A lot of people think that the McKinsey’s of this world are the business geniuses.
You hire McKinsey, Bain, or The Boston Consulting Group when you need to address big organizational problems–frequently those that involve broad reorganizations, massive cutbacks, reformulation of strategy, and culture makeovers.
According to Bloomberg Businessweek in a book review of The Firm, the notion is that these consulting big boys come in to “teach you how to do whatever you do better than you do it–and certainly better than your competition does it.”
The question is can consultants really do it better than those who do it everyday, or perhaps an objective 3rd party is exactly what is needed to break broken paradigms and set things straight.
These global consultants are usually generalists–who specialize in “rational thinking and blunt talk.”
It’s like going to an organizational shrink to have someone listen to your crazy sh*t and tell it back to you the way it out to be–and then guide you with some behavioral interventions (i.e. the recommendations).
What’s interesting also is that these consulting firms hire the “A” kids right out of school–so they are inexperienced, but bright-eyed and bushy-tailed ready with their idealistic thinking to tell you how things ought to be done–the question is do they have enough fundamentals under their belts and genuine solid thinking in a real setting to make sense to your business.
Probably the best thing is that these graduates can think out of the box and for an organization that needs to make a leap forward, these newbies can cut through the clutter and give your organizational a fresh start.
One of the problems pointed out is that with these consultant companies, it’s heads they win and tails you lose–if their ideas pan out, it’s to their credit–and if it doesn’t, well you implemented poorly.
Basically consultants are not magicians, but they do listen to your organizations tales of woes, put the pieces together, and tell you what you told them…many times, it’s basically validation of what people already know–but now it’s coming from “the experts”–so it must be true.
Another problem of course is whether their recommendations become more shelfware, collecting dust, or whether the organization can actually make the difficult choices and changes…or perhaps, there is another consulting firm that assists with that? 😉
(Adapted from my blog at www.andyblumenthal.com)
Give Malcolm Gladwell’s classic piece “The Talent Myth” a read, documenting the fall of Enron and Worldcom, and then tell me how much one ought to turn to management consulting firms for the “right” answers. http://gladwell.com/the-talent-myth/
Great post Andy! The sad thing is how much money gets wasted hiring smart people to tell us the truth when we already have smart people who can do the same thing. Except when they do it they run the risk of getting punished.
The downside as well from knowing many consultants is that they hit it as well when ends up being shelfware. Or hate it when they can tell client has a clear agenda they want them to help reinforce. Waste of everyone’s time and money then.
Consultants can add value when used well (clear problem where need help or specialized skill don’t have) but often folks don’t know how to use them well
Dannielle, well put. Internal consultants have the added advantage of knowing the company/organization they work for from the inside. The real problem is management who refuses to listen to the talented people within their own organization and prefer expensive outside “experts”.
I’d also try to use GAO and OIG as free consultants. When I was at the OIG, in our idealist view, we hoped to be internal consultants who told it how it was (and worked for free)
Several weeks ago, I asked the question of whether one could mentor “up”; that is provide advice and guidance to those above one’s own rank in the hierarchy. I noted that one of the obstacles was the pervasive assumption that advice should always flow in a downwards direction, and that upwards flow might be interpreted as a sign of weakness in a leader.
I note this because, while Steve, Sam, and Danielle all make very cogent points about looking within the organization for consultation, it may be the case that outside paid-for advice is conceived of as more legitimate and compatible with the leader’s role. In other words, if I consult internally, then what the hell am I doing in the role of “leader”? But if I pay for advice from outside, then my role as leader is not impacted because the needed knowldge could not be found within the organization (that’s my story and I’m sticking to it). Not in my head and not in yours.
I’m not trying to be cynical here. Rather, such consultants cost big money, and what manager/leader would not want to save on such expenditures unless there were some sound reason for doing so? I am suggesting that sometimes the function of such consultation IS to get what may be the very same advice you’d get internally, in a manner which does not compromise one’s status/role within the organization.
Viewed from that perspective, I see the challenge as one of fostering a corporate culture in which leaders’ status is not perceived as compromised by lateral or downward consultation. That’s a tall order, I’ll admit.
(Many of my colleagues have suggested that I should “go into consulting” post-retirement. I’ve been giving free analysis advice, as both a graduate student, and leading edge analyst, for so long – sometimes using my vacation time to do pro bono work for other agencies – I wouldn’t know a billable hour if it jumped up, bit me on my tuchus, and drew blood.)
A good consultant has a broader view of business trends and can let you know where you stand in relation to your competition. For government employees, the real benefit consultants bring is outside perspective. From my experience, government employees become very good at their primary job, but have a hard time taking off organizational blindes when faced with a strategic challenge.
My big worry is that the federal government (at least, here in DC) have gotten into the habit of outsourcing “critical thinking” to high priced consultants, instead of growing annd promoting our own talent. It’s also easier to throw consultants under the bus if an idea doesn’t pan out.
5 Reasons to use Consultants:
1. You don’t have the right talent in house.
2. It would cost more to hire or train the talent you need.
3. You have an issue or project that is more short-term in nature.
4. You have an issue or project that requires an outside perspective.
5. You want to innovate and internal folks don’t have political leverage to get it done.
What else would folks add?
