Porter delivers while others run out of ideas

first_imgPatriciaHewitt seems to have got herself a good deal, paying Michael Porter a ‘mere’£50,000 for his report on poor management. But who is the man behind the fee?By Jane LewisIn 1991, a Canadian financial commentator noted the country had been hit bya highly contagious disease that seemed to afflict normally healthy chiefexecutives and politicians. The symptoms of ‘Porter Syndrome’ wereunmistakeable: “Victims rave on about competitiveness, strategy andglobalisation” and “show a trance-like compulsion” to hand overmillions of dollars to an owlish-looking Harvard professor called MichaelPorter. Say what you like about Patricia Hewitt, but she certainly knows how to geta good deal. While a host of other countries – including Thailand, India, NewZealand and Portugal – have shelled out millions over the years to book theprofessor, the Trade & Industry Secretary has managed to secure his inputon the weighty subject of the effect of poor management on productivity inBritain for a mere £50,000. This is pocket money to a superstar of Porter’scalibre, particularly since he is arguably the world’s leading authority on thesubject – at least in terms of scope. You’d be lucky to book him for less than$200,000 (£124,500) a day on the conference circuit. And he earns millions moreeach year from private consulting and book sales. Porter first shot on to the scene in 1980, when he published his seminalwork Competitive Strategy – a groundbreaking redefinition of what strategyshould mean in business. His trick was to combine the hitherto separate schools of management theory andeconomics: he explained corporate strategy as a function of the marketplace andshowed how companies could use general economic rules to solve problems. Youonly have to note the staying power of big ideas such as ‘competitiveadvantage’ and ‘the value chain’ to see how formative his views became. Porter swiftly emerged as an eighties management demi-god, along with PeterDrucker and Tom Peters. Supporters claimed he was by far the most academicallyrigorous of the three. Certainly his books were so stuffed with data tables,rules and maths that, as someone once remarked, they made In Search ofExcellence read like a cheap romance. In 1983 Porter, then just 35, was snapped up by the Reagan administration toadvise on industrial and economic policy. Some claim the resulting Reaganomicscould just have easily have been called ‘Porternomics’. The 1990 publication of The Competitive Advantage of Nations, a detailedstudy of eight of the world’s leading economies, marked a change of directionfor Porter, who emerged as a celebrated international guru, much in demand fromgovernments. The timing was fortuitous: within the narrower world of corporatemanagement theory, Porter’s star was waning as a new generation of strategists,such as Gary Hamel and CK Prahalad sought to define a new ‘bottom up’ view ofstrategy based on core competencies and intellectual capital. The big idea Porter later admitted he had fallen ‘off the radar screen’ in corporatemanagement. But the widespread take-up of his ideas about nationalcompetitiveness more than made up for this. His big idea was the importance tonational economies of local ‘clusters’ of companies – often in the sameindustry – competing against and servicing each other (Silicon Valley is theobvious example of this). He argued that creating an environment where existingfirms can become clusters is the key to sustainable prosperity, because localcompetition boosts innovation and therefore productivity – and this in turnconfers global advantage. Far from sapping local economies, therefore, theprocess of globalisation actually boosted them. Critics charge that Porter’s work is too schematic, and that his obsessionwith developing ‘strategies’ can get in the way of common sense and pragmatism.Some complain he is forever producing laundry lists of ‘forces’ and ‘factors’,and passing them off as explanations. Others insist much of his work is hardlyoriginal, and that he has a knack for stating the obvious. Certainly his 1990 explanation of the UK’s economic woes – a gentlemanlyruling class, lousy technical education and poor industrial relations – wasalready a cliché. And sometimes he is just wrong: his early 1990s predictionthat the US would decline economically in the face of German and Japanesedominance backfired spectacularly. Unrivalled scope But he still has plenty of fans. They claim that not only have his views onthe nature of competitive advantage stood the test of time, but that 25 yearsat the corporate and international coalface have given him unrivalled scope.”I have had extraordinary access to lots of data and I have thisextraordinary access to companies,” said Porter. “I can ask prettymuch anything and they will give me the answer”. It is this “broader,holistic” view, which he claims gives him an edge. Certainly, few othergurus would have the confidence or scope to compare the productivity ofmanagers in Catalonia, say, with those of South Africa. Porter’s reputation as the international expert on productivity andcompetition was cemented when he began chairing the annual GlobalCompetitiveness Report – a kind of hit parade of successful nations. In 1999 hewarned that Britain risked a further decline in productivity because of itsweakening “innovative capacity”. This year, it seems a mightytransformation has taken place. The 2002 report (published just a month afterHewitt hired Porter to investigate Britain’s apparent productivity problems inOctober) showed the UK making substantial headway. Indeed, in Porter’s micro-economic competitive index, based on”sophistication of company operations and strategy and the quality of thenational business environment”, we leapt from seventh to third place.Better still, the figures for company operations show that on a measure of”reliance on professional management”, the UK comes top out of 80nations. That kind of good news would be music to any government’s ear. PatriciaHewitt may well be congratulating herself on £50,000 well spent. Michael Porter’s CVBackground: Born in Ann Arbor,Michigan, 55 year-old Porter is the son of a US army officer. Education: Degree inaeronautical engineering at Princeton; MBA Harvard Business School; doctoratein economics Harvard University. Career:2002: Appointed to Harvard’s Bishop William LaurenceProfessorship2001: Co-formed Institute of Strategy & Competitiveness atHarvard1996: Relaunched his career as a corporate strategist1990: Began career advising governments on national competitionissuesMid-1980s: Co-formed the pioneering management consultancy,Monitor1983: Joined Reagan’s Commission on Industrial Competitiveness 1977: Promoted to associate professor at Harvard He has also worked extensively on inner city initiatives.Publications: author ofcountless books and articles on strategy. His classic, Competitive Strategy(1988) is now in its 58th edition in 17 languages. Fans stretch across thepolitical spectrum: from Reagan to Clinton in the US; and from Peter Lilley andJohn Redwood to Tony Blair and Gordon Brown in the UK. Consultancy: Among others hasadvised First Boston, AT&T, Procter & Gamble and Shell. Few countrieshave escaped his attention. Previous Article Next Article Porter delivers while others run out of ideasOn 21 Jan 2003 in Personnel Today Comments are closed. Related posts:No related photos.last_img read more