet."

When asked for the top three factors that will impact organizations, 23 percent of CEOs mentioned globalization and 21 percent environmental issues, ranking them number 6 and 7 among their top issues.
For students, globalization was the highest ranked issue, voted on by 55 percent. Environmental issues were voted on by 42 percent of students and ranked fourth.

Businesses Need to Build Two Skills

Clay Shirky in his book "Here comes everybody" talks about how social tools are changing people and society. In it he makes the point that business will have to become media houses - as people will expect to see content from them. If businesses don't create content that is relevant and engaging for their audience (employees, stakeholders, customers) then they risk being left behind.

Creating content is never a businesses' core competence - hence traditionally it has been outsourced to PR agencies who interface and "pitch" story ideas to journalists. If you have interacted with either/all of them you know the amount of angst that is embedded in these networks.

However as "media" (the term comes from the word meaning "in-between") evaporates (slowly, ever so slowly) there will come a time when content will be created and shared in the space between businesses and their stakeholders.

But why should businesses bother?

One main reason - and we go back to the basic fundamentals - the purpose of the firm is to create customers (marketing) and to produce goods and services to meet their needs (innovation and production) as articulated by Peter Drucker.

Producing content - and managing a community of stakeholders - to co-create innovation will be what tomorrows' businesses will do to innovate and create customers.

Both are not skills that current organizations have.

So here is my short manifesto for businesses who want to remain relevant to how things are changing:

Learn and become good at:

1. Identifying and creating content relevant to their stakeholder
2. Building a community of people interested in content and willing to create content to the larger purpose of the organization.

Also do go through Gaurav's post on the new 360 degree marketing.

Thoughts? Comments? Share in the comments below.

Dell launches India Blog

It's exciting to note that Dell has launched its India Blog this week. It's a mix of content focusing on varied consumer groups. Looking forward to more initiatives by the Dell India team in embracing social business like it has done worldwide. In fact, there's the Take Your Own Path India community where people can share their entrepreneurial stories and it also has a business forum.

When it comes to embracing social technologies for business - Dell is an organization that is always a case study for the various communities it has created. Starting with almost a negative brand - Dell has leveraged conversations, community and collective intelligence using its properties like Idea Storm (a platform where anyone can submit ideas - and they are voted on by the community - and then chosen ideas are implemented)

Dell also has a vibrant support community - where users solve other users queries about Dell products. Then there's a vertical community for Small and Medium Business Owners, where SMB owners get advice from other entrepreneurs on running their business.

Then of course, there are the "social outposts" on Twitter like the DellOutlet which has helped Dell USA earn millions of dollars in revenue, and the SMB page on Facebook.

Check out Dell's slideshows that explain how Dell engages with the tools and listens and reaches out social media, blogging and responding.

Disclaimer: I am a Dell Alumni - having worked there as a HR generalist in 2005. In addition, my current employer 2020 Social works with Dell on their social media initiatives, like Dell Go Green - although I am not part of the team working with Dell. 

McKinsey and Nielsen form JV for Social Business Consulting

The industry of Social Business Consulting just became a little more interesting. McKinsey - the big daddy of the traditional Strategy consulting firms and Nielsen - the maker of the Nielsen Buzzmetrics, social media analytics and listening tool (which helps in listening and responding as explained in this blog post), announced a Joint Venture to help clients leverage the social media data being gathered.

Here's Clickz's news report:

Nielsen has formed a new social media consulting company through a partnership with McKinsey & Company. The firm, called NM Incite, includes executives from both Nielsen and McKinsey, and is intended to help brands act on social media research and analysis provided through Nielsen-owned BuzzMetrics offerings.

Over the years, Nielsen has served some of the same clients as McKinsey, a global strategic consulting firm with consultants based in more than 50 countries. The new venture brings the companies together formally in order to serve senior level executives. While Nielsen monitors social media to isolate brand strengths and weaknesses and consumer insights, the combined NM Incite will help clients apply that intelligence on a more strategic business level.

"Our clients have been asking many questions with regard to social media...as to how to use it to their advantage," said NM Incite's president of media products and advertiser solutions, Steve Hasker, who spent 12 years with McKinsey before moving to Nielsen and helping to get the joint venture off the ground.

Hasker said Nielsen's traditional clients in CPG, retail, and media have shown an interest in the new company's services, in addition to pharma and financial services. "The large clients will be a focus here," he added.

"There's a big area around product development," he said. NM Incite will focus on "how brands can leverage social media to harness consumer insights to develop better products and optimize the launch of those products," he said.

I personally think McKinsey's entrance into this space brings a larger sense of credibility to the social business consulting world - and along with folks like Dachis Group, Altimeter Group in the US, and 2020 Social in India, will be growing and maturing the market. I expect to see other large consulting firms like Booz & Co., BCG, Accenture and Bain to also actively look to enter the space via the JV, acquisition or "building a practice" route.

Check out NM Incite's blog posts here.


Yes, exciting times ahead.

Hating HR? Lessons from Tony Hsieh of @zappos

Remember there was this article some years back in the Fast Company called "why we Hate HR?"

There's now a follow up post at the HBR Blogs title Why We (shouldn't) Hate HR.

And I have often blogged about it - if business leaders were as demanding of HR as they are of Marketing and Finance, then they'd ask their HR people to do a lot more.

