Update On Management Consulting Blogs

Close to two years ago (in February 2005) I wrote an original post that noted a dearth of blogs by traditional management consulting firms. Six months after that post, I wrote an update where I happened to run across a few more blogs by individual consultants.

Since that time, I’ve run into many more blogs that are associated with management consulting, such as Guerrilla Consulting, David Maister‘s blog, and the Management Consultants’ Blog.

I also ran into a few more blogs that I closely associate with big name, traditional consulting firms (either because the blog carries the company banner or is written by an executive at the firm). Note that even though the blogs likely reflect the perspectives of the individuals and not the perspectives of the company, I still have some loose mental association between the individual and the firm. In any case, the other traditional consulting firm blogs I’ve run into over the past two years are:

In the past, some folks had indicated that a dearth of management consulting blogs may have been due to concerns about unwanted disclosure of confidential information. I’ve not heard of any cases to date, not to mention any disclosures that would indicate that blog media increases chances of disclosure over other media. (That said, there are clearly cases where the blogosphere amplifies the transmission of information which could be argued increases general risks associated with corporate blogs or those loosely associated with companies).

As an additional note, I find it interesting that the four traditional consulting firms that I mention above all have a strong technology competency associated with their brand. For example, Accenture not only has a strategic management consulting practice but also has a strong systems integration practice.

Update (1/4/07): Per comments below (Thanks, Amaresh!), Diamond has a blog by its information and analytics practice. From the looks of it, it is a unique blog that sheds some light on more rigorous consulting practices that top consultants strive to implement for their clients.

Update (1/9/07): Booz Allen Hamiton podcasts here.

Update (3/8/07): Accenture has started a corporate blog here.

Update (3/12/07): Although apparently not officially attached to the "Firm", McKinsey alum Paola Bonomo commented here (thanks, Paola) and points us to a wiki of McKinseyite and McKinsey alum blogs.

Update (10/13/07): Consultant Ninja has a blog over here. Thanks for the links! Sorry I was not able to comment on your blog as it does not accept users without Google logins.

An Illustration of the Consulting Spectrum: Giving Simple Opinions Versus Practicing Consulting “Science”

Here are some examples of how one might provide consulting support for a portion of a client project . The examples are based on real-world (but disguised) tactics taken by consultants who are posed with the problem of characterizing the threat of competitive entry by another company.

Person 1’s characterization:

  • The threat of competitive entry is moderate

OK. If one reads between the lines here, one might presume that the person is saying that competition will neither be heavy (potentially indicating price wars) nor light (where sales might go relatively unchallenged). Based on microeconomics-type conventions, the former case could mean that there are between 2 and 3 competitors and the latter case 1 competitor or close substitute. But the characterization leaves a lot to be desired.

A better characterization might be:

  • Competitive entry may occur within 2-5 years by one known competitor already operating in another region

This characterization gives a lot more specific details and timeframes (provided there are details to back up the claims).

Here’s some thoughts on an assessment which is also backed by facts ("science") to support the claim. When a consultant uses hard, quantifiable facts, the arguments and characterization become much less subject to potential challenges by others that results are biased by any personal opinions of the consultant.

Person 2’s characterization:

  • Competitive entry may be expected by one competitor, likely 2-3+ years out
  • Current market structure is mostly a duopoly, indicating moderate price pressure potential
  • The perspective on longer timeframe for competitor entry is based on regulatory requirements concerning X, Y, and Z ; of these the first two are relevant to client
  • The perspective on timeframe for competitive entry is based on public capital and operating expenditures filed in public financial documents and benchmarking of these current expenditures against comparables
  • Subjectively, the business structure that the competitor is using has a high failure rate
  • Historical entry of competitor is X, Y, and Z, and if history repeats itself where competitive entry does occur earlier than forseen, competitive entry will likely look like XYZ from marketing and sales perspective, ABC from a technical perspective, DEF from a financial resources perspective, etc.
  • Entry scenarios are further substantiated by number of retail points, form factor of product, etc. used by competitor and comparables in other markets.

Tea leaf reading aspects of consulting engagements can be hard. But sometimes tea leaf reading needs to be done, especially when stakes are high. All said, there are a spectrum of methods that consultants can use to support their clients through using business "science" or forensic-like methods as opposed to dispensing simple advice (which I dare call "consulting").

It’s Not Easy Being Green

"It’s Not Easy Being Green" are famous words often attributed to Kermit the Frog. I think these words apply to not only famous frog puppets but also "green" management consultants (i.e., those fresh to the field).

