MBA Good News and Bad News

Good (old) news: MBA students defend having ethics programs in business school. Bad (old) news: MBAs don’t value ethics during job selection. Bad (new) news: MBA students are more likely to cheat than those in other disciplines.

Mixed news: Business schools are targeting younger, less experienced candidates.

Good news: Business schools adapting their programs to address the lifestyle needs of females.

Good news update (9/21/06): Management guru David Maister shares his perspectives and increases the dialogue on improving the relevancy of business schools.

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.

Being A Dad And A Business Person

I originally wanted to write a post for Father’s Day earlier this year but missed my opportunity. But being on an engagement in Northern Spain, I have had some time to reflect upon being a dad and being a businessperson. And recent crossings in cyberspace with an old PRTM friend have given me pause to reflect upon life because of his tremendous integrity in both life and business.

I personally think there are a lot of things that one can work on in both being a dad and being a businessperson.

Being supportive plays an important role in business. In the past I wrote about how I think having a supportive manager swamps all other factors in terms of career advancement. Apparently I’m not alone in this view, at least when it comes to management positions. When 363 finance executives were asked by CFO magazine what were the top three factors that helped them to achieve their position, having a supportive boss was either #1 or #2 depending on whether the executive was male or female (see bar chart about a third down the page).

Being supportive as a parent is also key. Paying attention to what type of environment one’s kids thrive in is very important to helping them advance in life. Although "politics" may play less of a role in the family environment compared to a business environment, kids enter into environments where they may be subjected to greater numbers of groups, cliques, social settings, etc. in their personal lives than many adults even face in a normal workday. One needs to help kids to develop social skills, tools, confidence, etc. much like one needs in business.

For me, being supportive takes focus. It takes the kind of focus that one needs when trying to bench press heavy weights on a weight machine – no other distractions allowed. Sometimes it’s hard to be focused during a busy workday. Sometimes it’s hard to do that after a busy workday. But being supportive may be one of the most important things one can do as a parent and as a manager.

Communication also plays an important role. Think about how often and how you communicate with your boss or subordinates? How does the quality of communications compare with your personal life? Is the balance right? Do you need to develop better skills in one environment or the other? At one point this year, I found myself asking my boss more about how things were going than I asked my kids or wife. That was one indicator that things had gotten somewhat out of whack, and so I have started to refocus things.

There are lots of things that can be adopted between being a business person and being a dad. I’ve only cited two that come to top of mind. I used to have a few books on my bookshelf that influenced my thinking in these areas including, "The Road Less Travelled", "Venture Capital Dad", and the "Seven Habits of Highly Effective Families". While there are clearly differences and pitfalls in directly applying methods from the business world to the personal environment (e.g., stemming from the fact that a boss-worker relationship is different from parent-child), the fact that people learn so much in one environment or the other … well the power of leveraging those learnings more consciously has helped me.

For My Vonage Diary

Steve has to try out the VoIP thing because of network flexibility it offers.
Steve has some problems with Vonage service quality compared to landline. Or not?
Vonage hits 1 million lines.
Skype, the much different P2P VoIP player, is acquired for $2.6 billion.
Vonage leads the VoIP pack in terms of number of subs.
Vonage files for IPO.
Jeff Nolan tips me that Vonage is offering customers a piece of the IPO action, but Steve has already cancelled service (was it for qualified investors only though, even though "everyone" got email?)
Zoli Erdos calls the Vonage IPO like he sees it and provides some other good background links.
Vonage pricing/market capitalization seems similar to the Skype exit value.
Vonage IPO off to the year’s worst start (also here).
However this turns out, it will be an interesting lesson in venture capital money, stock markets, and pure play vendor versus bundled offering versus P2P play versus …

Update (6/1/06): Crazy stuff. Om reports on angry customers (plus some stats on number of takers) that took Vonage up on getting a piece of the IPO deal.

Update (6/5/06): Kedrosky points to and sums up the pre- and post-money valuations of each round so one can estimate how much each tranche participant "made out" with (note no down rounds). As another recent link to fill out the story, here is a recent class action lawsuit filed by shareholders.

Update (6/19/06): Vonage is half the IPO price.

Update (4/12/07): CEO resigns. Situation at Vonage goes from bad to worse.

What Role Does Brand Name Play In Terms of Past Experiences?

This post was triggered by a current MBA student at my alma mater. I really should get some recruiting dollars from my former employers. It’s amazing how many questions I get about my past, as a direct result of this blog.

Unfortunately, I won’t be able to cover all of the ground as suggested in the title, but one item that came up from the soon-to-be grad was weighing the tradeoffs of going to one of two management consulting firms. One of the firms in question clearly had a better brand name (in terms of general recognition) than one of the firms I worked for, PRTM. One item of importance to this person was opportunities for advancement, potentially post-employment at one of the consulting firms and potentially as connected to brand strength.

In my opinion, brand name can play a role with future employers and with colleagues in an organization. This is just a fact of life. As a simple example, when I look through resumes, if it easier for me to identify with the companies that a person has worked for, I can often get a better sense of the context associated with that person. It’s just a matter of instant name recognition. Of course, when I spend more time on due diligence, I try to cut through all of that so that it doesn’t matter whether a person has past experience with a well-known brand or unknown brand company. All that matters is whether the person can do the proposed job, mix with the team, and flourish.

But fact of the matter in professional situations, like when I’m in a room introducing myself and there are brand names like Booz Allen and McKinsey at the top of people’s minds and perhaps sitting at the same table, people will often give me less attention until I back up my pedigree with actual experiences. Only then am I able to get myself ahead or on level ground. In some ways, it’s another level of explanation that I need to get through before I can get across the message of the "real me". Note that I’m not emphasizing ego here – simply the observation of how much communication time one may be allocated by others depending the initial impressions one makes based on brand name of past (or current) employers.

My original question was how much does brand name matter though? In worlds where first impressions matter more (which is not every world by any means), where there are numerous one-off interactions before people start formulating opinions or working relationships, where other people may talk about you (e.g., your boss’ boss) without having much direct working experience with you, I believe that brand weighs more strongly. So I have tendencies to believe that in things like startup and engineering environments, where relationships are more closely knit, organization structures are small, and where interactions are more frequent between people, the notion of brand name will not matter so much. In a larger company, however, there may be many more one-off interactions (in certain areas of a company like business development or consulting), and brand name of your past employers may matter "more".

But to put this in context, one does not have to use the brand of the employer to put forth one’s own brand. This was one of the reasons I was comfortable enough to take employment with a less well-known management consulting out of business school. It was easier for me to focus on fit, experiences that I desired, etc. as opposed to getting concerned with what company name was going to be on my resume.

When I sat down to write this post, I thought that I was going to conclude that people should put forth their own brands. At least I find that this seems to work for me, and it is probably the method I would suggest by default. But I have tried to open my mind some, and I have observed that there are some people that do quite well advancing the brands of their past employers before they advance their own brands. I have tried to think about why this may be so, and I tend to believe that the optimal path may depends on the environment in which one plays (e.g., as defined in terms of number of cold people-to-people interactions on a daily basis, the timeframe of an average interaction, the size of the organization, and the basic goals of an average interaction).