Management Consultancy

Management Consultancy
What is management consultancy? How has it developed? How does it affect businesses?
This book answers these questions and introduces the field for those looking to develop
a career as a management consultant.
Providing a thorough introduction to management consultancy, Morgen Witzel
covers the topic from a range of perspectives including the field's historical development,
the client's perspective, business analysis, return on investment, consulting failures, ethics
and accountability and the growing importance of sustainability.
With exercises and case studies throughout, this practical textbook provides students
with a rounded and critical understanding of what it means to be a management con-
sultant and in so doing, will help readers emerge as employable management consultants
of the future.
Morgen Witzel is an internationally known writer, lecturer and thinker on the problems
of management and leadership. His books have been published in twelve languages and
have sold more than sixty thousand copies worldwide. He is a Fellow of the Centre for
Leadership Studies, University of Exeter Business School, UK and a Fellow of the Royal
Society of Arts, Manufactures and Commerce.
Morgen Witzel’s book on ‘management consultancy’ sets out new ground in a field
which is insufficiently explored in the academic literature. It deals with both the con-
ceptual and practical dimensions of consultancy in a readable and interesting manner. His
coverage of this very interesting topic is most thorough and his analysis is indeed robust,
setting the coverage in a truly global business setting. The book is clearly written and
accessible to not only undergraduates and MBAs in the subject but also interested
practitioners.
Malcolm Warner, Professor and Emeritus Fellow, Wolfson College and
Judge Business School, University of Cambridge, UK
The book brings the landscape of management consultancy to life. You’ll discover how
management consultants engage clients, work with problems, add value, and make a
difference. For anyone thinking about management consultancy as a career, making their
way in the field, or wondering whether to hire a firm, this provides invaluable guidance.
Nigel Guy Linacre, Co-Founder of LeadNow
Witzel acknowledges that management consultancy is a vast and changing subject and so
it is no mean feat to have written such a well-structured and engaging book. Students of
business will find a rigorous analysis of what it is to be a management consultant, sup-
ported with practical exercises and a range of global case studies. However, the relevance
and value of the content extends much further. With its detailed overview of subjects from
client engagement to ethics and professional standards, Management Consultancy earns its
place on the bookshelves of management consultants, both generalists and specialists as well
as their clients.
Alison Hogan, Managing Partner, Anchor Partners Ltd, UK
Management Consultancy
Morgen Witzel
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First published 2016
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
711 Third Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2016 Morgen Witzel
The right of Morgen Witzel to be identified as author of this work has been asserted by
him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act
1988.
All rights reserved. No part of this book may be reprinted or reproduced or utilised in
any form or by any electronic, mechanical, or other means, now known or hereafter
invented, including photocopying and recording, or in any information storage or
retrieval system, without permission in writing from the publishers.
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and are used only for identification and explanation without intent to infringe.
Also in the USA and Canada
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
Witzel, Morgen.
Management consultancy / Morgen Witzel. -- 1 Edition.
pages cm
Includes bibliographical references and index.
ISBN 978-1-138-79883-0 (hardback) -- ISBN 978-1-138-79884-7 (pbk.) --
ISBN 978-1-315-75635-6 (ebook) 1. Business consultants. 2. Management. I. Title.
HD69.C6W58 2016
001--dc23
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ISBN: 978-1-138-79883-0 (hbk)

ISBN: 978-1-138-79884-7 (pbk)
ISBN: 978-1-315-75635-6 (ebk)
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Contents
List of illustrations vi
Acknowledgement vii
1 Introduction 1
PART I
What consultancy is 7
2 What is management consultancy? 9
3 From company doctors to strategic partners 28
4 The roles of the consultant 40
5 The client 55
PART II
What consultants do 71
6 Analysis 73
7 Problem solving and capacity building 86
8 Impact 102
9 Failure and recovery 113
PART III
Issues in management consultancy 127
10 Ethics in management consultancy 129
11 Consultancy and sustainability 143
12 A career in consultancy 154
Bibliography 159
Index 165
Illustrations
Figures
3.1 The ‘Boston Box’ 33
3.2 The McKinsey 7-S framework 33
5.1 Presents a very simple framework for describing different types of
relationship 64
Tables
2.1 Comparison of old and new models on key dimensions 22
4.1 Professional standards for consultants 45
7.1 Weighted Options Matrix 88
8.1 Criteria for evaluating consultancy services 106
10.1 Examples of unethical behaviour by consultants 133
10.2 McNamara’s ethical standards for consultants 134
10.3 IMC USA code of conduct 134
10.4 Example of a Markkula Center exercise 138
11.1 Five areas of global risk 146
Acknowledgement
This book could not have happened without the contributions of the many consultants I
have met and worked with over the years, from sole practitioners to members and
former members of very large consultancy firms and academics studying the consultancy
profession. To all of them, past and present, my grateful thanks.
A few individuals must be acknowledged. Bennett McClellan was kind enough to
lend me his PhD thesis on the consultancy profession, which became a very valuable
source when discussing the tricky question of impact. Bennett also kindly gave permission
to reproduce material from it. My thanks also to Shelly Palmer for permission to quote
extensively from his excellent blog on data analysis.
Dominic Barton, Matt Krentz, Simon Hayward and Andrew Hooke kindly agreed to
be interviewed for this project and gave generously of their time. Readers will agree, I
am sure, that their insights have added a great deal of value to this book.
My thanks go also to Terry Clague at Routledge, whose idea this book was and who
commissioned me to write it, and to the ever-helpful and unfailingly courteous Sinead
Waldron, who saw it through to production. Many thanks also to Jaya Dalal for her
copyediting and her patience.
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1 Introduction
Management consultancy is one of the preferred career choices for business school students
around the world. Surveys for the past several years of MBA and MSs students have
shown that management consultancy is one of the top five – sometimes top three –
choices of career and surveys of undergraduates also include consultancy among the top
ranked choices. Consultancy has a perennial appeal for young people at the beginning of
their business careers.
Why so? Consultancy has a certain glamour about it, it is true, but this glamour is not
always deserved; a lot of consulting work is pretty mundane and un-glamorous. It
appeals to people who enjoy problem solving, but all management is full of problems
requiring solving. Students sometimes tell me that they think they would enjoy the
challenge and stretch of consulting, but again, there are plenty of other arenas in business
where challenge and stretch can be enjoyed.
If you want to be a successful management consultant, you have to be prepared to
work extremely hard for long periods of time. You must be able to put your client’s
interests first at all times, and not allow your own prejudices or preferences to interfere.
You need to be a good diplomat, and to have very high professional standards which
must never be allowed to slip. You need to have a very strong set of personal and
professional ethics.
You will need to be a good analyser and problem solver, but most of all, you will
need to be different. Diversity is the breath of life in management consultancy. Consulting
teams are expected to have a great deal of knowledge at their fingertips; no one expects
them to know more than their clients, but they must know things that are different, that
bring new perspectives and new ideas to the client. That means consultancy firms are
looking for people who have different experiences, different approaches to life, different
ideas. If you want to be a management consultant, then the advice from the professionals
is: make yourself interesting. Gain different experience, learn different knowledge, learn to
think about problems in new and different ways.
Knowledge is the consultant’s stock in trade. Without it, he or she has little to offer
clients. As this book will make clear, the would-be consultant must make personal
learning a priority, and must continue do so throughout the rest of her career. Knowing
how to be a consultant is not particularly difficult; again as this book will make clear, the
principles are pretty simple. But you will only be able to make those principles work if
you can master the kinds of knowledge that clients need, and bring it to them in exciting
and innovative ways.
I make this point because getting a job in consultancy is not as easy as it used to be.
Back in the 1990s when the profession was growing rapidly, consultancy firms used to
2 Introduction
descend on business schools and scoop up their best and brightest talents, usually based
on the marks they were awarded, take them away and train them into consultants. Those
days are passing, and for some consultancy firms, have already passed. Fewer consultants
are being hired, and the firms are being much more choosy about the people they do
hire. As we shall see in Chapter 12, they are looking for distinctive competences, not just
brain power or analytical ability.
Therefore, if you want to be a management consultant you need to concentrate on
building up your own skills and knowledge base and making yourself distinctive. This
book will tell you what kinds of things you need to know, what the tasks of the con-
sultant are and how you need to adjust to bring your own knowledge into line with
those requirements. This book will not teach you everything there is to know about
management consultancy, because the subject is vast and changing, and the most
experienced consultant in the world does not know a fraction of all there is to know.
Every client is unique; every client engagement is unique; client needs are constantly
changing and evolving; and consultancy firms are changing and evolving too. Knowledge,
for a management consultant, is a journey, not a destination. For would-be management
consultants, this book is the beginning; but only a beginning.
Structure of the book

In writing this book, I have assumed that the great majority of the audience will be
MBA, MSc or undergraduate business students, probably reading this module in con-
junction with a taught module or course on management consultancy. There are therefore
a number of student exercises, things that you can do either in class or in independent
study. I urge you to complete all of these and use them as bases for reflection both now
during your course and later. There are also a number of case studies; these are intended
for classroom use and discussion, but there is nothing to prevent students from considering
these as part of independent study.
Part I of the book defines the nature, tasks and roles of management consultancy.
Chapter 2 introduces students to two different but related approaches to management
consultancy. The first is the process model, which describes management consultancy as a
series of tasks and steps that need to be carried out including negotiation, analysis, iden-
tification of options, presentation of options and final agreed solution. The process can
also include implementation of the solution, although some consultants and consultancy
firms prefer not to get involved in implementation. The second is the client engagement
model, which focuses on the relationship between client and consultant. In the client
engagement model, maintaining the relationship should be the first priority of the con-
sultant, because unless a strong relationship exists, it is unlikely that the steps of the
process can be carried out successfully.
The notion of the engagement is crucial. Different consultancy firms use different
terms, such as project or assignment or study, but I prefer engagement because it suggests
a relationship of equals between consultant and client. That is an important point which
must never be forgotten. Clients call on consultants because they need help, but that does
not mean clients are helpless. They know as much, indeed far more, about their own
business than the consultant does, and the consultant must be humble enough to realise
this. A good engagement will only occur if there is mutual respect between both parties.
Chapter 3 gives a brief introduction to the consulting profession, its history and pre-
sent condition. Several figures from the profession – Dominic Barton, managing director
Introduction 3
of McKinsey & Company; Matt Krentz, senior partner and global leader of the People
team at Boston Consulting Group; Simon Hayward, chief executive officer of Cirrus
Connect; and Andrew Hooke, chief operating officer and head of government practice
at PA Group – then offer their reflections on directions in which the industry might go
over the next ten years.
Chapter 4 moves on to look at the role of the management consultant in more detail.
Or rather, the roles: one of the points made in this chapter is that different clients will
expect consultants to play different roles, depending on the client’s own situation and
needs. Part of the chapter is given over to role theory and how consultants can apply it
to their own work to build better and stronger client engagements. Other themes in this
chapter include the values of the consulting industry and also the professional standards
expected of consultants by clients and by the consultants’ own employers, the
consultancy firm.
This last theme is particularly important. Consultants must have very high levels of
professional standards and stick to them, all the time. A German business magazine once
referred to management consultants as the ‘Jesuits’ of business (Edersheim 2006). It is not
an inapt comparison. Purity and clarity of thinking and behaviour are essential for
consultants if they are to be successful.
Chapter 5 then moves on to the most important people in the management con-
sultant’s universe, the client. (Very few management consultants or consultancy firms
refer to the people who engage their services as ‘customers’; some firms ban the use of
the term altogether. ‘Clients’ is the preferred option.) We look at the reasons why clients
engage consultants, and discuss how important it is for consultants to know in advance
why they have been brought in and what clients’ expectations are. We also look at how
clients choose consultants before once again returning to the all-important client–consultant
relationship, which we examine this time from the client’s perspective.
In Part II we move on to look at what consultants do and how they deliver value to
clients. We begin in Chapter 6 with analysis, the gathering of data and information and
understanding it in order to solve problems and reach recommendations. Consultants
conduct analysis on three levels. First there is situation analysis, which involves taking a
broad overview of the client organisation. Before focusing on individual problems it is
essential to have as complete a picture as possible of the client organisation, its market
position, environment and resources; without this picture, it can be difficult if not
impossible to arrive at realistic recommendations.
Second, there is problem analysis, the focusing in on the things that require to be
changed. Often clients will already have an idea of what their problems are – that is why
they engaged consultants in the first place – but in this chapter we make the point that
the problems clients think they have sometimes mask other, deeper rooted problems of
which the client is unaware. We look at analytical techniques for getting to the heart of
the issue, such as Why–Because or Five Whys analysis. Finally, there is solution analysis, in
which the gathered data and knowledge are sifted for potential solutions.
In reality, time pressures and client demands usually mean that consultants are doing
two and sometimes all three stages at once, and often problem solving on the fly at the
same time. In reality this can be a good thing; action learning, which we also introduce
and discuss, can be a powerful tool for learning and reach insights that a more linear
approach would not reach. This is especially true if client managers are directly involved as
members of the consultancy team, and the book argues that it is very important to have
this level of client involvement.
4 Introduction
Chapter 7 moves on to problem solving and capacity building, the end games of any
consultancy assignment. We start by running through several generic methods of problem
solving, though of course consultancy firms – especially large ones – often have their own
‘house’ techniques. Techniques such as weighted options, abstraction, reduction, analogy
and hypothesis testing are considered along with their strengths and weaknesses. We also
discuss the importance of recognising bias in problem solving. Most of us suffer from
biases in our thinking; the important thing is to recognise what those biases are and make
allowances for them so that we get a solution which is right for the client, not right for
us. The chapter then moves on to capacity building and discusses the key areas where
capacity is most often needed, in systems (including technology), knowledge and people.
Chapter 8 looks at the issue of impact, the value that consultants deliver to clients.
There have been difficulties in the past in measuring impact, leading some sceptics to
argue that consultancy services offer nothing of provable value. Yet it is very important for
consultants to demonstrate that they do have impact, and that they do make a difference to
their clients. After defining impact, the chapter goes on to describe techniques for measuring
and stating impact and lays out what consultants need to do during and after engagements
to measure impact. At the heart of this chapter is the notion that true impact is deter-
mined by the client; whatever the client values from the engagement constitutes impact.
Not all this value can be measured quantitatively, and it is a mistake to assume that
measures such as increased growth, profit, market share and so on constitute verifiable
measures of impact. True impact is often much harder to find and measure.
Finally, Chapter 9 looks at consultancy failures and recovery. Every consultant
experiences failure at some point in his or her career, and one of the measures of a great
consultant is how well they recover from failure and retrieve the situation to create
client satisfaction. We define the causes and nature of consultancy failures, which can
stem from the behaviour and actions of consultants, clients or both. We look at some
common types of failure and show how failures can be detected and dealt with early on,
before they can grow to the point where they damage the engagement, and finally we
talk about learning from failure and how important it is if failures are not to be repeated.
Every failure damages the consultant and the firm he or she works for; keeping failures to
a minimum is essential for long-term success.
In Part III we look at some key issues in management consultancy today and tomorrow.
We begin in Chapter 10 by looking at ethics in management consultancy, and stress the
vital importance of a strong ethical outlook matched by high professional standards. We
discuss various approaches to ethics, the contradictions between these approaches – for
example, the difference between what is right and what is good, and how the two do not
always match. We then apply these approaches to consultancy, and go on to suggest
three frameworks for ethical problem solving that consultants might find useful.
Chapter 11 goes on to discuss sustainability, a hot topic in the consultancy and business
worlds at the moment. We discuss sustainability, indicating that it is a much broader
topic than mere environmental sustainability, important though that is. The book
recognises that people will have varying personal views on sustainability. For the consultant,
those personal views do not matter. What does matter is that clients, in ever increasing
numbers, are turning to consultants to help them with sustainability-related problems and
to build capacity to help them become more sustainable. This means that all consultants
must put sustainability on their own agenda: they must learn what it means, see what
new developments in sustainability are going on and use their knowledge to help clients
build capacity and solve problems.
Introduction 5
Finally in Chapter 12 we come full circle back to the idea of careers in consultancy.
We will discuss briefly what consultancy firms are looking for when they hire and the
characteristics of a good consultant, and then what consultants might consider doing to
further develop their own careers.
Throughout the course of this book, I have assumed a fair amount of prior business
knowledge, gained either from studies or through experience, and have not defined
general business concepts in detail, save as they relate directly to management con-
sultancy; this is a book about consultancy, not a general management textbook. If I use a
term with which you are not familiar, then you should look it up and familiarise yourself
with it as soon as possible. The terms I mention here are the bread and butter of
management consultancy, and you need to understand them and what they mean.
What to do once you have read this book

The first thing, of course, is to act upon its principles. In my view there are three things
on which you should concentrate if you are going to be a management consultant; and
further, even if you change your mind about your priorities or are unable to find a place
as a consultant, these three things will still stand you in good stead, in business and even
in life itself.
Cultivate the highest professional standards. Follow the list of standards set down in
Chapter 4, and live by them. Expect nothing but fully professional behaviour from
yourself, and act accordingly. You do not have to wait until you graduate to do this; start
now, and practice professional behaviour until it becomes natural to you. Recruiters will
be impressed, and you will stand out from the crowd. Your new employers will be
impressed too, and will mark you down as someone to watch.
Make knowledge your friend. ‘If I found out I only had two days to live’, a management
consultant once said, ‘then I would begin studying coffins’. Be curious about everything;
not just business problems but the world around you. Art, music, literature, philosophy,
biology, chemistry, physics, the air and sea and sky and land around us and, above all, the
people we meet and work with and interact with, can all serve as diverse sources of
learning. Learn how to learn, how to assimilate and store and create knowledge. Practice
doing so every day, until thinking and learning are as natural as eating and breathing.
Practice analysis and problem solving, all the time. Take every opportunity to work on case
studies, exercises, puzzles, anything that requires you to exercise your brain to work out
problems and find solutions. The analysis and problem-solving parts of your brain are
like muscles. Flex them, exercise them, keep them working and over time they will
build up and become stronger. After a while, problems that will leave your colleagues
baffled will yield up solutions quickly to you, because you know how to study them and
analyse them, and you know the way to generate answers to questions.
Management consultancy is not an easy option. The work is hard, and often it is dull
and unglamorous. But the rewards, in terms of helping other people and other organi-
sations and making a real contribution to business and society, and in terms of personal
development, can be very great indeed. If you are set on a career in management con-
sultancy, read this book and pay close attention to your studies. And above all, as we said
earlier, make yourself interesting.
Part I
What consultancy is
2 What is management consultancy?
Management consultancy is a professional service which offers advice to businesses and

other organisations on how to create value and achieve their goals. Management consultancy
is one of a number of outside professional services which businesses, governments and third-
sector organisations use in order to make themselves more efficient and more effective.
Other professional services include legal services, accountancy, auditing, management
search or ‘head-hunting firms’, investment bankers and other financial advisors, coaches
and counsellors, engineering, technical and IT consultancy and, increasingly, outsourcing
agencies providing back office support.
Superficially, at least, professional services firms can be divided very roughly into three
classes:
Advisors on direction, strategy and policy. These professional services are called upon
when the organisation needs to make decisions about its future direction, and
include management consultants to advise on a range of issues and investment
bankers to advise on more purely financial issues (such as acquisitions, spin-offs and
sell-offs).
Advisors on implementation of previously agreed strategy and policy. These professional
services are more hands-on and include outsourcing agencies, technical, engineering
and IT support services and top management coaches and counsellors. In theory, at
least, these do not make strategic decisions; they are hired to help implement decisions
that the board of directors has already made.
Advisors on compliance. This category includes lawyers, auditors and others whose
primary purpose is to advise the company as to whether it is compliant with the law
and other regulations.
In fact, there is considerable overlap between these services. Auditors do more than
just ensure that the company’s books are in order; they can also offer advice on whether
the company’s financial management systems are fit for purpose. Increasingly, IT con-
sultants are also involved in strategic decisions, and management consultants are getting
more involved in IT provision; the arrival of big data as a serious strategic issue means
that such an overlap is necessary. Accounting firms often offer advice on strategic issues,
and as we shall see, the ‘Big 4’ global accounting firms, Deloitte, PricewaterhouseCoopers,
KPMG and Ernst & Young, are involved in management consultancy and, indeed, many
of the other professional services listed above. Even at the level of the individual con-
sultant, roles can overlap, and there is often confusion within the professional and academic
literature on the subject as to who is a management consultant and who is not.
10 What consultancy is
Definitions of management consultancy
The Institute of Management Consultants in the USA offers the following definition of
management consultancy on its website:
Management consulting is the providing to management of objective advice and

assistance relating to the strategy, structure, management, and operations of an
organization in pursuit of its long-term purposes and objectives. Such assistance may
include the identification of options with recommendations; the provision of an
additional resource and/or the implementation of solutions.
In the UK, the Management Consultancy Association provides a slightly longer version:
Management consulting is the practice of creating value for organisations, through

improved performance, achieved by providing objective advice and implementing
business solutions. In other words, management consultants help take organisations
further than they would go on their own.
They do this by solving problems, providing outside perspective, and enhancing
business capability. Management consultants bring niche skills and a breadth of
experience into organisations, which is often useful for specific projects but not for
an organisation to employ full time.
Both definitions have several things in common. The first is the provision of objective advice. It
is axiomatic in the consulting profession that consultants should never put their own interests
first. They are there to serve the client, and to do so they must act always in an objective and
impartial manner. (Doing so has its own inherent difficulties, as we shall see later.)
The second common feature is that the purpose of this objective advice is to help
businesses to achieve their goals. Particularly striking in this respect is the Management
Consultancy Association’s view that ‘consultants help take organisations further than they
would go on their own’. The consultant must add value greater than the fees that he or
she charges. Otherwise, the client organisation is a net loser, and though the consultant
might gain, the client does not. This again is very much against the ethos of management
consultancy, which holds that there must always be a substantial net gain for the client.
In management consultancy parlance, this is known as impact.
The third common feature is the idea that the consultant adds capacity to the business
through the ‘provision of an additional resource’ or ‘bringing niche skills and a breadth of
experience’ to the client. In the past, this additional capacity lasted only for the length of
the relationship between client and consultant and terminated when the consultancy
contract ended. Today, however, there is an increasing emphasis on building capacity,
making permanent improvements that will ensure the client is stronger and more
resilient.
The fourth common feature is more controversial with the management consultancy
profession. (Very few management consultants refer to management consultancy as an
‘industry’; to most, it is always a ‘profession’, like law or medicine.) This concerns the
implementation of solutions. Some consulting firms do get heavily involved in imple-
mentation, while others insist that their role is to stick to high-level issues such as strategy
and that it is down to the client to implement recommendations made by the consultant.
In practice this a grey area, and even the most dogmatic of strategy consultants will
What is management consultancy? 11
sometimes lend a hand with implementation in order to ensure a positive impact. We
will come back to this issue later.
One further important point about the two definitions should also be noted. The
Institute of Management Consultants says that assistance offered to companies can
include ‘the identification of options with recommendations’, while the Management
Consultancy Association refers to ‘solving problems’. This may sound like a mere matter
of semantics, and probably the intention is the same in both cases, but the difference in
wording highlights an issue that needs to be kept in mind. The first definition suggests
that the client will be presented with a series of options from which they can choose
according to their own needs; the decision rests with the client. The second, ‘solving
problems’, can indicate an approach whereby the consultant moves in and ‘takes over’
the problem, presenting the client with a ready-made solution to be implemented, the
‘one best way’ which, if followed, will surely lead to success.
That approach can be dangerous. First, no matter how closely they study an organi-
sation, external consultants will never know every detail of every situation. Consultants,
just like clients, make mistakes. Consultants, as we shall see later in this book, have the
potential to add an enormous amount of value through the breadth and depth of
knowledge that they bring to any given industry problem, but they never have all the
answers, and nor should they pretend that they do. A great deal of damage can be, and
has been, done by consultants who insist that they are right and the client is wrong,
when later it turns out to be the other way around.
Management consultants should never dictate solutions to clients. The client should
always be involved in the analytical and decision-making process and should buy into the
process from the beginning along with any agreed solution. If the client does not do so,
then there is a strong risk that the relationship between client and consultant will fail; and
as we shall see, everything depends on that relationship working well.
In this book, we shall focus on what I call ‘general management consultancy’ or that
process of analysing issues, making recommendations and, sometimes, assisting with the
implementation of solutions across a broad range of high level management issues. This
was and sometimes still is known as ‘strategy consultancy’, although that term is
becoming increasingly redundant as the line between strategy and implementation con-
tinues to blur. I shall separate out IT and other technical consultancies, and I shall also
eliminate HR consultancies, auditors, coaches, investment banks and many others who
do provide a form of consulting service.
It should be added that much of the content of this book will still apply to those more
specialised consultants and firms, particularly when we come to discuss issues such as
client relationships, impact and the ethical responsibilities of clients. My decision to leave
out these specialist firms is based on two factors. First, their specialist nature means that
each of these types of consulting organisations also faces particular issues specific to that
sector, and these need special treatment; to cover all those issues would require a book
far larger than this one, and the resulting text would be diffused and difficult to read.
Second, the challenges facing the strategy/general management consultant in the modern
business environment are arguably more complex and difficult than in more specialist forms
of consultancy, and the sector is evolving quite rapidly. The nature of the consultant’s work
has changed dramatically over the past dozen years and will continue to change.
Therefore, in this book we shall be discussing management consultancy as practised by
the larger global consultancy firms, McKinsey & Company, Bain & Company, Boston
Consulting Group (BCG), Strategy& (formerly Boos & Company, now the consulting
arm of PricewaterhouseCoopers [PwC]), AT Kearney and others, as well as a broad
spectrum of small- to medium-sized consultancies – known in the profession as ‘boutique’
consultancies – which often have some sort of specialism connected to strategy, leadership,
international business or some other aspect of general management.
Process and engagement

How is this advice and support given to business? Part II of this book will discuss what
consultants do in much more detail, but before we get there we need to begin to
understand how the process works.
There are two models for understanding how consultancy works. The first is the process
model, which describes how consultancy services are delivered. The process model is a step-
by-step model which, like all such models, is a heavily simplified description of what really
happens in management consultancy, but it is useful in laying out the necessary elements
of the service delivery process. The second is the client engagement model, which shows
how consultancy services are delivered through the relationship with the client, known
as the client engagement. This model puts strong emphasis on the management of the
engagement first and foremost, the argument being that if the relationship is not robust
and flexible, then the service delivery process will be weakened as well.
It is important to note that these models are not mutually exclusive; the consultant
does not make an either/or choice between them. Both process and engagement are
vitally necessary. The nature of the client engagement sets out the framework within
which the service is delivered; the service model is then tailored to meet the needs of the
client. The case study at the end of this chapter will show more fully how this happens.
The process model

There are a number of variations on the process model, of which Burtonshaw-Gunn
(2010), Kubr (2005) and Johnson (2012) are examples. Individual management consult-
ing firms will also usually have their own model; the McKinsey model, for example, is
summarised at http://www.caseinterview.com/how-do-management-consulting-teams-
work. Despite their differences, however, at heart each process model is roughly similar.
Each consists of a series of steps, varying from six to twelve depending on the model and
the author. The simplified model presented below summarises the key features of a
number of other models and consists of seven steps, as follows:
1 negotiation and contract signing

2 analysis of the situation
3 identification of the problem(s)
4 options for solutions
5 choice of solution
6 implementation of solution
7 assessment of impact.
Negotiation and contract signing

