« November 2003 | Main | January 2004 »

December 2003

John Kay, in his book The Business of Economics, has a few sharp words for Michael Porter (pp. 30-31):

One of the most famous propositions in business strategy is Michael Porter's injunction not to be 'stuck in the middle'. 'The worst strategic error is to be stuck in the middle, or to try simultaneously to pursue all the strategies. This is a recipe for strategic mediocrity and below-average performance, because pursuing all the strategics simultanenously means that a firm is not able to achieve any of them because of their inherent contradictions' (Porter 1990: 5). 'A classic examle is Laker Airways, which began with a clear cost focus. Over time, Lake began adding frills, new services and new routes. The consequences were disastrous' (Porter 1985: 17).

The trouble with this proposition is that it is just not true. Porter is wrong in his account of why Laker failed, and many successful firms are stuck in the middle. Every Sainsbury van has 'good food costs less at Sainsbury's' painted on the side. Is Sainsbury's problem today that it is stuck in the middle?

. . . .

The version of stuck in the middle that is true--you will not succeed if you are not good at something--is so nearly tautilogical as hardly to be worth enunciating. The version of it that has major content--that you cannot pursue both cost reduction and product differentiation--is clearly false. There are obvious dangers in confusing one with the other.

People were rocking with laughter; some were in tears. Deadpan, Don Watson waited. One audience member said later it was the funniest dinner of academic deans he had ever attended. But Watson was not joking. He was reading from a university mission statement and other material on its website.

"To provide outcome-related research and consultancy services that address real-world issues" - shrieks of laughter. The university's "approach to quality management is underpinned by a strong commitment to continuous improvement and a whole-of-organisation framework" - uproar in the room.