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Farah Stockman

Why did the smartest guys in the room go bankrupt?

For nearly three decades, Monitor Group, an elite Cambridge-based consulting firm, sold expensive advice to companies and governments all over the world. In the ecosystem of the industry, Monitor was not a cost-cutter or bean-counter. It was made up of “big ideas” gurus who devised winning strategies; the ones who helped you spot an opportunity on the horizon, miles away.

Mark Fuller, co-founder, former chairman and CEO of the Monitor GroupFILE 2006/ASSOCIATED PRESS

So it shocked the business world when Monitor’s own strategy came apart. This fall, the company filed for bankruptcy. On Jan. 11, Monitor was officially acquired by the auditing firm Deloitte. It was the end of an era.

Michael Porter, co-founder of the Monitor GroupFILE 2003/HARVARD UNIVERSITY NEWS

What does it mean when the smartest guys in the room file for bankruptcy? I combed hundreds of pages of Chapter 11 documents for clues about what lead to the company’s surprising demise. And I found plenty.

The documents refer to a dizzying array of affiliated companies that do work far afield from traditional consulting, from Monitor 360, which performs analysis for US intelligence agencies, to Monitor Talent, which books speakers for corporate events, to Monitor Institute, which assists nonprofits, to Monitor Quest, which provides bodyguards for billionaires.


Joseph Fuller, co-founder of the Monitor GroupFILE 2008/GU JINGSHENG - IMAGINECHINA

It seems there is nothing that Monitor doesn’t do. The mushrooming of Monitor runs contrary to the advice of the godfather of corporate strategy, Michael Porter, who helped found the firm three decades ago. Ironically, Porter got famous by arguing that corporations should specialize in areas where they have a competitive advantage.

OK, I thought. I get it. This is a story about advisers who can’t take their own advice. But I found other reasons why things went astray. The oddest was Younghoon Park, a Cornell professor who is on the list of Monitor’s top 30 creditors. Bankruptcy documents say Park is owed $44,949. But Park insists he has never done business with Monitor. He can’t figure out why they keep sending him letters.

“I would love to get some money for sure,” Park told me on the phone. “But I’m not part of this story. It’s very strange.”

OK, I thought. I get it. This is a story about brilliant people who think big thoughts but failed to master the little details that matter most, like who they actually owe money. Lots of details fell through the cracks at Monitor. When I looked up the company’s registration at the Massachusetts secretary of state’s office, I discovered that it had been revoked in 2008 because of failure to file a simple report.


Brian McNiff, of the secretary of state’s office, says it’s not against the law to do business in Massachusetts without that registration, but that the lapse opened the company up to liability.

The required reports are one-page documents. Monitor hadn’t filed them for nine years. Maybe there is a good reason why a consulting company with offices from Hong Kong to Casablanca, which routinely writes reports as thick as Bibles for companies around the world, didn’t file a one-pager for themselves in Boston. But I haven’t found it yet.

It paints a picture of a firm that didn’t have enough people paying attention to details; a firm with a distracted genius at its helm. The expired registration named him: Mark Fuller, president and treasurer.

Monitor was formed in Fuller’s living room in 1983. The oldest person in the room that day was Porter, a 36-year-old Harvard Business School professor whose seminal book, “Competitive Strategy,” transformed the way that business was taught and practiced.

Most articles about Monitor’s bankruptcy focus on Porter. Some even claim that the bankruptcy proves his ideas were all wrong. But those articles miss the fact that Porter played a minimal role in the company. Monitor was really the brainchild of Fuller, an assistant professor at Harvard Business School who helped Porter research his book.


Fuller, then 29, saw an opportunity to “monetize” Porter’s newfound fame by selling advice based on his theories. Porter would make occasional appearances, but the real consulting work would be done by others. Fuller would run the show, leveraging both Porter’s reputation and the Harvard “brand.”

“Mark is a genuine entrepreneurial genius,” one of his former colleagues told me. “He is just touched with something.”

Fuller had been bred to think big. His father had been a Harvard Business School professor and he himself graduated from Harvard’s college, law school, and business school in short order.

That day, he invited a talented group to join the effort: his little brother Joseph; Mark Thomas and Michael Bell, who had come from Bain consulting; and Thomas Craig, who had a background in agribusiness. They were all Harvard Business School grads in their 20s.

(Two women, Catherine Hayden and Mary Kearney, were also involved in the early days, but didn’t stay for reasons that aren’t entirely clear.)

Getting Monitor off the ground took endless work. The founders lived on airplanes. They did hundreds of hours of number-crunching for free, just to show clients what they were capable of. They worked the deals themselves, rather than passing them off to junior people.

“In the consulting industry, as you get more successful, you start to get fat, and you start to believe that you are omnipotent,” said former John Hancock CEO David D’Alessandro, who hired Monitor in the ’80s. Monitor had a different attitude than Bain and McKinsey, he said: “They were clearly hungrier. They listened. They didn’t come out of the box with formulaic answers.”


Monitor gained a reputation for being more creative, energetic, and less bureaucratic than its competitors. The firm mimicked the academic world, calling senior partners “thought leaders” and dressing casually. (Fuller apparently wore an inexplicable rubber band around his wrist for years.) It experimented with ideas, even if it wasn’t clear they were profitable. It recruited young, big-picture thinkers who wanted to change the world.

“Most of us at Monitor would rather do something extraordinary for clients and get paid half the money than do something ordinary and get paid twice as much,” one Monitorite told me.

