When advisers switch sides
By Stefan Stern
Published: October 17 2007 17:54 | Last updated: October 17 2007 17:54
In the popular view, management consultants are mysterious individuals who speak a strange language, supported by elaborate PowerPoint demonstrations packed with two-by-two matrices and other over-complicated graphics.
It is a nice legend, but also misleading and increasingly out of date. The consulting profession has been through several business cycles. It is a mature industry. There are few first-time buyers of consultancy ready to be bamboozled by lavish audio-visual presentations.
There is another reason why corporate clients are much less likely to be “taken in” by whizz-bang consultancy speak. There has been two-way traffic between corporations and consulting firms for some time. Both are populated by individuals with similar backgrounds: university graduates who have picked up an MBA and plunged straight into the commercial world, whether on the client or the consulting side.
The relationship between clients and consultants is shifting, with significant consequences for both. They may sit on opposite sides of the table, but an outsider might struggle at first to spot which is which. The language, attitudes and style of both are converging.
Before joining Bain as a partner in its financial services team, John Ott was global head of strategy and mergers and acquisitions at Barclays Bank. His career has leapt from consultancy to the corporate world and back again. He sees the client/consultant relationship as something that works best when there is a shared understanding of the business problem to be solved – something that is easier to achieve when colleagues are speaking the same commercial language.
“We like it when clients push us hard, and we push them hard too,” he says. “Working together should be an experience that helps develop thinking on both sides.” When clients have worked out what they want to achieve but are open to new ideas, there is a much greater chance of a successful outcome, Mr Ott says. In this way, clients will be thinking more like consultants, while good consultants are able to put themselves into the shoes of their clients.
Tom Graham recently joined KPMG management assurance services after 10 years working in finance with Land Rover, the carmaker. The transition from an in-house role to that of consultant has been smooth.
“It’s not quite the big jump you might imagine,” he says. “It’s been a natural extension to the career path. Now I’m in a service business and not manufacturing, but attitudes here and on the client side are very similar: it’s all about outputs and doing a quality job. It all comes back to good project management in the end.”
Two-way traffic between businesses and consulting firms is not new. As Chris McKenna, reader at Saïd Business School in Oxford and author of The World’s Newest Profession: Management Consulting in the 20th Century, points out, Tom Kearney (later to found AT Kearney) worked in a Chicago meat-packing company before becoming James McKinsey’s first partner in his consulting firm in 1929. McKinsey himself left the firm and went back into business at Marshall Field’s, the department store that had been one of McKinsey’s clients. Marvin Bower, the great force behind McKinsey’s growth, was an advocate of the MBA partly because this new qualification provided an alternative source of potential recruits, allowing him to hire people who had not worked in business before.
There is a kind of synergy between consultants and clients that can, in the best sense of the word, be exploited by both. Even though consultancy firms usually have a clause in the contract prohibiting clients from poaching any of the consultants who are working with them, in practice this can happen at any time.
“We don’t always like it, but I suppose we should see it as a compliment,” says the head of one consulting firm. This cross-fertilisation also firmly embeds former colleagues in the client firm, making them a likely future user of that consultancy’s services.
There is always the chance that a consultancy can lose talented staff for other reasons. Jonathan Schwartz, Sun Microsystems’ chief executive and a former McKinsey consultant, was underwhelmed by some of things he saw going on within client organisations. “I remember meeting people and thinking: ‘Hold on, I can do this better than they can,’” he recently told BusinessWeek magazine. He did not remain a consultant for very long.
The traditional differences between life inside a business and a consultancy are also breaking down. Consultancy once meant travel and long hours, compared with a more comfortable and predictable life in-house. The global era has eroded the distinction: corporate life is no longer sedentary or steady state.
So what differences persist? Kerry Le Van, also at KPMG after working for British Gas for five years, says that life in consulting can be a little more intense, if only for limited periods. “When you work in industry all the demands on you are coming from the same source – your colleagues,” she says. “You may be able to balance these demands out a bit. As a consultant, you can be on call to clients all the time.”
On the other hand, that variety of work is one of the attractions that draws some managers into the consulting world in the first place. While a corporate career might throw up a series of familiar problems, every client will present its own unique challenge.
Those who make the switch to consultancy after working for an unusual employer can bring a rare perspective to their new job. Neil Ellett had a 12-year career in the UK’s Royal Air Force, piloting Chinook helicopters, before joining PA Consulting, where he is now a partner for defence sector clients.
He has an intimate knowledge of his clients’ products and services. “I might tell them: ‘I can see why you are marketing this product in this way, but the fact is no one is going to use it like that.’”
Consultants and clients are no longer staring at each other in bewilderment from opposite sides of the table. They understand each other’s priorities better.
Whether this always leads to better results is another question. But at least “mutual incomprehension” can no longer be offered as an excuse for failure.
Overheard: dialogue between customer and consultant
The client says: “This is a key priority area for us going forward.”
The consultant says: “Well, we would suggest the following key deliverables . . .”
Client says: “What are the timelines here?”
Consultant says: “We will report back on progress on a weekly basis, with more frequent updates where necessary.”
Client says: “How do we achieve buy-in internally for this work?”
Consultant says: “We suggest an all-staff off-site plus regular follow-ups and climate checks.”
Client says: “How do we get the sequencing of messages for key stakeholders right?”
Consultant says: “We will identify hot teams to lead internal discussions on progress.”
Client says: “What will success look like? What are the measurable outcomes here?”
Consultant says: “We think it should be possible to achieve a 30 per cent improvement on fixed and variable costs.”
And on receiving the invoice . . .
Client says: “HOW much?”
Consultant says: “You know, this sort of advice doesn’t come cheap.”
Copyright The Financial Times Limited 2007
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