Arguably there is another step before this: marketing to potential clients and getting their
attention in the first place. Among consulting firms there is a spectrum of opinion on
whether and how strongly consultants should market themselves to clients. Some see
‘selling’ as a dirty word and are not too happy about ‘marketing’ either. This is a holdover
from a historic time when consultants aligned themselves professionally with lawyers,
doctors, accountants and other professionals whose ethics forbade them to advertise, on
the grounds that advertising puts undue pressure on people to consume services that they
might not really need. These days, of course, lawyers, doctors and accountants do
advertise, but a ‘build it and they will come’ mentality still prevails among some con-
sultants, who believe that their reputation alone should suffice to attract clients. At the
other end of the spectrum there are consulting firms, usually more specialist ones, that do
advertise and market aggressively.
The effectiveness of either extreme approach is open to question. Though there are no
objective studies of this, anecdotal evidence from the profession suggests that most con-
sultants gain clients through their existing networks. Repeat clients – organisations that
have previously been clients and were so satisfied with the service they received that they
are willing to come back for more – account for a significant amount of business, and
word of mouth – former and current clients recommending the consultant to contacts of
their own – is vitally important.
Getting started in a new market often depends on how quickly the consultant can
attract a reference client, a respected name that will encourage other potential clients to
consider this consultant as a viable alternative. For example, if a consultant setting up
operations in Britain can attract a blue chip name like Marks & Spencer or John Lewis,
this will serve as an indication of quality to other potential clients, who know these top
firms only hire the best.
Another key marketing strategy which does not involve advertising, but does send out
signals of quality to potential clients, is knowledge dissemination. Most of the big con-
sultancies have some form of knowledge dissemination channel that lets the world know
about new ideas emerging from the firm, and some of these like strategy+business (Strat-
egy&) and McKinsey Quarterly (McKinsey) are highly respected and widely read. They are
an excellent source of ideas and new thinking about management; they also send a signal
that this is a serious consulting firm with new and original ideas. And, finally, even
consulting firms that eschew advertising will still invest time in cultivating potential clients,
buying lunch for key decision makers and generally ‘schmoozing’.
Once a client expresses interest in working with the consultant, however, matters then
proceed to the negotiation and contract phase. One important lesson for the consultant
is: don’t start working for the client until the contract is in place. Some unscrupulous
clients will ask for work to be done and then not pay for it, on the grounds that no
contract has been signed; this is relatively rare, but it does happen and can be particularly
painful for smaller consulting firms with less in the way of financial reserves. More
importantly, the success of the consulting project will depend on the clarity of under-
standing between consultant and client, and it is during this phase that this understanding
is established.
The initial phase of this step will usually consist of discussions between the prospective
client and the consultant about what problems and issues the former faces. The con-
sultant must then take a view as to whether they have the capacity and know-how to
deal with these problems and issues. If not, then the ethical course of action is to walk
away; otherwise, the consultant will be taking the client’s money under false pretences.
Most times, however, clients approach consultants because they have already heard of
their reputation in a particular field of expertise and believe they can help. These
preliminary discussions will centre around trying to zero in on the size and scale of the
problem so that the consultant can estimate the time and resources the project will
require and what fees to charge.
There are a number of excellent works out there on negotiating contracts, including
Wheeler (2013), Hall (1992), Horton (2012) and Kolb and Williams (2003). McGinn
and Nöth (2012) discuss how conversation between negotiating partners shapes and
frames the outcome of the negotiations, even when that conversation isn’t necessarily
focused on the deal in hand; the clear implication is that relationship building is an
important part of negotiations.
There are two ways of approaching negotiations. One is to see the negotiation in an
adversarial context, a zero-sum game in which each party tries to achieve the maximum
possible for themselves at the expense of the other party (or parties). The second is to see
negotiation as a means of achieving the best deal for all, a positive-sum game which will
add value for all parties.
In consulting, it is important to take the second approach. If consultants enter nego-
tiations, as some do, with the idea of extracting the maximum possible in fees from the
client while doing the minimum possible work, they will fail. Clients are not stupid, and
most will know when a consultant is trying to gouge them for high fees with no value in
return. Even if they do sign a contract and engage the consultant, they will quickly spot
that they are not getting value for money. During the 1990s a number of unscrupulous
consulting firms, most of them fairly small, behaved so badly that they threatened to
bring the entire industry into disrepute and caused some observers to question whether
consultants were actually doing any good at all. Czerniawska (2002, 2005) enjoined
clients to start off negotiations with a clear view of what value they wanted and to press
consultants to deliver this.
As Czerniawska (2007) also says, trust is an important component in any consultancy
relationship (on this point see also Maistor et al. 2002). The first purpose of any nego-
tiation, therefore, should be to establish trust. First and foremost, the consultant must
demonstrate to the client that they can be trusted. Here, prior reputation is important. If
the consultant has a track record, clients will know their reputation (one of the key
pieces of advice given by most observers to potential clients is to do due diligence on
consultants before inviting them to the negotiating table). This is one of the reasons why
consulting firms protect their reputations so jealously; as the saying in the industry goes,
you are only as good as your last engagement, and any failure, no matter how small, has
the potential to come back and haunt the consulting firm.
For those without a track record and reputation, the task is correspondingly more
difficult. There are endless self-help books on how to establish trust, but most fall into
the category of ‘if you can fake sincerity, you can fake anything’. The best way to
establish trust is to demonstrate it: be sincere and authentic, observe high professional
standards and always do what you say you will do, without fail. This is a running theme
that we will see again throughout this book.
Among the key elements that need to be negotiated are the time scale, fees, resources
required and details of the consulting process.
The time scale of the project, including dates for the completion of each key stage of
the work as well as an end date for final completion and sign-off, should be made clear
in the contract. The key stage deadlines are particularly important as clients are usually
eager to see what is happening during the project; they will not be content to sit and
wait for the final presentation at the end. They want to see what they are paying for. It is
important too to state any exceptions that might disrupt this time scale; for example, if
the client asks for additional work, this might mean that the original schedule can no
longer be adhered to. Clients need to be made aware of this.
Fees for the project, including both the overall fee and a schedule for payment, should
be agreed before work starts. For larger projects especially, consultancies will often bill at
key stages; for example, the first stage payment might be due upon the consultants
completing their preliminary analysis and presenting findings to the client. Consultants
sometimes also opt to bill on a monthly basis for the lifetime of the consultancy. Payment
terms and conditions should be clearly laid out and enshrined in the contract.
The subject of consultants’ fees is a particularly thorny one, and consultants have been
widely criticised for charging what some believe to be excessive fees. Consultants
respond that they have added value to companies far in excess of the fees they charge,
and therefore their fees are worth it. When a company does spectacularly well and there
has been strong impact, the latter argument holds good. When a company stumbles
despite paying consultants to help it sort out its problems, the former argument then
raises its head. There is no absolute right or wrong here, and the real truth is that no one
really knows how to accurately price or assess consultants’ fees.
Fortunately, perhaps, at the large consultancy firms fees are established at a high level,
and most readers of this book will not have responsibility for setting fees until they have
many years’ experience; the exception being those who decided to set up their own
consultancy businesses and start from scratch. For those, and for other readers simply
interested in how fees are set, here are the three main methodologies for fee-setting:
Cost plus pricing involves calculating the costs of servicing a client, both direct and
indirect, and then adding a margin for profit which allows the company to reinvest in
new knowledge, pay dividends to partners/shareholders and so on. How big that margin
is will depend on the company, its needs and its stakeholders.
Benchmark pricing means looking at what other similar firms are charging and then
charging much the same as them.
Value-added pricing requires the consulting firm to calculate the potential value that the
consulting project will bring to the client organisation. The price charged is, notionally, a
small proportion of that value.
The first and last methods both run the risk of setting the price either too high or too
low. If the price is too high clients, especially new clients, will question whether the
service is worth the cost to them; if it is too low, clients will wonder if low price is a
signal of low quality. It is interesting to note that while consultants compete with each
other on several dimensions including reputation, knowledge, skills and reach, they
rarely compete on price. Consultants do not hold two-for-one sales or Christmas mark-
downs. It is axiomatic in the profession that high price connotes high service quality, and
most clients seem prepared to go along with this (those organisations that do not agree
tend not to employ consultants at all).
As a result, the benchmarking approach is most common. Large consultancy firms in
particular have one standard rate which they charge to all clients on a take-it-or-leave-it
basis, trusting their reputation and track record to justify their fees on quality grounds. Of
course, although few will admit in public, all these firms will discount their fees, some-
times quite heavily, to get a client they really want and whose presence on their books
will enhance their own reputation. And, of course, all the large consultancies tend to
offer discounted fees to charities and social organisations, or even work for them pro bono,
without fee at all.
Next, the consultant should make clear what resources they are devoting to the project,
including the number of people who will work on the project team, what their resources
will be and the number of hours of their time they will provide and also any technology
or other resources that the consultant will contribute. It is important, during negotiations,
to get a clear understanding of the client’s needs so that accurate assessment of resources
required can be made. If the consultant overestimates the resources required, then the
client is effectively being asked to pay for a service which is not delivered. As well as
being wrong ethically, if the client realises they are being overcharged, this could have
an impact on the consulting firm’s reputation. If the consultant underestimates the
resources required, then the consulting firm effectively has to pay for any additional
resources including consultants’ time out of its own pocket, unless the client agrees in
advance to make an additional payment. But for a consultant to come back and ask the
client for more money than was agreed in the original contract also has reputational
implications.
Clarity is also needed as to what resources the client will provide to the consultant
team. These resources can include workspace and access to services such as broadband –
typically, much of consulting work, especially the early stage analysis, is done on the
premises of the client company – and also access to key people to meet or be inter-
viewed by the consultant team. It is becoming increasingly common for members of the
client organisation to actually serve on the consultant team, partly to liaise with the rest of
the firm and partly to act as ‘internal consultants’ to help the rest of the team understand
and analyse the firm more fully.
Most importantly, though, the consultant team needs access to data and information.
This is vital if the consultants are to effectively understand and analyse the problems the
firm faces and come up with solutions. Clients should be asked to provide any infor-
mation that the consultant needs to see. It is quite common for clients to ring fence
information and only allow consultants to see what the client believes is relevant to the
current problem; everything else is held back for reasons of confidentiality. However, as
we shall see, the problem the client really faces and the problem the client thinks they
face are often not the same. To get at the heart of the problem, consultants need broad
access to information across the company.
Needless to say, consultants must also promise absolute confidentiality when handling
information about clients. Confidentiality clauses should be enshrined in any contract.
Some confidentiality agreements specify a time period, after which confidentiality is
lifted, but many consulting firms regard confidentiality as permanent; they do not discuss
details of client firms, ever, even if that firm later disappears.
Whether as part of the formal contract or as part of a separate signed agreement, the
consultant should also make the client fully aware of the process by which the project will
be carried out. How analysis will be conducted, how and when results will be presented,
how the client will be involved in any decision-making processes should all be made
clear in advance, and the consultant must then stick to this process. It cannot be stressed
too strongly that consultants must do what they promise to do. Saying that you will do
one thing and then doing something different will worry clients and erode trust. It must
always be remembered that clients are paying for the consultant’s service, often paying
very well, and they are entitled to know how their money is being spent.
Therefore, it is important from the very outset to manage the client’s expectations.
Some clients are used to using consultants and know how the system works. Others are not,
and they may be uncertain as to how to proceed. Sometimes there are those in the client
organisation who oppose the use of consultants, and the chief executive may have to
provide results to these opponents in order to justify bringing in consultants in the first
place. The consultant should help clients to understand what will happen, lay out a plan
and a time line and then stick to them.
Of course no plan is foolproof, and there will often be occasions when it becomes
necessary to depart from the plan. In that case, the consultant should go immediately to
the client, explain what has happened, and ask the client’s consent to deviate from the
original plan. Only if substantial additional expense is incurred, and only if the client has
previously agreed to pay additional fees if unforeseen circumstances arise, should any
further fees be demanded. This might seem unfair: why should the consultant be forced
to pay the cost if unforeseen circumstances arise? The client might well reply that it is
not their fault either, and that it was the consultant’s job to foresee all circumstances. And
regardless of this, there is once again the reputational issue. If consultants make a habit of
demanding fees over and above the original contract price, no matter what the reason,
then word will get out in the market place and those consultants could well struggle to
attract new business.
It is important also to make sure that there are clear points of first contact for both
clients and consultants, people who can be called on to provide information and
resources when needed. Each organisation also needs a project champion. If something
goes wrong, both sides should know who to call in the other organisation to sort pro-
blems out. Preferably that person should be someone with enough seniority to enforce
their will and get things done. In the consulting firm, this should be the engagement
director or project leader, a senior and experience consultant who can exercise control
and discipline over the team. In the client organisation, this should ideally be the CEO
or someone else at board level.
The aim of the negotiation and contract process should be not to establish dominance
over the client, but to provide absolute transparency about the consultant’s intentions,
what service they will provide, where and when it will be provided, by whom, for what
fee, over what time period, and what the added value to the client will be. The con-
sultant must always be realistic and never promise to deliver the impossible. The service
provided must match or exceed the client’s expectations; it must never fall short. If it
does, then once again the consultant’s reputation will be damaged. In sum, the con-
sultant must work out what realistically they can do, make promises to do it and then
stick to those promises like glue.
Analysis of the situation

Once details have been agreed and the contract has been signed, the second step is to
analyse the client organisation. This analysis can cover any or all of the following:
the purpose and values of the organisation, including its history

the organisation’s current strategy and mission
the current finances and financial prospects of the organisation
the current organisational structure
the quality of the organisation’s leadership and its management teams
the organisation’s ability to generate knowledge and capacity for innovation
the organisation’s supply chain and production systems
the organisation’s current products and services and their fitness for purpose
the organisation’s customers, including identification of key customer segments,
customer demand and customers’ propensity to consume
the organisation’s marketing structures and systems, including analysis of how well
they are reaching customers.
We will have more to say about analysis and analytical tools later in this book, in
Chapter 6. The main point to make at the moment is that, in terms of a process view of
management consultancy, the analysis must be both accurate and on time. As we shall see
again in Chapter 6, finding the right solution depends on accurate diagnosis of the problem
in the first place; solving the wrong problem will often merely make a bad problem worse.
The other point to be made here is that accurate analysis depends very much on
talking to the client and even more on listening to the client. No matter how experi-
enced the consultants are, the clients will always know the details of their own business
better than the consultants, in the same way that doctors recognise that patients often
know the details of their medical symptoms better than do the doctors themselves. As Dr
William Osler, one of the founders of Johns Hopkins Medical School, put it, ‘Listen to
your patient; he is telling you the diagnosis.’ Osler thought that the doctor’s role was to
help patients interpret their symptoms, make sense of them and understand the larger
picture. There is a clear parallel with the role of consultants, who should look to their
clients as the first source of knowledge.
Identification of the problem

The third step is the identification of the problem or problems that need solving. We
will have more to say about this in Chapter 7, where problem-solving techniques will
also be discussed. To continue with the medical analogy above, a patient might feel an
itch and think they have a rash. The doctor, with his or her broader and deeper medical
knowledge, might then notice other symptoms and realise that there is a risk of skin
cancer. In a similar fashion, consultants examine the symptoms presented by the client
and make a diagnosis of the problem.
This can be, and frequently is, different from the problem the client believes they face.
Bringing clients to this understanding requires tact and diplomacy – especially if the root
of the problem lies in the top management team who hired the consultants in the first
place! Even without this complication, no client likes hearing that they are wrong. Pro-
blem identification typically works best as a series of discussions between clients and
consultants which allow the former to develop their own conclusions, rather than the
consultant simply presenting the client with fait accompli.
Options for solutions

As already noted, rather than imposing a single solution, a good consultant will develop a
range of options for the client to choose from. Kubr (2005) refers to this stage as ‘action
planning’, similar to ‘action learning’ (Argyris and Schön 1978). Rather than a standard
planning exercise which gathers all available information, then sifts and analyses it before
coming up with a final plan, action planning develops a range of proposals alongside
analysis, various plans being tested, re-evaluated and adapted in light of new knowledge.
Kubr argues that it is particularly important to have the client involved in action planning,
working closely with the consultant. In his view, ‘action planning requires imagination
and creativity, as well as a rigorous and systematic approach in identifying and exploring
feasible alternatives, eliminating proposals that could lead to trivial and unnecessary
changes, and deciding what solution will be adopted’ (Kubr 2005: 22).
Choice of solution
While consultants can indicate their own preferred solution from the range presented,
they should not attempt to bias the clients and should clearly present the pros and cons of
all the available options and then allow the client to choose freely.
It may well be that the client will choose what the consultant thinks is the wrong
solution. This puts the client in a difficult position. If the consultant allows the client to
go ahead down the wrong path and the client then fails, fingers will be pointed at the
consultant. The consulting firm will be blamed for the failure and will suffer reputational
damage. On the other hand, if the consultant dissuades the client from a particular course of
action, and later events then vindicate the client’s judgement and show this to have been the
right course after all, the consultant will again be blamed. On the whole, it is better to argue
the pros and cons fairly but, in the end, trust the client to make a decision in their own
best interests. Right-thinking observers will know what happened and will understand.
Implementation of solution
As we saw earlier, some consultancy firms prefer to restrict themselves to what they see
as the primary purpose of consultancy, the giving of independent, impartial advice, and
do not get involved in implementation of the agreed recommendations. Others feel it
right and proper that, having played a major role in developing the recommendations,
they should get involved in implementation even if this might compromise their inde-
pendence. Kubr (2005) reckons that between 30 and 50 per cent of consulting projects
include implementation; for the remainder, the consulting relationship terminated with
the delivery of the final project report and discussion of the choice of options.
In Chapter 7 we will discuss some of the pros and cons of getting involved in imple-
mentation, and see that there are no right or wrong answers, only what is right for the
ethos of that particular consulting firm and the nature of its client relationship. However,
it is important to stress that in this area as in every other, client expectations must be
managed. If the consultant does not intend to get involved in implementation, the client
must be told this up front, before the contract is signed. If a client expects help in
implementation and the consultants refuse, this could be interpreted as walking away
from the problem; the consultants could be accused of not wanting to get their hands
dirty. This would not look good from a reputational point of view. Again, the limita-
tions of the consultants’ actions, what they will do and what they will not do, must be
understood clearly from the start.
Assessment of impact
‘Impact’ refers to the outcome of the consultancy project and the effect it has on both
parties, the client and the consultant.
Impact for clients is notoriously hard to prove, and privately many consultants admit
that measures such as improved financial performance or share growth on the part of the
client organisation are hard to verify. A firm may hire consultants and then experience
spectacular growth in productivity or profits; but it is impossible to empirically verify a
link between the two. Other factors such as a rising market, improvements in systems put
in place some time ago, a recent change in leadership and so on might also have been
partly responsible. In order to do so, one would have to create a parallel universe in
which the client continued operations without any consultancy intervention and then
compare performance between the two.
McClellan (2010) argues against using financial or performance measures to demon-
strate impact and instead proposes a framework for assessment based on demonstrable
outcomes in the capacity of the client organisation. Among the questions he believes
should be asked are:
Did the results of the consultancy project reframe the issues or change the way the
organisation considered the problem?
Did the results of the project generate cohesion among decision stakeholders?
Did the results of the project generate commitment among decision makers?
Did the results of the project satisfy the project’s sponsors?
Did the implementation of the project’s recommendations change measurable outputs?
Was the organisation generally seen as benefitting the organisation as a whole?
We will discuss McClellan’s framework in more detail in Chapter 8.

Impact for the consulting firm is somewhat easier to judge. As well as fees, consulting
firms gain two primary benefits from successful consultancy projects. The first, as already
discussed, is enhanced reputation; clients are more likely to hire consultants who have a
track record of success. The second is knowledge. It is not always recognised that, while
clients learn from consultants, consultants are also equally busy learning from clients. As
well as solving problems, they also assimilate best practice, gain industry and sector
knowledge, and generally gain experience as consultants, improving their own consulting
skills for the next project. This last is a continuous process that will go on throughout the
consultant’s career.
Summary of the seven-step process model
1 negotiation and contract signing

2 analysis of the situation
3 identification of the problem(s)
4 options for solutions
5 choice of solution
6 implementation of solution
7 assessment of impact.
The client engagement model

As noted, the process model of management consultancy is very valuable in that it
encompasses the various actions and activities that consultants need to undertake in order
to carry out a consulting project. We discussed some of these steps in detail above, and
noted that others will be covered in later chapters in the book. However, there remains a
danger that the process model used on its own can become a kind of box-ticking exercise.
Provided each step is done in the right order, the consultant should reach the right
solution and the client will benefit.
We need to beware of this kind of Cartesian linear thinking in management con-
sultancy, however, for several reasons. First, linear thinking can seldom cope with the
messy nature of the real world. Further, on the average consultancy assignment, time is at
a premium and consultants are under pressure from clients and their own bosses to show
results. It is rare for them to have the luxury of completing each step before moving to
the next; usually, they are trying to undertake several steps at once. And as Kubr (2005)
points out, the action planning model has some positive benefits, especially if clients are
involved.
Finally, there is a temptation when following the strict process model for consultants
to see the process as something to be applied to clients, rather than being done with them.
We noted how there is sometimes a tendency for consultants to take over, to own the
problem and its solution themselves rather than sharing with clients. As a result, clients
feel disenfranchised within their own organisations, which makes them less willing to
cooperate and share knowledge with the consultants – vital if valid conclusions are to be
reached – and less willing to commit fully to agreeing and implementing a solution. This
reduces impact for both parties. On a number of occasions above, we saw how client
involvement is essential to success; yet too often, clients are not involved and do not feel
happy with the outcomes (Patterson et al. 2013; Haverila et al. 2011; McClellan 2010)
The answer is the client engagement model. This model adds several features to the process
model, chief among which are:
1 shared ownership of problems and solutions

2 knowledge transfer
3 team facilitation
4 capacity building.
These four features are not sequential steps, but run right through the process of
consulting from start to finish.
The notion of client engagement has been around for a long time, and client–consultant
contracts are often referred to as ‘engagements’, the meaning being that the client engages
the consultant to provide a service. Over the past dozen years, however, the meaning of
‘engagement’ has shifted away from a purely contractual arrangement to a deeper rela-
tionship. The semantic change is a subtle but powerful one: instead of the client engaging
the consultant, the client and consultant engage with each other, forming a temporary
partnership for mutual benefit.
Client engagement as a concept owes something to recent thinking on co-creation in
professional services (Greer 2015; Aarikka-Stenroos and Jaakkola 2010) and also to older
services marketing literature (for example, Bitner et al. 1997), which argued that customers
are not merely passive recipients of services – including professional services – but active
players in the service delivery process. How customers behave and interact with service
providers plays a major role in determining whether the outcome of the process is successful
or not. Thus, the interaction between a doctor and patient, or lawyer and client,
including their personal views of each other and likes and dislikes, will influence whether
at the end of the day the patient or client is satisfied with the outcome. The same, it can
be argued, is true of consultants and their clients. Co-creation takes this idea a step fur-
ther and suggests that firms can better understand their clients, and better create value for
them, if they work with them to develop products and services together.
However, the real push towards a model of engaging with clients came from sheer
practical experience. As the market for consultancy services began to level out in the
early twenty-first century and clients became more sophisticated, management con-
sultancy firms had to shift their stance. Instead of a quick six-month or twelve-month
engagement with the consultant in and out and one problem fixed in isolation, clients
began demanding more permanent, long-term benefits. Knowledge transfer and capacity
building were among the areas where consultancy firms found they could deliver.
Adams (2013) offers a new model of management consulting that shifts ‘away from
top-down thinking to a more inclusive approach that values the contributions of not
only consultants and top managers but also stakeholders like employees, customers,
partners and the broader community’, or in other words engagement with not only the
client organisation itself but all of its key constituents. The following is a summary of
Adams’s comparison between ‘old’ and ‘new’ models of management consultancy.
Shared ownership of problems and solutions

As discussed earlier, clients are more likely to be engaged with ideas and more likely to
implement solutions effectively if they feel involved in the analysis and decision-making
processes; whereas consultants are more likely to get the data and information they need
if they involve clients and listen to them, like doctors listening to patients telling them
the diagnosis. The client engagement model starts, then, with a perception of the two
parties working together as a united team, sharing information and ideas freely and
continuously throughout the process – including the negotiation process.
Some very simple devices can help reinforce this new way of thinking. For example, it
was common for meetings between client and consultancy teams to take place in rooms
where the two sides sat on opposite sides of a table. Mixing up the seating so the two are
mingled can create more of a feeling of togetherness and break down the hierarchy
between client and consultant. More sophisticated arrangements can see members of the
client organisation seconded onto consultants’ teams, and consultants in turn seconded to
work with clients for a time in order to get to know the organisation from the inside.
There are many other techniques that can be tried in order to break down the barrier
Table 2.1 Comparison of old and new models on key dimensions

Old model New model
Value proposition Smart people giving answers Smart people empowering
you
Value creation Applied knowledge, solutions Networks of intangible
capital
Knowledge and intellectual Proprietary tools and data Open sources tools and
property knowledge
Core competencies Human capital for hire Better understanding of
intangible capital
Adapted from Adams (2013).
between ‘them’ and ‘us’, and simply create a feeling of ‘us’, one team working to find a
solution together.
Of course there will still always be barriers to sharing knowledge, especially during the
negotiation stage before confidentiality clauses have been signed. Clients will have pro-
prietary knowledge that they are reluctant to share with anyone; consultants may have
knowledge of practices at other client organisations which they are not free to share. A
degree of compromise will always be necessary, and absolute transparency is an ideal
which will never be reached. So long as there is trust and goodwill on both sides,
however, this should not matter. If it is not possible to share information, simply explain
why it is not possible in honest and candid terms. If the engagement with the client is
strong and there are bonds of trust between client and consultant, then the need for
secrecy will be understood and will not strain the relationship.
Knowledge transfer
Adams (2013) suggests that the days of management consultancy firms gaining competi-
tive advantage from proprietary knowledge which they apply to clients in order to solve
problems may be over. Modern information technology means it is increasingly difficult
for consultancies to protect their IP once it is out there and in use. More importantly,
the problems that clients are now bringing to consultants are often too complex for any
single consultancy firm to have all the answers. Consultancies too are increasingly having
to look outside their own organisations for knowledge. The ability to use knowledge-
sharing and open-source knowledge networks is becoming an important skill for today’s
management consultant.
Knowledge transfer, in this new context, increasingly does not so much mean teaching
clients how to do things as teaching them where and how to learn. Consultants spend
much of their time gathering and harvesting knowledge, while managers perforce spend
much of their time with their heads down trying to manage the organisation. Even at
senior executive level, it can be difficult for people to find the time to master the vast
quantities of knowledge in circulation. Brown (2015) has shown how boards of directors
use a wide variety of consultants, management consultants included, to teach them where
and how to find new systems. Once the system is found and in place, the company then
takes over running it; the consultant is no longer needed.
Team facilitation
In this model of shared ownership and knowledge transfer, much of the important work
is done by teams of consultants, executives and other stakeholder representatives. As well
as bringing their own knowledge and experience to the table, consultants can also add
value by facilitating and guiding these teams. Their role as independent impartial advisors
comes into play here; they can guide teams and ensure that options are identified and
discussed without prejudice, focusing on what is best for the client organisation without
getting embroiled in its internal politics.
Capacity building
The term capacity building was originally derived from development economics, where
it refers to the reducing of barriers or obstacles that prevent individuals and organisations
from reaching their goals in an effective manner. In consultancy today, capacity is more
usually taken to mean enabling companies to reach their goals more efficiently and
effectively by, in effect, building in the capacity to grow and develop. Companies call on
consultants in the first place because they lack capacity in problem solving, either generally
or with relation to specific issues (international expansion, mergers and acquisitions,
growth, efficiency and so on). Now, instead of calling in consultants to fill the gaps left by
lack of capacity, clients are calling on consultants to help them build capacity permanently.
Some of the key areas where clients are looking for capacity increase are:
Strategy and strategic thinking. This was one of the traditional areas where companies
lacked capacity (see Chapter 3) and where many still struggle. Consultancies can
help by passing on their own experience of strategic thinking and coaching senior
executives to become strategic thinkers, seeing strategic thinking not as a separate
discipline but a natural extension of their own roles.
International and global management. This is another traditional area where companies
lacked expertise, and there is still a demand for consultants who can pass on
experience of issues such as entry into new geographical markets, different legal and
regulatory systems, different financial and currency regimes, working and leading in
different cultures and so on. This means that consultants themselves increasingly
require international experience, and for any new consulting firm entering the
market, having some form of international presence is pretty much table stakes.
Risk management. The aftermath of the 2008 crisis which saw a number of global
businesses, especially financial institutions, badly underestimate the risks they faced
has brought a new surge of interest in risk management. Risk is of course an
essential part of management; no one can do business without incurring risk at some
point. But many companies feel, not without reason, that they lack capacity in risk
management and are looking for consultants who can help make them better at
gauging and managing risk.
Resilience. A topic for discussion in academic circles for the past dozen years, resi-
lience too has gained new prominence since 2008. Not all risks can be avoided and,
eventually, a business will hit a rough patch thanks to declining markets, geopolitical
uncertainty, major accidents (such as the Deepwater Horizon disaster), cyberterrorism
or any one of a score of other reasons. When these ‘black swan’ events happen, the
company has to be resilient, that is, be capable of bouncing back and recovering
from the crisis as quickly as possible. Companies are looking for consultants who can
help them build resilience into their own systems and people.
Sustainability. Although the word ‘sustainability’ has become debased and lost cred-
ibility in recent years, there are few organisations on the planet not affected directly or
indirectly by the threat of climate change, demographic and social change, or both.
Companies are increasingly seeking – partly as a result of pressure from stakeholders,
partly as a result of genuine conviction on the part of senior management – to
manage themselves in a more sustainable way, minimising their impact on the natural
environment, maximising their social capital and the societal benefits they provide
while at the same time making themselves more financially durable. There are close
links at many levels between sustainability and resilience. Most large consulting firms
now have sustainability practices and there are a number of boutique firms devoted
to sustainability consulting but, as in other areas, clients are looking for more than
just quick fixes; they are looking to build their own capacity and make themselves
more sustainable. It seems likely that in the near future, all consultants will become
sustainability consultants to some degree. We will discuss this issue in more detail in
Chapter 11.
Summary of the client engagement model

As noted earlier, the client engagement model does not supplant the process model;
there is no either/or choice between them. Rather, the client engagement model focuses
on the client–consultant relationship that lies at the heart of any consultancy project.
That relationship, if not already pre-existing from previous engagements or contacts, is
developed during the negotiation step, and serves as the basis for a deeper engagement
through analysis, identification and choice of options, and implementation. Using the
client engagement model should help the consultant, for if there is a strong relationship
between the two parties, the consultant will find it easier to get access to information and
gain the client’s full and willing co-operation. At the same time, the client engagement
model shows how to deliver the deep and enduring value that the clients increasingly
look for, by transferring skills and knowledge and building capacity through collaboration
and co-creation.
Chapter summary
In this chapter, we have looked at definitions of management consultancy, and also
defined the focus of this book as general management consultancy, not specialist tech-
nical consultancy (although it was suggested that there is considerable crossover between
the two, and many of the conclusions of this book will apply to specialist consultancies as
well). We also saw where management consultancy fits within the wider constellation of
professional business advice.
The core of the chapter was taken up with a discussion of two models of management
consultancy:
the process model, which offers a series of steps from negotiation and contract signing
to assessment of impact once the consultancy project has been completed. The
process model shows consultants what tasks need to be undertaken and underlines
the importance of setting client expectations, following up on promises made to
clients, protecting the consultant’s own reputation and delivering impact and value
for client organisations. However, the process model can become linear and deter-
ministic and, if followed too rigidly, can lead to the consultant taking over the
problem and not involving the client in key decision. This leads us to:
the client engagement model, which focuses on client relationships and delivering the
value that matters most to clients. We saw how the nature of that value is changing.
Whereas formerly clients hired consultants for their problem-solving abilities,
increasingly they are seeking to use consultants to build capacity and achieve long-term
transformation.
We also saw some of the grey areas of consultancy, particularly in areas such as fee-
setting and measurement of impact. We will return to impact in particular later in this
book. In the next chapter, however, we shall look at the growth and development of the
management consultancy profession, how it has evolved and the pressures it has
responded to; we will also consider some of the criticisms that have been levelled at the
profession and how it has responded. This will give us a better idea of the values and
purpose of management consultancy, and we will end by looking at possible future
directions for the profession.
Student exercise
You are a consultant with a large, global consulting firm. You receive an approach
from a potential client, not a company that you or your firm have worked with before.
The company is a light engineering firm based in your home country (this can be the
UK, or any other country that you are familiar with). The company makes doors and
windows for houses, and has been very successful so far; it now has a turnover of
about £150 million (or equivalent in local currency) and wants to expand. It thinks your
firm can help it do so.
Now, think of some of the reasons why this client has approached you. Why do you
think they might have picked you? What are the attributes of a consulting firm that this
client will value?
Make a list of these, and then turn to the next question: what are some of the specific
things they will need in order to help them achieve the expansion they are looking for?
Again, make a list and turn to the third and final question: keeping both the process
and client engagement models in mind, what questions do you need to ask this
potential client before knowing whether and how you can help them?
Keep these three lists and refer to them again as you go through this book. Taken
together, these questions represent the starting point for a consultancy engagement.
The exact questions will vary depending on the client, its size, its ambitions and needs
and the industry it is in, but the basic themes will remain broadly constant.
Case study: Qiang Tractors

