The Death of Competition

Customer Value Foundation

 

 

I have been urging companies to become more customeric and create more value. The world is changing and with smarter customers, and the older thought processes, outmoded strategies, disruptive processes, focus on profits over customers have to give way to new mind sets. That is why we urge companies to build a Customer strategy as a precursor to building a business strategy. Read this interesting article on how Michael Porter’s consulting company died, and contact us to help change mindsets and get more of your people to create value.


Gautam Mahajan
President-Customer Value Foundation
Email: mahajan.g@customervaluefoundation.com
Mobile: +91 9810060368

December 4, 2012 by Cindy Barnes

A big shock in the world of consulting a couple of weeks ago was when Monitor Group filed for bankruptcy in the USA. Monitor was the multi-million dollar strategy consultancy started by Michael Porter in the 1980’s based on his famous 5 Forces model. The premise of Porter’s model is excess profits can be found by focusing in industries and companies whose barrier to entry or barrier to competition is high. Monitor’s consulting revenues streamed in from doing the data and financial analysis for companies to show them how and where to maintain this competitive advantage. Safe and highly profitable havens of industry were identified for those companies who could afford Monitor’s fees. This was a way of analysing markets to keep structural barriers high and make more money than, potentially, the merits of a company’s products or services deserved.

This competitive, defensive view of the world is surely not good for customers or society as a whole. With globalisation and the internet, it’s the customer today who is in charge of the marketplace (except in those heavily government regulated industries) and not the old paradigm of the seller in charge, blocking out the competition.

As Clay Christiansen showed, disruptive innovation destroyed company after company that believed in its own competitive advantage. The only safe haven today is to engage with customers and continuously add more customer value through redefining and redesigning what you offer and how you engage. Continuous innovation in many areas, including product and service design and customer experience design, is how to win.

For new companies this new model is easier. Established companies have a harder job to move themselves towards being willing and able to make this shift from the anxiety of fending off competitors towards the open and collaborative culture that continuous innovation needs. Letting go of the corporate anxiety around this shift is key to making it happen.

What doesn’t deliver bottom line results in the long term is a strategy of focusing on only defeating rivals or only pursuing shareholder value. What does deliver results (from many studies) is managing people well and continuously adding customer value. To do this well requires deep customer understanding and the creativity to know what to do with this new understanding and customer insight.

Are we witnessing the death of competition and the growth of collaboration and innovation and a new type of company overall?

This piece was born out of an article on Forbes.com “What Killed Michael Porter’s Monitor Group?” by Steve Denning

  

Contact Customer Value Foundation for help

email: mahajan@customervaluefoundation.com
website: http://www.customervaluefoundation.com

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2 Comments on “The Death of Competition”


  1. Thank you Gautam.
    It is important to do always that which is Right, True and Good always to maintain a sustainable balance
    In turbulence.

    KV. Simon
    Regional VP
    American Hotel & Lodging Educational Institute


  2. Thank you for the note and the article . The values as perceived by the customer are changing constantly due to
    a continuous reassessment of the requirement and an increased awareness for sustainability . This would mean
    that competitive advantage of a company is put to test systematically in view of the changing market environment .
    In my view, the ” throw away philosophy ” in consumerism will have to disappear with a more logical approach
    for “consuming less but consuming better ” ( this is a rough translation of a well known expression in French
    “Consommez moins mais mieux.”) . This expression may mean different things in different countries . In developed
    nations , this expression may mean a certain type of protectionism for shutting out cheap imports and consuming
    locally made goods in smaller quantities but with higher unit prices . Real cost of any product will have to include
    Life Cycle Cost with the notion of ” cradle to grave ” and particularly the cost of management of end of life of products
    and recovery of value through recycling and reuse .

    C.M.A NAYAR
    Board Member
    Areva T&D India


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