Consulting can be a high pressure profession, and clients (as well as senior colleagues) often closely scrutinize new consultants, especially newly-minted MBAs during the first period when they land on a project. For what it’s worth here are some of the things that helped me get through my first few months when I entered the profession:

  • Check out the dress code for the first client you hit – Consultants need to dress well (perhaps well enough) so that they don’t inadvertently give the impression that their skills are average or mediocre. While seemingly shallow advice, underwhelming clients is not something that is easy to overcome. All said about dress, it may not be desirable to overdress for the client either. Unless you carry your wardrobe like a model, overdressing can make you stick out like a sore thumb.
  • Don’t immediately tell clients that you just started with the firm and just got your MBA – It can be tempting to say this because you think people will be easier on you if they know you are new. Not the case in consulting. It is much better to say something to the effect of "I am in my first year with the Firm". If you tip that you literally just started in the profession (too early before developing a relationship), you may be working yourself out of a hole with the client before you even get a chance to prove yourself. By all means, do not lie about who you are, but engage people the way they need to be engaged.
  • Get your first win in the eyes of the client early on – I’ll be honest. I don’t think I did this the first time I hit the client site. I was more concerned with following my perception of firm procedure & methodology to the letter. I focused on activities to the exclusion of results and what was actually going to help the client in a tangible way. Fortunately, one of the engagement managers on the project was able to steer me in the right direction. He told me something the effect of "Forget about XYZ methodology. The essence of what we need to do is meet goal ABC." Compare my shortfall compared to an analyst on the project that on day 2 of the project, without any fancy "MBA-based" methodology, found uncollected revenue by the client of X hundred thousand dollars (I’m just pulling out some numbers here) by reviewing some customer contracts. The results exceeded the professional fees of the analyst by many, many times compared to the two days of work.
  • Watch, learn, and work on developing "presence" – One of the unspoken areas about interviewing prospective consultants for employment is that consultants need to project and communicate with a strong level of confidence that carries right on to the client site. Being able to get through case interviews, being smart, being personable, and being a logical thinker is not enough when interviewing for a consulting firm. Consultants need to be able to facilitate situations, re-frame things, test hypotheses, and communicate in such a way as to drive things to closure. Projecting presence doesn’t stop after the interview process for employment.

At What Point Should Consultants Make Recommendations to Clients?

I run into a lot of folks who use the term "management consulting" a lot more loosely than I would use the term. I often run into people who say things like:

"You should just go in there and start telling them what to do – go and consult."

"Go and give them your advice."

"I can do consulting. I can give them my expert advice."

"So you tell them how to start wireless businesses?"

Although I’ve not described the context for these statements fully, these types of statements make me cringe. Why? Because people who say these things often presume that consultants start dispensing advice without understanding and gathering an inventory of a client’s situation.

In some circumstances, maybe the consultant can jump right in to start making recommendations. For example, if a client is simply missing some basic fundamentals, e.g., sales or operational reports, written contracts, one can dispense some "advice" from the start. But I tend to caution giving advice so early in a consulting relationship. I tend to prefer to share perspectives as well as the factors or things I would need to investigate to either confirm or alter my initial read of the situation. This communicates to the client that I am not in the business of dispensing shallow advice. It also sets the frame for the consulting methodology that I am going to use to solve the problem at hand.

Now provided that a consultant is going to use a structured methodology for solving a client problem, at what point does the consultant make recommendations to the client? My timing preference is based on the fact that clients ultimately have to live with proposed solutions. As such, I prefer the recommendation process to be more iterative. For example, on one project I may have to first gather competitive marketing information about mobile operators and benchmark my client against those competitors. The next step may be for me to outline the options that the client has to pursue to close the gaps (say increase efficiency of distribution points versus increase number and type of distribution points) along with the tradeoffs. As the final step, the client and I jointly work to decide the best path. By involving the client in the recommendations process, the client takes more ownership of the solution, and hence, the solution will tend to stick better.

There is second school of thought on how to time recommendations to clients. Rather than the process being iterative, the thinking is that if the client is a large Fortune 100/Tier 1 ranking/etc. client that the consulting style should be more iterative. For smaller clients, e.g., middle-market/Tier 2 ranking/etc. companies, the thinking is that a consultant should take a stronger up-front stance on making recommendations and skipping a lot of the client facilitation and decision-making process.

I can see some benefits to the strong up-front approach as opposed to the iterative process:

  • consultant takes more control by initiative
  • smaller companies do not have as many resources as larger companies and need consultants to service as "interim managers" and not just as facilitators
  • consultant may leave a stronger impression with the client by being strong up-front

As a consultant, what method do you use? If you are a client, what method do you prefer?

