I finally got around to reading a book that I had bought ages ago - Dangerous Company by Charles Madigan - about the merits and perils of hiring a Consulting company to help revitalize an organization's business. Noting below are a few pointers that really caught my attention:
1) With a consultant, I am asking him to propose a solution. With an advisor, I am testing solutions that we are inventing. – Arthur Martinez, Sears
2-bits: It would be super if both Consultants and Organizations were clear about this fine distinction of expectations. There are 4 possible combinations on how these expectations can be mis-matched leading to sub-optimal outcomes:
i) Organization wants advisor, Consulting company is being a consultant
ii) Organization wants consultant, Consulting company is being an advisor
iii) Organization wants advisor, Consulting company is being advisor
iv) Organization wants consultant, Consultant is being consultant
As is obvious, scenarios iii & iv are win-win discussions, but most engagements tend to play out (in my experience) between i & ii, leading eventually to dissatisfaction at both ends.
2) BCG Bruce Henderson’s real insight was that he looked at all the other consulting firms and said that everybody was inwardly focused. They were all focused on how clients could do things better. McKinsey, how we can organize better; Booz Allen, how do we operate more efficiently or how do we compensate better; Arthur Little, how do we forecast better, how do we lay out our plant better. Bruce said, that’s all inwardly focused, all management techniques that anybody can quickly copy. You can’t be inwardly focused. You’ve got to do something unique and you’ve got to pay attention to your competitors. So his was an external perspective. And it focused on developing a strategy, looking at the company as a whole, instead of as individual business units. And he defined success as having a relative economic competitive advantage that was sustainable.
2-bits: Always knew this segregation at a subliminal level, but it has been clearly articulated now.
3) The business of consulting is a goal-oriented process, and sometimes the goal is an immediate change aimed at making a client feel the investment was worthwhile. Cutting costs is the quickest way to do that, however short-lived the benefits. And that usually translates into cutting employees. It created a good deal of confusion at Cigna. One whole army of employees was marching out the door even as a new army of different kinds of employees was marching in. The efforts at Cigna and Montgomery General remain works in progress, which handily fit into the Gemini philosophy that nothing is ever really over, that change has become a constant. It is tempting to assess this is as a formula that avoids any formal measure of what was actually accomplished. To counter that, Gemini has constructed elaborate systems of measurement against goals so that its consultants and its clients always have a concrete benchmark to apply against the swirling abstraction of change. It gives the client something to look at as the process is under way and the consultants a yardstick to assess their own performance.
2-bits: In my experience - mostly in 'Growth markets' - I haven't really done any focused-cost cutting engagements. Most of them have been rather focused on increased-sales and operations-efficiency projects. The key ambiguity in these projects thereby has been on identifying & measuring 'organic' increases/improvements vs. 'consulting-input-led' increases/improvements.
4) If you want to know what consulting companies are doing, follow the money. They latch themselves onto fat parts of the economy, because that is where the long-term revenues are.
2-bits: I have been party to at least 3-4 trends myself - Multi-channel Retail, Omni-channel Everything, Business Transformation, Digital Transformation...But frankly, I believe this would be true for all Service-oriented businesses. They will service, what their 'business-product' customers want to get serviced.
5) Gemini got something too: an object lesson in exactly how a small hospital works and where the buttons can be pushed to make it more profitable and more efficient. This is one of the unrecognized processes that is always under way in consulting engagements. The smart companies walk away not only with fat checks, but something that is more valuable over the long run, experience in a particular industry, something to carry to the next tier of clients in making the argument for pricey transformation efforts. Sometimes they create patented processes they sell to other clients, sharing a bit of the take over time with the initial contractor.
6)This is a common theme in the world of consulting, where the change argument, driven by business school books that urge a virtual rejection of all that has come before, has been an important tool in getting contracts.
2-bits: Corollary of Point 4 above
7) The most important element of a consulting engagement is knowing the reason why consultants are being brought into the formula. Gemini’s leaders say the company is selective in accepting contracts and shies away from engagements in which muddled managers are searching wildly for anything that will improve the balance sheet. That may be so, but another truth is that consulting companies will go wherever they are paid to go and attack whatever problem they are assigned to attack. There may be a nobility of purpose to their complicated philosophies, but there is a practicality at work that sometimes offsets that: Consulting, after all, is a business, not a philosophy.
8) There’s an important caveat about hiring consultants: To the extent that you are not clear about the outcomes you are looking for, you could end up buying services you don’t need, solving problems that are major problems but that don’t necessarily advance you to where you want to go.
2-bits: Corollary of Point 1 above