Qiang Tractors is an engineering company based in the western Chinese city of
Chengdu. Its primary product is agricultural tractors; it does make other specialist
agricultural equipment such as crop sprayers and combined harvesters, but so far the
market for these in China has been fairly weak, and tractors account for about 85 per
cent of the company’s production and sales. Direct sales are all in China, though a few
of the company’s vehicles have been exported by dealers to Malaysia and Thailand.
Qiang (the name means powerful, or strong) was formerly a state-owned company,
but was bought out by its management in the 1990s and is now a private company.
Over the past five years Qiang has grown rapidly. Turnover last year was 820 million
yuan, or about US $132 million, up 14 per cent on the year before.
Qiang’s owners have set themselves two goals: first, to break into international
markets, particularly in the USA where they believe they can deliver vehicles of similar
quality to those produced by US makers but at a lower price; and second, to float the
company on the Shanghai Stock Exchange within the next five years.
Qiang’s owner-managers are very competent engineers and designers who rightly
believe that they produce an excellent product. They are aware that they lack financial
experience, and have no experience whatsoever of financial markets; all their growth
so far has been either organic, through retained earnings, or through bank-funded
debt. They also have no experience at all of international business. Some of the
owner-managers have travelled to the USA to look at competing products and gather
information about the market, but several of the team have never been outside of
China. They are, however, ambitious and highly motivated, and they are determined to
reach their goals.
Go back to the student exercise above, and make the three lists as described there.
Considering these, think how you might approach this as a consultancy engagement.
In particular:
How does the process model help you to understand what needs to be done and
what Chiang’s requirements are? Try sketching out a rough plan of how you think
the consultancy engagement might run. How will you prepare for this engagement?
What do you need to know about Chinese business practices and negotiating
styles? How might you go about collecting information and analysing the
business?
How does the client engagement model help you to understand what the client is
really looking for? Are they looking for problem solving, capacity building, or a mix
of both? If the latter, what form does that mix take? How would you go about
building relationships with this client? What cultural issues might arise in the
course of the engagement that would complicate matters?
3 From company doctors to
strategic partners
The consulting profession is a little more than a hundred years old. During that time, the
global business landscape has seen many seismic changes. In order to continue to fulfil its
own mission of advising and serving businesses, the consulting profession has had to
move quickly to try and anticipate those changes; and in so doing, it has played its own
role in shaping that business landscape.
Having discussed what management consultancy is, it may now be useful to describe
how it got there. Why do consultants do what they do, and why do they do it in the
ways that they do? The reasons are often rooted in the history of the profession. In this
chapter, we will look briefly at that history, seeing how the practices, ethos and values of
the profession have evolved. We will consider what that ethos and those values are
today, along with some of the criticisms that have been levelled at management con-
sultancy, before looking at where the profession may be going next and what the future
will hold.
Origins of management consultancy

Businesses, governments and other organisations have often used external advisors in the
past, but the emergence of advisors as organised institutions is relatively recent. The first
firms of advisors were accountancy practices, and this may partly explain the strong
connection between management consultancy and accountancy firms today.
One of the first accountants to be called in as a consultant was William Deloitte, who
in 1849 was called in by the shareholders of Great Western Railway. The timing is sig-
nificant. Great Western was one of the world’s first railway companies. It had been
founded by the engineer Isambard Kingdom Brunel in 1833, and began running trains in
1838, at a time when the railway industry was very new and there were no managers
with experience of running a train. The railways were also a large and capital intensive
business, and their building and running required raising hitherto unheard-of sums of
money on the stock market. To put it bluntly, few managers really knew what they
were doing, and most were making mistakes. Deloitte was called in initially as an
external auditor, and then later to sort out the company’s chaotic financial affairs and
bring order to its financial structure.
Deloitte went on to build a very successful business as an auditor and advisor, and the
firm he founded is the ancestor of the Big Four firm of the same name. Another Big
Four founder was Edwin Waterhouse, who with his partner Samuel Price established
Price, Waterhouse & Co. in 1867. Waterhouse was a very well-known forensic
accountant who made his reputation investigating cases of fraud. As time went on he
From company doctors to strategic partners 29
broadened his remit and began to advise businesses on how to professionalise their
management. He also specialised in helping businesses restructure and reorganise when
converting from business partnerships to limited liability companies. Price, Waterhouse & Co.
went on to become the modern PricewaterhouseCoopers. Many other accountants
followed a similar track, of whom probably the most important was Lawrence Dicksee,
who wrote, lectured and advised companies on the importance of professional management
and leadership.
As well as accountants, the late nineteenth century saw the emergence of ‘company
doctors’, what we might today refer to as ‘turnaround specialists’. Company doctors were
called in by the shareholders of declining companies to help revamp their management
and operations and turn the company around. They not only gave advice, but also had
hands-on involvement in implementation of solutions. Instead of fees, they often took
stakes in the companies they rescued, receiving a shareholding in exchange for their
efforts. Today, most (but not all) management consultancies refuse to take stakes in client
companies on the grounds that this would compromise their independence.
One of the most successful company doctors was Arthur Chamberlain, uncle of the
future British prime minister Neville Chamberlain. He turned around a number of ailing
companies but was perhaps best known for his work with the British ammunition
manufacturer Kynoch. Chamberlain arrived to find the company in a state of confusion
with several loss-making divisions, no clear accounts, no organisational structure and no
quality control. Workers worked long hours, and many arrived so early that they
brought their breakfast with them, heating their food over candles alongside production
lines where cartridges were being filled with gunpowder. Unsurprisingly, explosions and
injuries were frequent. Chamberlain revamped Kynoch from top to bottom, creating an
organisational structure, introducing clear lines of reporting and control, closing down
loss-making operations, reducing industrial accidents and improving quality.
Why were people like Deloitte, Waterhouse, Dicksee and Chamberlain needed?
Because, in the nineteenth century, management was largely an amateur affair. There
were no business schools in the modern sense in either Britain or the USA. There were
training colleges offering courses in accounting, financial management and sales, but most
managers never attended these. Their only management training was received on the
job. Sometimes, for example in the British scheme of ‘gentleman apprentices’ operated
by firms such as shipbuilder Harland & Wolff, this training was of good quality, but even
so, managers learned only about their own firm and their own industry. In other cases,
training was non-existent. Outside consultants brought a breadth of experience and
depth of expertise in their own fields that was largely lacking in management. These
early consultants took the first steps in professionalising management.
Scientific management
The next stage in the development of the consulting profession came at the very end of
the nineteenth century with the development of scientific management (Kanigel 1997;
Witzel 2011). The scientific management movement was also a response to the lack of
professional competence and lack of efficiency in management. A group of American
engineers, the most important of whom were Frederick Winslow Taylor and the husband-
and-wife team Frank and Lillian Gilbreth, developed precision measurement techniques
to improve working processes. Taylor pioneered the idea of time study, measuring how
long it takes to complete a task and then devising ways of saving time so as to complete
the task more quickly. The Gilbreths used a variety of methods including moving photo-
graphy to re-engineer tasks so that fewer movements were required and thus tasks were
made less fatiguing; they went on to pioneer ergonomics, the design of workplaces that
improved efficiency by increasing worker comfort and reducing physical stress (Witzel
2015). The combined methods of Taylor and the Gilbreths became known as ‘time and
motion study’, and are still used by consultants today.
Taylor, the Gilbreths and other pioneers of scientific management including Morris
Cooke, Carl Barth and Sanford Thompson set up their own consulting firms. Some of
these firms were quite large by the standards of the day; Taylor, for example, worked
with several hundred companies in the USA before his death in 1915. Others not
directly connected with the scientific management movement were also very successful.
Charles Bedaux adapted and improved on some of Taylor’s techniques and established a
firm that enjoyed considerable success in the 1920s and 1930s; in Britain, a late 1930s
spin-off from the Bedaux Company, the PA Group, is still practising today. Scientific
management methods also spread to other parts of the world, notably France, Belgium,
the UK and Japan, and there was also some impact in Germany and Brazil. In Russia, the
Polish engineer Karel Adamiecki developed independently many of the same techniques
as Taylor, and became well known as a consultant across the Russian empire before its
collapse in 1917.
The spread of scientific management was largely spearheaded by these consultants,
who having seen scientific management work in some firms, argued that others
should adopt the same methods. Their marketing techniques were much the same as
those of modern consulting firms; rather than hard selling, they engaged in knowl-
edge dissemination through lectures, books, articles and public speeches. These
helped to establish the consultant’s authority and reputation. A few good ‘reference
clients’ would then do the rest, spreading word of the consultant’s abilities through
the industry.
Most of these consulting firms were centred around a single individual, and when that
individual retired or died, the firm disappeared. Two exceptions deserve to be noted. The
first was founded by the chemist Arthur D. Little in 1886 (Stevenson 1953). Originally a
specialist in industrial research, Little focused on engineering and technical problems, but
gradually came to realise that technical issues were often only the beginning; in order to
use new technology properly, companies also had to radically overhaul their management
systems. Little began gradually broadening out into general management consultancy,
while never losing touch with his base in applied research. His company made headlines
in 1921 when its chemists actually made a silk purse out of a sow’s ears (Kahn 1986).
The ears were boiled and rendered into glue, which was then chemically treated to make
fibres; the fibres were then woven and sewn together to make the purse. This was a
gimmick, or course, but it brought the firm to public attention and established its reputation
as a firm that could do the seemingly impossible.
The second firm was founded in 1914 by the engineer Edwin Booz, who set up his
own consultancy business at the age of twenty-seven. Booz was usually called in to solve
specific technical problems, but often found that the demand for his services quickly
widened as the solution to each problem uncovered other problems further along the
line. Booz’s firm offered advice on everything from plant location to marketing strategy.
His firm, Booz, Allen & Hamilton, went on to become one of the largest management
consulting firms in the world; today, it is known as Strategy& and is part of
PricewaterhouseCoopers.
General consultancies
Both ADL and Booz survived in part because they expanded beyond technical and
engineering issues to become general problem solvers. The same was true of two other
firms, Urwick Orr and McKinsey & Company.
Urwick Orr was founded in Britain in 1934 by one of the first management ‘gurus’,
Lyndall Urwick (Brech et al. 2010). A former army officer, Urwick had learned about
modern professional management while working for the York-based confectioner
Rowntree, then one of the most innovative firms in the world in terms of management
practice. Urwick was influenced in part by scientific management, but also by the general
management theory of the French mining executive Henri Fayol. Urwick developed
one of the first broad-based theories of general management, and followed the usual
methods of writing and giving lectures and addresses in order to popularise his ideas. The
first, and for long the largest, British management consultancy, Urwick Orr offered
consultancy support in training, organisation, scientific management, marketing and a
variety of other fields, all with the intention of improving the quality and efficiency of
modern management.
James O. McKinsey was an accountant and the author of a very successful book on
financial management, Budgetary Control. In 1925, realising that the principles he was
describing had application far beyond the field of accounting, he set up his own manage-
ment consultancy practice, McKinsey & Company, in Chicago. McKinsey remained a
relatively small firm under his management, and under his successor A.T. ‘Tom’ Kearney,
the firm came close to disappearing altogether (Edersheim 2006; Bartlett 1996). Kearney
later founded his own company, A.T. Kearney. McKinsey & Company survived and,
under the leadership of Marvin Bower, consolidated its position in the 1940s and 1950s
before later embarking on a period of rapid growth.
McKinsey and Urwick Orr were arguably the first general management consultancies.
A survey by Dean (1940) found hundreds of business consultancy firms established in the
USA, but the vast majority of them specialised in often very narrow areas of expertise.
And even McKinsey and Urwick Orr, along with emerging rivals like Booz and ADL,
were primarily problem solvers, hired by clients to come in and look at a specific issue,
be it a high-level strategic problem or a mid-level problem of operations or imple-
mentation. Again, management consultants were responding to the needs of the time.
During the 1930s, companies struggled to operate profitably against a background of
worldwide economic depression; their managers were concentrated on the issues imme-
diately in front of them, and few had leisure to contemplate the bigger picture. The
advent of the Second World War in 1939 brought new problems: for some businesses,
how to survive in the midst of global conflict and turmoil; for others, how to adapt to
the stresses of rapidly increased wartime production. When companies hired consultants,
it was to help them deal with basic problems, and survive into next year, or next month,
or even next week.
The consulting boom

The post–Second World War period saw rapid growth in the consulting industry,
although as McKenna (2006) points out, the industry was still dominated by small firms;
in 1962 the Wall Street Journal estimated that there were 2,500 consulting firms and
around 30,000 consultants operating in the USA. (Numbers in France, the UK and
Japan, the countries where management consultancy enjoyed the most success and prestige,
would still have been small fractions of the above totals.) However, the world’s largest
management consultancy, Booz Allen & Hamilton, only employed 300 consultants, and
McKinsey & Company probably half that number.
Much of the boom was fuelled by new management techniques developed in America
during the Second World War, and by the export of those techniques to the other parts
of the world. One of the most important techniques was Methods-Time Measurement
(MTM), effectively a more sophisticated and scientifically based version of time-and-
motion study, which promised to help firms achieve greater efficiencies. MTM was
developed out of wartime production needs in the armaments industry (Witzel 2011),
and after the war was adopted by manufacturing sectors across a wide range of industries,
using consultants to bring in and teach the new methods. Here is an early interesting
example of capacity building. Many of the MTM engagements were quite short-lived;
the consultants were engaged to come in and not only teach how to use the new technique
but also how ramping up production could open up new business opportunities, especially
in a rapidly growing export market.
MTM was also exported to other countries, especially Japan and those in Western
Europe. The Marshall Plan, the US government’s programme of economic aid to Japan and
Europe, had the specific intent of creating strong economies in those regions that would act
as a bulwark against the political threat posed by the West’s ideological enemy, the Soviet
Union (Kipping and Bjarnar 1998). In order to rebuild the war-damaged economies of those
regions, the US government employed hundreds of consultants to advise Japanese and
European firms on how to rebuild. Sometimes there were unexpected consequences. In the
1950s, American consultants on statistical quality control (SQC) were very much in demand
in Japan, and played a role in the Japanese quality movement that later led to the develop-
ment of total quality management. The irony is that American and European business largely
ignored SQC, with the result that twenty years later, Japanese companies were able to
compete very effectively with their Western rivals on the basis of superior quality.
The next development was the publication of one of the seminal works on business
strategy, Alfred Chandler’s Strategy and Structure (Chandler 1962). The book introduced
the business world to the importance of strategic thinking, arguing that ‘structure follows
strategy’, i.e. that companies should first determine what their strategy is and then devise
an organisational structure to suit it. Chandler also had a recipe for the best form of
organisational structure to suit rapid growth, the multi-divisional form or M-form, which
he believed to have been largely responsible for the USA’s rapid economic growth.
These ideas were picked up by McKinsey & Company in particular, which embarked on
a long series of restructuring engagements, turning old-fashioned conglomerates into
modern M-form businesses. McKinsey also expanded overseas, first into Britain and then
into continental Europe, where it was very successful (Kipping et al. 1999; Bartlett 1996).
Nearly two-thirds of the top 100 companies in the UK were restructured in this way, so
much so that to ‘be McKinseyed’ was a popular term for restructuring.
The consulting boom had several consequences. One, according to McKenna (2006),
was a rise in the status of consultants themselves. No longer mere technical advisors,
management consultants were now seen as an elite. Consultancy became a career pro-
spect of choice for young people, rather than being something that older men did as an
alternative to retirement, and consultancy firms could increasingly take their pick of the
best and brightest graduates of business schools. For businesses, hiring consultants became
more than just an acceptable alternative; it became the done thing. If a board of directors
chose not to hire consultants, people began asking why. For consultancy firms, this was
the beginning of the consultancy toolkit. MTM and the M-form organisation would be
replaced by other ideas, the ‘Boston Box’ strategy tool developed by the Boston Consulting
Group (BCG), founded in 1963 by a former ADL consultant, or the 7-S framework
developed at McKinsey.
Also, as McKenna (2006) and Kipping and Bjarnar (1998) have pointed out, management
consultancy became one of the main channels for the export of American management
methods to other parts of the world: initially Japan and Western Europe, but in the
1980s and 1990s, Asia, Africa and Latin America as well. They and others have argued
Low relative High relative

market share market share
High growth Question marks Stars
rate
Low growth Dogs Cash cows
rate
Figure 3.1 The ‘Boston Box’
Structure
Strategy Systems
Shared
values
Skills Style
Staff
Figure 3.2 The McKinsey 7-S framework

that the way the world does business now is basically the American way and that
American business models have had a decisive influence on global business culture.
Consultants were seen as one of the major channels of export of that model. If we accept
this argument, then we can conclude that management consultants have done more than
just advise businesses – and from the 1970s onward, governments and NGOs as well –
on how to adapt to the changing business environment. They themselves have been one
of the primary agents responsible for those changes.
The growth boom that began in the 1950s and 1960s continued through the 1970s and
1980s. The big US-based management consulting firms, McKinsey, Booz, A.T. Kearney
and ADL, grew bigger and bigger, and were joined by others: BCG; Bain & Company,
founded by a group of consultants who broke away from BCG in 1973; and Monitor
Group, founded in 1983 with the backing of Harvard Business School strategy guru Michael
Porter. Accounting firms also began expanding their consulting operations, one of the largest
and most famous being Andersen Consulting, set up by the Arthur Andersen group in
1989 (and now known as Accenture). Andersen Consulting quickly became much more
profitable than the parent accounting firm, with fatal consequences for the latter.
Economic liberalisation in China and India, the fall of the Berlin Wall in 1989 and
subsequent opening up of the old Soviet bloc, the booming oil economies of the Middle
East and the rise of certain South American countries, notably Brazil, as economic powers all
led to further growth in the consultancy profession. The big consultancy firms mentioned
above all had to scale up, expanding the numbers of offices and consultants, in order to keep
pace with demand. Whereas formerly a consultancy engagement might have encompassed a
single factory, warehouse or retail operation, now consultants worked with clients who had
operations around the planet. The consultancy firms responded by becoming increasingly
globalised themselves. A consultancy team no longer worked out of a single office; instead, it
might pick team members from three, four or more offices around the world and expect
them to work virtually to analyse and recommend solutions for clients.
However, as the big firms moved increasingly towards solving high-level global pro-
blems, this left the door open for the specialist ‘boutique’ firms to move in and address
specific market niches such as leadership, quality or technology. By building their own
relationships and reputations, the boutique firms were able to nibble away at the market
share of the big global firms, even as the service offerings of the latter were increasingly
coming under scrutiny.
Challenge and crisis in consultancy

Management consultancy had long had its critics, but by the 1990s those criticisms were
gathering force. Some observers like Czerniawska (1999) and Clark and Fincham (2001)
questioned the relevance of contemporary management consultancy approaches; others
like Saint-Martin (2000) expressed concern over the amount of influence consultants had
over both businesses and governments; still others like Argyris (2000) and O’Shea and
Madigan (1997) argued that much consultancy advice was misguided and the consultancy
profession was part of the problem in business, not part of the solution.
Criticisms of management consultancy fell into four categories:
Management consultancy was not delivering value for money.

Management consultancy was a fashion or fad, which companies used whether they
needed it or not.
Management consultancy was delivering one-size-fits-all solutions, using the same
tools and making the same recommendations to every company rather than analysing
problems individually.
Management consultancy was sending companies in the wrong directions, and the
solutions it recommended did not actually work.
The value-for-money argument centred on the very high fees that some of the large
consultancies charged, upwards of $1 million a day, and questioned whether any advice
could possibly be worth this much. Surely the money spent on consultants, the argument
ran, would be better spent on investing in systems and capacity in the company; this
would yield a better result. As we saw in the last chapter, it is very hard for management
consultants to demonstrate real impact, and certainly in the 1990s impact measures
focused on very basic areas such as improved financial or operational performance.
However, it was very hard to prove that these improvements were directly the result of
the consultant’s intervention. There is no doubt that the consulting industry was stung
by this criticism, and one result has been an increased emphasis on impact and the need
to both create real impact and demonstrate that impact publicly. Some consulting firms
now refuse to work with clients where they do not feel that sufficient impact is
possible.
The notion that management consultancy was a fashion or fad had been around since
the 1960s, but gathered force in the 1990s after a rush by businesses to embrace business
process re-engineering (BPR). Originally, BPR had been designed to bring about greater
workplace efficiency by aligning business functions more closely with the value chain to
achieve greater synergies across the organisation. Companies frequently adopted its
principles often without checking first to see how relevant they were to its own business
models (Davenport 1996). In the eyes of many, BPR often destroyed as much value as it
created, and consultants were blamed for the headlong rush to adopt it. While some
consultants did sell BPR very aggressively, however, there were plenty within the con-
sultancy profession who were also sceptical and would not touch it. The ‘fad’ argument
ignored the very real and deep-seated positive changes in terms of more professional and
more sophisticated management that consultants had helped to bring about.
More serious was the one-size-fits-all solutions argument, and here the consultancy
profession has to hold its hand up and accept some of the blame. M-form, the Boston
Box and other consultancy tools were rolled out by the big consulting firms in virtually
identical fashion through the 1970s and 1980s, and there undoubtedly were management
consultancy templates that were repeated from one engagement to the next. This is
not the whole story; there was also some very good original work done, some excellent
analysis and highly creative solutions that helped businesses to go ahead and grow
quickly, especially in emerging markets. But the perfectly natural tendency on the part of
consultants has been to look for a successful recipe and then replicate it, and this is dan-
gerous. Consultants need to remember to treat each client engagement as an individual
case, and some high-profile consulting engagement failures occurred when consultants
forgot this rule.
The argument that the solutions consultants recommended did not actually work is a
more difficult one to unravel. One of the most influential books ever published by
management consultants is In Search of Excellence by McKinsey’s Tom Peters and Robert
Waterman (Peters and Waterman 1982), which spelled out the 7-S framework and then
gave examples of ‘excellent’ companies that followed 7-S principles. Critics noted that a
decade later, a number of these ‘excellent’ companies were performing poorly. But does
their poor performance mean that the consultants did a bad job or that their ideas were
wrong? We have already noted that it is fallacious to ascribe a company’s positive per-
formance solely to consultant intervention, but it is equally wrong to ascribe a company’s
negative performance to the same cause. It is important to remember that consultants are
there as advisors. Consultants can give all the advice they want; that does not mean the
client has to accept it.
That said, the poor performance of companies known to have used consultants
extensively did rebound on the consulting profession as a whole. This had some positive
results. One is that, as already noted, consultants became much more concerned about
impact and developed a much stronger client focus, moving away from reliance on
the process model and further towards a client engagement model. Another was a move
away from classical management consultancy tools and toolkits towards a more bespoke
approach, with each client’s needs assessed and solutions provided on an individual basis.
Templates and frameworks still exist, but they are no longer seen as magic bullet solu-
tions. Adaptation and flexible implementation are now much more important than
before; good consultants fit the solution to the client, rather than trying to force the
client into the solution.
It was not so much the external criticisms of consultancy that produced the biggest
crisis for the profession as the growing sophistication of clients. Even up to the 1980s,
consultants could still claim with some justification to be more expert in many areas of
business than their clients. They had more education, more training and more experience
than many managers, and their breadth of experience across sectors and across countries
meant that they had a larger worldview than their clients.
By the beginning of the twenty-first century, that was no longer true. Managers in
large companies especially were now as well trained and had as much international
experience as consultants. They no longer needed pure problem solvers; most of the time
they had the intellectual tools and business systems to solve problems themselves.
Dominic Barton, managing director of McKinsey, notes how the profession has changed
rapidly in recent years; much of what consultants did in the 1970s and 1980s, he says, are
things companies can now do for themselves. As Bob Bechek, managing director of
Bain, says: ‘The bar keeps rising in terms of the sophistication of what we and our direct
competitors are able to do for our clients and what our clients expect us to do’ (Hill
2013).
Tough economic conditions have also put pressure on consultants. The economic
downturn of 2001–02 produced the first real crisis in the profession for decades; com-
panies reduced their spending on consultancy services just as consultancy firms had begun
hiring more consultants in anticipation of continued growth. That crisis also brought
about the demise of accounting firm Arthur Andersen, in circumstances that also did not
cast the consulting profession in a particularly good light. It will be recalled that Andersen
Consulting had become more profitable than its parent accounting firm. Andersen
Consulting numbered among its clients the now infamous energy corporation Enron,
where Arthur Andersen also served as auditors. According to Squires et al. (2003), during
the 1990s Andersen Consulting put pressure on the auditors to overlook lapses in
Enron’s accounts, as the consultants were afraid of losing Enron’s business. When Enron
crashed, Arthur Andersen’s reputation was destroyed and the firm eventually failed as
well. Andersen Consulting, which split completely from Arthur Andersen in 2000, not
long before the failure of Enron, survived under its new name, Accenture.
Some consultancy firms disappeared altogether, and most struggled. The financial crash
of 2008 and subsequent economic slowdown has had a similar effect. The market for
consultancy services today is at best flat and, especially at the top, a process of consolidation
is ongoing. The Big Four accountancy firms have been quick to take advantage of the
troubles in the industry: in 2013 Monitor was purchased by Deloitte after the former
went bankrupt, and Booz was acquired by PwC and renamed Strategy&. Roland Berger,
the largest German strategy consultancy, considered a takeover offer from Ernst & Young
but rejected it; however, the possibility that Roland Berger will accept a similar offer in
future remains. The consolidation process has not ended, and Andrew Hooke of PA
Consulting Group reckons that only about half the current population of consultancy
firms will survive the next ten years: the rest will have been bought out, merged, or
simply disappeared.
Future directions
To get some ideas about where the consulting industry might be going, I spoke to four
senior consultants, all with long track records in the profession: Dominic Barton, managing
director of McKinsey & Company; Matt Krentz, senior partner and head of the People
team at Boston Consulting Group; Andrew Hooke, chief operating officer and head of
government practice at PA Consulting Group; and Simon Hayward, chief executive
officer of Cirrus Connect. All four were unanimous in their view that the profession is
going through major changes and, in particular, that the nature of client demand has
changed very greatly and is forcing consultancy firms and consultants to evolve in order
to keep pace.
‘We have definitely moved to a different level’, says Barton. ‘Clients are demanding more
flexibility in how they are served. They want deep expertise and experience, and they want
to build capacity.’ He makes the point that client firms have much more expertise of their
own than they might have had twenty or thirty years ago, thanks in part to better training
and education. This puts the onus on consultants to develop more and deeper expertise of
their own. ‘We have to keep ahead of the curve, keep pushing, keep innovating.’
Andrew Hooke agrees. ‘Gone are the days of what you might call “method consulting”,
where the consultant comes along, evaluates, finds out what is wrong and tells you what
the solution is’, he says. ‘Today the market wants very leading edge expertise and advice,
and as a consultant you have to make sure your capabilities and expertise are ahead of
those of the companies you are working for.’ That is true of every consulting firm.
‘Consulting has reached a crossroads’, says Hooke, and a very different direction lies
ahead of it. ‘General consulting is dead’, he says. ‘Any consultancies that don’t have very
specialist leading edge expertise are going to find life very difficult.’
What sorts of expertise are clients demanding? Barton sees technology and big data as
one of the areas where demand is growing. Modelling and software are increasingly
supplementing traditional consultancy advice. As a result, says Barton, ‘fewer than half
the people we hire now are traditional MBAs.’ Today’s consultant is just as likely to have
a background in analytics or software as in business and management.
Matt Krentz agrees that mastering big data is a major challenge. ‘The amounts of data
that businesses have can be overwhelming’, he says. ‘How do we take this near-overload
of potential information, make sense of it, put a structure around it, and understand its
implications for business and what they need to do to create competitive advantage?’ If
consultants can do that, then they can add value for clients.
Krentz and Barton both warn that consultancy firms need to be able to demonstrate
that they have made a difference for their clients. Simon Hayward thinks this is more
true now than ever before. One of the key challenges consultants will face, he thinks, ‘is
around being able to demonstrate real impact.’ He is sceptical about some of the current
impact measures in use. ‘Measures of productivity and so on can be helpful, but a lot of
the impact is often longer term. It can therefore go far beyond short-term return on
investment.’ Hayward believes consultants need to follow the example of some of the
other professions and focus much more carefully on what their impact is and how it is
delivered. ‘Clients want to see value’, he says, ‘and consultants should recognise that their
reputation will be optimised by clients citing high levels of impact.’
One consequence of the demand for impact is a move towards getting consultants
involved in implementation, not just making recommendations. ‘Clients are demanding
much more product from us, much more than just a report setting out a series of advisory
statements’, says Hooke. ‘For example, if you are designing a value chain to support a
new brand, you will have to visualise and model that value chain to show how it will
work, rather than just producing a report to show how it might work. Or you might
have to go to the next stage and help implement the value chain.’ Similarly, when
designing software for clients, it is not possible to simply hand it over and let the client
get on with it; consultants need to be on hand to help implement the new software and
make it work smoothly. Only thus will maximum impact be achieved.
Globalisation is also affecting the consulting profession just as it is affecting every aspect
of business life. Dominic Barton sees a shift in gravity in the business world. ‘By 2025,
more than half of the billion dollar-plus companies will be in today’s emerging markets’,
he says. These big companies are, as Matt Krentz also points out, increasingly complex
and interconnected. The challenges they face are global in scale, not just restricted to one
region or country market. This is putting pressure on consulting firms to match their
clients in terms of capacity. ‘Scale matters’, he says. ‘You need to have the breadth and
depth, the sector capability, functional capability and geographical capability to serve
clients. And that is putting pressure on smaller firms.’
Simon Hayward agrees that boutique consultants face tough challenges when trying to
match clients in terms of scale and concedes that serving the big global players is
becoming more difficult. Boutique firms can only continue to compete, he says, by
offering a greater depth of expertise. However, smaller firms tend to be close to their
clients and have strong client relationships, and this can be an advantage. It seems clear
from what Hayward is saying that client–consultant relationships will grow more, not
less, important in future.
Matt Krentz believes that the nature of corporate leadership is also changing, and lea-
ders are being required to lead more diverse teams across more diverse topics. They need
to be more multicultural and more adaptive and flexible. And this is true also, he says, of
management consultants, who need to grow with their clients. Finally, says Krentz,
consultants need to be aware of the increasing pace of change. ‘The process from original
start to insight is so much faster than it was thirty years ago when I first became a con-
sultant’, he says. Innovation, globalisation and data interconnectivity are all driving this
increasing speed of change.
It follows from what Krentz and the others have said that consultants will be under
pressure in the years to come to deliver more, faster, and with greater impact. This will
mean great changes in the consulting profession. What we call consultancy and
consultants may look very different in ten years’ time.
Chapter summary
In this chapter, we saw how the management consultancy profession has evolved and
what that evolution has meant for both consultants and clients. The first consultants were
accountants and ‘company doctors’, both of whom were called in to deal with problems
beyond the capacity of management to resolve. Company doctors often took a stake in
the companies they worked with, whereas accountants remained independent. This latter
ethos has generally prevailed in management consultancy up to this day.
The chapter went on to describe how new management tools and systems such as
scientific management, MTM and strategy were diffused by consultants across the USA
and, later, around the world. Consultants have played a major role in the spread of modern
management methods, and have also been involved in the development of some of those
methods. Consultants have advised businesses on how to deal with the new business
environment; an environment that they themselves have played a major role in shaping.
The increasing power, prestige and profile of management consultancy has also
attracted criticism. We have discussed some of the main arguments concerning the effi-
cacy, or otherwise, of management consultancy and the impact these have had on the
profession. Finally, we looked at the recent and current challenges facing the profession
and offered some thoughts on what the future might hold.
Student exercise
Using your own knowledge of the global business environment, make a list of what
you believe the key challenges facing the management consultancy profession over
the next five years will be. In your analysis, you should consider:
1 Changing demand from clients: what services will companies, governments and
NGOs need in future?
2 Changes in management: what will tomorrow’s managers want from consultants?
What are they capable of doing themselves? Where are the gaps in their knowledge
and skills sets? Can consultancy firms fill those gaps, and how?
3 Changes in the structure of the consulting profession: what are the implications of
the takeovers of consultancy firms by Big Four accounting firms? What role will
be left for boutique firms?
4 Changing economic and geopolitical forces: where in the world will the greatest
demand for consultancy services be? Where will demand be weakest?
5 Change in technology: what impact will new technology have on management
consultancy?
These questions are meant as starting points, not as a complete analysis: other
questions will doubtless occur to you.
Consider the results of your analysis and then look at your own career and experi-
ence thus far. Should you choose to take up a career in management consultancy, what
do you need to do? What skills and experience do you yourself need to acquire in order
to become an in-demand consultant who can add genuine value for companies in the
future?
4 The roles of the consultant
The plural word ‘roles’ in the title of this chapter is significant. In client engagements,
management consultants often play several different roles, depending on the client and
their needs at the time. This chapter will discuss the various roles that consultants play,
how they play them and what the implications are for both consultants and clients. Role
theory leads us into a discussion of the paradoxes of management consultancy, of which
there are several. By the end of this chapter, it should be clear that management con-
sultancy is not just a matter of turning up at the client’s premises, analysing data and
presenting solutions to problems. The day-to-day reality of management consulting is
more complex than that.
We all play roles in our business and working life, but not everyone is comfortable
about doing so, and role conflicts can be a source of confusion and stress. Uncertainty as
to what roles we are meant to play can lead to difficulties in knowing where boundaries lie,
what is and what is not acceptable professional behaviour. Therefore, before discussing roles
in detail, we will first look at the values of management consultancy, and then at pro-
fessional standards. If role uncertainty does arise, then referring back to these values and
standards can usually help the consultant to find the best way through the problem. We
will discuss the ethics of management consultancy in more detail in Chapter 10, but a
preliminary discussion is essential before we come to a discussion of what it is that
management consultants do.
Values of management consultancy