Excellent comments by all. One of my current jobs is being an internal consultant within DoD. We are one of many agencies that are available to other government agencies. We are just not as expensive as external consultants or even the semi-independent think-tanks and laboratories. What I find interesting is how few agencies know we exist as a very cheap and very experienced “consulting” group. You don’t even get a chance to work here without 15 years experience and most of us are pushing closer to 30. No new college grads either. About the only other agencies that even think of asking for help are NASA and DHS.
What I think is the real question is what kind of experience and benefit do we bring to an engagement. An outside group that only tinkers in government issues is going to be biased to the way that industry does things. That can be a good perspective as long as it is not just blindly followed. We, as internal consultants, are more likely to be biased to the way the government is known to function. That could also be good or bad, depending on what is needed. Either way, we are going to bring a fresh set of eyes to the engagement. Many times what groups that are “stuck” need is just the opportunity to try to explain where they are. We, the consultant may not know the answer any better than the customer. However, we often know what the right question to ask is.
My organization also has the added benefit of being professional instructors — so we also can easily identify training needs and then tailor the engagement to fix skill shortfalls. Skill lapses are not always the problem, but it is usually at least one area that needs to be eliminated before trying to move on to more complex solutions. Our rates are so low (basically free to DoD and about $80 per hour for all others) because Congress basically set us up to be the pool of available experts.
The Freakonomics podcast produced a good piece exploring the true value of management consulting (at least in the commercial world) a few months ago: http://freakonomics.com/2012/11/26/i-consult-therefore-i-am-a-new-freakonomics-radio-podcast/. Essentially, they find that operational consulting (to improve efficiencies and processes) DOES create measurable ROI, while value is really difficult to discern for strategy consulting (the McKinsey-esque kind).
It’s a good piece to put through your earbuds… while hard at work, of course.
Reminds me of Martin Kihn’s 2005 book, “House of Lies : How Management Consultants Steal Your Watch and Then Tell You the Time.” Good read from a former consultant at these firms.
I always found it interesting, being a consultant to the federal government, that success is usually given to the federal personnel, but blame is easily transferred to the contractors for failures. I never have a problem with this construct, as my job is to make the federal clients succeed.
I think it goes to the lack of true collaboration that exists between federal government and its contractors. The relationship seems to be getting more adversarial everyday.
Andrew’s comment, and Darrell’s comment, illustrate a very crucial point. While Andrew makes a persuasive case for looking outside, a great deal of it rests on management’s perception of the state of affairs in-house. Do they actually know what sorts of intellectual capital reside within the organization? Darrell’s comment shows that it can, and be leveraged appropriately. Perhaps one does need to bring in people from outside, but I’ll wager that at least half the time the optimal insights and advice can be gotten internally…except that management is largely unaware it exists. I know in my own case, I am always described in terms of what I do, and never in terms of what I know. Consultants, of course, are described in the reverse form: in terms of what they are experts in and rarely in terms of what their advice has been able to accomplish in sustainable fashion. Small wonder that management turns outward, rather than inward.
As for outside perspectives, I frequently have the umitigated gall to write to well-respected scholars after reading a journal article that I liked. These are pleasant, articulate, brilliant people, all, and we have delightful exchanges, but I frequently find that even the best of them are largely underinformed about the details of how things actually work on the ground, and the diversity of job families and work contexts that exist. What we want from an “outsider perspective” is someone looking at the exact same information as an insider would, from a different angle. But what we all too often get from such a perspective is a view somewhat “liberated from reality”. Maybe it’s because we don’t fill them in enough. Maybe its because they don’t have to work there and live with the consequences after they’ve provided the advice. Harsh, I’ll admit, but that’s what it can feel like.
Andy’s point #5, about leveraging innovation. Does that reflect a true need for the consultant, or the perceived intransigence of others? Seems to me that spending millions to get some stamp of approval just to persuade people who were not prepared to accept your just-as-plausible point of view is not exactly the wisest expenditure of treasury. But of course, “wise” and “business” rarely come up in the same sentence.
Now, before it starts looking like I’m painting too broadly, I will confess to some positive experiences with consultants. In these instances, the consultant possessed more immediate access to knowledge about a particular topic, and could translate it into concrete steps more readily than most internal people could, because they specialized in that topic, and thought about it all the time.
In my own case, I’ve been a sort of internal pro bono consultant to other agencies, and was able to step in, ask a bunch of the right questions, get them up to speed on something a few months ahead of schedule, and in a few instances, save their ass from embarrassment. But these were ALL instances where the individual who brought me in knew me, and was aware of what knowledge I had and could provide. They also respected my judgment on the subject matter. Many have moved on to other positions, or retired, and the folks who took over from them don’t know me from a hole in the ground. So, I don’t get called on any more.
This is why I say that what Darrell describes could very easily exist in one’s own organization, and maybe even be useful to other organizations, but you have to take stock of that knowledge and know it’s there. I don’t think many organizations of any appreciable size are particularly good at that.
It would be simple if consultants and government employees were all interchangeable cogs. Unfortunately we’re not. It is the job of a true leader to determine the capabilities and time constraints of his/her staff and the external support needed to supplement that.
If a leader contracts out for something her staff could easily have done, then shame on her. However, if she contracts for something that could not have been achieved with the same timeliness, cost, or quality internally, then great!
All consultants aren’t created equally – and neither are all employees. It becomes really important for leaders to find the right mix to keep the trains moving.