Advice or Consultancy

Helen must needs be fair, When with your blood you daily
paint her thus. (Troilus and Cressida Act 1 Scene 1, William Shakespeare)

 I came to the unsurprising conclusion some time ago that there is something significantly wrong with business or management consultancy as it is currently offered and delivered. It’s not so much the what, but the how, in the sense of on what basis.

Part of the issue for me, and a major part at that, is that having been done, in a number of senses, by expensive and highly self-regarding management consultancies at least twice in my corporate life, I knew that the value proposition was largely an illusion. The management consultancies put their collective mouths where the clients’ money is but risk nothing.

There had to be something better.

 They get called in when there is a problem. They get called in when there is no visible way forward, or competing ways forward that are too difficult to choose between. They get called in for the benefit of their experience. And these are good reasons for getting third party help.

 So what is wrong?

 At first, I naturally focused on the traditional bugbear with management consultancies and why I was so disillusioned with the processes they embody. This was quite simple.

 In my first brush with the highly exclusive end of management consultancies, I had the traditional experience. A senior partner had obviously smoothly sold the consultancy assignment to the board, and promptly disappeared, presumably to sell the same consultancy assignment, and results, to the next major client.

 In her place was a team – they don’t work in isolation – of fresh-faced graduates.

 Her team knew less about structuring a department than any member of my direct reports. It seemed absurd to me that my company was spending nearly £200k on this farce. I was assured that the partner, who I was told was well worth his £5k per day in 1994, would be there to assure quality and dictate the most appropriate way forward.

 Absurd, and you couldn’t make it up.

There were masses of other annoyances, too. There was, for example, a straightforward method behind what they did, which was largely ineffective. They went through a consultation phase, presumably to find material for a later assignment. They then disappeared to do an edit on their existing presentation and finally the senior partner would come back to deliver it.

 On this occasion, it emerged that they also planned to give us that year’s management consultancy fashionable approach, undoing, awkwardly enough, what they’d told the company to do three years previously. My cynical view, that it was merely a bit of cut and paste after some nugatory interviews, was dismissed by my senior management as irrelevant, because, they pointed out, they would hardly have had to pay these sorts of fees for that type of outcome. (It didn’t help my case that William Shakespeare had exposed this fallacy more than four hundred years earlier.)

 These elements of traditional management consultancy were annoying and irritating, but it isn’t the real problem.

 Nor is it the fact that they are staffed by very bright people with a significant incapability. Those youngsters they send round to do the work have impressive academic qualifications, and amazing processing bandwidth. No data and almost zero experience to do the processing on of course – but something much worse. By the time these impressively bright and fresh faced people reach the age of 40, over 95% of them will be gone, having not made the grade. They are weeded out progressively on the basis of the bottom performing 10% or so leaving per year.

 On that basis, what these consultancies are implicitly saying is that they are rotten at recruiting the right people, so we get our clients to sort them out for us and tell us which ones aren’t worth keeping.

 Would any sane business really recruit one hundred people, nurture, train and invest in them and then deliberately discard ninety five of them? Clearly not unless they were not up to the standard required. Yet it is these failures-to-be who are the ones to do the work.

 It is crazy – and this is another bitter fact for their clients: they have to deal with people 95% of whom will not be good enough to do the actual job.

 Bizarre. And even more so as it is not the real problem.

 The real problem time and again is that there is no accountability. When asked about this, the expensive management consultancies change the subject and will say that they take full responsibility for what they propose, but even that is like grasping a cloud. Their immediate get out is that they were not responsible for the way anything was implemented, and while their consultancy was brilliant, the nincompoops in their client just didn’t do it properly.

Try and pin them down on accountability, and you will find that the concept is totally alien to them.

And when you reach this point, you realise that you just can’t blame the world class management consultancies. There is some sort of mutual benefit in the current situation that makes it too cosy. If in IT terms you couldn’t previously be sacked for buying IBM, wrapping the warm security blanket of any one of the major consultancies around your corporate position means that, even if their consultancy is absolutely junk, you did your best for the company by buying what everyone else regards as the best.

 At this point not only do the management consultancies have a vested interest in pretending that the emperor has a jolly decent set of togs, but the whole corporation that they have just done also has that vested interest.

 It is not that the model is broken, in my view. We can see various fixes and improvements, but, beyond being some sort of crutch, I don’t think that any of them are relevant or remotely justifiable.

 Consultancy just embodies the wrong model and the wrong attributes.

And so . .

Nothing I’ve written thus far will surprise many people, although there might be some uncomfortable winces of recognition. But if I was just telling you what I think the problem is, then I’d be no better than those that I increasingly see as of limited value.

 The key words are of course accountability and responsibility. But if that was all it was, it would be very easy to fix.