Some Reasons Not To Go Into Consulting

I am often contacted by people that are looking to get into management consulting. There are many reasons (confirming evidence) cited for going into the profession, some of which include exciting work, the potential for high earnings, and tremendous business experience.

But there are a number of overlooked reasons for not going into the profession. It is important to look at disconfirming evidence too – if one only looks for reasons to go into the profession, one overlook some important factors.

Some reasons for not going into consulting:

  1. Without active career management, consultants are susceptible to becoming obsolete by lack of direct operating experience or subject matter expertise.
  2. Entry- to mid-level consultants often lack a direct ability to control their futures in terms of getting assigned to projects.
  3. Travel can take a toll on life, and consultants are more susceptible to having transient relationships (both personally and professionally). Some firms are known (through the grapevine) for having high divorce rates at the partner-level.
  4. Consulting can create high stress along multiple dimensions. Stress affects one’s health, and it would not be unusual for a consultant, at some point in his/her career, to feel as if the world is caving in.
  5. It is not unusual to run into persons at client sites that dislike consultants tremendously no matter what good work the consultant has done, who the consultant is, or how nice the consultant is.
  6. High earnings associated with consulting "nirvana" (for lack of a better word) can tempt one to make future professional career choices only in material terms (e.g., money and prestige of position).

I’m sure there are many other items (six off the top of my head seemed like enough). Please feel free to add to the list by commenting below.

All said, if one takes a rational look at the upsides and downsides to consulting, one can make a better informed decision about a career choice in consulting. If one is fortunate enough to get an opportunity to go into consulting, I would suggest actively managing the potential downsides or creatively turning them into an advantage.

Thoughts On PhDs in Consulting

Let me preface this by saying that I’m not really qualified to write on this subject, but a reader has asked if I would share my thoughts on the subject of PhDs in management consulting (sorry for the late reply but I have not checked my personal email for more than 2 weeks, and there were a few thousand to sift through [not counting having to read any!]).

One firm comes to mind immediately when I think about the subject of PhDs in management consulting … it is McKinsey. I recall that McKinsey actively recruits on campus for PhDs. I know very little about their formal programs for PhDs, so if anyone would like to share their thoughts, please feel free to do so.

The handful of McKinsey PhDs I have known were slotted into typical team structures as either individual contributors or engagement managers (I don’t think this is necessarily representative of the career tracks for PhDs for reasons I will elaborate on below). The individuals that I knew shared no common trait other than they were brilliant and structured thinkers. One had a strong propensity to actually lead people. Another had a very strong quantitative and statistics background.

When I was at PRTM, the PhDs I knew tended to be grounded in both an industry sector (e.g., biotechnology) and functional speciality (e.g., product development) from the get-go as compared to other, non-PhD consultants that would specialize later down the road. In my opinion, PhDs can get slotted this way because PhDs are considered true "experts" in a particular field, they have invested more time in both schooling and focus on a particular industry, and they can command better premiums for their personal investments when they leverage this background.

I also know a lot of PhDs through my wife’s affiliation with the business school community as a PhD and professor. It is common for professors, who do a lot of management consulting on the side, to provide consulting in their specialized (research) area of expertise, e.g., corporate tax, venture finance/valuation, antitrust. This is in contrast to non-PhD consultants that come down a similar path that I have, e.g., the MBA path where consulting may be of a more general nature but derive specialization over time through greater industry focus (e.g., telecom), functional focus (e.g., sales operations) , situation focus (e.g., growth business) and problem-type focus (e.g., virtual network operator) as part of client projects.

Some successful traits I have seen in PhDs that pursue management consulting are as follows (and the requirements are probably more intense for strategy and research-type consulting firms as compared to firms that get more involved with execution or implementation):

  1. structured thinkers
  2. ability to apply quantitative methods (e.g., statistics, triangulation, valuation) to seemingly impossible problem areas
  3. fact-based researchers and consultants
  4. clear communicators
  5. industry experts or experts in their ability to translate the language of other PhD experts that cannot communicate in business terms
  6. experts that can provide due diligence, e.g., on a complex engineering or science subject

Some traits where I have seen PhDs fail in management consulting situations:

  1. Cannot communicate in business terms
  2. Too academic in their approach to solving problems
  3. Not ready to move at a very fast pace (as often required in consulting)

Now a lot of the successful/unsuccessful traits I’ve mentioned above can also apply to non-PhD consultants too. That said, I think I would stress stuctured thinking, communication skills, and leadership skills as being most important for non-PhD/MBA types.