As we saw in the previous chapter, management consultancy has had some severe critics, and
there have been times when those criticisms have been justified. Management consultants
are human; they make mistakes. Sometimes, they forget the purpose of their work. Some-
times they let self-interest take over, when they should be thinking about the interests of
their client. Sometimes, they lack the courage to behave as they know they ought to do.
At the heart of management consultancy is that fundamental purpose defined at the
beginning of Chapter 2: the provision of impartial advice to companies that will help
them to create value and achieve their goals. That is what management consultancy is
for; that is why consulting firms exist. Any other activity is at best a distraction from that
purpose, and at worst a dangerous diversion down the wrong course. Good management
consultants remember, always, what their purpose is. They are professionals, delivering a
professional service.
Different consulting firms have different value statements, but the following seven
values are common right across the profession:
The roles of the consultant 41
1 putting the client’s interests first
2 honesty and integrity
3 impartiality and independence
4 professional competence
5 moral courage
6 the quest for excellence
7 the creation of value.
Putting the client’s interests first. It is axiomatic in the consulting profession that the
consultant is the least important person in the room. It is the client’s interests that matter.
The consultant must always act in the best interests of the client and must never do
anything that could harm or damage the client. In legal terms, the consultant has a ‘duty
of care’ to the client. Consultants are in a privileged position: they have access to a great
deal of inside information about the client and they also have a position of influence over
the client company and its key decision makers. If they make mistakes, the outcome
could be harmful to the client. Therefore, they owe it to the client to ensure that
(a) they do no harm and (b) they serve the client’s interests at all times.
There are pragmatic as well as ethical reasons for this. It is the client who foots the bill;
it is the client’s fees that pay the consultant’s own salary, so therefore ‘the customer is
always right’. And disagreements with clients can, if made public, have a deleterious
effect on the consultant’s reputation. Indeed, if the duty of care is held to be breached,
the consultant could be sued for damaging the client’s business.
However, the notion of putting the client’s interests first has within it the seeds of a
dilemma. What are the client’s interests? What if the client wants to choose a course of
action which, in the opinion of the consultant, is wrong? What if the client wants to do
something that in the consultant’s view would be dangerous to the client organisation
and/or its stakeholders? If the consultant objects, then the principle of putting the client
first would appear to be violated. But if the consultant makes no objection and the client
goes ahead and puts their organisation in jeopardy through a wrong-headed course of
action, then have the client’s best interests been served?
The answer to the question is obviously ‘no’, and therefore a subsidiary principle
emerges: the consultant must always warn the client of any risks and dangers that
the client’s actions might generate. If the consultant believes the client is wrong, then the
consultant must say so, clearly. Of course the consultant must also explain the reasons for
his or her thinking, and it is important that if a potential disagreement with a client looks
like emerging, all members of the consultancy team discuss the issue thoroughly, examine
their own views and be sure they have reached a position they are willing to uphold.
But the duty of care that consultants have towards clients means that they must speak out
if they see danger or the risk of something going wrong.
In extreme cases, the client may wish to do something that is illegal or morally
repugnant. In such cases, the duty of care still holds good. Regardless of what the client
wants to do, if in the judgement of the consultant there is a legal or moral hazard, then
the consultant must say so. In such cases, too, the consultant is no longer bound to
support the client. It is perfectly correct, if the client intends to break the law or violate
regulations or do something that is morally wrong, for the consultant to walk away.
Honesty and integrity. Following on from the above, consultants must be honest: with
their clients, of course, but with their own teams and with the world at large. Con-
sultants must also be people of high integrity. Once again, their privileged position as
insiders with client organisations means they can be nothing else. They must observe the
highest professional standards (see below).
Once again, though, being honest raises a dilemma. Does this mean that the consultant
must tell the truth about everything, all the time? If asked a question about a client by a
third party, must the consultant answer in full? For example, if a consultant is asked by a
journalist to disclose the financial affairs of a client company, must the consultant do so?
The answer is obviously ‘no’, as to do so would violate the value of putting client’s
interests first. Honesty in this case is not the same as transparency. Although the principle
of transparency, the laying out of information for all to see, is much discussed and praised
in business today, I will go out on a limb and say that total transparency in a consulting
business is a bad thing. Yes, the consultant must be absolutely clear and honest with the
client about the work they are doing for that client, but that does not mean they are allowed
to tell the client about work done for other clients. Transparency, therefore, applies to all
matters directly connected with the current client engagement; it does not apply to any
other client engagements, as this too would violate the value of putting those clients’
interests first.
There are obvious grey areas here, and in the end the consultant must use his or her
own judgement; again we will discuss this in much more detail in Chapter 10. But client
confidentiality is absolutely essential for consultants. Some consultancy firms will not
discuss even the names of former clients, let alone current ones, with outsiders. For
them, client confidentiality is sacrosanct.
Impartiality and independence. Consultants must be independent in terms of thought and
judgement. They are there to serve the client’s best interests, but that does not mean
they are there to take the client’s side, still less to take the side of the chairman or CEO
against other members of the executive team or other stakeholders (or vice versa).
This is important because, as we shall see in the next chapter, the reasons why clients
engage consultants are complex. Client organisations, especially large ones, are rarely
completely united. Very often, the client’s board is a series of shifting coalitions, popu-
lated by different parties with different ends and different ideas of how the company
should be run. The executive team may have one idea about the direction of the com-
pany, while the non-executive or independent directors who represent the shareholders
may have another (Brown 2015). Indeed, a disagreement over what to do next may well
be the reason why the consultant has been engaged in the first place, in the hope that the
consultant can break the deadlock.
The consultant’s duty is always to the client as an organisation and not to individuals
within the organisation. Arguably, the duty of care extends beyond the confines of the
organisation and embraces all stakeholder groups, customers and employees, as well as
shareholders. Few consultants are usually willing to go as far as one consultant I knew,
who bluntly told a board of directors that they themselves were the main thing holding
the company back and they should all resign; but the principle behind his statement was
clear. The consultant is loyal to his or her duty, to the client organisation, never to
people; not even to the people responsible for engaging you and bringing you into the
organisation in the first place.
Moral courage. Telling a board of directors that they are incompetent, or walking away
from a dishonest client and refusing to serve them, takes courage: not the physical
courage required of fighter pilots or lion tamers, but moral courage, the courage to do
what is right regardless of the consequences to oneself. Let us be clear; if a consultant
walks away from a client because he or she believes the client is doing something morally
wrong, there will be consequences for the consultant: financial consequences certainly,
and perhaps reputational as well, if the former client chooses to go public and tells a
distorted version of the truth.
Even telling a board of directors what they don’t want to hear requires courage. Some
boards react angrily when told that their preferred course of action is wrong. I know of
cases where consultants have been insulted and even physically threatened by angry clients
who thought that they knew best. ‘We operate on the FIFO system around here’,
snarled one director to a young consultant who dared to suggest a different way of doing
things. ‘You don’t know what FIFO means? It means, Fit In, or **** Off!’ It is, of
course, best to avoid such unpleasant scenes, and diplomacy is an important skill for any
management consultant; unpleasant findings sometimes need to be presented in delicate
fashion. But they still need to be presented, and having the courage to stand up for what
is right is an essential quality in a consultant. Again, remember: the first loyalty is to the
client organisation as a whole, not its individual members.
Competence. The consultant has a duty to be competent and also not to attempt
anything which is beyond his or her competence. If consultants are asked a question by
clients and do not know the answer, they must say so. If they are asked to do something
which they do not feel competent to do, they must admit it, if at all possible recom-
mending a colleague who does have the necessary competence and then bringing them
onto the team.
Consultancy firms place a lot of emphasis on competence and try to hire in such a
way that they have access to as many different skills sets and experiences as possible so
that they can cover any eventuality if it arises. For individual consultants, there is a duty
to be competent. This means constant training, learning and gaining of experience. Good
consultants learn something from each engagement and put that learning to use in each
subsequent engagement.
But does learning from each engagement imply a violation of confidentiality? Yes, if
you take information about clients and apply it to other engagements. Passing on details of
a previous client’s business model or organisation is wrong in every way. But good
consultants use engagements to learn something about themselves. They hone their own
analytical skills, they gain experience of problem identification and problem solving, and
they learn about the deep issues affecting entire industries and sectors, not just particular
firms. It is that learning that makes consultants valuable and gives them skills and
experience which managers in client firms may lack.
The quest for excellence. Allied to competence is the quest for excellence. Good
consultancy firms and good consultants are never satisfied with ‘good enough’. They
always strive to do the best that is possible for clients, to deliver the best and most
thorough service they can. No matter how successful the engagement, they are never
entirely satisfied; they are constantly self-analytical, constantly looking for ways to
improve. In the parlance of the profession, they are ‘insecure overachievers’, people who
‘usually exceed expectations because they’re willing to operate outside their comfort
zones in return for approval’ (Business Management 2007).
The creation of value. And, similarly, good management consultants are dedicated to the
creation of value. For the client, this can mean whatever it is the client values: for a
business it might mean improved profitability, growth, efficiency or sustainability, while
for a government it might mean improved delivery of essential services to the public, for
a hospital it might mean better use of scarce resources or improved recovery rates for
patients, and for a charity or NGO it might mean more efficient and less costly
management systems and better use of resources towards the end for which the organi-
sation exists, such as alleviating poverty or delivering arts and culture programmes.
Whatever the organisation’s purpose, the consultant’s duty is to help it deliver value: not
just small incremental improvements, either, but transformational value on a scale that
makes the consultant’s fees justifiable and value for money.
Consultants are also dedicated to creating value for their own consultancy firm. This
too can take several forms: fees, of course, but also valuable are increased and improved
knowledge, stronger relationships with current and former clients, and an enhanced
reputation within the profession generally. And finally, they create value for themselves,
in the form of enhanced skills and knowledge and better ability to do their job, and also
in job satisfaction, the knowledge that the work they do has, for someone, somewhere,
truly made a difference. Most consultants are very well paid. But most will tell you that
the satisfaction of learning and doing a job well far outweigh the material rewards of the
job. And the ones who cannot tell you that, honestly, are not very good consultants and
will usually not last long.
Professional standards in consulting

Above we discussed the values of the consulting profession, the things that good con-
sultants and consultancy firms believe in and that guide them. Following on from this,
there are also professional standards to which all consultants should adhere. These are the
everyday actions and behaviours expected of consultants, guided and shaped by the
values; or to put it another way, these are how good consultants behave as they go about
their business.
The London-based Institute of Consulting has published a list of professional standards
expected of its members, grouped under six headings which roughly correspond to the set
of values above: behaving in an open, honest and trustworthy manner; acting in the best interests of
your organisation, clients and/or partners; continually developing and maintaining professional
knowledge and competence; creating a positive impact on society; respecting the people with whom you
work and upholding the reputation of the profession. The list is presented in Table 4.1. I have
taken the liberty of abridging the list slightly and leaving out some repetitions in the
interest of space.
Most of the items in Table 4.1 are either self-explanatory or were covered in the
discussion of values above, but let us pick out a few for further discussion.
1.3 Disclosing any personal interest which may affect your decisions. Most consultancy firms
will require consultants to disclose interests as part of their contract of employment. An
‘interest’ is any personal or financial connection with the client or any organisation
involved in the engagement. Examples might include family or friends working for the
client organisation, previous employment by the client organisation, holding shares in
the client company and so on. In some cases it is enough for all parties to be aware that
the connection exists; in others, potential conflict of interest might require the consultant to
be taken off the team and moved to another engagement.
Some consultants are unhappy about disclosing interests, believing perhaps that their
personal connections might be embarrassing. In fact, most consultancy firms will be
entirely understanding. What they will not tolerate is concealing interests which might
affect the outcome of the engagement. This is usually a disciplinary offence, and rightly so.
1.5 Neither offering nor accepting gifts, hospitality or services which could create, or imply, an
improper obligation. Some consultancy firms interpret this as meaning that no gifts of any
Table 4.1 Professional standards for consultants
1 Behaving in an open, honest and trustworthy manner
1.1 Being responsible and accountable for your actions and decisions
1.2 Exhibiting and defending professional and personal integrity at all times
1.3 Disclosing any personal interest which may affect your decisions
1.4 Being truthful and transparent in all communications
1.5 Neither offering nor accepting gifts, hospitality or services which could create, or imply, an
improper obligation
1.6 Ensuring compliance with all relevant legislation and regulations in the countries where you
are operating
2 Acting in the best interests of your organisation, clients and/or partners
2.1 Safeguarding and not seeking commercial advantage from all confidential information that
comes into your possession
2.2 Serving customers and clients to the highest possible standards at all times
2.3 Establishing, maintaining and developing business relationships based on mutual confidence,
trust and respect
3 Continually developing and maintaining professional knowledge and competence
3.1 Maintaining relevant competence and knowledge at all times
3.2 Acting only in accordance with your level of capability and in accordance with the highest
standards of professional behaviour and performance
3.3 Seeking support if asked to act beyond your current level of capability
4 Creating a positive impact on society
4.1 Treating others fairly and with respect, promoting equality of opportunity, diversity and
inclusion, and supporting human rights and dignity
4.2 Addressing the interests and needs of all stakeholders in a balanced manner
4.3 Ensuring that the environmental impact of your work is as balanced as possible
4.4 Recognising and valuing the responsibilities you have to the communities in which you work
4.5 Challenging and reporting conduct and behaviour which you suspect to be unlawful or
unethical, and encouraging others to do so
5 Respecting the people with whom you work
5.1 Supporting colleagues to understand fully their responsibilities, areas of authority and
accountability
5.2 Encouraging and assisting colleagues to develop their skills and progress in their careers
5.3 Promoting, sharing and encouraging best management practice
5.4 Acting consistently and fairly when addressing personal performance or standards of behaviour
5.5 Having regard for the physical and mental health, safety and well being of colleagues
5.6 Demonstrating respect in all interactions, whether face-to-face or virtually
6 Upholding the reputation of the profession
6.1 Upholding the profession’s integrity and good standing, and refraining from conduct which
detracts from its reputation
Source: Institute of Consulting 2015

kind should be accepted by consultants from clients or prospective clients, ever. This can
be problematic when working in places such as east or south Asia where gift-giving and
hospitality are an important part of the culture and refusal can cause offence. Whether
receipt of a gift could result in ‘improper obligation’ is generally a matter of common
sense; if in doubt, ask for advice from more senior consultants. Many firms also keep a
gift register, where consultants are obliged to disclose any gifts or hospitality received
over a certain amount.
4.2 Addressing the interests and needs of all stakeholders in a balanced manner; 4.3 Ensuring
that the environmental impact of your work is as balanced as possible; 4.4 Recognising and valuing
the responsibilities you have to the communities in which you work. All three of these issues will
be dealt with more fully in Chapter 11.
5.2 Encouraging and assisting colleagues to develop their skills and progress their careers.
Consultants work as a team, not only on client engagements but in their own offices as
well. They rely on knowledge-sharing and contributions from other team members to
develop their own skills, and a willingness to share knowledge and experience is one of
the attributes consultancy firms will be looking for in candidates for employment. At
more senior levels, an important part of any consultant’s work is the development and
mentoring of junior consultants.
5.6 Demonstrating respect in all interactions, whether face-to-face or virtually. Courtesy and
diplomacy are vital to the consultant’s work. Consultants should always treat clients, and
each other, with respect but not with undue deference. Never lose your temper with a
client, or in front of a client. Never denigrate people of other cultures or other gender in
front of a client, or even appear to agree with or support other people who do so.
Importantly, too, treat junior members of the client’s team – drivers, receptionists, per-
sonal assistants and so on – with equal courtesy. You never know when you might meet
these people again, or what you might need from them.
A few further points about professional standards:
Time-keeping. Punctuality is essential. A consultant should never be late for a meeting
or telephone call (and at the same time, should never be embarrassingly early). If some-
thing happens and delay is unavoidable, the client should be contacted at once and told
of the situation and offered the chance to reschedule. Clients are allowed to be late;
they’re paying the bill. Consultants are not.
Appearance. Consultants should always dress suitably for meetings, and that usually
means formally. What ‘formal’ means is different in different cultures. In the USA and
UK, men will wear suits and ties; in Singapore, on the other hand, ties are rarely seen
and jackets almost non-existent. Do your homework before going to work in another
culture.
Clarity of language and expression. In discussions, presentations and written documents,
use clear, jargon-free language and stick to the essentials. Do not over-embellish your
written documents or use flowery language. Keep presentations as short and clear as
possible, and never, ever read aloud from your PowerPoint slides except to emphasise a
key point.
Give the client your full attention. It is not acceptable to answer emails or go on Twitter
while meeting with a client. This causes annoyance and even offence. A recent survey in
the USA (Bradberry 2015) showed that 86 per cent of professionals believe it is inap-
propriate to answer phone calls during meetings, 84 per cent think it is inappropriate to
write texts or emails during meetings and 66 per cent think it is wrong to write texts or
emails during lunches off-site. And yet, the habit persists, especially among younger
managers. While you are in a meeting with a client, focus on the client and the
client only.
And what if the client is answering calls or writing emails? That is their business. To
repeat, the client is paying the bill, and while you are in the room with them, they are
the centre of your universe.
Role theory
Handy (1993) describes how people working in organisations play various roles,
depending on the circumstances, the nature of the organisation itself, the people they are
working with and the position they hold. Ashforth (2001), Stryker and Burke (2000) and
Sluss et al. (2010) have in various ways described the interaction between people playing
various roles. Role theory is particularly important for consultants, as they are often
obliged to play more than one role at a time.
Although there is a great deal of literature on role theory, its essence is quite simple.
The people around us have certain expectations of us (in role theory these are known as
social expectations). There are norms of behaviour to which we are expected to conform,
but there are also things that people expect us to do. What exactly people expect of us
depends on the role we have been assigned.
Some people are uncomfortable with the idea of role theory, believing that it means
that they have to act a part, and thus try to be someone other than whom they really are.
There is thus an apparent contradiction between role theory and notions of authenticity.
In fact, as actors often say, acting a role is not just a matter of pretending to be someone
else. The actor Dame Judi Dench, who has played roles ranging from Shakespearian
heroines to M in James Bond films, has said that playing a role means reinterpreting
herself for a new set of circumstances, but it does not mean that she becomes someone
completely different. And in any case, role theory does not require us to ‘act’; it merely
requires us to meet the expectations of others. This can involve compromise; to satisfy
others, we might end up doing something that we would not, given a preference, have
otherwise chosen to do (and there are obvious ethical implications here). But at heart,
we remain ourselves.
Consultancy roles
As noted, consultants play a number of roles (Kitay and Wright 2006). Cheng (n.d.)
describes some of the roles that consultants play within teams: partner, engagement
managers, associate, analyst. Each has a role to play in that team; certain things are
expected of each person, depending on their position. The partner will take lead
responsibility for client relationships; the engagement manager is responsible for the
overall management of the project and ensuring it gets done on time to specification; the
associates and analysts contribute their specialist skills.
More important and more difficult to manage are the expectations that clients have of
consultants, and the roles consultants must play. At any given time, a consultant may be
required to play one or more of the following roles:
Expert. Clients expect consultants to know things that they themselves do not know.
Two kinds of knowledge are expected: a broad general knowledge of the economy, the
market environment, and competitor firms and how they do things, and deep expertise
in certain fields, marketing, strategy, technology, managing people and so on. The client
doesn’t necessarily expect the consultant to know more than the client does, but it
definitely expects different knowledge. This expert role requires, of course, that con-
sultants have knowledge in the first place, and a consultant who lacks knowledge will
very quickly be found out.
And, of course, the consultant needs to have knowledge on both dimensions. In the
1990s people in the profession began talking about the idea of the ‘T-shaped consultant’,
the horizontal bar of the T representing broad general knowledge and the vertical bar
the deep specialist knowledge. It remains true today that consultants require both kinds
of knowledge in order to play the expert role well.
Analyst. Another universal expectation of consultants is that they are analysts. They
should know how to ask the right questions, how to break down a problem into its
component parts. They should be able to see the whole picture, but they should also be
masters of detail. In order to play the role of analyst well, the consultant needs to be
familiar with a range of quantitative and qualitative techniques for analysis. We will
describe these techniques and how analysis works in more detail in Chapter 6. The main
point to make here is that the consultant has to be able to look into problems and issues
and see further and deeper than other people; including the client.
Problem solver. Although as we said in the last chapter the world of management
consultancy has moved on, there is still a demand by companies for simple problem
solving. How to enter a new market, how to introduce a new technology, how to make
an acquisition, how to develop or change a strategy: these are all common requirements
from clients at the start of an engagement, even if the engagement eventually moves
on to another level. The expectation is that the consultant will be able to help solve
problems that the client cannot solve unaided. As well as being good analysts, then,
consultants need to be able to go a step beyond. They need to be able to see patterns
where others cannot, to be able to conjure order out of seeming chaos. We will talk
about problem solving more in Chapter 7, but for now it is important to remember that
this is a key client expectation. A consultant who cannot or does not solve problems will
be perceived by clients as a failure.
Critical friend. Clients also want consultants who can help them see themselves and
their organisation in a new light. They want a confidante, an outsider to whom they can
talk freely. Most senior executives are fundamentally lonely; there are few people to
whom they can unburden themselves. They need to talk about their hopes and fears, and
receive impartial feedback and advice, without fear that their secrets will be revealed to
the world. This is one of the reasons why independence and impartiality are so important,
and one of the reasons too why confidentiality is vital. Most of all, though, consultants
need to be good listeners, sympathetic and empathetic to their clients and able to
encourage them to open up and talk. This helps build relationships; it also helps the
consultant understand what is going on in the client organisation at a very deep level.
Builder. As we saw in the last chapter, clients are increasingly looking for consultants
who can help them grow. They need people who can see beyond the organisation where
it is now, imagine what its future might be, then determine what capacities and capabilities
the organisation will need to reach its future goals, and finally help build those capacities
and capabilities into the client organisation. That requires consultants to be builders, and
also to some degree architects; they need to be able to see the organisation in the round, to
understand how it functions as a whole, not just a few of its constituent parts.
Partner. The partner role is similar to that of builder, only it lasts for longer.
Increasingly too, clients are looking for partners with whom they can work over the long
term. That does not mean that the consultant is continuously engaged, doing work for
the client on a continuous basis (though sometimes it can mean just that, and this can
ultimately be dangerous for the consultant; see Chapter 5). What it really means is that
the client has someone they can rely on to be available when needed. If a problem arises,
or a discussion within the business reaches no conclusion, or if an independent opinion
is needed, the client has only to pick up the phone to find the advice and support
they need.
Leader. Sometimes, too, the client wants to be led. This can particularly be the case
with smaller or newer businesses, where the management team lacks experience or
confidence. They want the wisdom of the more experienced consultant to help them
decide where to go, and sometimes too, they will expect the consultant to make the
decision for them.
This is dangerous, and should not be attempted. The risk to the consultant is that, if
things go wrong, the consultant will then (rightly) be blamed for having chosen the
wrong course of action. The risk to the client is that they will not learn from the process
and will not advance or develop. Clients who want to be led should be gently encour-
aged to take responsibility and make their own decisions, while consultants should aim to
build capacity so as to make this possible.
Role conflict
One important aspect of role theory is role conflict, situations in which the demands of the
role place the person playing that role under stress. There are two primary types of role
conflict. One occurs when the person is asked to play a role which makes them
uncomfortable. Perhaps they do not like the role or the compromises it forces them to
make; perhaps they are not psychologically suited for the role. For example, very gregarious
and outgoing people might feel very comfortable in a sales or customer-facing role,
while quiet, introverted people might be more happy in an analyst role. The second type of
role conflict occurs when people are forced to play two or more roles at the same time,
and get caught between the competing demands of those roles.
As far as the first type goes, it is clear that not everyone can become a good management
consultant. The fundamental role of the consultant is a complex one. As the discussion
above shows, consultants have to be outgoing and personable in order to build
relationships, and deep thinkers at one and the same time. Plenty of people with exce-
llent skills try their hand at consultancy and fail, because they do not have the right
mindset. Anyone considering consultancy as a career should look at the above roles and
consider whether they feel comfortable playing all of them. If the answer is no, then the
would-be consultant might well face problems fitting into the world of management
consultancy.
Dealing with conflicting roles at the same time is a common problem for consultants,
and a major source of stress. Here are some of the key role conflicts that consultants can
get caught up in:
Independent advisor v partner. The partner role can be a difficult one for the consultant
to play, as if the consultant gets too close to the client and gets to know the client too
well, then independence can be compromised. At the same time, if the consultant is too
independent, then he or she can be too far removed from the client. If the client sees the
consultant as remote and disinterested, then it will be harder for the client to trust the
consultant and partnership relations could be damaged.
One solution is to keep some members of the consultancy team regularly in touch
with the client to provide continuity, but at the same time replace others, bringing in
new blood and new faces so that fresh ideas and opinions are brought to bear and an
impartial viewpoint is preserved.
Problem solver v critical friend. Problem solvers are called in to solve particular problems and
then depart; critical friends are there to listen and advise but not to get involved directly in
the client’s life and work. The problem for the consultant can be where to find the balance.
Clients do get overly attached to consultants; some consultants report something similar to
Stockholm Syndrome, where clients become so psychologically bonded to consultants
that they will not let them go, and keep inventing new and often unnecessary work to
keep them on. Sometimes the critical friend’s task is to say to the client: let it go. End the
relationship now. Otherwise, the dependence will become harder and harder to break.
On the other hand, failure to listen and to act as a critical friend could damage the
relationship and the client might well turn elsewhere the next time they need advice.
The right balance between not close enough and too close must be found, and it will be
different for each client and each engagement.
Analyst v builder. Here again the issue is, how close to the client do you get? The old
problem-solving consultancy model was based on the notion that the consultant analyses
the situation, comes up with a range of options and presents these to the client, perhaps
with the consultant’s own recommendation as to which options might be best. The
client signs off on the report and the engagement ends. That model is becoming harder
to sustain. Clients want builders; they want people they can engage with and partner
with to build capacity, to create a long-term strategic vision and then follow through
on it. But, that can pull the consultant deep into the client’s affairs, compromising
independence and impartiality.
Consultants are often under pressure to become more deeply involved with clients.
Resisting that pressure requires delicacy and diplomacy, including an ability to say ‘no’
without compromising a relationship.
Expert v leader. As we said earlier, the consultant is an expert. He or she does not know
more things, just different things. However, less sophisticated clients may mistake different
knowledge for more knowledge and assume the consultant is wiser than they. The pro-
blem here, and this has happened with even some large companies over the years, is that
the client accepts whatever the consultant says uncritically and attempts to follow the
consultant’s direction rather than choosing their own way.
This problem can be avoided fairly easily, so long as the consultants are aware of it.
Clients can be encouraged, gently and politely, to become aware of how much they
themselves know, of their real expertise in their own field. That should give them more
confidence and less likely to depend on the consultant.
In order to deal with these and other role conflicts, the consultant needs to be strong-
minded, tactful and diplomatic, and above all to remember the purpose of management
consultancy and the values we discussed at the start of this chapter. Those values are the
consultant’s bedrock; adhering to those will see the consultant through any situation, no
matter how messy and dangerous it might be.
Five paradoxes of management consultancy

A paradox is a set of conflicting or opposing statements, both of which are true at the
same time. For example, ‘the world is in daylight’ and ‘the world is in night’ are
opposing statements and yet both true; at any given moment, some portion of the world
is in daylight and the remainder is in darkness. Contrary to common belief, a paradox is
not a puzzle that can be ‘solved’. Paradoxes just are. They exist, and we have to find
ways of living and working with them.
The world of business is full of paradox, and five in particular affect management
consultants and the roles they play:
1 the paradox of knowledge

2 the paradox of similarity
3 the paradox of the future
4 the paradox of change
5 the paradox of humility.
The paradox of knowledge is that clients look to consultants for answers, but the answers
almost certainly lie within the clients themselves. Broad experience and deep specialist
knowledge are of course important to the consultant, but their primary purpose is this: to
enable the consultant to understand and contextualise what he or she learns when
analysing and studying the client. The vast majority of the knowledge the consultant
needs in order to analyse and problem solve is already there; it is just that the client is not
aware of it.
The consultant needs to follow the advice of Dr Osler, whom we quoted in Chapter 2:
listen to the client and they will tell you what the problem is, and probably much of the
solution as well. Too often in the past, consultants have assumed that they knew better
than the client, made their own assessment of the situation and imported a solution
which they knew had worked in other cases. This policy is risky and is based on muddled
thinking. Every business is different; every business problem is different; and it follows
that every solution must be different too. What is the real task of the consultant? To
provide answers? No, the real task is to help clients find the answers within themselves.
The paradox of similarity follows on from the paradox of knowledge. As we said, every
business problem is different and every solution is different; yet at the same time, there
are remarkable similarities in business problems across sectors and across time. As Witzel
(2015) points out, businesses that get into trouble have a habit of doing so in very similar
ways. Over-ambitious growth, failure to meet customer demand, inability to manage
people, failure to adapt to new technology, poor execution of strategy, making wrong
bets in acquisitions are all common mistakes made by management teams. All of these
can be addressed by returning to some of the fundamental principles of business: managed
growth, financial prudence, leadership, risk management and so on. The temptation to
apply templates and standard toolkits is very strong, and is entirely understandable given
that the solutions to problems often look very similar. The temptation must be resisted.
Everything is the same yet different, and every solution must be the same but different
too; based on templates and past experience, yes, but tailored to the individual situation.
The paradox of the future is that clients expect consultants to help them deal with the
challenges of the future, but the future is unknowable. Therefore, no one really knows
what those challenges will be.
Many consultants, and other organisations, devise models which they claim will help
them predict the future. But no model can possibly account for every variable that the
future might bring (LeShan and Margenau 1982). The future cannot be predicted with
any degree of certainty whatever. And yet, we have to prepare for the future and
whatever it brings. Consultants need to be honest about this and manage client expec-
tations. Rather than trying to plan for every eventuality that might happen, they should
concentrate on building capacity and resilience, preparing the client for future shocks and
helping them develop the ability to ride out those shocks.
The paradox of change is that some of the things around us are constantly changing, and
yet others are not. It is easy to be dazzled by the rapid pace of change in the economy, in
markets, in technology, and to assume that everything is changing. But some things remain
constant. The nature of customer demand changes almost every day, but the principle
that customers demand quality goods and services has never altered. Companies grow and
change and evolve steadily, but we know that if a company grows too far, too quickly, it is
putting itself at greater risk; and that is as true now as it was in William Deloitte’s day.
When analysing a problem and developing a menu of options, consultants need to
know what about a client organisation must change. However, they must also have the
wisdom to see what is working well and what should not and must not change, but be
left alone; strengthened or reinforced perhaps, but fundamentally unaltered. Change in
and of itself is not a panacea, and unnecessary change can do more harm than good.
The paradox of humility is that consultants must be confident and assertive, yet they
should never forget that they are the servants, and the client is the master. When con-
sultants become too confident and too assertive, they are perceived as arrogant: a charge
which has been levelled at the profession more than once in the past. Consultants should
believe in their own abilities and have the confidence to go into unfamiliar situations,
analyse them and find answers to questions, but they should never do so in a dom-
ineering or overbearing manner. Any consultant who does behave in this way will soon
find that he or she no longer has many clients.
Chapter summary
In this chapter, we looked at the values of management consultancy and discussed seven
values:
1 putting the client’s interests first