 And here, first, let me assume that most businesses do need external help. Behind my assumption there are good reasons. A third party, for example, can often bring a new perspective. You may not learn anything startling or new, but you will see what you already know in a completely different light. That has a value and one that is often underestimated. No business can afford to have dedicated people full time doing things that are only a concern for a limited amount of time, whether that time is 10% or 50% or 90% of a full time equivalent. It is usually better to buy in that particular skill or experience when you need it. Few businesses can afford to have people whose main role is to understand new developments, whereas third parties need to be aware and dealing with them all the time.

 Again, challenge is all very well in corporate life, but it is awfully wearing if everything you do is challenged, although it is incomparably worse if nothing is, so you start to believe your own propaganda. Having looked at many businesses, from large to small, I have come to see the lack of challenge from within to be one of the signals of corporate decay. Yet even with the best will in the world, challenge from the inside is never treated with the respect it may or may not deserve. The sense of hierarchy and position is too closely engrained in us for it to be otherwise.

 An outside intelligence, underpinned by experience, can not only be a key to corporate survival but also a safety valve, a dash of cold water, and a cue for breakthrough thinking.

 It is not for nothing that mediaeval rulers had a licensed fool – that is someone who was paid not to make fun, but to make fun of them. And the very nature of the licensed fool demanded a high intelligence – but with one difference from management consultancies. The fool was very much accountable. If he went too far once, he wouldn’t be able to do that again.

 That, weirdly as it may sound, is traditionally where management consultancies have found their invitation to sit at the top table, but for all the reasons I have suggested – and more – that isn’t the right answer. They are no longer accountable if they ever were, and, as I have shown, responsibility is accepted within such a narrow compass that it is just an illusion.

 How do we change that?

 In my experience of dealing with companies, the way that most of them accept criticism best is by saying that what is proposed is a suggestion. Watch the smooth senior partners of the major consultancies and each time they will focus on this word: suggestion. You can hear it when I write these words: Our considered suggestion is . . .

 The hardest word that companies have to deal with is: advice. Think how different the whole tone is when someone says: Our advice is . .

  It implies superior insight. It implies a wider range of experience. It implies that the recipient of the advice hasn’t understood something.  It implies that fault has been found, if not with individuals at least with the way the company conducts its affairs.

 In short the word advice implies all the reasons why you may need a third party to look at what you are doing.

 Which, funnily enough, is probably why you employed the third party in the first place.

 I am therefore making a plea for taking a different view of internal and external business problems and issues, and seeing them not as evidence of failure but all too often indicators of success.

 The people who tell me that they have solved all business problems that they have come up against are really telling me that they haven’t really been trying. Problems are not an indicator of failure – but just the opposite.

 What people need is advice – and yes, they are entitled not to take that advice, but they do have to listen and work out for themselves why the advice is not acceptable.

 It seems to me that the new wave of third party engagement with businesses has to break with the security blanket of the management consultancy suggestion and the rather elegant façade of cost rather than value. It now needs to embrace the harsh discipline of advice, and the people giving that advice need to be accountable and responsible – but first accountable.

 The first step towards that, and I do say that achieving accountability is a journey and a process, is that reward has to be based on delivery of value. I know that beggars a range of issues, but I can put that a different way that slides through some at least of the objections. If before the advisor starts the process of assessment leading to advice, the business and the advisor sit down and establish where the value might lie and agree a scale of reward related to that value creation, we have a mechanism that won’t be perfect, but it will move a longer way towards accountability than anything we’ve got now. Secondly, the adviser has to maintain in the public domain a statement of the advice given, in the most general terms as there will be commercial issues otherwise, and also the outcomes generated by that advice. Thirdly, the business buying the advice has to be committed to endorsing the outcomes that are claimed.

 At this point we are starting to engrain accountability into the fabric of the project, and not to tack it on at the end.

Does it work?

The answer has to be – not totally yet – but it is a great advance on the previous position.

 It also depends upon the ability to sit down at the beginning of an exercise and to understand what the business benefits will be, whether they are improvements to the top line or the bottom line, and anything in between, and assigning a value to that.

 Is this difficult? Yes. Is it impossible? No.

 I have had the objection that this means a great deal of work prior to starting the advice process. My rejoinder is that unless you do sit down prior to any such assignment and work out what you believe you will gain from it, you are probably wasting, if not yours, somebody’s money.

 It does take trust, however – both ways. Let me illustrate this.

 One of our considerations is around charging a flat fee for the advice and the process that surrounds it, and then paying a premium related to the perceived value. The great breakthrough in this thinking is that responsibility is built into the process as well as accountability – and the responsibility flows both ways. The business paying for the advice is having to commit to taking a responsible attitude towards advice – remember that bogey word – and then to pay a premium if the outcomes are appropriate.

 We’re in the early days of this at the moment and we’re feeling our way towards the solutions – but we already know that we can replace consultancy with advice, and we can replace very limited responsibility and virtually no accountability with a mechanism that encourages both.

 That has to be an advance. As does the serious consideration of all the issues.

 The point is that consultancy is the wrong model. Advice is the right way forward.

 Our challenge is now to make that process even more firmly anchored in accountability and we have started that and made significant progress.

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