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Entries in Strategy (1)

Thursday
Jan052012

Strategy Consultants and Their Glass Ceiling (Actually Floor)

As many of you know, I spent a decade in management consulting (essentially through the 1990's). So when Walter Kiechel's, The Lords of Strategy: The Secret Intellectual History of the New Corporate World popped up in Amazon, I pulled it down to my Kindle with the idea that I might grab some nostalgia (and hey even have a few shallow thoughts!) for those years spent chasing the billable hour. Walter Kiechel's book is heavily weighted toward Boston Consulting Group (BCG), Bain & Company, and McKinsey. But more interestingly it flows through the intellectual concepts underpinning their consulting work (and the personalities associated with those concepts). I liked it.

Here's what struck me first. Kiechel's book illustrates that the past 40 years have seen an intellectualization of business. Consultants and their pals, the business school professors, became the "intellectualizers" and "analyzers".  In retrospect this is what drew me to consulting. These folks became the "intellectualization monetizers". These consultants and academics built frameworks and methodologies and then applied them to clients. Alas, less frequently, they actually built solutions and solved a problem. OK. I've inserted that "less frequently" in the prior sentence in part because I like causing trouble and to actually make a point. I found that often the management consulting business of the 1990's was a bunch of conceptual tools and methods in search of work. I suppose this had to be so. The industry was growing and could not scale beyond the firm's principal partners without a more formalized tool set and defined service delivery structure.

Here's what struck me second. The flow of methods and frameworks in this book seemed, when viewed retrospectivly in a continuum, as a long series of fadish absolutes. Positioning, core-competence, knowledge management, re-engineering, shareholders, change management. Each absolute was radical, transformative (and urgent!). Each of course justified a consulting engagement. And each added some value (maybe). But each framework was ultimately incomplete or insufficient and therefore ultimately required a redirection or extension into new frameworks (and engagements). It seems clear that the temporality of each construct speaks ultimately to it's intrinsic value. It would be interesting to walk back through all this stuff and assess what aspects have been embedded into business today.

Here's what struck me next. Looking beyond the consulting frameworks and methodology, the consultants core value to a client was an ability to drive rigor. Today, I think and analyze with rigor (so I learned something in ten years). But today I don't really practice "strategy" as an activity. As I read this book, I started mapping my decade as a consultant against my decade as a small company CEO. So how do I view big consulting today from the context of small business CEO? Actually the answer is in a consulting engagement story! I remember my large tech company client that replaced its senior executive in the midst of our engagement. The new executive reviewed and loved (!) our efforts. Then he promptly terminated our engagement. His rationale was that his senior management team members were abdicating their responsibilities in having consultants driving the direction of the company. He also noted more importantly, that the core insight required to proceed was sufficiently established and, as such, he believed that it should now simply be validated through ongoing action and rapid adaptation (rather than further analysis and planning). I remember quietly agreeing. The company’s strategy at this point would advance (evolve) based on continuous execution. The consultants natural limit in creating value had been reached.

Consulting's "natural limit" is reason why the charms of the strategy consultancies don't work "down market" and why I've found strategic planning and frameworks of limited benefit this past ten years: strategy in entrepreneurial organizations seems largely driven from continuous action and adaptation. Further, the need for strategy in some ways is directly proportional to the CEO's distance from products and customers. And for entrepreneurs the distance is just not that great.  So here's the corollary: Since strategy consultants typically structure and analyze, and since they typically don't do action and adaptation (also called the long slog of actually making products and customers) then they are consigned to self standing engagements in large organizations of sufficient complexity that require the (re)discovery, (re)analysis, and (re)structuring of business realities currently hidden from the senior executives. This is not an argument against planners and strategy (by the way I'm indeed ducking a definition of that word) though it may be an argument that strategy in companies like mine is not a project unto itself. Also an aside, in the book, Kiechel cites a budget (I'll call it cash management) process and product alignment to sales opportunities as the "lowest level" of strategy ("do what we did last year ... but better). Would it not be interesting that these are actually the sufficient strategic foundations for entrepreneurs and generally dynamic product-centered organizations? I await the counter arguments.

Finally, in the end consultants don't make products and they don't make customers. This is a strategic planner's "glass ceiling" or maybe actually "glass floor". In reading Lords of Strategy you can see the consulting industry shift in later years to accommodate this need to achieve dynamism and outcomes. In my firm it began with "change management" methodologies and more recently with tight relationships with private equity (hello Mitt Romney). Bain may have had the right idea (certainly from a consulting engagement profitability perspective) in having an embedded long term presence at a client to help translate their efforts into "shareholder value". Considering the tag line "when buying Bain services you are buying corporate profits at a discount", I suspect that Bain's work looked up toward the boardroom and shareholder and to a lesser degree toward the work of making products and customers. Alas, arguing shareholder value versus customer product focus is possibly a false choice or at least grist for the consulting mill's next framework.

Walter Kiechel has a blog if you wish to follow his work. Also here again is his book: The Lords of Strategy: The Secret Intellectual History of the New Corporate World