2 honesty and integrity
3 impartiality and independence
4 professional competence
5 moral courage
6 the quest for excellence
7 the creation of value.
After examining each of these in detail, we went on to discuss professional standards for
consultants. After a brief summary of role theory, we went on to look at the roles consultants
play, some of the conflicts and stresses that client expectations can create, and ended with the
paradoxes that consultants have to live and work with playing their various roles.
The end result is a human-centred approach to management consultancy. The
importance of the process is obvious and must never be neglected. But the process can
only work if it is contained within the envelope of human and institutional relationships
between client and consultant. Engagements are just what the word says; a contract and
relationship between two parties engaged to work with and mutually support each other.
If that mutual support exists, then value will result for both client and consultant.
Student exercise
Consider the seven roles that consultants are required to play:
1 Expert
2 Analyst
3 Problem solver
4 Critical friend
5 Builder
6 Partner
7 Leader
Which of those roles do you feel comfortable playing? Which make you uncomfortable,
and why? What could you do to make yourself more comfortable in those roles?
When you have answered these questions, go on to the role stresses and
paradoxes that this chapter discusses. How might the seven values of consultancy
discussed at the head of this chapter be used to help manage those stresses and
paradoxes?
Case study: Breitenlee Diagnose

Breitenlee Diagnose is an Austrian maker of medical diagnostics technology, based
in a suburb of Vienna. Founded eight years ago by a group of scientists from the
University of Vienna, the company has patented several important pieces of tech-
nology used in the early diagnosis and treatment of various forms of cancer. Initially
privately funded, the company was floated on the Vienna stock exchange three years
ago. The company now employs 244 people at locations in Vienna, London and
Baltimore, Maryland (the latter two locations are marketing and sales outlets
employing six–eight people each). Turnover last year was €440 million, with profits of
€5.6 million.
Apart from the finance director, recruited at the time of the flotation to bring in
needed experience of public companies, the executive directors are still the original
founders of the company. They have learned a great deal about running a business
over the past eight years, but they freely admit that they still have a great deal to learn.
None apart from the finance director has any formal business training; they have
learned how to run the business by doing it, through practical experience. One board
member taught for a time at a university in Berlin, and another did postgraduate work
in London; apart from that, their working life has been spent in Austria.
The board wants to grow the Breitenlee business and expand into lucrative markets
in the USA and Japan, but they know they lack the knowledge and experience to do
so. They have therefore engaged your consulting firm to provide the necessary
knowledge and draw up an expansion plan for them.
Given what you know of this client so far, what roles do you think you, as consultant
engaged to work with Breitenlee, will be called upon to play? Do you see any conflicts
between these roles, and if so, how would you resolve them?
Case study: TurningPoint Media

TurningPoint is a media and online advertising company based in Hyderabad in
southern India. The company creates media and advertising products and services for
a variety of clients; it does not market directly to these clients, but instead relies on
relationships with independent media buyers, who source advertising content for
clients. Founded six years ago, TurningPoint originally served Indian clients, but during
the last two years it has also developed a number of high-value clients in the USA and
China, where its reputation is spreading rapidly. TurningPoint is privately owned, but
there are plans for a flotation on the Mumbai exchange in the near future. Turnover last
year was $132 million, with profits of $5.4 million, most of which has been reinvested
in new technology, new facilities and more staff. TurningPoint is widely recognised for
the excellence of its work, and has won several national and international awards for
quality.
TurningPoint’s senior management have engaged consultants to help them work
out a future strategy. In particular, they have asked the consultants to:
come up with a plan for growing the overseas market still further
map the future development of the online advertising industry as a whole, so that
the client knows where to concentrate their own efforts
develop an organisational structure that will fit the company’s strategy of
expansion
mentor the CEO and her senior executive team, who it is felt lack experience
especially in the international dimension
Your consultancy firm has been chosen because TurningPoint is aware of work
you have done with several other Indian firms, helping them to develop successful
international experience, and the client hopes you can do the same thing for them.
Based on what you know to this point, how many and which of the five paradoxes
do you think could emerge during this engagement? If they do emerge, how would
you deal with them?
5 The client
This chapter focuses on the all-important theme of client relationships and discusses the
importance of building and maintaining relationships, including key roles such as
engagement director/key account manager. One of the central points of the chapter is
that the client determines what is value; the consultant must work to help the client, not
himself/herself. At the same time, consultants have a duty of honesty to their clients;
they must tell their clients the truth, even if that is not always what clients want to hear.
We start by looking at the reasons why clients engage consultants and continue the
discussion begun in the last chapter about client expectations. We will also look briefly at
the engagement process, and how clients go about selecting a consultant. We will go on
to look at client–consultant relationships, how these are established and some of the
problems that can arise. By the end of this chapter, you should have a better under-
standing of how clients think and what they want, and what this means for the con-
sultant. It should be clear by now that concluding a successful engagement depends first
and foremost on the strength of the relationship between client and consultant. A weak
or dysfunctional relationship is unlikely to result in repeat business and could actively
harm the consultant’s reputation.
Why do clients engage consultants?

Client organisations call in consultants for a wide variety of reasons, not all of which are
immediately obvious or apparent. Appelbaum and Steed (2005) and McLachlan (1999)
argue that consultants need to clearly understand the reasons why they were engaged if
they are to build successful relationships, and Macdonald (2006) comments on how
differences in motive may in part depend on the level of sophistication of management
in the client organisation. It should be added too that clients may engage consultants for
more than one reason, and that new, previously unthought-of reasons may emerge as the
engagement progresses.
Some of the reasons why organisations say they engage consultants include the
following:
1 identifying and solving problems

2 gaining a fresh and objective perspective
3 the need to be challenged and stretched
4 access to specific expertise
5 seeking to benchmark or learn about best practice
6 access to more and better analysis
7 supplementing existing staff
8 training
9 capacity building.
Identifying and solving problems is what the first management consultants did, and is still
very much part of the management consultant’s stock in trade. A large part of the con-
sultant’s time is spent identifying and solving problems (see Chapter 7). ‘Problems’ of
course covers a very wide range of issues, from arresting a decline in the company’s
fortunes on the one hand, to helping it implement a growth strategy and enter new
markets on the other. Businesses and other organisations face problems every day, and most
of the time it is down to staff and management to sort these problems out. Occasionally,
though, there comes along a big problem where management doubts its own ability to
reach the right solution, and that is where the management consultant comes in.
As any experienced consultant will tell you, however, the problems the client has
identified are not always the real problems. It can take quite a long time before the real
problems emerge, either because the client is reluctant to discuss the matter, or because
the client is only partially aware or unaware of the situation. It often happens that the
first problem the consultant has to solve is: what is the problem?
Gaining a fresh and objective perspective is a frequently cited reason for engaging con-
sultants. Companies can be claustrophobic places, where even very senior managers and
executives spend much of their time with their heads down, trying to get through the
minutiae of their day’s work. It is hard for them to find the time to look around and see
the bigger picture, and harder still for them to look at their own organisation objectively.
Managers identify with their own organisation and their own work. They convince
themselves, rightly or wrongly, that everything the organisation does is good and will be
successful; or they are dissatisfied, but are not quite certain why. Either way, their closeness
to the issues clouds their judgement.
A trusted, impartial and independent consultant can hold up a mirror to the organisation
and its people and help them see themselves as they really are. At the same time, the con-
sultant can give his or her own view as to the effectiveness or otherwise of the organisation,
its policies, procedures and products. It could be argued that any independent critical friend
can do the same, and indeed as Brown (2015) points out, providing that objective viewpoint
is one of the tasks of the non-executive or independent director. However, consultants, with
their broad experience of other organisations and other industries, can bring a more critical
eye to bear on the client organisation, and offer new and different perspectives.
This independent objective viewpoint is one of the most valuable things a consultant
brings to a client. At the end of a good consultancy engagement, the clients should have
learned a great deal about themselves, and see themselves in a fresh and more realistic
way. This gives the client a much better chance of developing and implementing a realistic
strategy.
The need to be challenged and stretched is one that many clients will admit to if they are
being honest about themselves. This need is particularly felt by companies that have been
quite successful for a long time. There is then a danger of falling into a rut, of doing the
same thing day in and day out for no better reason than this is what has always been
done. A trusted consultant can pose challenges to management by asking questions such
as: why are you doing what you are doing? Have you thought of doing different things,
or doing the same things but in a different way? What alternatives have you explored?
What are the opportunity costs of switching versus carrying on as you are?
The client 57
This sort of challenge usually takes the form of a review, either of the company’s
strategy and activities, or of its structure and processes. These reviews can be very useful
in helping the company to a better understanding of its present position and future
options.
Access to specific expertise is a very common reason for engaging consultants. Provision of
specific knowledge and expertise is very much the domain of the boutique consultancies
which each have their specialisms, but the big global firms offer specialist expertise as well; each
has its own separate practices devoted to banking, finance, operations, technology and so on.
The consultant himself or herself is not necessarily the expert. Earlier we discussed the
notion of the T-shaped consultant, one who has broad general knowledge but also specific
areas of focus. However, it also needs to be pointed out that many consultants are young
and have relatively little work experience, certainly less than the senior managers in the
client organisation. What the consultant needs to know is where the expertise can be
found, either within the consultancy firm or externally from elsewhere in business, academia,
et cetera. It follows that consultants need good networks of contacts with experts in
many fields, around the world, on whom they can call at need.
Seeking to benchmark or learn about best practice is also a very common reason for engaging
consultants. Good management teams engage in continuous improvement and are con-
stantly seeking to evolve their business model, upgrade their processes and improve their
product and service offerings. It is well recognised that competitor firms offer a very
powerful source of learning, but it is not always possible to go directly to competitors
and ask what they are doing. Instead, consultants who have a wide range of experience
of the industry and have worked with many clients can be employed to advise on the
best current practices.
This can be a tricky area for consultants, who are of course bound by confidentiality
agreements not to discuss the business of current or former clients with another client.
The consultant must never, ever give away specifics of what a client or past client is
doing. What consultants can do is tap into their own distilled knowledge of working
across the industry or sector and sum up their own observations as to what works
and what does not. General observations can be passed on to the client organisation.
Client-specific information cannot.
Access to more and better analysis. Consultants are highly trained analysts, and their
independence and objectivity gives them the ability to look at an organisation and
see things differently from its own managers. Consultants are frequently called in to
analyse data, quantitative or qualitative, and draw conclusions which can be presented to
the client. Of course the client could in theory conduct this analysis themselves. How-
ever, the client may not have enough trained analysts on staff to do the work quickly, or
it may simply be more cost-effective to employ consultants and let staff get on with the
work they are already doing.
Supplementing existing staff. This is particularly common in the public sector, where
consultants are sometimes employed on quite long contracts to do the same job as
directly employed staff. As consultants are expensive, this is not a particularly cost-effective
way of using them, and this is usually only done as a matter of last resort. A better way of
using consultants to supplement existing staff is to bring them in on a time-limited basis
to do specific jobs that need to be done quickly, but for which there is no long-term
staffing requirement. Setting up a new system or department, commercialising a new
innovation and setting up a new production process are all examples where extra staff
may be needed on a temporary short-term basis.
Training. There are many specialist training consultants who will provide training to
staff, including on-the-job training. The demand for training by general management
consultants will probably be fairly low. More commonly, general consultants will be
asked to help with capacity building. This can include training, usually for senior man-
agers and executives, but can also include improving systems and technology to make the
organisation more flexible and resilient and better suited to growth. Training then
becomes part of larger package of consultancy service.
Capacity building. The organisation needs to improve its systems, its ability to assimilate
and use knowledge, and/or its staff and management competencies in order to make it
better able to meet its goals. We discussed capacity building briefly in Chapter 2, and in
Chapter 7 we will have more to say about how capacity building is done.
Hidden reasons
Above are some of the ostensible reasons why clients engage consultants, but there can
be other reasons too, reasons which as we said earlier might not be at once apparent and
might emerge only as the project goes on. Some of the most common of these are:
1 needing a change agent to get things moving

2 validating a conclusion already reached
3 needing someone to make an unpopular decision, who can then be blamed for it
4 needing allies in a political dispute with other executives or stakeholders
5 fear of the unknown
6 consultancy dependency
7 not knowing what to do and hoping a consultant can point them in the right direction.
Needing a change agent to get things moving internally is a not an uncommon hidden reason
for engaging consultants. Sometimes, indeed, this need is overt and clearly expressed, in
which case it tends to fall under the headings of identifying and solving problems, and
needing challenge and stretch. But sometimes, client executives may be reluctant to admit
that they have reached an impasse and that nothing they try seems to make a difference.
They need an outside force to break the logjam, but their reluctance to admit this means
that consultants might remain unaware of the deeper problem for quite some time.
This is tricky for consultants, because unless they realise that there is resistance to
change or difficulty in implementing change, any solution they recommend will
encounter difficulties and might well fail. The consultants will struggle to make impact.
Consultants, therefore, should at an early stage of their investigations determine whether
the organisation is ready for change, how difficult/easy it will be to implement change
and what barriers might exist. These barriers can range from a faulty organisational
structure, poor internal communications, technology that is no longer fit for purpose or
poorly motivated staff and managers, to entrenched resistance to change from factions
within the organisation that see change – and therefore, the consultant as change agent –
as threatening. In the latter case, if the factions can mobilise enough support, they can
prevent the change programme from happening and the consultant will be unable to
make an impact. The consultant may need to mobilise support for this programme
within the client organisation; in extreme cases, consultants have been forced to with-
draw and abandon the engagement. If at the outset the barriers to change seem too great,
the consultant should think seriously about whether to take on the engagement at all.
The client 59
As for validating a conclusion already reached, it sometimes transpires that the client has
already done their own analysis and problem identification, and reached their own con-
clusion. However, the client’s executive team may not feel confident that this is the right
solution; or they know it is the right solution, but lack the moral authority to convince
other stakeholders. Reasons can include such factors as inexperience on the part of the
executive team, uncertainty over whether the in-house analysis has been carried out
properly, disagreement among the executive team or opposition from other stakeholders
about the correct course of action, and the desire by executives to defeat rivals within the
organisation and establish their own political situation. All of these things can and do
happen.
If this motive is discovered, the consultant should take care to protect his or her own
independence and neutrality. On no account should the consultant get involved in any
internal conflict or debates. He or she should tell the truth as it is seen, lay out the
options to all parties and invite them to make a choice without prejudice. If the reason is
inexperience or insecurity, then the consultant should also take steps to boost the con-
fidence of the management team and help them become better able to make decisions
by standing on their own, rather than relying on someone else for validation.
Needing someone to make an unpopular decision, who can then be blamed for it, is, as many
consultants have discovered to their cost, a quite common reason for engaging con-
sultants. The consultant in effect becomes ‘cover’, doing what management would have
done anyway but does not have the courage to do alone. For example, if a company
intends to restructure and, in the process of restructuring, make several thousand
employees redundant, top management can order the restructuring and then be hated by
the employees losing their jobs, or it can hire a consultant to undertake the restructuring
and blame the consultant for the job losses, in which case hopefully employees will hate
the consultant instead. (What usually happens is that employees see through this and hate
both management and the consultant in equal measure.)
There is nothing to stop consultants from doing management’s dirty work for them if
they so wish, but consultants need to be aware of the potential repercussions. For
example, if stories of workers being sacked at the orders of consultants get into the
media, this can impact negatively on the consultants’ reputation.
Chief executives also sometimes call on consultants when they need allies in a political
dispute with other executives or stakeholders. In this case, the chief executive hopes that the
consultant will reach a conclusion very similar to his own – and unscrupulous CEOs will
try to influence the consultants or control their access to information in order to ensure
this happens – and this will give him a tool to use against his rivals. ‘We must follow the
consultant’s recommendation’, becomes the mantra: the consultant is the expert, and his
or her views must be followed. Rivals will be forced to rebut the views of the con-
sultant, which is difficult, or back down (or hire consultants of their own in hopes of
coming to different conclusions).
Again, during preliminary investigations, the consultant should take the political tem-
perature of the organisation. Are the board of directors more or less united, or are there
significant factions? Is the CEO well supported, or are there others challenging his deci-
sions and his lead? Do shareholders back the current policy and strategy, or do they have
different views? Are there powerful trade unions or other employee groups challenging
the leadership of the board? If there are significant rivalries, the consultant then needs to
take a view as to the risks of being sucked into a political game. As before, too, this must be
avoided at all costs. There are plenty of cases of consultancy firms damaging their reputations
and consultants losing their jobs by getting involved in client politics. Independence and
impartiality must be jealously guarded.
Some clients appear outwardly confident, but on getting to know them better the
consultant finds that this confidence is only skin-deep. Fear of the unknown is a not
uncommon problem among executive teams and boards of directors, and sometimes that
fear becomes paralysing. Companies literally do not know what to do next. The wisdom
and experience of the consultant can be powerfully reassuring and, properly applied, help
executives and boards to get their confidence back. However, if fear is a problem, it is
best that the consultant identifies this early on and adjusts his or her own roles early on,
becoming less of a problem-solving analyst and more of a critical friend and partner.
We referred in the last chapter to consultancy dependency, the tendency by some
executives and organisations to constantly employ consultants even when it is not
necessary to do so. There can be various reasons for this, including reluctance to make
decisions (and if the consultant makes all the decisions, he or she can be blamed if things
go wrong, while the executives will take the credit if things go right), fear and the need
for validation. Often, the decision to employ consultants is simply one of habit. As we
said earlier, it is important to try to break this dependency and encourage clients to stand
on their own, building capacity to help them do so if necessary. The idea of dependent
clients can be very tempting; it means constant work and a steady inflow of fees. But the
long-term reputational risks are severe. ‘Once they get their hooks into you, you never
get rid of them’, is how several consultancy firms that undertook long-term or rolling
contracts for dependent clients have been described.
Finally, clients will engage clients because they do not know what to do and hope a consultant
can point them in the right direction. In these cases, an inexperienced or even incompetent
client is hoping that the consultant will take the lead and make the decision for them. As
with dependent clients, these companies should be helped to stand on their own and
given the capacity to do so if necessary. Consultants should not make decisions for clients,
no matter how helpless those clients appear to be. If they make a decision and it goes
wrong – and if the client is inexperienced, or incompetent, there is a higher than usual
chance it will go wrong – then the consultant will be blamed.
How do clients choose consultants?

There is no one answer to this, and experience suggests that many clients choose rather
haphazardly. They will choose a consultant whose reputation they know, or where they
might have a personal relationship, or who other companies in their industry have worked
with. None of these are particularly good reasons for hiring a consultant. Relationships and
reputation are important, but they should not be the sole deciding factors.
Smart companies, when they chose consultants, follow a clear set of rules:
1 define the project carefully from the outset

2 set expectations within the client organisation
3 communicate those expectations clearly to potential consultants
4 hold a beauty pageant
5 place clear limits on the project
6 have clear lines of communication
7 insist on continuity
8 monitor the project as it goes forward.
The client 61
One common mistake companies make is to fail to define the project clearly at the
beginning. What is it that they want from the consultant? Lack of clarity on this issue can
be confusing for both sides, and result in misunderstandings and loss of focus. Writing a
clear brief for potential consultants should be the first step, even before prospective
consultants are contacted.
We saw earlier how important it is for consultants to manage the expectations of clients,
and only promise to do what they can deliver. Clients also need to manage their own
expectations and be realistic about what consultants can deliver. Consultants aren’t
miracle workers; they are independent advisors and should be used as such. Smart com-
panies will ensure that their people are aware of what the consultants can and cannot do.
Then, those expectations should also be communicated to consultants as part of the initial
brief. Consultants should be in no doubt as to what the company needs from them.
Smart clients also hold a beauty pageant, sending the initial brief to several consultants
and asking them to pitch for the engagement. On the whole consultants hate pitching, and
some firms refuse to do it. That is their choice, of course. From the client’s perspective, the
beauty pageant allows them to look at three, four or more potential consultants and then
make an informed choice.
‘Mission creep’ is not uncommon in consultancy, and some unscrupulous consultants
will take advantage of this and invent things for themselves to do, for which more fees
can then be charged. More common is a situation where there is no clearly defined end
to the project and the consultant ends up lingering longer than he or she should, trying
to finish a project that keeps evolving and changing shape. There should be flexibility, of
course, as new problems will undoubtedly come to light as the engagement goes forward,
but there should also be a clearly defined end to engagement. When this is reached, if
problems remain, a new engagement should be concluded, preferably with a new brief
and a new beauty pageant.
Clear lines of communication between consultant and client are a must. There must
be designated first contact points in each organisation, so that if either party needs to talk
to the other, they know who to telephone or email in the first instance. There should be
frequent meetings, either virtual or face-to-face, and as many of these as possible should
be attended by senior people in either organisation, executives on the client side, partners
and engagement directors on the consultant side.
Some consulting firms employ people whose primary role is to negotiate contracts
with clients. Once this is done, they hand over to the consulting team and move on; the
client never sees them again. Experience suggests that this is a mistake. Clients build
relationships of trust with individual consultants; the reputation and brand of the con-
sultancy firm that employs them is far less important. If the trusted person then disappears
to be replaced by someone less trusted – and, perhaps, less competent – this damages the
relationship. Smart clients insist that the consultant who pitches for the work is the one
who carries it out; smart consultants go along with this.
Finally, smart clients monitor engagements closely as they go forward, keeping con-
sultants up to the mark and ensuring they are getting value for money. They don’t sit
and watch clients passively, they ask questions, get involved and act like true partners in
the engagement.
What should consultants do if clients don’t do these things? There is no reason why a
consultant should not accept an engagement with a client that does not take the fully
professional approach outlined above, but the consultant needs to be aware that such
clients are more difficult to deal with and the engagement will carry more risk. Clients
who are not clear about what they want are always more difficult to deal with than those
that have a clear agenda and are prepared to take charge.
The client–consultant relationship

In this next section we will look at establishing and maintaining client relationships,
and then at what to do when client relationships break down. It is inevitable that, at
some point, consultants will experience difficult client relationships, and it is impor-
tant to be prepared for this. Success in managing relationship problems will depend
in part on the strength of the relationship in the first place and on the type of
relationship.
Types of client–consultant relationship

I made the point earlier that every client engagement is unique, and it follows that every
client relationship is unique. Each relationship is a cocktail, whose ingredients are the
management culture of the client organisation, the size and sophistication of the client,
the client’s own aims and ambitions, the expectations the client has of the consultant, the
consultant’s own capabilities, knowledge and experience, the consultant’s values and last
but by no means least, the personal chemistry between both parties.
Culture is worth a further discussion. Culture can be defined as the commonly shared
beliefs, ideas, practices and ways of doing things that exist within organisations. Every
organisation has a culture, but some are more deep-rooted and harder to change than
others. Older companies tend to be more culturally bound and sometimes find it hard to
resist change, while newer ones often have cultures that are still evolving and changing
and therefore more flexible and open to new things (there are plenty of exceptions to
both rules, however).
Cultures also tend to differ between business sectors. In software and other high-tech
sectors there is often more informality, less hierarchy and deference and more indepen-
dence on the part of managers and staff. People will speak out in meetings and say what
they think. Oil companies and steel companies, on the other hand, are often more
formal and hierarchical, and junior staff are sometimes more deferential to superiors and
less likely to speak up. (Again, there are exceptions to both rules.) Getting a feel for the
culture of the organisation and what kinds of relationships exist within it is an essential
preliminary for establishing a client–consultant relationship. The consultant will need to
tune his or her approach to fit the expectations and habits of the client. Once again,
there is no one-size-fits-all approach to establishing relationships.
However, although every client–consultant relationship is unique, relationships can be
classified into different types, and this can be helpful to understanding how to build
relationships and make them work. Examples of relationship typologies can be found in
Coulter and Ligas (2004), Laing and Lian (2005) and Nikolova (2006). Nikolova
describes four basic models of relationship, as follows:
the expert model, or what might be described as the traditional model of client–
consultant relationship. In the expert model, the consultant creates value for the
client through the application of expertise and problem solving. This model is
strongly transactional, focusing on performance improvement. It also implies a fairly
passive role on the part of the client, who engages the consultant, then listens to
The client 63
what the consultant says and applies the result. As we have already seen, however,
the changing nature of client demand has undermined the effectiveness of this model.
the reflective practitioner model, based on the principles of action learning (see especially
Schön [1987] on the concept of the reflective practitioner). This model sees much
more interaction between the parties, with ideas and solutions developing out of a
series of reflective conversations between the two. An exchange of knowledge then
occurs. As Nikolova says, this model can be a bit nebulous and some find it difficult
to see how the knowledge exchange works; this model also places more emphasis
on the interaction and less on the goal, meaning there can be confusion about the
desired end result of the engagement.
the critical model, which is based on postmodernist concepts of meaning and value
and shifts the emphasis away from the transactional approach to one based on value
creation. Put very simply, the critical model states that the value of the relationship
is determined by consumers – in this case, the client – who takes those elements
which have meaning to them and uses them in their own way. Different consumers
will attach value to different things, with the result that a solution successfully
applied in one engagement may fail in another because the second client does not
value the result. The onus is on consultants to understand what the client values and
what meanings they attach to different things.
the interpretive model, which attempts to combine features of all three models, trans-
actional, relational and critical, and combine them in a new form of relationship
model. In the interpretive model, two parties with different expectations and ideas,
different world-views and cultures, perhaps speaking different languages, come
together to achieve a common goal. Each side must be prepared to learn from
the other. Value, in this model, is both created and transacted out of the reflective
conversations and general interchange.
These typologies are useful in helping us to better understand (a) that different rela-
tionships exist and (b) different frameworks can be used to analyse them. However, they
are best suited to analysing existing relationships; they are less useful when planning and
developing new relationships. A simpler framework is needed. If we go back to Chapter 2,
we can recall the two primary approaches to management consultancy, the process
model and the client engagement model. The first is highly transactional, similar to the
expert model described above; the second places more stress on relationships. However,
we also saw in Chapter 2 that both the process model and the client engagement model
are necessary. They are not opposites; instead, they complement each other.
What we see in real-life consultancy engagements is a variation in emphasis. Some
engagements are highly transactional and the relationship is of relatively little importance;
sometimes it is the other way around. In most cases, the consultant will know the balance
beforehand; it should take only a few preliminary discussions with potential clients to
establish what service they need, what kind of value they are looking for, whether they
are interested in a lasting relationship.
Distant friend relationships are ones where only a weak or temporary relationship is
formed, and where the transactional value is comparatively small. Client organisations
often have distant friend relationships with other kinds of advisors: lawyers and manage-
ment search consultants are examples of advisors who are called on only infrequently and
only when needed. Once the relationship has been reactivated, the advisors show up,
deliver their service and depart. The relationship becomes dormant once again.
Low transactional High transactional
Low Distant friend Technician
relationship
High Wise councillor Active partner
relationship
Figure 5.1 Presents a very simple framework for describing different types of relationship
Silent partner relationships exist in management consultancy too, typically where a

consultant has conducted an engagement already. This engagement may have satisfied
the client entirely, but they may then have no further need for the consultant’s services
for some time, perhaps even years. Then a problem arises and the client calls on the
consultant once again, but there is no expectation of a deep and lasting relationship; the
consultant will once again do the work required and depart, and it might be further years
before the two are in contact again. Typically, too, the service the consultant provides is
not vital to the client’s entire firm; it might be as simple as a piece of market analysis or
advice on a proposed strategy – ‘we have an idea and we need a quick opinion on it’ – rather
than a full-scale engagement.
The relationship may exist at a low level, but it still needs to be managed. All the values
and professional standards we discussed in the previous chapter apply just as much, if not
more, to distant friend relationships. By their nature these relationships are more tenuous
and it is easier to break them or lose sight of them. And yet, this kind of repeat engage-
ment can be very important to a consulting firm, for one simple reason: the potential
always exists to convert distant friend relationships into something more enduring.
Technician relationships have a low or weak relational content but a high transactional
value. That is, the consultant is delivering something of real value to the client, but the client
is more focused on outcomes and deliverables than on the relationship itself. The client
wants results and is not interested in much else. The consultant is the technician called
upon to provide skills, solve problems and get those results.
In these relationships, clients will be less interested in capacity building and more on
problem solving – ‘we need to restructure our European division and we need it done
by the end of the year; we’ll let you get on with it’ – so this could be said to be a rather
old-fashioned type of relationship. It is true that clients today tend to be more interested
in capacity building, but these kinds of problem-solving relationships do still come up.
Wise counsellor relationships are those where the client values the strength of the rela-
tionship and places relatively little emphasis on transactional outcomes. The client sees
the consultant as a trusted friend, one to whom they can unburden themselves and talk
about a wide range of problems. Engagements can be rather unstructured and unfo-
cused – ‘we don’t have a specific problem, we just felt it would be helpful to talk to
someone’ – and it may take skilful management by the consultant to restore focus and
deliver impact.
Wise counsellor relationships can be very strong and deliver a great deal of value over
time. Most companies and most chief executives need a wise counsellor, or more than
one, and consultants with their range and breadth of experience are very well placed to
fill that role. Another danger, however, is consultancy dependence. As we discussed in
the previous chapter, some clients become so dependent on consultants that they cannot
or will not move without them. That must be avoided.
The client 65
Active partner relationships feature both a high level of transactional value and a
strong relationship element. Here the client both wants and expects the consultant to be
closely involved and build strong bonds with the company, while at the same time
delivering a much needed service with measurable outcomes. Both problem solving and
capacity building will be wanted: ‘we need you to help make us better able to face the
challenges of the future’. This is increasingly the direction in which the consultancy
profession is moving, and more and more clients, especially large companies, are
demanding this kind of relationship. The risk for consultants is that an active partner
relationship can compromise the consultant’s independence by pulling them into the
client’s business; in effect, they become too close to the client. So long as consultants are
aware of the danger and manage the relationship accordingly, however, this problem is
avoidable.
Establishing a relationship
Establishing a new relationship with a client requires commitment from both sides. From
the consultant’s standpoint, the key issue is to establish a climate where the client believes
the consultant can be trusted. There is no clear recipe for how this is done. Nikolova
et al. (2014) give three conditions for establishing trust:
1 signalling ability and integrity

2 clarifying the outcome of the consultancy process and establishing expectations
3 demonstrating likeability and personal fit
All three conditions are best established by being authentic, that is, being fair, open and
honest in all dealings with clients, maintaining high professional standards from the outset
and taking whatever steps are necessary to reduce the risk to the client. Nikolova et al.
rightly describe the initial step by the client as a ‘leap of faith’. The client organisation is
about to commit a large amount of money and other resources to this relationship, and
the client has no guarantee that they will ever see a return on this investment; indeed, if
things go badly wrong and the consultant gives bad advice, the company could be
harmed and value destroyed. Consultants need to understand the client’s perception of
risk and be sympathetic to it.
Signalling ability and integrity is often a matter of reputation, but clients will also learn
a great deal about the consultant from face-to-face conversations. Consultants can also
signal intent and trustworthiness through the questions that they ask. Biech (2007: 186)
gives a list of questions that consultants should ask the client at the beginning of a
relationship, including:
1 What are your mission, vision and guiding principles?

