My friends and acquaintances often ask, “What is management consulting?”, “What do you do?”, “Why do you do this?” “Who are management consultants at all?” I thought that if so few people have a clear idea of what the words “Management Consulting” are about, it is probably worth writing a couple of paragraphs about it.
Management Consulting Is a Craft, Practically an Art
There are many professional consultants in the world, such as in mining engineering, the environment, graphic design, law, etc. These are professionals, who are well versed in their field, have solid experience and are able to make confident judgments about the problems associated with their specialization. In some countries, such as Australia, Great Britain and Ireland, the term “Consultant” refers to the most senior medical position, such as “surgeon-consultant”, which speaks of the virtuoso skill of the doctor. Consulting is an experience one has gained over the years.
I have been specializing in management consulting for years. There are more than a million management consultants around the globe. Every year, about 25-30% of MBA graduates join the ranks. The civilized world is accustomed to happily using various services, and they order such services annually for more than $300 billion to improve a business. For example, the notorious “doubling of Russia’s GDP” was derived by consultants at McKinsey, probably the world’s most famous consulting company, in 1999 as a conclusion from the analysis of 10 industries in our homeland. Their report reflected the reserves for each surveyed industry, and concluded that they are sufficient to increase Russia’s GDP by half in 10 years through an increase in operating efficiency of production.
Management consulting was growing and developing along with evolving the management as a science. The first management consulting firm was “Arthur D. Little”, after the professor at the Massachusetts Institute of Technology (MIT), who founded it in 1886. In 1914, Edwin G. Booz founded the consulting company “Booz & Company”, providing services to both businesses and government agencies. By the way, Marvin Bower, the founder of the “McKinsey”, in his memoirs claimed that they were the first consulting company, creating the very notion of “Management Consulting” in 1939. As it is now in Russia, a management consultant was, at best, but not too often, associated with an efficiency expert. Personally, I am taken aback for such a comparison.
A Management Consultant Is Often Mistaken for Someone Else
There are not many true consultants in this field in Russia, and in the CIS as well: the industry is still too young. However, the term “Management Consulting” is, in fact, the only correct name for a host of professionals who help solve complex business problems. Everything else is either a small part of it, or an artificially made up category, or causes irritation.
For example, HR consulting, i.e. consulting in the field of personnel management, a branch with managerial consulting with an approximate annual turnover of $18 billion worldwide. Customers demanded more detailed and focused services in personnel management – a dedicated business area appeared.
IT consulting is a relatively independent branch, but more often, they don’t solve problems at all. Instead, they only add another mechanism to the company management, as a rule very complex and enigmatic, which, however, successfully distracts from the current turmoil. Given the fact that the cost of equipment and licenses is included in the revenue of such companies, it is not possible to calculate the volume of services provided by them. Rather, they are quasi-distribution networks of IT vendors — both hardware and software — their partner sales channels, rather than management consulting in spirit.
An audit is not a consulting at all. In the western world, after the scandals with Enron and WorldCom, consultants rushed to distance themselves from the auditors who had previously used a single client base. Reporting scams have sunk several large corporations, brought the Sarbanes-Oxley Act (SOX) to life, imposing stricter reporting and auditing requirements, but did not cast a shadow on the consultants.
Also, sometimes, but more often than we would like to see, there are various “trainers-coaches-consultants”, unfortunate psychologists, hapless “NeiroLinguisticProgramming-gurus”, who are not even close to consultants.
For a long time in the USSR, technical literacy had been a common measure of intelligence. The country needed engineers, physicists won the lyricists. Hence, the common association with the word consulting – “technical”. And since any of their “technical system” should have been loved as a second wife (someone may say as the first one), all sorts of “technical consultants” are perceived excessively jealously (but sometimes yet deservedly).
A Management Consultant Is not a “Techie”
My work has little to do with “technical” and “system”. It is difficult to call “technical” a social formation, brought to life by the will of the founding fathers. By definition, the “system” is a stable and complete entity and does not need to be improved. The definition “system” is good for analysis, modelling, but not for life.
Any company grows and develops itself, and a business is rather a living organism, the creation of the founding entrepreneurs, who had invested most of themselves in these creatures. So, obviously, the consultant is closer to a caring gardener, compassionate doctor, rather than like a brutal plumber in a dark blue overalls with a wrench in his hand. And although the companies is not too often resemble the creations of Frankenstein, consultants have enough work.
