Reflecting on Heuristics

I was recently asked on Quora, “Should one use heuristics at all as they are prone to cognitive biases?” What follows are my thoughts.

Heuristics usually allow people to make quicker decisions. For example, when catching a fly baseball, sometimes people use a gaze heuristic to keep the ball at roughly the same inbound angle by adjusting their position and moving forward or backward. This gaze heuristic allows us to quickly and dynamically make judgments to catch the ball as opposed to having to pull out the slide rulers, calculators, and physics books to figure out where the ball is going to land.

While heuristics can help with speed, sometimes we have the benefit of time to slow down to think about the consequences of potential biases and where the heuristics might lead us astray. For example, people often talk about a 4% drawdown rule/heuristic for using your wealth at retirement (e.g., use up 4% of your wealth each year). But one has to remember that using up your wealth is essentially an irreversible process. What type of risk analysis have you done? Have you assessed your longevity and potential variances both positive and negative? What happens if you live 40 more years? Have you accounted for negative health events? Have you thought about maximizing your happiness in retirement as opposed to economic numbers?

So heuristics can be used with some success. But heurisrics should be audited for their benefits and shortcomings, especially if the consequences of an error are significant enough.

Reflecting on Your Consulting War Stories Builds Character

I don’t claim this to be a good war story, but it is a war story has had a deep impression on me.

Early on in my career, I was asked by the managing partner on the project to help a struggling manager to help develop their plan for the business. When I got into the weeds, the problem was essentially an operations strategy and planning project. I brought a little rigor to the analysis, and I worked with the manager to break down scenarios and workflows and applying Little’s Law (i.e., average inventory equals average cycle time times average throughput) to validate the strategy, offer operational improvement suggestions, and calibrate the model. When the results were presented to the executives, they were pretty impressed. I was later privately told that I had helped to save the manager’s job. Take that for what it’s worth, but in any case, that made me feel really good. A key was that I helped to facilitate the strategy and analysis process, not completely do the work on my own.

Years later and in a totally different industry, I was asked to help with an operational assessment where the company had lost a tremendous amount of institutional business in the past year due to sales and operations processing issues. The executive team wanted me to take a look at the total business and dissect where things went wrong. There was some subtext that they believed that the one of the division managers had crashed the ship. Though it was never stated explicitly, I think the executives wanted me to find the implicating evidence. I ended up using similar techniques to the first project; first I tried to determine why people churned out as customers, and then once I attributed it to cycle times, I essentially used Little’s Law to determine why cycle times went up so drastically. In the end, what I found was that cycle time increases drove severe customer churn and that cycle time increases were not due to the manager in question. It was an issue caused by and owned at a broader level. I was done. Along with process recommendations, I presented the analysis results to the executive team. They were happy, but a bit surprised that I had not found implicating evidence for the manager. Once the project was complete, I was happy. I was happy that the client was happy, and I was happy with my approach and sticking to science as opposed to being swayed by biases or internal politics of the client company. Months later, I found out that the executive team ended up firing the manager. I’ve had mixed feelings ever since, ones that have never been fully resolved.

I ask questions like, do management consultants have impacts on people’s jobs? Or do management consultants feel that they are so important that they have impacts on people’s lives? Who owns the results? Is it the management team? Who owns the implications if people’s jobs are lost? What if jobs are gained? The answers to these questions are both debateable and situational. All said, to this day certain project types and situations trigger bad vibes for me, and I try to avoid them where possible.

 

Does a Person Need Passion or Expertise to Start a Consulting Firm?

Here are the situations regarding two people I know:

  1. Person 1 is terribly bored by the work he does in radiology, but he’s extremely good at it, and organizations like product companies, health systems, and providers seek out his consulting services.
  2. Person 2 is extremely excited and passionate about behavioral economics and wants to start a consulting firm. Unfortunately, this person has no experience in the area and can’t figure out ways to both find and close deals with clients.

To start a consulting firm, what matters is being able find clients and close contracts with clients. To stay in consulting for a sustained period, one also needs to be able to deliver the services. Passion (and expertise for that matter) can play a supportive role in all of these areas; it can make it easier for you to find clients, close contracts, and keep delivering quality services. I don’t believe passion is needed to get the ball rolling though. It might be something one should think about before starting to roll the ball, but business development is a must-know-thing for running one’s own consulting firm.

What Should an Experienced Consultant Watch Out for During a Consulting Engagement?

Here are seven things on my list:

  1. The problem statement for the engagement and the scope of work should always be in focus (including the value of the project); refine the problem statement as necessary.
  2. The engagement structure consists of the activities, deliverables, resources (both consulting team and client), and collective orchestration. Productivity and chemistry of the team at key points need to be watched.
  3. Engagement team should set expectations early on as to the tone of the engagement in terms of whether they will help to lay out options for the client to choose or whether they will make recommendations more strongly up front.
  4. In consulting the process is an essential part of the deliverable. The “train” needs to stay on this track.
  5. It is important to regularly communicate engagement progress relative to goals (say once every 1 to 2 weeks). The engagement manager needs to be completely in control, competent, and communicating effectively.
  6. New consultants should be closely mentored in the field by senior members on the team. Ideally, the engagement manager should establish a close relationship with the client lead so that honest feedback about consulting team members can be collected.
  7. When approaching the end of an engagement, both the client and consulting team should both plan and work toward a smooth transition/completion.

Lifehacks for New Management Consultants

It’s been nearly twenty years since I started management consulting. I tried to quickly reflect on lifehacks that really helped me in my first year so that other, new consultants might benefit from my learnings.

Here are a few to make your personal life better:

  • Never check baggage on flights.
  • Get airline status so that you can board planes as soon as possible (e.g., purchase airline credit card if necessary).
  • Plan your weekends at least one week in advance.
  • Spend some money to make your personal life more comfortable (e.g., dry cleaning, house cleaning).

Here are some random tips on the professional side:

  • Find mentors and develop advocates for you within the firm as soon as possible.
  • Get very familiar with the engagement kickoff deck if possible for your first assignment (it often outlines the problem statement, engagement workstreams, and roles in organization).
  • Get briefed on the industry of your client as fast as possible; ask others what they did to come up to speed.
  • Be nice to and get to know the secretaries and receptionists; they can help you navigate staff in the client company.
  • Don’t reinvent the wheel if possible. Leverage templates and/or Powerpoint plug-ins like ThinkCell or other; the goal is to use your brain more and offload mechanical tasks.
  • Try to avoid taking any crazy medicines that the client might offer you (lol – this is personal one for me that I regretted for my first client).

To clarify the last bullet point, the client offered me some homeopathic medicine with goose liver in it or something when I was ill. Pretty certain after that I developed an year-long allergy to my own blood serum where I had to take Actifed for a full year while at work because I would get welts all over me every four hours or so.

As a final thought, I wanted to point out my book, The Consulting Apprenticeship. While the book provides insights regarding management consulting, I feel its strength is really in highlighting some of the previously unwritten, nuances of the trade which can help new consultants navigate their way.

Edit 2/13/2019: Special mention to Kevin Johannes Wörner who has a nice video covering advice for new strategy consultants (9 lifehacks) based on his experiences, including at Roland Berger. I really resonate with Kevin’s comments about how to deal with massive amounts of data and information coming at you in the client environment and focusing on the few items that really drive results.