2 How would you define your organisation’s culture and values?
3 What values are most important to your organisation?
4 What resources are available?
5 What options are available to work through a relationship problem?
6 What logistics do we need to clarify?
7 How do you feel about my being brought into the organisation?
8 How will your organisation be different as a result of this intervention (i.e.
engagement)?
At the same time, the client will probably want to ask the same questions, even if
phrased slightly differently. The answers to the first five questions in particular will do
much to frame the client’s view of the consultant. By demonstrating their own mission
and their own values, consultants can reassure clients and help to build trust.
Managing client expectations is essential from the outset. To repeat a point made earlier
the consultant must always deliver on any promise he or she makes. Therefore, it is
essential not to over-promise. Only agree to do those things that you know you can do.
It is not essential for clients and consultants to become good friends, but it is essential
that a strong professional relationship be grounded in personal compatibility. This will
require compromises, especially by the consultant. You may find yourself working with
people whose views on politics or social issues are personally repugnant to you or who
have mannerisms that irritate you. Put that to one side; you are here to do a job in as
professional manner as possible, and to do that job well, you must establish a relationship.
Ignore areas of difference and search for areas of common ground.
Above all else, from the beginning, focus on the client. Make them feel important.
They are not just another client; during the duration of the engagement, they are the
client, the only client that matters, and the consultant should focus on their problems and
issues, not his or her own. Let the client know that they really are at the centre of your
universe, and demonstrate this through actions, not words.
Maintaining relationships with clients

McLachlan (1999) suggests six key factors are important in achieving successful client
relationships and reaching a positive outcome to the engagement. These are:
1 integrity and, in particular, putting the client’s interests first

2 client involvement and readiness to change
3 a clear agreement concerning requirements and expectations
4 client control of the engagement
5 consultant competence
6 a good fit between consultant and client.
From this list it can be seen that much depends on, first, identifying the correct type of
relationship to build, and second, establishing the relationship along the lines described
above. Maintaining the relationship as it goes along, then, is largely a matter of con-
tinuing to deliver on promises and continuing to deliver on all six dimensions: demon-
strate integrity, keep the client involved, stick to the agreement on requirements and
expectations without going off at a tangent, let the client control the engagement,
maintain high levels of competence and professional standards and ensure that the fit
between both parties continues.
Experience suggests that the two most difficult to manage are keeping the client
involved and maintaining fit. It must always be remembered that while the client is the
centre of the consultant’s universe, the consultant does not always occupy a high priority
in the client’s mind. Senior executives of client organisations have many demands on
their time and mental energy, and the larger and more complex the organisation, the
greater those demands will be. It is not realistic to think that the CEO of a global
company will give the consulting team more than a small fraction of his or her time and
attention. Consultants need to be wise in their use of the client’s time, keeping meetings and
The client 67
conversations to a minimum – often, the frequency and timing of meetings can be agreed in
advance – and then using that time to maximum advantage to convey information and
ask questions.
Even so, there may come a time when things begin to drift, particularly during longer
and more complex engagements. It is then up to the engagement manager and the senior
partner or engagement director to work with the client to get things back on track.
Maintaining fit can also be difficult with longer and more complex engagements.
Members of the team may change, on both sides, and the personal chemistry established
at the outset will then be lost. The introduction of new team members on either side to
bring required skills and knowledge to the table can also alter the personal balance. The
client’s views of the engagement and what they want from it may change. Engagement
managers and partners need to be constantly watching for signs of change; junior con-
sultants need to keep their eyes and ears open too and report any perceived shift in the
climate to their seniors.
When client relationships go wrong

If we take McLachlan’s list and turn it on its head, we will find the most common
reasons why client–consultant relationships go sour:
1 The client feels the consultant has displayed a lack of integrity.

2 The client no longer feels involved in the engagement and has become distant.
3 The client feels that their initial expectations are not being met.
4 The client feels the consultant is controlling and driving the engagement for their
own benefit, not that of the client.
5 The client feels that some members of the consulting team are not competent,
which increases the risk to client themselves.
6 The fit between consultant and client has broken down.
If the client feels the consultant has displayed a lack of integrity, then something very serious
indeed has happened. The first priority is to investigate: what has happened to make the
client feel this way? Usually an investigation will trace the cause to one incident, or
perhaps a series of incidents centred around one person. Once the cause is known, the
next priority is to issue a full apology to the client, together with a clear statement of
how the incident will be dealt with. In serious cases where an individual consultant is
deemed responsible for the breach of trust, the consultancy firm may have to remove
that person from the team.
This does not mean that consultants should always simply bow to any accusation of
lack of integrity. If the investigation reveals that the consulting team has done nothing
wrong and has behaved with complete integrity throughout, this should be reported to
the client and an attempt should then be made to find out how the misunderstanding
occurred. If the client persists in a baseless accusation, the consultants may have to con-
sider whether they are doing so with malicious intent; if this is deemed to be the case, it
may well be best for the consulting firm to withdraw from the engagement. This is a
nuclear option, however, and there might well be long-term reputational consequences
for doing so. It is far better to stay in and try and negotiate a new understanding.
If the client no longer feels involved in the engagement and has become distant, then similarly
the consultant must investigate and determine what has happened. The two most
common problems are changes in personnel on either the client or consulting side, or
both, and simple breakdown in communications. Perhaps the consultant and client are
no longer talking frequently enough, or in enough detail. The consultant then should
initiate a new round of discussions or meetings, or perhaps an away day, where both
sides can sit down together and reconnect. This might have to be done several times
until the relationship is restored.
If the client feels that their initial expectations are not being met, the consultant should first
get as much detail as possible from the client as to what has gone wrong. Where in
particular were the shortcomings? A gap analysis (see Chapter 6) can be helpful in
establishing the nature of the problem. Usually it will be found that one of two things
has happened: either there as an initial misunderstanding between client and consultant as
to what will be delivered, or the consulting team is not delivering up to standard. In the
first instance, discussions will need to be held to negotiate a new understanding, which
should then be clearly written down and agreed by all parties so that further mis-
understandings do not occur. This of course highlights the point made in Chapter 2, that
a clear and agreed understanding should be part of initial contract negotiations; if it is,
and both sides act in good faith, then this problem should not arise.
If the consulting team is not performing up to standard and is genuinely not delivering
on what was promised, then a serious situation has arisen. The matter should be reported
by the engagement manager to his or her superiors in the consultancy firm, and
immediate remedial action taken. This could include bolstering the team with more
resources and more consultants – for which, of course, no additional fee should be
charged – or replacing underperforming team members with others.
In extreme cases, consultancy firms have been known to replace entire consultancy
teams and then conduct the entire engagement again, without fee, in an effort to protect
their own reputation. After lack of integrity, nothing is more harmful to a consultancy
firm’s reputation than an accusation of incompetence. Of course, things should never get
to this point: the engagement manager and senior partners should be monitoring the
situation closely, and detect signs of underperformance and correct the situation before
the client is even aware that anything has happened.
If the client feels the consultant is controlling and driving the engagement for their own benefit,
not that of the client, the first step is to sit down with the client and discuss in more detail
what has happened. Sometimes the client managers have themselves become more dis-
tant, as discussed above. Sometimes communications have broken down and members of
the consulting team are taking decisions without always informing the client. Either way,
steps should be taken at once to restore communications and give ownership of the
project back to the client. Getting the client involved quickly in a key decision or series
of decisions about the direction of the project might be one way of doing so.
If the client feels that some members of the consulting team are not competent, the engage-
ment manager needs to determine quickly the truth of the matter. Is this an impression
that is being given off by the consultant in question? Is he or she not behaving fully
according to professional standards? If so, then the engagement manager or partner
should have a word with the consultant and caution him or her about his behaviour. If
the problem persists, the consultant should be removed from the team and transferred
to another project; if it still persists, he or she might be invited to seek employment
elsewhere.
If the consultant genuinely is struggling to keep up thanks to training or lack of
experience, then he or she should be gently removed from the project and replaced with
The client 69
a suitable alternative. The replaced consultant should then be given opportunities to
upgrade his or her skills and experience as soon as possible.
If the fit between consultant and client has broken down, then it is imperative to restore the
situation. The consultants need to look at areas where the fit no longer works. Do new
team members need to be brought in? Have communications broken down between
consultant and client? Should the consultant introduce some new technique or idea in
order to spark the client’s interest? Above all else, though, the consultants need to talk to
the client, to gauge their mood and understand their needs. A thorough discussion
should result in the client both telling the consultants what the problem is, and what
they feel needs to be done about it.
Despite all these best efforts, however, some relationships will break down irre-
trievably. Received wisdom to the contrary, the customer is not always right; clients are
human too, and they can at times be difficult, bad-tempered and hard to deal with.
Sometimes they will make unreasonable demands; a few unscrupulous ones may try to
take advantage of the consultants to get extra services for free. If this happens, then the
consultant must negotiate a way out as diplomatically as possible, even if this means
taking a financial hit; it is far better to lose money than reputation, for it is far more
difficult and takes far longer to replace the latter than the former.
Chapter summary
In this chapter we discussed clients and their relationships with consultants. We began by
looking at the various reasons, overt and hidden, why clients employ consultants and
then, having made the decision to bring in consultants, how they choose which con-
sultants to employ. We looked at types of consultant relationships, how relationships are
built and maintained, and why they go wrong and what to do about it.
The key point to take away is that the client relationship, in whatever form it takes, is
absolutely vital. Without a good relationship, any consultancy engagement will struggle
to make impact. As we saw, those relationships can be ‘low’ – relatively distant and
unengaged with sporadic contact or ‘high’ – relatively close and intense with frequent
contact. But either way, the relationship must be strong.
What is a strong relationship? It is one that is capable of enduring, no matter what
stresses and strains it is put under. The mantra for consultants should be this: build the
relationship first. Once it is in place, then deliver the process.
Student exercise
Look again at the four types of relationships: distant friend, technician, wise counsellor
and active partner. Then go back to the discussions in this chapter and the previous
one about client expectations and the reasons why clients hire consultants. Which
reasons and which expectations would appear to fit best with which type of relation-
ship? (You can assign reasons and expectations to more than one relationship type,
but be clear about why you are doing so.)
When you have done so, look at the entire picture. Can you see common factors
emerging? Try to create a model which shows how expectations and reasons fit with
relationships. Can an understanding of expectations and reasons help us predict
which types of relationship would be most suitable?
Case study: Alcorta S.A.

Alcorta S.A. is a Spanish consumer goods company specialising in food products.
Headquartered in Valencia, it has operations across the country and subsidiaries in
Spain, Italy and Morocco. The company is organised in three divisions, bread and
other flour products, dairy products including milk, cheese and yoghurt, and produce
(fresh and fresh-frozen fruit and vegetables). Like many Spanish companies, Alcorta
has struggled since the economic downturn began in 2008 and the subsequent
Spanish sovereign debt crisis. The company had formerly had a large export market in
Russia, but European Union sanctions against Russia following political events in the
Crimea and eastern Ukraine have cut off this market, leading to further problems. The
company has incurred financial losses for the past four years.
Accordingly, Alcorta needs a new strategy to bring it back into profitability. It has
engaged your consultancy firm to carry out a strategic review, and also advise on the
possibility of closing one of the three divisions. A project team has been set up,
consisting of an engagement manager and several consultants from your firm, and
three managers from Alcorta, one from each of the three divisions. All three Alcorta
managers on the team are from the middle management level, and two have been with
the company for less than five years.
The project began four months ago, and almost at once it became apparent that it
would be difficult to engage Alcorta’s senior managers on a meaningful level. They are,
quite simply, too busy firefighting: negotiating with creditors to extend the company’s
loans and shareholders to keep them from selling, negotiating with key customers and
suppliers to keep the company’s operations afloat, and generally engaging in crisis
management.
The three Alcorta middle managers on the team seem out of their depth, and it is
impossible to tell how much, if any, information they are passing back to their senior
management team. It is probable that all three are afraid of losing their jobs in any
subsequent restructuring. They take little part in discussions, and do not always turn
up for meetings. As a result, as the strategic review progresses the consultants are
increasingly coming up with the key recommendations themselves, deciding on what
areas the review will focus and developing strategic options without input from the
client.
Yesterday, Alcorta’s CEO telephoned the managing partner of your firm. He was
unhappy and even a little angry at the way things are progressing. He and his
managers feel isolated from the consultants and no longer in control of the project. He
accused the firm of running the engagement to suit themselves, of lack of urgency in
getting the job done, and of failing to keep him and his senior team informed. The
managing partner has passed this complaint on to your team and asked you to resolve
the issue as soon as possible.
How will you respond?
Part II
What consultants do
6 Analysis
What consultants do first of all is analyse situations and problems to determine their real
nature. They do not take any situation at face value; they always look beneath the
surface of issues and events to determine what is really happening, what the real causes
are. As the Japanese engineer Taiichi Ohno put it, ‘Underneath the cause of a problem,
the real problem is always hidden’ (Ohno 1988: 126).
In theory, in a consultancy engagement the consultant team gathers all available data,
analyses it and then comes to conclusions, usually formulated as a series of options for
action. In practice, things rarely work this way, for several reasons. First, there are time
constraints. Consultants often have only a few months, sometimes only a few weeks, in
which to unravel problems and find solutions. Second, problems are not always neatly
defined, and it may be that there are several co-existing problems, some of which need
to be solved before others can be tackled. Third, it is not at all clear that this linear
approach is the best method.
Schön (1983, 1987) and also Argyris and Schön (1978) introduced the notion of
‘action learning’. In what they call ‘normal’ learning, investigators take control of a
situation and analyse it from the outside, working on the assumption that they can
intervene and control any variable they wish. A consultancy engagement in this sense is
like an experiment in physics conducted in laboratory conditions; the consultant/scientist
observes and if the experiment is not going well, alters variables in order to get the result
he or she is hoping for.
Organisational life, says Schön, is not like that; the investigator will always have difficulty
seeing the reality that exists inside the organisation. The best way of doing so is for the
investigator – in our case, the consultant – to sit down with managers from the organi-
sation and learn from them. The result is a series of conversations, discussions and
observations in which knowledge moves forward in an iterative, often heuristic manner.
We think we know something; we test it using a series of analytical techniques, we alter
our perspective according to the results and move on.
This should also result in what Schön and Argyris refer to as ‘double-loop learning’ in
which both parties question not only their findings but also the underlying assumptions
behind the investigation in the first place. For example, a team might investigate the
prospects for a product launch in a new geographical market. The findings might lead to
the conclusion that this market is not likely to have a high sales or profit yield. A double-
loop approach might lead us to question, not whether this is the right market, but is
geographical diversification the right strategy at all? Further analysis might conclude that
it is, in which case the original idea was justified; or it might conclude that it is not, in
74 What consultants do
which case the plan has to be torn up and a new idea developed. Double-loop learning
allows us to question not just what we think, but why we think it.
An action learning approach also means that analysis and problem solving, rather than
being distinct phases, are often conducted at the same time. Again there is a heuristic
element, with proposals being put forward, discussed, amended, accepted or dropped in
an iterative fashion as the product goes forward. Rather than searching for one big light-
bulb moment, a ‘eureka’ solution, analysis and problem solving will be more effective if
the consultants develop their thinking on a gradual basis. Evolution, not revolution, is
usually the more effective approach.
Quantitative and qualitative analysis

The term ‘analysis’ usually makes us think of quantitative measurement, spreadsheets and
number crunching. This is indeed a vitally important part of analysis, for two reasons.
First, clients want to see evidence for the consultant’s conclusions, and usually they want
hard, empirical evidence. They want things that they can define as facts. Rightly or
wrongly, modern business culture distrusts a priori reasoning. ‘In God we trust’, said the
quality and strategy guru W. Edwards Deming, ‘all others must bring data.’
Analysing data has its own challenges, however. Shelly Palmer, a respected American
consultant specialising in data analysis, lists seven issues that must be considered before
setting out to conduct data analysis (Palmer 2015):
1 Algorithmic complexity: How quickly or slowly will the algorithms perform? Every
algorithm, says Palmer, has a speed execution parameter determined by the speed
and processing capacity of the computers being used.
2 Quantity of data: Very large data sets can overwhelm computers and slow them or
even stop them.
3 Input speed: How fast will the data be input? ‘Will they come in real time from the
Twitter firehose or at hundreds of gigabits per second over a fiber channel connec-
tion from a data warehouse? Are they sitting on a storage device that is local to the
CPU? Is there a wireless network connection involved? Are the data coming
through various networks, bounced around the earth via satellite and reassembled
via load-balancing tools before you can get to them?’
4 Output speed: How often and how quickly will outputs be required? Is real-time
reporting required? Or will less frequent reports do the job just as well?
5 Accuracy: What level of accuracy is needed? Will ‘close enough’ do, or is absolute
precision of measurement required?
6 Confidence: What is the acceptable range of confidence in the results?
7 Data set complexity: ‘How complex is the data set? Is it structured or unstructured?
How much data overlap exists (annual financial reports in the presence of monthly
reports, etc.)? Are component parts linearly separable? Are the data distributed in
multidimensional arrays, etc.?’ There is, says Palmer, ‘literally no end to the hot mess
of data-set complexity, and it will have a huge impact on the efficacy and even the
feasibility of any analytic technique.’
Palmer goes on to say that data analysis will always require trade-offs. If one of the
seven issues above – say, data set complexity – is deemed most important, then
Analysis 75
compromises on the other six will be needed; for example, if the top priority is a very
complex data set, then input speed and output speed in particular might have to suffer,
accuracy and confidence could be compromised, and a less complex algorithm might be
needed to simplify the process.
Do these sound like technical issues, something that computer support people will deal
with for you? Think again. As we saw in Chapter 2, big data is becoming increasingly
important to consulting firms, and an ability to work directly with data will in future be
very much a part of the consultant’s job. Mastering these and other issues is essential.
You may still have computer support staff on hand to help you with the technical issues,
but you need to be able to (a) understand what they are talking about and (b) give the
client a realistic picture concerning what can and cannot be done.
The other side of quantitative analysis that needs to be remembered is reliability of
both data and analytical systems. According to Baker et al. (n.d.), as many as 94 per cent
of spreadsheets in use in business contain errors sufficient to make their outputs unreli-
able. The old computing principle of GIGO (Garbage In, Garbage Out) still applies. The
authenticity and accuracy of any data must be verified as far as possible before use.
Qualitative analysis can play several important roles. First, it can be used to verify the
authenticity of data, often by asking simple questions such as ‘where did these data come
from?’ and ‘how were these data collected?’ Second, it can fill out and flesh out
impressions given by data, and often give a more human approach to the picture that
data have created. For example, consultants can analyse thousands of data points con-
cerning the market demand for laundry detergent in Nigeria, but the experience of
going to Nigeria and talking to people who do their own laundry will give impressions
and understanding that data cannot.
Most qualitative analysis focuses on asking questions and then analysing the answers.
There are many frameworks for qualitative analysis, far too many to be discussed in detail
here: Yin (1989), Denzin and Lincoln (2005) and Savin-Baden and Major (2013) are all
excellent sources. Here I will discuss just two very basic techniques which should give an
idea of how qualitative research works, Socratic questions and Why–Because analysis,
and some of the problems involved.
Socratic questions, or Socratic seminars, are derived from the more famous Socratic
method of debate (Mangrum 2010). Socratic questions are put to a group – in this case,
the project team of consultants and client managers – and follow an order of hierarchy:
first, opening questions, in which each participant describes the situation as they see
it and the dominant themes are teased out;
second, guiding questions which help to both encourage further debate on those
dominant themes and keep the discussion focussed so it does not wander off topic;
third, closing questions, which are designed to help participants sum up key issues
and reach conclusions.
Exactly what questions are to be asked will depend on the subject of the discussion
and the composition of the team. Socratic questions can be a very useful way of getting
people to focus on an issue or set of issues. The main weaknesses are that Socratic
questions do not always result in hard conclusions; there may continue to be debate or
disagreement which might have to be resolved by further discussion, and the conclusions
reached are not always verifiable; other forms of analysis, including quantitative analysis,
may be necessary to confirm or disprove the conclusions reached.
Why–Because, or ‘Five Whys’, is also a question-based framework, used largely in a
posteriori situations where it is necessary to determine what has happened in the past. It is
therefore best suited to pure problem-solving situations, where it can be quite effective.
The ‘Five Whys’ title was coined by Taiichi Ohno, who reckoned that five questions
beginning with ‘why’ would take the investigator to the heart of the problem. For
example:
Q: Why did the Titanic sink?

A: Because it struck an iceberg.
Q: Why did it strike the iceberg?
A: Because the lookouts failed to sight the iceberg in time for the ship to change course.
Q: Why did the lookouts fail to sight the iceberg in time?
A: Because it was night and the ship was travelling at high speed.
Q: Why was the ship travelling at high speed at night in area noted for the presence of
icebergs?
A: Because the captain believed that ice posed no real danger to the ship.
Q: Why did the captain believe that ice posed no real danger?
A: Because he had been assured by the ship’s designer that the Titanic was unsinkable.
This line of questioning leads to the heart of the problem, a reckless and unfounded
assumption that the Titanic was unsinkable. Had other analytical frameworks been applied
earlier, it might have been learned that the ship was not unsinkable, that ice did pose a
danger, and Titanic might have proceeded more cautiously and the disaster averted.
Why–Because analysis has its limits, one of which is that it is best used to analyse past
events (although a variant, the ‘So What?’ framework, is used by the British military to
anticipate future events). It also encourages analysts to stop after a certain point in time,
when in fact they might need to keep asking questions and reach still deeper levels (‘why
did the designer believe the Titanic was unsinkable?’ and so on). However, as a brain-
storming tool it has its uses, and it has the advantage of simplicity; anyone can learn to
use this tool in a few seconds.
Conversations, discussions, interviews, focus groups and just walking around and
looking and listening will all add to the consultant’s knowledge. One of the best con-
sultants I ever knew had an invariable rule when going into a client firm for the first
time. Rather than going straight to the C-suite to meet the board, he would arrive
unannounced and then take himself on a tour of the premises. He watched, and he
listened. How did employees interact with each other? Did they talk to each other as
they worked, or did they sit in silence in their cubicles and ignore each other? How did
they greet the consultant himself? Did they smile, stop and ask if they could help him, or
did they walk past with their heads down, trying not to meet his eye? Did people appear
energetic as they worked, or apathetic? Did they have adequate facilities for coffee and
cold drinks? Were the meeting rooms well-equipped and did they appear to be in use?
Were there potted plants in the office, and did it look like anyone had tended or
watered them? This consultant told me that he could tell a lot about a company by the
cleanliness of the toilets; if they were clean and well cared for, it meant that employees
respected the company, but if not, it meant that they did not care. Only when he had
completed his tour did the consultant go to the boardroom and meet the executives; and
by then, he had formed his own impressions and knew when the executives were telling
the whole truth and when they were hiding something.
Analysis 77
And that brings us to a final point about quantitative and qualitative analysis. Some
clients will try to hide data. Sometimes this is done for reasons of confidentiality, but as
we discussed in the last chapter, if the client–consultant relationship is functioning as it
should, then it should be easy to overcome this issue. Sometimes, though, confidentiality
is a smokescreen. Managers may worry that the data – especially if it indicates poor
performance – will put them in a bad light and compromise their own jobs. In extreme
cases, they may even be trying to hide evidence of illegal or unethical behaviour. It is all
very well for the chief executive of the client company to issue an order for all data to be
revealed; that will not stop some unhappy or desperate people from trying to hide it.
Qualitative analysis and common sense will be needed for the consultant to tell whether
there are holes in the data that have been handed over.
Qualitative and quantitative analysis are both necessary. They complement each other,
and each reaches parts the other cannot reach. The consultant, therefore, must be part
computer scientist and part psychologist, or at least be able to draw upon elements of
both disciplines in order to do his or her work well.
Situation analysis
It is vital that consultant and client both have a clear view of the client’s current situation.
The consultant of course needs to have an accurate appreciation of the real problems the
organisation faces. One of the most common errors in consultancy is fixing the wrong
problem. If the consultant takes the situation at face value – often, at face value as pre-
sented by the client – this merely makes a bad situation worse. Here are some examples
of consultants getting it wrong by failing to understand the problem in the first place (for
legal reasons, all of these examples have been anonymised):
A transport company failed after consultants recommended a strategy of acquisitions,

not realising that the company’s financial situation and management systems would
not support that strategy and that it was not sufficiently capitalised to undertake
major acquisitions without racking up high levels of debt.
A consumer goods company came near to bankruptcy after consultants recom-
mended a radical change in its branding and product lines, apparently not realising
the degree of customer loyalty engendered by the existing brands. When the brand
philosophy changed, customers deserted in droves, but no new customers emerged
to replace them, and the company had to backtrack and restore the old brands.
A retail chain became insolvent after a team of consultants recommended a major
cost-cutting exercise, including cuts to staff bonuses and the training budget. Staff
morale plummeted, which in turn affected the quality of customer service; customers,
used to a high standard of service, switched to other chains.
All of these failures could have been prevented if the consultants had been fully aware
of the circumstances of the company.
The areas that the consultants should research at the outset of the engagement include
(but should not necessarily be limited to):
the client’s product/service range and key brands

prevailing market conditions in all major markets and market segments
the strength of customer loyalty to key products/services and brands
the financial health of the company
the financial and ownership structure of the company
the composition of the board of directors
the company’s management and leadership capacity, i.e. how well or otherwise it is
managed and led
whether the CEO or any other key executives are likely to retire or depart soon
whether the company has adequate reporting and control structures, financial and
otherwise
the company’s organisation and lines of communication and reporting
staff morale and effectiveness
the company’s culture, and how it is likely to react to change
supply chains and how well and efficiently they are managed
production systems, in particular how efficient and effective they are
the company’s key sources of value creation, i.e. where does it add most value for
customers
the company’s history and reasons for its growth and success – or failure – in the past
the company’s current strategy.
Other questions will need to be asked depending on the company’s current position
and the markets in which it operates.
Clients are often puzzled, and sometimes a little resentful, when consultants begin to
ask a broad range of questions, particularly if the client is expecting a low-involvement,
‘distant friend’ or ‘technician’ style of relationship. But the nature of the relationship does
not matter. Even if the consultant has been engaged to deal with a very narrow problem
or range of problems, he or she still needs to have a complete picture of the company in
mind before beginning work. Otherwise, he or she will be unable to foresee all the
impacts of any later recommendations, and the law of unintended consequences will take
effect, as in the examples given above.
Much situational analysis can be done fairly quickly. Trawls of publicly available
information, access to any research the company has already done for itself or recently
commissioned and targeted conversations with key managers in the client firm will usually
be sufficient to build up a picture and highlight key problems. The client will expect this
stage to be completed fairly quickly, too; they don’t hire consultants to tell them what
they already know. For the consultant, the priority is to get this ‘big picture’ firmly in
mind as quickly as possible, and then move on.
Problem analysis
Situation analysis will, if conducted correctly, highlight the key problems the company
faces. The company itself may already be aware of most of these, and it is likely that one
or more of these problems are the reason why the consultant was engaged in the first
place. However, as we have seen several times already, the problem the company has
identified may not be the most pressing issue, and it is possible that the problem masks
other, more serious problems the company is not yet aware of. Here is another anonymised
example:
A fast-moving consumer goods (FMCG) company found itself experiencing flat
sales growth while several of its near competitors continued to grow rapidly. The
company concluded that its brands had lost their appeal, and engaged consultants to
Analysis 79
help it develop new and more exciting brands. The consultants, after conducting a
thorough situation analysis, used a Why–Because framework to examine the problem
of flat sales. Analysis of the data collected suggested the following questions and
answers:
Q: Why is sales growth flat?