The Tao Of Taking Apart Cars With Your Bare Hands

Business school and management consulting firms provide their people with methodologies, best-in-class practices, historical case studies, scientific techniques, and the like as a foundation to the knowledge base. Usually there’s a past experience, a past consulting project … something for consultants to draw on to solve a client’s problem in the present.

But cases arise when a consultant in the field needs to solve a problem where it is (for all practical purposes for one reason or another, e.g., lack of sufficient time) impossible to draw from any prior experiences or any general framework. Problems of this flavor posed to me in the past include:

  • figuring out the optimum workflow for an outsourced function where the client is one of only two direct competitors in a closed industry where standard reference models are unknown
  • examining the operating model of a biofuel business (where I had no prior industry experience)
  • sizing the business value and economic value of a human life (for insurance and product development purposes)
  • valuing the price of a lease instrument that had never been created before (but that could be modelled ("mimicked") as three separate instruments that had been created and valued before)
  • predicting the nature of a competitor’s bid (based on imperfect and annecdotal information on their salesforce structure, estimations of sales quotas, estimations of sales cycle times, # deals, etc.)

I often liken the complexity and fuzziness of such situations to the situation of being posed the problem of having to take apart a locked car with one’s bare hands, without the assistance of tools, machines of any kind, or prior knowledge of past practices. How would you take apart the car quickly and if your life depended upon it?

Philosophically, one might try to breach the exterior of the car to get inside, where it might be easier to disassemble parts. One might break the window first, remove winshield wipers for make-do tools, use metal parts from the wipers as screwdrivers, unscrew pieces of the dashboard, and then try to move on from there. (Note that there’s no one way to approach the problem, but there are some ways that are probably less effective than other approaches).

The real point of my post is that a creative, never-give-up type of mentality is required, if anything as a last resort for a consultant. This same can probably also be said of entrepreneurship and other business scenarios, but I tend to associate this characteristic more with consulting (probably because of the project-driven, problem-solving nature of the practice). The Tao of Taking Apart Cars With One’s Bare Hands is a lesson in creativity, fortitude, and resolve in problem solving.

Hunting Versus Fishing Licenses in Consulting

An updated version of this post appears in The Consulting Apprenticeship.

This past week I was involved with a fairly typical discussion that occurs during the preparation phase for a management consulting project that includes a diagnostic or assessment phase. A goal of an assessment may be for a consultant to help a client quickly zero in on where major problems are and to quickly determine where to focus business improvement efforts. For an operations project that may span many business units and the work of thousands to tens of thousands of people, data collection and interviews play a critical role in the analysis. As one can imagine in analysis projects, if one gets garbage in, one likely gets garbage out.

In comes the role of the “hunting license”. As one can imagine, consultants may need to get very sensitive information (e.g., financial, sales, operational) in order to help a client analyze what is going on. When working in the trenches of a client organization, the individuals on the line may be reluctant to give the consultant information. If a consultant has be given an adequate hunting license, essentially an authorization by a manager or executive (e.g., CEO, COO, CFO) to obtain any operational data needed, a consultant can better navigate through the client organization and obtain information needed.

That said, consultants need to recognize that their hunting licenses do not generally mean that they have a right to “fish” (for information). When consultants seek information and/or question workers in the trenches, they should have a clear goal in mind. They should not randomly seek information just for the purpose of seeking information and in hopes that client problems will reveal themselves down the road. Seeking information can take up a client’s precious time and resources, so the effects of asking for substantial amounts of information should be recognized.

Sometimes avoiding fishing is not as easy as it seems, especially in cases where the problem may not be readily visible. That said, to avoid the pitfalls of fishing, a consultant should use a structured methodology for attacking a problem, and the methodology should be connected to end results (and/or prove, disprove hypotheses along the way) as much as possible. For example, in analyzing a backoffice operation, one may want to look at people, processes, and systems as the structured methodology. One may look at the roles people are playing, document the workflows people are using, and examine the computer support for various paper handling steps. To show how the connection of data to end results must be clearly understood, if during the backoffice analysis case I mentioned it is determined that salary information of the workers analyzed will be off-limits to the consultant, then the consultant may want to state that any potential problems about whether a client’s workers are paid competitively (thus potentially affecting worker quality and effectiveness) would be beyond the analysis.

Another way to avoid the pitfall of fishing is for the consultant to ask for information in a layered way. That is, before diving deep in every area of investigation, a consultant can ask for broad information first. Once a problem has surfaced, a consultant can then ask for more detailed information regarding the particular area.

So all in all, I would say the hunter instincts are good traits for consultants, but fisher tendencies need to be watched with caution or avoided entirely.