In Russia, as always choosing its own path in everything, consulting often takes the form of the now fashionable “groups” and “corporations,” a sort of management consulting Goliaths. For the subconscious argument “there are a lot of us” and “we are the largest,” based on the peremptory verity of the thesis that “quantity is being transferred into quality”, is intended to dispel any doubts. The Soviet megalomania, which weaponized the thesis, with a certain success knocked it into the consciousness of the masses. By collecting a large number of employees in divisions, departments and subdivisions, the founders of these “consulting” monsters, residing in Moscow, are trying to bite off the market as much as possible. To make it easier to chew, add numerous salesforce – all sorts of account managers, business directors and vice-presidents.
However, it is senseless, although encouragingly pleasing, to discuss your consulting needs with a salesperson. Only people who have worked hard and seriously in this area are able to understand true needs and identify the problems and its roots. And very few people who have made a reliable diagnostics will sincerely decide to help. They can be understood. They have their own complex management tasks: they have a sales plan; they need to prepare reports, where, as a rule, only amounts received under contracts matter. The reputation, the main asset of any respected consulting company, is exchanged for a momentary profit. However, in Russia, professional reputation is sometimes successfully replaced by size and with an ad.
That is why in Western countries with more than a century of experience in the consulting industry, a huge number of small (up to 50 people) consulting firms, small “boutiques”, and only a few of them are relatively large (the largest is the same McKinsey – 9,000 people in 71 offices in 51 countries) and are known worldwide. There are no more than a few dozen and their size determined mainly by territorial expansion, the desire to be closer to the client everywhere, rather than the desire to increase their numbers. The reasons are transparent: only a partner of a company who heads his own practice with a small number of consultants, under his own supervision can be responsible for the services provided. However, there are probably even more independent consultants in the world, who has own practice and team up with other consultants for complex projects.
A Management Consultant Is More of an Artisan
Consulting is a craft, practically an art. You can formulate a process to transfer it to students, but you cannot vouch for the result. More precisely – for the result, that will solve the client’s problem. While to pack “consulting” in a box and putting it up for sale over the counter is not so difficult. The question is whether the general set of 10 panacea will help cure any ailment. And ailments in any living organism always happen a lot and vary. In my practice I encountered both bizarre, intricate problems that required long-term sequential and parallel complex projects, as well as unobvious simulations, where it was enough to take a sober look at the situation and change the responsibilities along with subordination for a couple of managers so that the problem ceased to exist. However, the latter is a rare exception, but to understand the problem deeply before solving it is the main principle of a good consultant.
Consultants are people who fight against the imperfection of business organisms. This requires various rare and very valuable qualities. They are able to understand what the problem is about, dig down to find the true underlying roots and causes, formulate an interrelated list of problems with their causes, substantiate their diagnosis and suggest actions to remedy the situation — a seemingly simple and uncomplicated set of actions. However, in order to implement them and achieve a useful result, certain skills and knowledge are required. The abilities to be critical, look at things detached, find and compare information quickly are probably the main ones. Knowledge that a real consultant cannot do without is economics, organizational development, marketing, accounting and reporting, finance, strategy, operational management, international business, IT management, supply chain management, project management, … This is taught in Western business schools or acquired in the long practice of many projects. I prefer the experience. Only experience allows gradual revealing a true picture of the world, which does not always coincide with abstract theoretical concepts, and developing practical and workable solutions.
In this sense, consulting is always a challenge to your abilities, your experience. New clients are almost always mean interesting, non-standard tasks. It is as if waking up Dr Watson, shaking his shoulder with the words “The game has begun!” Finding the true causes of problems is always like a detective story, in which the client’s problem is the bad person (or their group?), and the main prize is the unravelling the case. This is an incredibly exciting activity, which does not ever let you get bored and allows helping other people in their difficult ways, sometimes full of unexpected challenges.
Management Consulting Is a Way to Make the World a Little Better Place
On the other hand, our whole life is an experience. When we wake up, read the morning news, use various services, buy a coffee in the nearest cafe, discuss a cell phone contract in a shop – we interact with the world and get experience that partly transforms us too. A business is not an abstract thing, some closed offices and strangers in suits. This is what we encounter, and often use, every day. We are driving a car made by Volkswagen, drinking Jacobs coffee, communicating on iPhone or Nokia with a girl from Alfa Bank. Our interaction with the world can be convenient and predictable or dramatically unpleasant. Consulting is an opportunity, improving business, to make the experience of communication with the world around you a little more comfortable and pleasant, and a little better than it was yesterday.