Monitor became a way of thinking — a culture — which might have become a factor in the company’s ultimate demise.

One person who saw Fuller speak in the late 1990s said he was struck by how Fuller talked of Monitor “as a way of life.”

“He was starting to act like a cult leader,” the man, who didn’t want to be named, told me. “Usually, these companies have a portion of the visionary types and two or three more practical and grounded people.”

Monitor apparently didn’t have enough of those.

But for 15 years, the company’s model worked. The business grew at an incredible clip, taking on some 1,600 employees. During those years, the six founders stayed friends. They sang a musical routine at Porter’s wedding. They celebrated the birth of children. They took their families skiing together every year in Aspen. And they grew very, very wealthy.


By the late 1990s, however, the partnership showed signs of strain. Some of the founders, now in their mid-40s, were sick of traveling. Two had gone through bitter divorces. One wanted to cash out, and sell his equity stake back to the firm. But Mark Fuller, I am told, wouldn’t let him. (Attempts to talk to Fuller were not successful.)

Roger Martin, a partner in the early years who is now dean of University of Toronto’s business school, said they all agreed that if you left the company, you left your equity behind.

“This was part of our corporate philosophy from inception,” he said. Walking off with a big check would endanger the firm. Those who wanted their money out had only one option: selling Monitor.

But Fuller didn’t sell. One insider told me that a potential buyer offered $375 million in cash and up to $125 million in bonuses, but Fuller was convinced he could get more.

Years went by and the founders kept drawing hefty salaries. But most disengaged from the bread-and-butter consulting work, passing it off to junior people. Mark Thomas and Michael Bell formed Monitor Clipper, a private equity firm. Joseph Fuller turned his attention to research and dabbled in Mitt Romney’s campaign. Thomas Craig spent lots of time in Africa.

Mark Fuller got involved in unusual ventures in the Middle East. There were rumors of plans to build a tire factory in Saudi Arabia, or buy an asphalt plant in Iraq. Even when he was home, he was known for taking appointments at Bar Noir at the Charles Hotel, rather than in the office.

Because he was head of the company, Fuller worked with little oversight. One of his projects — a consulting contract with Libya — became a nightmare for the firm. What began as an effort to help reform Libya’s economy turned into a stealth public relations campaign to burnish Moammar Khadafy’s image. Monitor paid intellectuals to meet Khadafy. Fuller even proposed arranging a flattering book to be written about Khadafy’s ideas, for a fee of $2.45 million. Maybe Fuller’s work in Libya would have produced a windfall for the firm if Khadafy had chosen reform. US oil companies would have hired Monitor to help them access Libya’s oil fields. Monitor had already managed to get a role in planning a $20 billion megacity outside Tripoli.

But Khadafy didn’t embrace reforms, and he started killing his own people. In 2011, news of Monitor’s PR campaign leaked, causing a scandal.

That project, along with another contract Fuller oversaw — which promised to help the Kingdom of Jordan get more influence over John Kerry — forced Monitor consultants to file retroactively as lobbyists. The failure to register in the first place was one more example of paperwork falling through the cracks, of the devil hiding in the details.

Monitor admitted that some aspects of the Libya project were “a mistake,” but insists that it had nothing to do with the company’s demise.

It’s hard to believe that the bad press had no impact. In 2011, the year the story broke, Monitor collected about $300 million in revenues. But work slowed. By October, it had trouble making payroll. A few months later, Monitor experienced a “universal downturn across the board,” Bansi Nagji, Monitor’s president, testified in the bankruptcy case. Not in one region, but the whole company.

“We were experiencing drag everywhere this year,” he said, “which was the thing that was so perplexing for us.”

Perplexing indeed.

I found one more clue in the paperwork to explain Monitor’s terrible financial state: a lawsuit. It turns out that Hallmark, the greeting card company, hired Monitor in 2001 to redesign its business model. Later, Hallmark accused Monitor of using confidential data shared during that job for its own benefit in speeches, trainings, and finally, to help Monitor Clipper purchase a Hallmark competitor. That’s as close to malpractice as you can get in an industry with no set rules.

OK, I thought. This is a story about guys who “monetize” everything, including the trade secrets of their own clients.

In November, a judge ordered Monitor Clipper — a separate company not subject to the bankruptcy — to pay Hallmark $31 million. Monitor had already settled for $12.5 million back in 2009. That year, in the wake of the economic downturn, Monitor was $25 million in the hole. It had borrow money at a high interest rate. The death spiral had begun.

So the company was already teetering when Fuller stepped down in 2011 from a role he had played for nearly 29 years.

Last week, Deloitte bought Monitor for $116 million, a price so low that some investors won’t get their money back. The original six founders watched their equity evaporate overnight. (It’s hard to feel sorry for them since the firm’s top 12 earners took home over $7 million in salary and bonuses before filing for bankruptcy.)

Yet, strangely, this story has a happy ending. If Monitor got into trouble because its big thinkers didn’t have enough bean counters to keep them in check, then its marriage to Deloitte — the best bean counters in the world — is a match made in Heaven.

None of Monitor’s six founders are expected to stay on with the firm, now called Monitor Deloitte. But most of Monitor’s new crop of energetic, big-picture thinkers will. And that’s as it should be. Sometimes youth is the biggest competitive advantage of all.

Farah Stockman can be reached at Follow her on Twitter @fstockman.