Some time back, one of Insty’s contributors made the following comment regarding the foul McKinsey consulting company:
In my first hand experience, McKinsey was hired (no doubt at great expense) to “review” and “improve” the faltering Bloomberg TV network. What did they do? First, the “consultants” asked all the employees what they did, and how things worked. Then they created mountains of PowerPoint presentations and simply repeated what they’d been told. Finally, they recommended a “reduction in forces” (corporate-speak for layoffs). This pattern is the modus operandi for McKinsey: “Teach me what you do, and then I’m going to tell you how to do it.” Another pattern is that often consultants convince clients that they ought to be hired “in-house.” McKinsey doesn’t mind that at all because it’s one more “in”, one more tentacle reaching into corporate America.
It’s actually a lot worse than that — and McKinsey are far from the only bad actors in the management consulting business: pretty much all of them (Bain, Booz Allen, Accenture, Deloitte, etc.) are pretty much the same, and operate in the same manner as McKinsey, as described above.
They are called “process” consultants in that they bring little actual industry experience to the party; senior partners will make the sales pitches, but once the contract is signed, they’ll send in the freshly-minted MBAs (“junior associates”) who spend an inordinate amount of (billable, of course) time in learning the client’s business and industry mostly by talking to mid-level managers in the company. These managers not only know the business, but are quite likely to know the solutions to whatever problems senior management don’t know how to address.
This knowledge will then be (stolen) used by the MBAs in drawing up their conclusions, with the caveat that if the client management do not adhere to their recommendations to the letter, then the consulting firm cannot be held responsible for any future failure. Of course, this means eventual failure of the process as no one can follow a plan to the letter, ever.
The other kind of consultancy, by the way, is called “experiential”, meaning that the consultancy brings actual industry familiarity and a track record of both building and running a particular business practice or system.
I was one of those. Typically, I would be brought in by a retail company to either help build or rebuild a customer loyalty program, back before there were actual systems designed to run them. Building from scratch meant designing a reporting stream (first), and then creating the database structure that would enable such a reporting stream to function. Rebuilding often meant tweaking the existing system to work properly, but to be honest, most of the time the programs were a veritable shit-show of catastrophes because they had been designed and built by the IT department rather than designed by Marketing. I would come with an actual drop-in-ready reporting system to start with, that management could tweak or enhance (depending on their specific needs), and a database- and table structure to support it — CEO-level overviews, Buying/Merchandising detailed data, Store Operations (down to store-manager level) and Marketing/Advertising.
I never had a system fail on me, despite all attempts by IT to sabotage or delay implementation. (I have stories, hoo boy do I have stories…)
If I were running a large-ish business today and needed help in a particular area where I had little experience, I would only hire consultants in the latter group, and probably not even then — it’s always better to find someone who knows the problem and has solved it before than to make it a blank-page project.
But the process guys? Waste of money, waste of time.
I remember once working for a Great Big Company whose management decided that we needed restructuring, and hired Bain & Co. to consult on the project. Because most of us peons were pretty smart guys, we soon realized two things: a) the Bainies were scouting for people and functions they could recommend for termination, and b) the Bainies themselves were only interested in recommendations over a two-year period (the time in which they themselves were going to be judged by their own management). Consequently, whenever “interviewed” by a Bainie, you had to make sure that in showing them your function and your business plan, that plan had to have a resolution date of at least three or (better yet) five years in the future. Then they’d lose interest in you and move on to greener pastures. As I recall, this intelligence was communicated company-wide by jungle telegraph (cafeteria lunch table, phone calls to friends in the branch offices etc.) after the first three days of Bain’s involvement. (When I told my boss this tale — long after the Bainies had left — he just put his head in his hands and laughed for five minutes.)
I don’t know what Bain finally recommended to our senior management, but I never saw any particular change in the day-to-day. Quite frankly, the Bain money would have been better spent in performance bonuses, but no doubt the Finance department would have had a shit-fit, for all their usual reasons.
Don’t get me started on Finance…