A: Because customers are finding rival brands more attractive.
Q: Why are rival brands more attractive?
A: Because competitors are actively wooing them with product offers, two-for-one deals
and giveaways, backed up by intensive advertising campaigns.
Q: Why are competitors marketing in such an aggressive way?
A: Because they have concluded that our client’s marketing campaigns are weak and not
very appealing, and they sense an opportunity to seize market share.
Q: Why are the client’s marketing campaigns weak?
A: Because after the departure of the previous marketing director six months ago, the
company has appointed a temporary replacement while it searches for a suitable
candidate, but one has not yet been found.
Q: Why has no suitable marketing director been found?
A: Because the company is advertising the post at a lower salary than the industry standard,
and talented people are taking jobs elsewhere.
In this case, the client acted on the consultant’s recommendation to substantially

increase the pay and benefits attached to the marketing director post, and to make the
hiring of a new director a top priority. A new director came into post, galvanised the
marketing campaign and won back market share without the need to design risky and
expensive new brands.
Problem analysis often includes an element of prioritisation. Any company, analysed at
any moment in time, will be facing a wide range of problems that need to be solved.
The question is, which are the most significant? Which have to be solved right now, and
which can be put off until another day? Which will have immediate consequences, and
which will only begin to make themselves felt in the medium or long term? Which
present the greatest threat, and which are less significant? Which will require the most
time and resources to solve? And finally and most importantly, which can the consultant
expect to solve, and which not? Where can the consultant make an impact?
It is not up to the consultant to answer these questions, or at least not alone. Problems
should be identified and then, through the reflective action learning process described
earlier, discussed fully and frankly with the client. It is down to the client to make the
final decision about which problems to tackle first. Of course the consultant should make
recommendations, and it is part of the consultant’s duty to draw the client’s attention to
problems they might not have previously noticed; but it is the client’s business, and the
final responsibility is theirs.
Solution analysis
As we said earlier, analysis and problem solving often happen together, and this tends to
happen even more often once the basic problems have been identified. Solution analysis
represents not so much actual problem solving (see Chapter 7) as identifying a range of
possible solutions to key problems.
How do we identify a range of solutions? Here, experience comes into play. The first
question to ask is:
1 What has worked in similar situations in the past?
This is a starting point: there is no guarantee that what has worked in the past would
work again in future, but equally, there is no point in reinventing the wheel if a perfectly
good solution already exists. To determine if a given solution will work, as per the
Socratic model, more questions need to be asked:
2 Will this solution work in the present circumstances?
by:
2a What reasons can we think of why this solution will not work?
2b Can those problems be overcome?
If the answer to 2a is ‘we can’t think of any reasons why this solution will not work’,
then the team hasn’t tried hard enough. There will always be reasons why a solution
might not work. Go back and look again. Once that discussion is done, if at any point
the answer to 2b is ‘no’, then the solution should be put to one side, at least for the
moment, while the discussion moves on to more promising possibilities.
Among the possibilities for discussion, there is one that should always be included: do
nothing, or leave things as they presently are. Occasionally, this does turn out to be the
right solution, especially if the consequences and risks of doing nothing are less severe
than every other option. Coca-Cola famously scrapped its iconic Coke brand and
invented ‘New Coke’, a costly failure, because it was worried about the rising popularity
of rival brand Pepsi. In fact, the Pepsi surge peaked and Coca-Cola was able to reclaim
its leadership of the soft drinks industry. Had Coke simply done nothing and waited, the
same result would have been seen. If in the opinion of the team, ‘do nothing’ is a viable
option, then it should be presented to the client along with a case for support.
The final, concluding question then is:
3 Of the viable options identified, which will we put forward for further consideration?
Here it may be useful to rank options according to their attractiveness along dimensions
such as:
affordability
time scale to implement
management time and attention required to implement
replicability (i.e. could rival companies do the same thing, or would this give the
client competitive advantage?)
long-term value for customers
long-term value for the client company.
Again, depending on the client’s situation, other dimensions may apply as well, and
the client should be asked to contribute ideas of their own on how to rank options.
Analysis 81
Options can be weighted according to potential value and potential risk, and a picture of
the attractiveness of each then emerges.
Care must be taken that this does not deteriorate into a purely mechanistic process,
however. No matter what the attractiveness matrix suggests, the final decision must be
based on experience, wisdom and common sense. To someone with long experience of
an industry, an option which appears attractive may not feel right, on an almost instinc-
tive level. Those feelings and instincts should not be disregarded, and experience must
always have its say in any discussion.
Once a range of viable options has been identified, these should be presented to the
client. Each option should have a case for support, reasons why this is considered a viable
option, and with the potential value and potential risks clearly identified. The consultant
can of course indicate which options he or she favours, but the final choice should be the
client’s.
Analysis paralysis: how much analysis is enough?

Many readers will be familiar with ‘analysis paralysis’, where companies and management
teams refuse to move until all analysis has been completed, while at the same time setting
out a programme of analysis so rigorous, intense and complete that it probably never will
be completed. This is a sure recipe for inertia and stagnation.
Consultants cannot afford to get caught in analysis paralysis. To repeat what was said
earlier, they have limited time in which to complete their work, and they cannot afford
to get bogged down in lengthy analysis. They are under pressure to produce results,
quickly. At the same time, if their analysis is incomplete or superficial, they might overlook
problems and risks which could ultimately be harmful to the client.
No matter how hard we look at a given problem or issue, we will never know
everything about it. So, how much is enough? At what point do we assume that our
knowledge of an issue, while still not complete, is good enough to allow us to carry on?
According to economist and systems thinker Herbert Simon (1956), it is very rare for
people to be in position where they are able to make an optimal decision, that is, one where
they are in full possession of the data and can make a decision based on all possible alter-
natives. Instead, they are forced to make sub-optimal decision. When we accrue enough
data to reach the acceptability threshold, we then undertake what Simon calls ‘satisficing’ (a
combination of ‘satisfy’ and ‘suffice’), or in short, we make do with what we have.
How do we know when we have reached the acceptability threshold, the point at
which we decide what we have is good enough for the moment, and go ahead? The
answer is that we never do know absolutely for certain, and this is one of the risks that
every manager and every consultant takes: I believe I have reached the acceptability
threshold, but I might be wrong. There might be something out there that I have
overlooked. Here again, experience plays a vital role. Experienced consultants will know,
a priori, when they think they have reached the acceptability threshold. There are no
ways of measuring this threshold, no determinants of it, only a ‘gut feeling’ that the time
is right to make a decision.
One way of assessing whether the acceptability threshold has been reached is to make
a decision in principle and then ask:
Is there anything we do not know that, if we knew it, might potentially cause us to
change our decision?
If the answer is yes, then it might well be that there are enough unknown factors out
there for this to still be a risky decision. If time and resources permit, it might be best to
pause and do more research and analysis before proceeding. If the answer is no, or at
least, there is nothing that would alter the decision in any major way, then it is possible
that the acceptability threshold has been reached.
Analytical techniques
Here is a sample of the kinds of business analysis techniques with which consultants
should be familiar with. Most if not all consulting firms also have their own bespoke
techniques – these are often part of their distinctiveness and competitive advantage, and
as such the inner workings of these techniques are sometimes jealously guarded – but
these basic techniques will be needed from the outset.
I am assuming that most of these will be – or will become – familiar to students
through other courses and modules, and am therefore including only a brief description
of each, and in some cases a reference to a source from which more can be learned.
Please note that this is not a complete list, and depending on the consulting firm you
work for and its areas of concentration and expertise, there may be many more techniques
which you will be required to learn and use.
Balanced scorecard. Developed by Kaplan and Norton (1992), the balanced scorecard
is a technique for analysing business performance against objective. Performance is measured
across a number of dimensions – originally four: finance, customers, process and learning,
but now greatly expanded – and compared with stated strategic goals. Gap analysis is
then conducted to find out where and why the company fell short.
Benchmarking. Camp (1989) describes benchmarking as the comparison of a com-
pany’s performance with that of similar, rival companies across a number of dimensions
with a view to finding out what the company is doing well and where it lags behind its
rivals. Benchmarking can include any or all of the following: financial performance,
strategy, technology, marketing, operations, processes, energy use and sustainability.
Camp gives a twelve-stage step process for use in benchmarking; other versions of the
process may vary.
Cash flow analysis. Cash flow refers to the money flowing into and out of a business.
Inflow typically comes from three sources: operations, financing and investing. Outflow
refers to the cost of sales and more generally to the cost of doing business. Consultants
will need to know how to read a cash flow statement and calculate operating cash flow.
Five forces. Porter (1980) defined the five forces that determine the nature of com-
petition in an industry: industry rivalry, bargaining power of customers, bargaining
power of suppliers, threat of substitutes and the threat of new entrants. The original idea
has been much expanded and enlarged upon, and there are now several models of
industry competition. The consultant should know these and be familiar with their use.
Four Ps. The Four Ps (product, place, price and promotion) are the basic elements of
the marketing mix, first defined by Jerome McCarthy in the 1960s. Kotler and Keller
(2011) discuss the Four Ps and other marketing mix models such as the Seven Ps and the
Four Cs. All are roughly similar, and are intended to focus thinking on how marketing
works and how relationships between companies and customers are developed.
Management competencies. Management competency frameworks spell out the
competencies, knowledge and skills required of managers in a given post or role. There are also
leadership competency frameworks, though the use of these is somewhat more controversial.
Analysis 83
The Institute of Management Consultants also offers a management consultancy competency
framework (http://www.imcusa.org/?page=CONSULTINGCOMPETENCY) which
will give those unfamiliar with the concept a sample of how they work.
Market analysis. While the Four Ps are used to define how companies will market
their products and services, market analysis describes the nature of the market itself.
Market analysis can be quite simple or it can be a protracted exercise involving masses of
quantitative data. Elements of market analysis (Kotler and Keller 2011) include but are
not limited to market size, rates of growth (or contraction), distribution channels,
industry cost structure, consumer spending power and propensity to consume, and
market segmentation.
MOST. This is a basic tool for understanding the strategic purpose of a business. It
defines the mission, objective, strategies and tactics of the organisation (strategy being the
route it will take to reach its mission and objective, tactics referring to the things it will
do to carry out that strategy).
Net present value computation. Following on from cash flow analysis, net present
value refers to the value of present cash inflows, minus the value of present cash out-
flows. NPV computation has a number of uses, including assessing the profitability of an
investment. See Brealey and Myers (2002) for more detail on how to calculate net
present value.
Performance measurement. Neely et al. (2002) offer basic techniques for measuring
and managing the performance of individuals and organisations. There are many other
techniques for performance measurement, however, and consultants should be familiar
with several at least.
PESTLE. Sometimes also known as PEST, this is a technique for scanning the
external environment of a business and getting a quick and relatively complete picture of
the world around it. PESTLE (an anagram of political, economic, social, technological,
legal and environmental factors) can be a useful prelude to a SWOT analysis, below.
There is a good introduction to PESTLE at http://www.cipd.co.uk/hr-resources/fa
ctsheets/pestle-analysis.aspx.
Process flow analysis. Originally an engineering technique for measuring the
efficiency of manufacturing process flows, process flow analysis can be applied to almost
any business system. The standard method is to (1) determine the requirements of the
process, (2) analyse the process as it currently functions and (3) conduct a gap analysis to see
where the process is falling short of requirements; however, there are many variants on this.
Quality management frameworks. Frameworks such as Total Quality Manage-
ment (TQM) and Six Sigma are now widespread. As well as knowing how they work,
consultants should be aware that the data capture element of these frameworks can be a
valuable source of material for analysis, especially related to process flow analysis (above).
Return on investment and rate of return calculation. Brealey and Myers
(2002), and just about every other corporate finance textbook, show how to calcu-
late these two factors, vital when determining whether to make or proceed with an
investment.
7-S. The McKinsey 7-S framework – strategy, structure, skills, systems, style, staff and
shared values – originally began life as a tool for strategic thinking (Peters and Waterman
1982), but also lends itself well to the analysis of existing organisations. By asking ‘what’
questions – what is the strategy, what is the structure, what skills do we have, and so
on – analysts can detect gaps between where the organisation is and where it wants to
be, and then formulate strategies for closing those gaps.
SWOT. An anagram of strengths, weaknesses, opportunities and threats, SWOT is a
useful basic tool for understanding a company’s current position, what opportunities it
has and what dangers it faces. SWOT has been criticised for being simple, which it is, but
sometimes simple tools can open a door onto a world which can then be explored using
more sophisticated concepts.
Value chain analysis. Porter (1985) described the value chain as consisting of five parts:
inbound logistics, operations, outbound logistics, marketing and sales, and after-sales ser-
vice. Each of the five parts should add value. Value chain analysis involves deconstructing
each of the five stages, analysing whether it truly adds value, what factors lead to value-
adding, and whether and how more value could be added.
As noted, this is by no means a complete list, and would-be consultants are advised
to note down any analytical techniques they think might be useful and to build a
personal library of these. This constitutes a resource that can be accessed for use at a
later date.
Chapter summary
In this chapter, we began by looking at approaches to analysis and in particular
at the concept of action learning and how it can be applied to consultancy. We considered
the strengths and weaknesses of quantitative and qualitative analysis and discussed how the
two complement each other; it is worth reiterating the point that both are necessary, and
either on its own will not be sufficient.
We then looked at three stages of analysis, analysis of the situation, analysis of the
problem(s) and analysis of possible solutions. The point was also made that in an action
learning mode, all these stages may be happening more or less at once, and there is also
an overlap between analysis and problem solving, the subject of the next chapter. We
looked at the issue of ‘how much is enough’, introducing the idea of ‘satisficing’ and the
acceptability threshold, and finally concluded with a brief rundown of some basic
analytical techniques which every consultant should know.
Student exercise
This is a very simple exercise, probably not something we would ordinarily do in real
life; the purpose is to get you used to questioning techniques. Think of a recent
incident in your personal or working life where things did not go as you wished.
Something went wrong at work; you received a lower than expected mark on a
paper; you had a minor accident while walking/riding a bicycle/driving; you were late
for a meeting or appointment; anything at all that had a less than satisfactory
outcome.
Now, employ the Why–Because, or Five Whys, technique to analyse the causes of
the problem. Begin by asking why the incident happened, and answer with the most
immediate cause (I was late because I slept through the alarm, etc.). Then keep asking
why this happened until you have found the root cause of the problem, or until you
reach the point where you can no longer answer. If the latter, consider what research
you would need to do in order to find out.
When you have finished, consider another question: What other analytical techniques
might you have used? Might they have given you a different answer?
Analysis 85
Case study: Rio Blanca Turbines

Rio Blanca Turbines is an Argentinean company based in the Nueva Pompeya industrial
district in Buenos Aires. The company was formerly a subsidiary of German industrial
giant Siemens, but was bought out by its management several years ago with support
from American private equity firm Yellowstone, just before the most recent Argentine
financial crisis. Rio Blanca makes power generation turbines, originally for hydro-
electric generators, but its management sees an opportunity to get involved in wind
generation. They know they will face stiff competition from India and China, two of the
largest producers of wind turbines, but believe they can compete, especially in the
burgeoning Latin American market.
The greatest problem faced by Rio Blanca’s managers is the chronic instability of
the Argentine economy, in particular a deflated currency which makes imported com-
ponents expensive. There is also difficulty in attracting and retaining trained staff; there
is a relatively small number of skilled engineers in Argentina, and those that exist are
either snapped up by large firms or go abroad in search of more lucrative employment.
Despite these problems, Rio Blanca believes it has many advantages, including an
existing strong presence in the local energy generation market, a track record of
quality engineering and an ability to deliver products at competitive price compared to
Indian and Chinese rivals. The board, with support from investor Yellowstone (which
owns 54 per cent of the company) has engaged your consultancy firm to analyse the
market and develop a strategy for moving into wind turbines. The board wants to
move quickly, so has asked your firm to conduct its analysis quickly and deliver a
report in six months’ time, but with reports after two months and four months. Two
senior Rio Blanca managers will work with your project team.
Now answer the following questions:
1 How will you schedule the work? What key stages can you identify where you
could give meaningful reports according to the timetable set by the client?
2 What assumptions do you detect in Rio Blanca’s position that need to be ques-
tioned and verified? How will you go about doing so? What analytical techniques
will you use?
3 How will you introduce an action learning element into the analysis? How will you
involve Rio Blanca’s managers on the team?
4 What might be the acceptability threshold for each of the key issues you examine?
At what point might you feel confident about proceeding, even if you are not yet in
possession of all information?
7 Problem solving and capacity building
At some point the analysis must end, and when that end is reached, clients expect out-
puts. In Chapter 2 we saw two types of client demand, ‘pure’ problem solving in which
the consultant plays a technician role and comes in to solve a particular problem, and
capacity building, where clients want to develop their own capabilities and learn to solve
problems for themselves.
In reality, of course, there is a great deal of overlap between capacity building and
problem solving, just as there is – or should be – a great deal of overlap between
problem solving and analysis. The discussion in this chapter and the previous one is
therefore somewhat artificial. What we are doing here is picking the consultancy process
apart in order to examine its parts in more detail; but it must always be remembered that
consultancy is a whole in which process and relationships, analysis and problem solving
should ideally all happen together in a homogeneous way.
Problem solving
In the previous chapter, in the sections on analysing problems and analysing potential
solutions, we talked about the process of analysing information and creating a menu of
possible solutions. What we did not discuss is how we assess the problem in order to
come up with realistic solutions. How do we arrive at a solution to the problem, i.e.
what needs to be done to resolve the problem or make it go away? And how, among the
multitude of potential options for action, do we pick the ones that seem to make most
sense? How do we make the decision as to which options we will recommend to the
client? And then, as consultants how can we best assist the client to make the final
decision as to how to proceed?
First and foremost, good consultants rely once again on experience and common
sense. They have a ‘nose’ for the best solutions and the best options for actions. They do
not take their instincts for granted; they stop, they think and if necessary they analyse
further before making their final recommendations. But experience is the most valuable
asset a client can bring to bear on problem solving and decision making. (In strict
philosophical terms, problem solving and decision making are two separate concepts, but
for simplicity’s sake I am treating them here as the same thing; problem solving involves
making a decision as to how best to solve the problem.) Younger consultants who lack
experience should watch and listen to their more experienced colleagues carefully and
learn from them.
However, there are also tools that can aid in problem solving. Indeed, there is no
shortage of problem-solving frameworks. Many consultancies offer their own
Problem solving and capacity building 87
frameworks, and many companies have also developed their own problem-solving
frameworks. The problem with the vast majority, however, is that they concentrate on
problem identification and analysis, and are very vague as to how problems get solved
and decisions get made. The famous Eight Disciplines or 8Ds model, developed at Ford
Motors to resolve production problems, is a good example of this:
Ford 8Ds model
1 form a team
2 describe the problem
3 develop an interim containment plan to isolate the problem and prevent it
spreading
4 determine and verify the root causes of the problem
5 verify permanent corrections that will resolve the problem
6 define and implement corrective actions
7 prevent recurrence
8 recognise the efforts of the team and thank them.
The most critical steps are arguably 5 and 6, because these are the action elements of
the process; here is where we make our decisions and take action. But how are we to do
this? What determines our selection of corrections or actions?
Sometimes the answer will appear to be obvious, and then there would seem to be
little reason for long deliberations. In other cases, though, the problem will be complex
and the solution may need to be equally complex; and even in the first instance, the key
word is ‘appear’. Sometimes the apparently obvious solution is not always the right one.
As we saw earlier, apparent problems may mask real ones, and the same is true too of
solutions.
So, consultants do need some tools to help them check that their decision is the right
one. Let us take a look at a few problem-solving frameworks and test their utility. I have
selected just seven, but a little research will uncover many more, some of them variants
on the themes given below (Flood and Jackson [1991] and Weiss [2011] are good places
to start looking).
Problem-solving tools
Weighted options
This is sometimes known as the RAND model or the Kepner-Tregoe model, but in fact
versions of this technique have been in use for many decades, probably centuries. This
assumes that the analysis process, if not complete, has identified the key problems and
reached a point where options are beginning to emerge. Using the weighted options
model, the consultant first lists the key issues that will be involved in implementing
any solution. These could include affordability, complexity, ease of implementation,
management time and effort required to implement, impact (see Chapter 8), congruence
with the client’s stated needs and expectations, and so on. Each option is then tested by
scoring on a scale of 1–10, with 1 representing unfavourable and 10 representing
favourable. If more than one option at a time is being considered, a matrix can be created,
for example:
Table 7.1 Weighted Options Matrix
Option 1 Option 2 Option 3 Option 4
Affordability 5 3 6 5
Complexity 7 7 7 4
Ease of implementation 2 7 8 4
Management time required 3 4 8 5
Congruence 7 6 3 6
Impact 8 7 3 7
Total 32 34 35 31
In theory, the best option is the one with the highest score, i.e. the most favourable factors.
But, take a look again at the table. Option 3 scores highest, thanks to its ease of imple-
mentation and the fact that little management time will be required to implement. But it has
the lowest score of all for congruence and impact. Is this necessarily a solution the consultant
wants to recommend? Won’t the client see this as an easy option, perhaps even a lazy option?
There are two problems with the weighted options model. First, the weights assigned
to each factor are necessarily subjective. The team can try to eliminate this subjectivity as
far as possible by discussing each factor and each weight in detail, but an element of
subjectivity will always remain. And second, as we have just seen, an apparently high
score can be undermined by weaknesses in key areas.
Sometimes, though, the value of the weighted options model is that it exposes what
should not be done. In this sense, it is a little like flipping a coin to choose between
options. If we flip a coin and are satisfied with the result, then that probably is the right
option. But if we flip a coin and the result makes us uneasy, feeling that we wish we had
taken the other option, then that is a signal telling us that we now know which option
we should have chosen. The right course of action is to ignore the coin toss and do what
we should have done at the beginning.
Scoring the weighted options can also expose flaws in our earlier analysis, as we suddenly
realise we do not have enough information to go on to make an informed decision. It can
expose weaknesses in our thinking, but equally it can also highlight strengths. This can be a
very useful aid to decision making, so long as we don’t let it rule our thinking completely.
Experience and common sense, once again, should always trump the score on the matrix.
Trial and error

Trial and error, or the suck-it-and-see method, is another long-established tool for pro-
blem solving. The reasoning is that because we cannot know the future, the only way to
establish for certain whether something will work is to try it. Rather than run the risks of
implementing a full-scale solution, consultants will sometimes try a pilot study and
observe the results, using the PDCA (Plan, Do, Check, Adjust) method. The pilot needs
to be designed carefully so that, if failure occurs, there will not be spillover consequences
for the rest of the client organisation.
There are disadvantages to this method. Even a limited-scale pilot project may be
costly; more importantly, there often is not enough time in the tightly compressed
schedule of a consultancy engagement to run a pilot and observe the results. Some
consultants do not like pilot projects, believing that even a limited small-scale failure will
reflect badly on their own reputation. Nor does the success – or failure – of a pilot
project necessarily mean that the same result will be achieved when the concept is rolled
out on a larger scale.
However, pilot projects, properly designed and monitored, will give a great deal of
experimental data which can be applied to refining the solution, and experience of
running a programme in something like real-life conditions, more real than the slightly
artificial world of boardroom and meeting room. Pilot projects are a good idea, but only
if there is time and resources to run them and monitor them properly.
Abstraction
Unlike pilot projects which involve testing solutions in real-life conditions, abstraction refers
to the creation of an artificial model in which the solution can be tested and checked before it
is applied. Modelling requires the creation of an artificial environment in which an abstracted
version of the solution is run and its performance observed. Most of this kind of modelling
involves computer simulation, and can be highly complex, especially when large-scale
corporate strategies or reorganisations or global product launches are being considered.
There are specialist agencies which do nothing but build and run bespoke models;
there are also generic models which can be applied to a wide variety of circumstances.
Those consultancy firms with the time and resources to do so will often develop models
of their own; this again demonstrates professional competence and is an important part of
establishing reputation and competitive advantage.
The disadvantages of modelling are several. First, unless the consultants already have
appropriate models to hand, building and designing models is time-consuming and
expensive; and even with pre-existing models, running them for long enough in order to
test all possible options can take a long time. Second, the principle of garbage in, garbage
out (GIGO) means the outcome of any modelling exercise is only as good as the model
itself. Flawed models will produce misleading results. Consultants must therefore take
steps to verify the accuracy of any model that is suggested for use, and this too can take
time and requires technical expertise.
Finally, it is often assumed that well-designed models will provide wholly accurate
results and can predict future performance. Where a closed system is being modelled –
that is, where the environment is limited, all known factors can be included in the model
and there is no chance of new or unexpected factors being introduced, this is true. But in
open systems, where the presence of new or undiscovered variables is always a risk, there
can be no certainty in modelling (LeShan and Margenau 1982). This is not to say that
models of open systems should never be used. But, if they are used, the margin for error
should be noted and, if possible, calculated and applied to any results.
Models, properly employed, can however give a great deal of useful data, and rather
like trial and error, these data can be used to refine and hone conclusions. A good model,
properly employed, will enhance the consultancy team’s knowledge and help identify
which options are most likely to work and which can be discarded.
Reduction
In the reduction method, consultants will try to simplify a problem and reduce it to a
few key elements. They then compare this much simplified problem to other similar
problems and create a generic problem. For example, the failure of a new brand to
make impact can be compared in its simplest form to other brand failures and thus a
generic problem, ‘failed brands’. Next, the consultants look at generic solutions to the
generic problem. What are the usual generic solutions to the problem of failed brands?
The usual options are: drop the brand entirely, re-launch it with different features to
the same market, or re-launch it with the same features to different markets. Now the
generic solutions are applied to the present day problem. The client’s brand managers
have the same three options: the consultancy team’s task now is to identify what
changes could be made to the brand in order to follow the second option, identify
what key markets could be developed for the third option, and the costs, risks and
returns of all three.
One reduction method is TRIZ, originally developed in Russia and now widely used
in Europe (Barry et al. 1996). TRIZ uses a fairly simple process of abstraction and con-
cretization to get at the fundamentals of problems and then build up solutions from
fundamentals too. The processes of abstraction and concretization effectively eliminate all
non-workable solutions and leave us focused on those key fundamentals.
The main criticism of TRIZ and other reduction methodologies is that they can be too
reductive and reduce problems to such an abstract level that they are no longer mean-
ingful. This in turns means that the range of solutions reached will not necessarily be
appropriate to the specific problem of the company. On the other hand, reduction is
quick, easy and cheap to do, and can usually be performed by a team brainstorming
around a table. Reduction is very useful for helping teams to focus on fundamentals, but
on its own is probably not precise enough for advanced decision making and should be
used in conjunction with other tools and methodologies.
Analogy
Analogy is a philosophically complex and diverse concept, and I have simplified it greatly
here (see Holyoak and Thagard [1995] and Keane [1997] for more details). Analogy
means comparing a thing to something else like it in order to generate ideas. For
example, consider the following proposition: heat is to fire as cold is to ____. There are
several possible responses to this, including ice, frost, snow and so on, but all these are
elemental things that have cold as a property.
An example of analogical reason in business problem identification might go something
like this:
Our client, ABC Logistics, is considering entering the Japanese market. The client’s
chief rival, XYZ Logistics, tried to enter the Japanese market last year, and
encountered severe resistance from Japanese businesses who were unwilling to deal
with a foreign logistics company. Therefore, if ABC Logistics tries to enter the
Japanese market, it will _______.
In terms of solutions, the reasoning might go something like this:
To get over the problem of cultural resistance, XYZ bought a Japanese logistics firm
and left its senior Japanese management team in place, reasoning that they would
know and understand the market. Another company, LMN Logistics, has just
established a subsidiary in Japan but hired several top managers from Japanese
competitors. A third company, PQR Logistics, decided the market was too difficult
and chose not to enter Japan at all.
Thus by comparing like with like, we come up with three possible solutions, all of
which have been tried by other firms. This is a very simple example, and analogies have
a tendency to become rather more complex very quickly, but the principle should
be clear.
Analogous reasoning is not relevant to every situation; there may be no clear-cut
analogy, and the consultants might then be in danger of forcing the situation, looking for
an analogy when none is there. More seriously, there is within analogous reasoning the
fallacy that just because a thing worked once, it will work a second time. It is possible
that it will; it may even indeed be likely that it will, but there is no certainty. All sorts of
intervening variables may lead to a different result. The best way of using analogous
reasoning is as given in the example above, to generate a range of possibilities. Each
possibility then needs to be examined and several questions asked:
Why did this analogous example happen as it did or come to exist as it has?
What are the key factors that make this an analogy?
What are the differences that set our own situation apart from this analogy?
What impact might those differences have on the outcome in our case?
Within limits, analogous reasoning can help spur creative thinking and choice, but like
all the methods discussed here it should be used with care.
Hypothesis testing
In this method, each solution that was identified by analysis is then treated as a hypothesis
and tested. The question asked of each hypothesis is:
Can this be proven?
To prove the hypothesis, the consultants will then need to go back to the data and
analysis and examine the reasons why they came up with this hypothesis in the first
place. Supporting arguments will need to be marshalled and examined rather after the
manner of lawyers presenting a case in court. For example:
Our client, RCM, is considering developing a second production facility. Our analysis
suggested factor conditions that would make Turkey a possible base for this facility, as
costs are low and the return on investment would be good.
Turn this into a hypothesis and you have:
An investment in a production facility in Turkey would yield a strong return on

investment.
The next step is to analyse all the data that have been gathered so far. Can it be proven
beyond doubt that there would be a strong return on investment? Probably not, so the
next step is to ask:
How confident are we that an investment in Turkey would yield a strong return?
Confidence can be expressed in some sort of ratio or percentage, or perhaps simply
categorised as high, medium or low.
The main weaknesses of hypothesis testing are two. First, hypotheses are by their very
nature not real; there is none of the real life experience one would get from running a
pilot, and how thoroughly and well the hypothesis is tested depends entirely on the skill
and experience of the consultants doing the testing and whether they know to ask the
right questions. Second, people tend to become attached to hypotheses they themselves
have created, and there is a stronger than usual risk of bias creeping in (see later). The
advantages of hypothesis testing are once again that it is relatively quick and requires few
resources; the consultancy team can brainstorm a test around a table or online without
much effort or investment being required. Hypothesis testing also requires the team to
look again at the gathered data, and may expose inaccuracies or holes in the data that
need to be plugged.
Disproof
This is the opposite of hypothesis testing, where instead of proving a hypothesis, the
team creates a hypothesis and then asks:
Can this be disproven?
The same method as above is followed: the evidence and data are examined, but this
time with a view to disproving the hypothesis. Therefore in the example given above,
the statement that:
An investment in a production facility in Turkey would yield a strong return on

investment.
would be considered incorrect and the team would attempt to prove that position. Once
again, it is likely that there would be no absolute proof that this statement was incorrect,
and the team would have to state their level of confidence. The disproof method forces
teams to look at negative factors and therefore should in theory reduce the level of bias;
so long as the team is honest in its assessment and considers all the evidence fairly.
Which method to choose?