I was again reminded of this when over the last few days I read the book "Delivering Happiness" by online retailer @zappos CEO Tony Hsieh. The book is a mix of a personal story and is also tied in with how his experiences led him to build the culture at Zappos.


When I was reading the book, I was reminded of a book I read more than a decade ago - Maverick by Ricardo Semlar.

Tony is as much of a maverick as Ricardo, taking decisions that puts the culture of the organization, openness and transparency at the centre of the structure, and then challenging the norms of the industry.

Tony's belief is that the culture of the organization is the biggest brand it has, and that value drives the way Zappos treats its people and lets them take decisions. The culture is tied to the core competence of the organization which is Customer Service. Zappos knows that both the core value and core competence need to be invested in, and while it has twice faced tough economic times it didn't compromise on them. Long term needs to be balanced with short term. It is not an either-or option, unlike what most senior executives believe

But most importantly Tony's belief is that an organization's larger goal is not profits, or even passion but a purpose - and for Zappos that purpose is to Deliver Happiness - to its customers, partners and the world at large. I personally think that Zappos is the archetype of the Organization 2.0 I keep blogging about.

The HR processes support such thinking within Zappos. For example they have a culture book, which is a collection of how each of their employees experience the culture at Zappos - and now anybody can read that book.

During interviews HR people can reject a perfectly technically suitable candidate if they don't meet the "culture fit" of the organization.

After a person is recruited, they are taken through a few weeks of training - where every employee has to experience the core competence of the organization - customer service - by manning the contact centre phones. Doesn't matter if your job is in Finance or Legal or HR. You have to man the phones for some time.

After training - each employee is offered $ 2000 to quit, if they want to. That's a lot of money, and Zappos believes that people who are not touched by the purpose of the organization will take that option and leave. About 1% do.

If you are aspiring to build the 21st century's next enduring business, you should read Tony's book.

Here's a slideshow put together by Tony which captures the salient points of the book. Check it out

Zappos - Amazon - 02-25-10

View more presentations from zappos.

Thoughts on growing trend of HR Outsourcing in India

Times Ascent recently had a write up on the growing trend of Human Resources Outsourcing (which is something more than just temping) which is catching on in India with firms like XecuteHR , HuSys and PeopleStrong getting bigger and bigger projects and not just from the Micro and Small & Medium Enterprises sector.

Here is the article.

HRO - growing popular each day
by Monarose Sheila Pereira


The concept of human resource outsourcing is growing popular with each passing day. However, there are disadvantages to this concept too along with the numerous advantages, say experts.

Human Resource is now the golden career option. Companies are realizing the importance of hiring, training and retaining their employees, therefore giving tremendous importance to the HR Portfolio. HR outsourcing has been picking up in a big way too. Teams of highly experienced professionals provide clients with customised HR solutions which range from short-term based solutions, to an on-going HR relationship with the client. However there are advantages and disadvantages to HR consultancy.

According to Consultant Gautam Ghosh, the advantages of HR Outsourcing are of different types - because different types of HR work can be outsourced. “Payroll Outsourcing helps freeing up HR and Finance people from doing operational work and to instead focus on high end work. C&B Survey outsourcing is the norm because competitors are comfortable sharing information with a third party and not with organisations directly. Third party recruiters and Executive Search Consultants have huge databases that internal recruiters rarely posses. Training outsourcing, specially for high end training means using the high cost resources only when needed and not spending a salary or management time for trainers on the time. Coaching outsourcing is critical because often employees need to share information that they would not be comfortable sharing with an internal employee,” he expresses.

Consultant Trevor Ferandes believes that in order to become more responsive to the needs of the business, HR must increase its strategic capability, or pursue alternative models that will free resources to support business strategy. “Delivering an integrated and compliant HR service is highly complex. HR commonly scores poorly with the business, since its focus has traditionally been on transactional and administrative processes. In most cases, building a world class HR function is not a core competency or strategic priority for most organisations. Outsourcing gives them access to world class skills and allows them to focus on what they do best – product and service innovation,” he says.

HR can deliver the right mix of core and non-core HR services efficiently and effectively. By allowing the organisation to keep in-house what it does well and outsource what it does not, the outsourcing option facilitates access to proven ideas and solutions and thereby increases performance through disciplined use of standard processes and solutions. This helps maintaining the HR focus on value-added activities in sync with the organisation's requirements.

However, besides the advantages, there are disadvantages to HR outsourcing too. Ghosh informs, ”The disadvantages of HR outsourcing is that it forces HR department to rethink its core role, and give up the earlier comfort of being ‘administrative expert’ and build new skills, which many are not able to do; and their business sees that they are no longer adding any value or stepping up to the ‘business partner’ role.”
Fernandes says “Cost is a critical consideration, but it is a mistake to evaluate HR outsourcing primarily on the basis of financial savings. Companies should consider broader enterprise requirements.”

Personnel and HR Director Tulsidas B Patel, believes that besides the cost of consultancy being very steep as compared to hiring your own staff; the most important factor going against companies opting for consultancy is that HR is a very confidential field and many companies would not like to compromise on this important aspect.

So with the field growing, the pros and the cons fighting for viability, companies now have a good low down on information to help them make their options.

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