The choice of methods, either those discussed above or other bespoke methods of pro-
blem solving, must depend on the situation, the client and the nature of the engagement.
All seven of the problem-solving methods discussed above have their strengths, but all
seven all have their weaknesses and not all will be usable or applicable in every situation.
Generally speaking, it is best to use more than one method, preferably two, three or
even four. Apply each in turn, then compare the results. If the results are broadly similar,
there is an excellent chance that, if the team has avoided bias, it has come to a sound
conclusion. If the results show significant variance, then the team needs to look again.
Perhaps there are faults in the quantitative or qualitative data; perhaps one or more of the
methods chosen was not appropriate to this situation; perhaps one or more of the
methods has been misapplied or mishandled. The consultancy team needs to try to
isolate the reasons for the variance, and then conduct the exercise again, using different
methods if needed.
Bias in problem solving

Complete objectivity in problem solving and decision making is impossible, and even the
best consultants will admit that they suffer from bias in their decision making. There is
nothing wrong with this, so long as we are aware of the potential for bias and are willing
to admit it and to correct the bias we observe in ourselves and others. Here are some of
the most common forms of bias that affect the work of consultants:
Cognitive inertia. Teams have already developed a set way of looking at the world
and doing things, and are unwilling or unable to change or compromise. It is
important to mix teams up and bring in fresh faces and fresh ideas at intervals, to
prevent cognitive inertia from setting in.
Groupthink. This refers to the tendency of stronger members of groups to influence
weaker members to see their point of view, or at least, to refrain from expressing
their own point of view. The resulting decisions therefore reflect the views of those
stronger members, rather than the group as a whole.
Prospect theory. Put simply, prospect theory holds that we are more likely to take risks
if presented with a threat, and less likely to do so if there is a prospect of gain (there
are arguments to the contrary, of course). In consultancy, this could lead to teams
steering towards more risky options to ward off threats, but being more conservative
in order to protect gains. There will be times when either is the right course; there
will also be times when the opposite is necessary.
Role bias. Teams may find themselves putting more weight on information derived
from senior levels in the client firm, on the grounds that senior people must know
more and their information must be more accurate. Contradictory information from
more junior levels will be discounted accordingly. This bias must be corrected, and
all information evaluated equally in terms of credibility and importance. CEOs have
no monopoly of truth.
Selective use of evidence. We all have opinions about things we see around us, often
reached before we have assessed the situation. It is easy for a team, consciously or
unconsciously, to form judgements and reach conclusions before the analysis begins.
When this happens, team members are likely to focus their search by looking for
evidence that supports these judgements and conclusions, and ignore or bury
evidence to the contrary. This results in a skewed set of data and evidence and a
higher risk of reaching a bad decision.
Source credibility bias. A dislike or distrust of the source often leads people to discard
data and information which are, in fact, both valid and important. While the credibility
of any source always needs to be assessed, dislike and other personal feelings about a
source must be eliminated. On the other hand, people tend to pay more attention
to data and information from a source they do like, regardless of its accuracy or
value. This bias too needs to be corrected.
Taking the first alternative. Rather than exhaustively pursuing all lines of inquiry, the
team will fasten on the first likely looking alternative and then look for evidence to
support that, rather than considering all alternatives. This is a particularly common
bias when teams are working under tight time pressure.
Time bias, or listening to the last thing one heard. People tend to pay more attention
to things they have heard or read yesterday than things that were heard or read
several months ago. This can lead to older but more important information and data
getting laid aside or lost. Related to time bias is repetition bias, whereby we pay more
attention to the things we have heard or read most often.
Wishful thinking. Rather than looking for the best available alternative, the team goes
off at a tangent and pursues the best alternative in a perfect world, the alternative
they would like to see rather than ones that are likely to happen. This means that
more realistic options can be sidelined. Similar to this is choice-supportive bias, where
people unconsciously make their preferred alternative better than it really is, while
simultaneously playing up the weak elements of other alternatives.
Capacity building
Capacity building, the other outcome of management consultancy, is less fraught with
difficulty and risks in terms of decision making and option choice, but is arguably more
risky in terms of implementation.
Client organisations that need capacity building will sometimes already have a fair idea
of what capacity they lack and where more is needed, rather like the patient telling the
doctor the diagnosis. In other cases, however, the consultant will uncover instances of
lack of capacity, and in some cases these could threaten the viability of any proposed
solution to the client’s problem. We saw in Chapter 6 the example of a transport company
which failed after accepting consultants’ recommendation of a strategy of acquisitions.
What the consultants did not realise was that the company’s financial situation and
management systems would not support that strategy. Had they known this, they would
have either put forward a different strategy or recommended building capacity to support
the strategy that was ultimately chosen.
What do we mean by capacity? Earlier, in Chapter 2, we talked of capacity in terms of
reducing barriers to growth and enabling companies to meet their goals. Essentially,
capacity takes one of three forms:
1 systems capacity
2 knowledge capacity
3 people capacity.
Systems capacity
Systems capacity can mean a variety of things:
production systems for making and creating products and services

technology used either for production or for transmission of information and
knowledge
organisational systems and structures which determine how the organisation functions
and channels of reporting and control
information and communications systems which enable parts of the organisation to
talk to each other and share knowledge
sales and marketing systems, or outbound logistics, which enable delivery of products
and services to customers
innovation systems which enable companies to create and develop new products and
services
financial systems which enable financial management, reporting, control, budgets
and the like
management systems, or in other words, the processes by which the company is
managed and led, and decisions made and implemented.
This latter is often overlooked. As Kemp et al. (2013) point out, companies will spend
millions investing in production systems, software and so on, but rarely give much
thought to the systems by which the company is managed. This can result in management in
different parts of the company managing in entirely different ways, using different methods
of reporting and control, different budgeting processes, even different language to
describe the same things. This can make central coordination of the business difficult, if
not impossible.
Lack of capacity in any of these systems can hamper a company’s efforts to reach its
goals. Poor production systems can result in lack of quality, slow delivery, inefficiency
and lost time. Poor communications systems mean parts of the company do not talk to
each other and there is a loss of focus. Poor financial systems can result in weak cashflow,
inadequate due diligence on investments, and even open the door to the prospect of
embezzlement and fraud. All of these systems must be working well if a company is to
function effectively.
How can consultants add systems capacity? One thing that consultants become very
good at is systems design. Experienced consultants are familiar with a wide range of sys-
tems across different companies and different industries. They know what works well,
and what is less than optimal. They can spot bottlenecks and weak points and have the
knowledge to work out how to re-engineer systems to make them more efficient and
effective: efficient in that they run smoothly with low costs and minimal wastes, effective
in that they deliver what the customer and the organisation need, on time and on target.
Developing systems capacity, then, begins with analysis of existing systems. The consultant
will usually have in his or her mind a picture of an optimal system of this type. How does the
current system compare? Using the analytical and problem-solving techniques already dis-
cussed, the consultant looks for those bottlenecks and weak points and gaps, and then designs
or re-designs a system which can get the job done efficiently and effectively.
As with other problem solving, this design process should be undertaken in conjunction
with the client, who should be fully engaged in the process. Experience shows that pre-
senting clients with fait accompli solutions is risky. The client may not like the system, may
not understand it, or both. Getting clients involved early on means there is a much greater
chance that the client will be committed to the system and will make it work. Where
possible or desirable, alternative system designs should be considered and the best option
chosen. Opinion is then divided as to whether clients should be left to implement the
system on their own, the consultant sticking to the role of advisor, or the consultant should
also assist with the implementation process; but today, more and more consultancy firms
are getting involved with implementation, even if only at the early stage.
Knowledge capacity
Knowledge capacity refers to the ability of organisations to create, assimilate and use
knowledge in an effective manner. De Geus (1988) argued that the only form of
sustainable competitive advantage open to companies is their ability to learn faster than
their competitors, and de Geus (1997), Senge (1990) and Nonaka and Takeuchi (1995)
all described systems and structures for creating ‘knowledge organisations’ or ‘learning
organisations’, organisations capable of quickly absorbing and embedding new knowledge.
Note that knowledge capacity is not just a matter of innovation; that is only part of the
picture. Successful companies learn from a variety of sources including the environment
and the competition as well as creating knowledge internally.
Another important point to make concerning knowledge is the difference between
explicit knowledge – knowledge that can be easily codified, transmitted and shared – and
tacit knowledge, which is locked up inside companies or people because they find it hard
to express what they know or how they know it. For example, a football player may
know how and when to pass the ball to a team-mate to set up a chance of scoring a goal,
but when asked to explain exactly how he knows the right moment to make the pass, he
might struggle to explain. A painter knows exactly what pigment to use and what
brushstroke to apply, but she may well have difficulty explaining her technique to
another person, especially someone who is not a painter. Nonaka and Takeuchi (1995)
argue that the staff and management of any company represent a huge untapped reservoir
of tacit knowledge, and one of the tasks of management is to help people to make
explicit and share the many things that they often only half-consciously know.
Knowledge is essential to organisations (Witzel 2015), and lack of knowledge is one of
the main things that holds them back. Companies need knowledge in a variety of
dimensions: knowledge of markets, knowledge of suppliers, knowledge of financial risks
and opportunities, knowledge of the best and most efficient methods of production,
knowledge of new technology, knowledge of how to manage people; the list could go
on forever. If they lack knowledge in a key dimension, then decision making becomes
more risky. Companies either make bad decisions through lack of knowledge, or they
become afraid of the consequences of making decisions without knowledge and do
nothing. Let us look again at the list of reasons why companies engage consultants from
Chapter 5:
1 identifying and solving problems

2 gaining a fresh and objective perspective
3 the need to be challenged and stretched
4 access to specific expertise
5 seeking to benchmark or learn about best practice
6 access to more and better analysis
7 supplementing existing staff
8 training.
The need for knowledge is implicit, to a greater or lesser degree, in every one of those
eight reasons.
Consultants are a powerful source of knowledge capacity precisely because management
consultancy firms are true knowledge organisations in every sense. The average con-
sultant probably knows no more than the average client (though as we said earlier, he or
she will know things the client does not know, and vice versa). It is not how much they
know that sets consultants apart, but their capacity for learning and developing knowledge.
Consultancy firms know the truth of de Geus’s statement that the only sustainable form
of competitive advantage is the ability to learn, and any consultancy firm that stops
learning will not last for very long. Consultants don’t just use knowledge; they think
about knowledge, sources of knowledge, where and how to get more knowledge, all the
time. It is a constant part of their work, and if they slip up in this area, they will start to
fall behind. It is this thinking about knowledge and capacity for learning that consultants
can pass on to clients, and it is far more important and valuable than knowledge itself.
How can consultants provide knowledge capacity? There are three principal ways.
The first is direct knowledge transfer: the consultant in effect ‘teaches’ the client what he or
she knows, through problem solving, provision of specific expertise or analysis, or training.
This provides raw knowledge, but it also builds capacity: cognitive scientists tell us that
the more we know, the easier we find it to learn, and so increasing the stocks of
knowledge in a company should also improve its learning capacity.
The second we can call learning by osmosis. If consultants and managers from the client
organisation work closely together and the latter are involved in analysis and decision
making, they will get used to the consultant’s ways of working and will begin to
adopt these methods themselves. Managers who work with consultants for long periods
will tend to pick up the routines and ways of thinking of the consultants, often
unconsciously.
Third, there is co-created learning and capacity building through dialogue and discussion.
Talking with consultants and sharing information with them helps clients to become
familiar with new concepts, including new concepts of knowledge management and
learning. They do not so much learn directly from the consultants, but rather the inter-
action sparks off learning and thinking processes in the client managers that gets them
used to engaging in knowledge and learning in different ways.
There will always be finite limits to what consultants can do in terms of knowledge
capacity building, and it is important for consultants to realise this from the beginning
and managing expectations. Above all, never, ever should consultants go into a client
organisation pretending to know more than the client, or assuming the pose of teacher
or wise guru. This puts the client in an inferior position, which can lead to humiliation
and resentment on the part of the latter. ‘Stuck-up consultants who think they know
everything’ will struggle to achieve impact. The best course is ‘confident humility’; be
confident in what you do know, admit candidly what you don’t know, and be prepared
to embark on a learning journey with the client, rather than lecturing to them.
People capacity
People capacity means having the right people in the right places to enable the organisation
to carry out its mission and achieve its goals. It is an area where businesses often struggle,
particularly when growing rapidly or embarking on a radical change in strategy such as
expansion overseas or moving into entirely new product/service markets. Having the
‘right people’ in turn means not only people with the skills and competencies to carry
out their jobs but, at senior levels in particular, the vision and understanding to design,
develop and execute ambitious strategies in a realistic way. Without the right people in
the right posts, without the right mix of skills and vision, companies will at best struggle
to reach their goals and will at worse flounder and fail.
Consultants can again add people capacity in one of three ways. The first is through
direct substitution. Here, a consultant is seconded to a client company for a period of time
to provide skills and competencies currently lacking. Not every consultancy firm is happy
doing this, as they fear compromising their independence; others see this as an essential
part of client support, especially for young, rapidly growing companies where the
management team has enthusiasm and drive but lacks essential experience.
Direct substitution is usually seen as a short-term solution; while in the seconded post,
the consultant should also employ mentoring and coaching and develop enabling systems to
ensure the capacity building is permanent. Of course, sometimes the client firm makes
the consultant an attractive offer and he or she leaves the consultancy and joins the client
company, thus making the substitution permanent after all.
The second method is mentoring and coaching. This typically happens at quite a high
level in the client organisation, at board or just below, but there is no reason why this
cannot go on at any level. Here, consultants pass on knowledge and skills they have
received, but they also use mentoring and coaching techniques to help client managers
become more reflective, improve their analytical skills, learn to focus on core issues, and
above all else, become more confident and more willing to take responsibility and accept
justifiable risk. Familiarity with mentoring and coaching skills is increasingly becoming
part of the consultant’s basic toolbox.
Finally, consultants can help to create enabling systems and structures that will help client
executives and managers do their jobs better. Something as simple as a good manage-
ment information system, or a more clear and less cluttered line of communication
between key people, can give managers access to more and better information and
improve their confidence in decision making. A common problem among high-growth
companies is that growth in management structures fails to keep pace with the expan-
sion of the rest of the business, so that senior managers and executives are in effect
working below their pay grade. Structural reforms such as bringing in new managerial
posts to support the executive can free up time for consideration of bigger issues such
as strategy.
This brings us with nice circularity back to systems capacity, and the final point to be
made here is that capacity building is seldom a matter of choosing between one of three
options. True capacity building usually requires attention to all three areas, systems,
knowledge and people. After all, within organisations, all three are closely interlocked; it
follows that any capacity-building measures must reflect this.
Chapter summary
We started this chapter by looking at problem solving and considered a variety of
problem-solving tools, how they work and some of their strengths and weaknesses. We
looked at problem-solving biases, and underlined the importance of being aware of these
biases and looking out for them in one’s own thinking. We then moved on to capacity
building and looked at how capacity can be built in three key areas, systems, knowledge
and people.
There is of course a danger in reducing either problem solving or capacity building to
step-by-step processes (and of course, we must never get that in many consultancy
engagements, problem solving and capacity building happen at one and the same time).
Every engagement is different, every client is different, every problem is different. We
look for similarities and analogies because they help us to understand and make sense of
what we see, but we must never forget the unique nature of consultancy engagements.
Consultants need be prepared to mix and match their tools, picking the right ones for
the right engagement. If they get the mix right, then they should be able to have impact;
and that is the subject of the next chapter.
Student exercise
Go back and examine the seven problem-solving methods described above:
1 weighted options
2 trial and error
3 abstraction
4 reduction
5 analogy
6 hypothesis testing
7 disproof.
Consider them carefully, and then answer the following questions:

What are the strengths and weaknesses of each of the seven? In what sorts of
situations would you employ each, and in what sorts of situations would each not be
suitable?
Which of the seven will be most prone to bias? From the section on bias in problem
solving, work out what kinds of bias will affect them, and why.
Student exercise
In Chapter 2, we discussed five areas where companies feel it is particularly important
to build capacity:
strategic thinking
risk thinking
resilience
international experience
sustainability.
In each case, consider the kinds of capacity needs a growing company might have.
What elements of systems, knowledge and people would each company need? How
do you think you, as a consultant, could go about providing these?
Case study: Samaya

Samaya is a watch manufacturer located in the Indian city of Bangalore. It is one of the
largest branded watch makers in India, its main rival being Titan. Samaya was founded
five years ago and quickly made a name for itself with ranges of watches for both men
and women that were stylish and reliable. Although watch purchases worldwide have
declined thanks to the introduction of smartphones and other devices, Samaya has
bucked the trend and seen its sales rise steadily.
Market research suggests people buy Samaya watches as style accessories rather
than as time-keeping devices, and on the back of this Samaya has also branched out
into jewellery, hair accessories for women, and most recently a highly successful
cosmetics range. The company is considering a move into fashion footwear, but has
not yet made a decision on this. At the moment, watch sales still account for 92 per
cent of turnover, but the other ranges have grown very quickly since their launch and
the Samaya board believes there is clear potential.
Turnover last year was $332 million, with about 11 per cent of income derived from
exports. The level of exports has also been rising steadily, mostly to Pakistan, Sri
Lanka, the Gulf States and Southeast Asia, but Samaya has also had inquiries from
importers in the UK, France and the USA. The company also believes its products
would do well in Japan, as many middle-class Japanese are quite fashion-conscious.
Samaya’s board have made international expansion a priority, as its products sell for
higher prices than in the Indian market.
Preliminary analysis carried out by a team of consultants from your firm suggested a
number of strategic options. Samaya’s board has chosen to focus on four of these in
particular:
buying an established fashion footwear manufacturer in either the UK or USA and

then using this company and its products as a channel for distributing other
products made in India.
concentrating on establishing a watch market overseas, and setting up a
production facility in either Europe or the UK.
adopting a purely export strategy but concentrating on watches for the moment,
where the company has a proven competence.
adopting a purely export strategy but focusing on cosmetics and accessories,
using these to establish brand presence before developing the watch market.
Based on what you have read here, how would you use each of the problem-solving
methods discussed above? What results might you expect from each? What problems
might you encounter in using them? What problem-solving biases will you need to be
aware of?
Case study: Nordanvind Hotels

Nordanvind Hotels was founded in Sweden in 1912. Its first ski resort, Nordanvind,
was a luxury hotel favoured by the rich and famous across northern Europe. Expan-
sion did not begin until the 1970s when the third generation of the owning family,
seeing the increase in air travel and package holidays, began buying other hotels
across Scandinavia. Today the company owns fourteen hotels in Norway, Sweden and
Denmark, a combination of ski resorts, summer resorts and year-round hotels, and is
about to conclude the purchase of a spa hotel in Iceland.
Nordanvind is now interested in expanding further, and has possible acquisitions
planned for the Canadian Rockies, the Adirondack Mountains in New York, the Andes
in southern Chile, the Julian Alps in Slovenia, and the South Island of New Zealand.
However, Nordanvind is conscious of the difficulties it will encounter in managing such
an expansion. The firm is still family owned, and most of the board members have
some family connection. Their IT and financial systems still suit those of a mid-sized
family hotel chain, not a global luxury resort operator. Although all the directors are
well travelled, none have experience of running a business outside of Scandinavia.
They are aware that they need to build capacity, quickly, if they are to stick to their
expansion plans. They have called on your consultancy firm for help, and engaged you
to work with them for six months.
What mix of the three capacities discussed in this chapter, systems, knowledge and
people, will Nordanvind require? How would you go about delivering on these within
the six-month time frame?
8 Impact
Impact is a major issue for management consultancy firms, yet there have been very
few empirical studies of impact and academic literature has paid little attention to
the issue. Many books on management consultancy mention impact only in passing;
some do not mention it at all. And yet, few issues in management consultancy are
more important.
Good consultants spend much of their time thinking about impact and trying to
make a difference to clients. They do so for three reasons. First, firms need to
demonstrate that they really do make a difference to clients and thus the fees charged
by consultants are justified; second, to respond to those critics of the consultancy pro-
fession who argue that their fees are not justified; and third, and in my view most
important, for their own satisfaction. Consultants are highly intelligent, highly moti-
vated people, and the good ones take up consultancy not because they want to make a
lot of money but because they feel that, through their consultancy work, they can
make a difference. They need to know that there is impact, because this is what makes
their work worthwhile.
Perhaps one reason why the subject has received comparatively little attention is its
difficulty. Defining impact is not easy, and measuring it is extremely difficult. More than
fifty years ago, Johnston (1963) had already come to the conclusion that it is very difficult
to accurately measure quantitatively the productivity and impact of management con-
sultancy firms. A later study by Wright and Kitay (2002) found that most management
consultants and most clients use entirely subjective measures, apart from a few of the
larger consultancy firms which have tried, not particularly successfully, to link impact to
improvements in the bottom-line performance of client organisations.
Actual analysis of impact is rare. Sahlin-Andersson and Engwall (2002) concluded that
the management consultancy profession as a whole had played a role in increasing levels
of knowledge about good practice among managers. A study by Nachum (1999) examined
the productivity of management consultancy firms in Sweden and concluded that there
had been some positive impacts, while Bloom et al. (2013) conclude that the improved
productivity of textile firms in the Mumbai area over a three-year period could be linked
to management consultancy interventions.
McClellan (2010) is a rare example of an academic study focusing specifically on the
notion of impact. In particular, McClellan argues that impact is not just the outcome of
the consultancy process, but is created at every step of the engagement from beginning
to end. I will come back McClellan’s criteria for evaluating impact shortly, but first
we need to come to some understanding of what impact is and arrive at a working
definition.
Impact 103
What is impact?
Wright and Kitay (2002) noted that some management consultancy firms, mostly larger
ones, attempted to quantify impact by linking it to improvements in financial perfor-
mance, productivity and other bottom-line measures following the conclusion of the
consultancy engagement. This is the wrong approach, for two reasons.
First, as we saw in Chapter 2, it is impossible to prove a link between the work of the
consultants and improvements in the performance. Those improvements might have
many causes, of which the work of the consultants is only one. Business improvement
programmes can take a very long time to mature; the performance increase might be the
result of other projects undertaken months or even years before (they might even be the
result of a previous consultancy engagement with different consultants) that are only just
now beginning to bear fruit. They might be the result of changes in market conditions,
in entirely unrelated performance improvement or cost reduction programmes, and so
on. In other words, there is no way of proving cause and effect beyond a reasonable
doubt. We can assume that improvements might be the result of our consultancy work,
but to some extent we will always have to take this on trust.
Second, we can use the method of analogy to compare impact with product/service
quality, concepts which closely overlap. It is axiomatic in quality thinking that quality is
determined by the consumer (see for example Crosby 1979). The highest quality product
is not the one made from the best materials, or the one with the most product features,
or the one made to the highest specification; it is the one that most closely meets customer
needs and delivers most value to the customer. A meal at a Michelin-star restaurant and a
frozen pizza can both be of equal quality, if they meet the demands of particular consumers
at a given moment.
Let us apply this rule that quality is defined by the consumer to management consulting.
The ‘consumer’ in this case is the client; the ‘product’ is the advice, knowledge, problem
solving and capacity building delivered by the consultant to the client. What determines if
this is of high quality? Can the consultant say that the service was of high quality because it
meets their own high standards for service delivery? Can the consultant say that the service
was of high quality because it led to a 50 per cent increase in profits, or a 30 per cent
increase in productivity, or a 40 per cent increase in market share on the part of the client?
I have seen instances where all these things were delivered, and yet the client was still
unhappy and did not work with the consultant again. Does this mean there was impact?
And even if there was, how long does impact last? How long before the beneficial
effect, if any, of the consultancy engagement wears off and the client needs assistance
again? We referred in Chapter 3 to the controversy over Peters and Waterman’s In Search
of Excellence (1982) and how, ten years later, some of the ‘excellent’ companies were
having financial problems or had disappeared altogether. Some of this criticism was
unfair; it is impossible for a consultant’s impact to last for all eternity, and calling in a
consultant does not then make a company invulnerable to further harm. But how long
does impact last? And how long should it last? These are imponderables, and yet they are
vital to impact. If a company spends several million dollars on a consultancy engagement
and, six months later, can no longer see any benefit, then that company is unlikely to be
satisfied with the impact. But if after six years the company can still see the benefit, then
satisfaction is much more likely to ensue.
A final complicating factor is the switch in emphasis from problem solving to capacity
building. When the consultancy engagement focuses purely on problem solving, it is
easier to evaluate impact. There is a beginning, middle and end to the project, the pro-
blem is identified, analysed and solutions are found and implemented, and at the end an
outcome can be measured: was the problem solved successfully?
With capacity building it is quite a different story. Capacity building is, or should be,
delivered in advance of need; companies build capacity so that they can grow in the
future, even if it is the near future. But no one can predict for certain when that addi-
tional capacity will begin to yield value, or how much. Capacity building too is a leap of
faith; companies do it because they know they must, and because they are aware of the
consequences if they do not, but they cannot predict the future and they do not know
entirely what will happen. Certainly it is much less easier to define an outcome.
Bearing all of this in mind, then, let us attempt to define impact. From the previous
discussion, we can state the following propositions:
Impact, like quality, is defined by the client.
In fact, handing over the definition of impact to the client makes sense. No matter
how well the consultant knows the client organisation, he or she can never be entirely
sure what matters to the client and what does not. Some aspects or features of the service
that the consultant values highly may be of little interest to the client. For example, it
may be very important to the consultant that their research methods are empirically
proven to work; the client might not care, so long as satisfactory results are achieved.
Also, some of the benefits the client feels might be all but invisible to the consultant, and
some might take months or even years to emerge.
Impact can have both qualitative and quantitative value.
While it is quite true that the quantitative value of a consultancy engagement in terms of
bottom-line improvement cannot be empirically proven, there is no harm in making the
calculation anyway, provided that caveats are applied. Any number arrived at must be
treated as indicative, and the number must also be one that the client agrees seems realistic.
And as McClellan (2010) says, a wide range of qualitative measures must also be employed.
Impact should be lasting.
While there is no general agreement as to how long the impact of a consulting

engagement should last, it would seem sensible for the consultant and client to agree to
this at the outset. As a part of the process of setting client expectations, the consultant
should give a realistic assessment of how long the outputs of the engagement will con-
tinue to yield value. This should be done on the basis of those outputs that the client
values most. Here are a few examples:
strategy: Realistically, how long will this strategy serve the client and when will
another strategic review be needed?
competitive advantage: How long can the client expect to enjoy any advantage stemming
from the engagement, before new entrants come into the market, new technologies
threaten its core products, existing competitors raise their own game, and so on?
financial systems implementation: How long will any new financial systems last,
with upgrades, before they need to be completely overhauled and replaced?
Impact 105
restructuring: How long will the re-designed structure suit the company’s needs, and
when will it need to begin considering restructuring again?
process improvement: How long until new technology or changing products make
the processes obsolete?
capacity building: How long will the new capacity serve the company before new
capacity-building initiatives need to be considered?
This leads us to a simplified definition as follows:
The impact of a consultancy engagement is the combination of qualitative and qualitative value
enjoyed by the client over a defined period of time.
This definition is necessarily vague, and it has its weaknesses. One is that the client
may not entirely understand or recognise the value that the consultant has delivered. The
consultant can reduce the risk of this by setting expectations clearly at the outset, and by
conducting regular impact measurements and sharing these with the client. A second
weakness is that there may be no agreement as to the defined period of time; this again
may be a problem of unrealistic client expectations. The third is that a client’s senior
management and leadership may change, and the incoming leaders may not agree with
their predecessors as to what constitutes value, thus undermining the original agreement.
As part of that process of setting expectations, both sides need to be clear about the
limits of what consultants can and cannot do. Consultants are not miracle workers, and
they do not make companies invulnerable to competition or economic forces. Consultancy
engagements are temporary, and subsequent changes in strategy, focus, leadership, etc. may
well take the company in directions the consultants never intended.
More than one consultant has visited a client company a few years later to find that
new managers have thrown out or ignored the recommendations he or she had made. If
the client company then gets into trouble, that is not the consultant’s fault. On the other
hand, will the world see it that way? Many consultants have been blamed for the sub-
sequent failure of companies they worked with, despite the fact that the failure was in no
way their fault. All such blame impacts on the consultant’s reputation.
This brings us back to a point made early on in this book: right at the start of the
negotiation process, the consultant should determine whether it is possible to have
impact with this prospective client. Will the client listen? Will they be active partners in
the engagement? Is their top management of sufficient quality and sophistication to come
up with the ideas the consultant needs? Will the management team be able to implement
any solutions we propose, with any confidence of success? If the answer to any of these
questions is ‘no’, then the consultant should consider whether to take the engagement.
This may sound harsh, as if the consultant is putting their own reputation first. On the
other hand, consultants who lose their reputation by failing to make impact do not
remain consultants for very long.
How can impact be measured?

McClellan (2010) rejects purely financial and performance metrics as adequate measures
of impact. From his own research, he proposes instead that impact can be measured on a
large number of client-centred dimensions. Table 8.1 shows the full range of these
dimensions, which he groups into six categories: formulation of the problem,
Table 8.1 Criteria for evaluating consultancy services
Evaluation category Dimensions of evaluation
Formulation of problem Brought awareness of issue needing resolution
Clarified sponsor’s (i.e. the executive or team responsible for
bringing the consultants in) intention regarding outcomes
Identified competencies required to resolve issues
Confirmed resources needed to resolve issues
Defined/shaped problem/statement/question
Articulated necessary/desired outcomes
Confirmed nature of opportunity merits strategic investigation
Conveyed sense of urgency regarding potential opportunity
cost
Constitution of project Considered because of past activities (reputation, experience)
Presented qualified personnel (team leader, team members)
Showed understanding of specific requirements of the situation
Brought applicable industry/company/functional
knowledge
Demonstrated mastery of applicable methods/technologies
Presented credible approach/plan to solving the problem
Proposed appropriate timeline with a sense of urgency
Conformed to budget expectations and expected value
proposition
Communicated competence to solve problem
Provided evidence of fit with organisation
Engendered sense of comfort to project sponsor
Experience of the Managed all phases of the project in an orderly manner
engagement Assigned sufficient and appropriate personnel to the
project
Met contractual milestones (timing, expense) and
interim deliverables
Practiced collaboration/inclusion inside the
organisation
Focused appropriate internal and external resources on the
problem
Minimised disruption to the organisation (time, staff,
mind-share)
Conducted comprehensive, competent data-driven
investigation
Surfaced, explored and/or brought forward relevant options
Applied creativity to developing strategy
Found ‘ah-ha’ insights (different, reframed, breakthroughs)
Maintained integrity (objectivity, non-political)
Delivered credible answer(s) to problem/question posed
Proposed practical paths forward
Accounted for competency of the management team
Crafted a compelling storyline and presentation
Assimilation of results Gained trust of key decision makers
Refocused issues or reframed mindset of the
organisation
Fostered cohesion among decision stakeholders
Obtained commitment to action from key decision
makers
Met goals of project sponsors, whether ‘pure’ or
‘political’
Impact 107
Evaluation category Dimensions of evaluation
Determination of Changed inputs (resource allocation, staffing, goals, priorities)
outcomes Changed processes (the way we do things, organisation,
structure)
Changed context/culture (the way we see things, the way we
behave)
Changed outputs (financial measures, closely watched
numbers)
Achieved transaction (buy, sell, trade, LOBs or companies)
Prevented disaster (what we would have otherwise done)
Improved strategic position, viz. The Future that Unfolded
Seen as having generally benefitted organisation
Extended relationship with consultant (implementation,
follow on)
Incidental benefits Generated energy inside the organisation
Forwarded the sponsor agenda
Identified ‘accidental’ opportunities
Provided learning (individual, group or institutional)
Improved organisation’s capabilities or competencies
Contributed to personal advancement (sponsor, team,
consultant)
Reframed mindset of organisation in general (we now see
things differently, do things differently, have greater
aspirations)
Source: McClellan (2010)
constitution of the project (setting up the project team, etc.), experience of the engage-
ment (that is, the process of analysing and problem solving), assimilation of results (the
process of presenting and agreeing final recommendations), determination of outcomes
(including where relevant, implementation) and incidental benefits derived. Each
dimension is expressed as a statement about the consultant’s contribution, with which the
client can agree or disagree; responses could also be scored on a scale of 1–10 with 1
meaning strongly disagree and 10 strongly agree.
Highlighted in bold in Table 8.1 are fifteen issues that McClellan’s research found to
be most frequently mentioned by clients, and therefore most likely to determine client
satisfaction and therefore impact. It is worth considering the implications of these, and
also of those issues that were not highlighted by clients – but, in terms of impact, are still
important.
First, it is interesting that none of the issues identified under formulation of the problem
were among the most frequently mentioned by clients. Yet, from a consultant’s point of
view, these issues are vitally important: they help establish the scope of the problem,
client expectations and the nature of the relationship. One implication would seem to be
that these formative steps happen under the radar for many clients, or at least are not
considered a priority. It would therefore follow that the consultant needs to take the lead
here in order to ensure that these things do get done.
Under constitution of the project, the issues that most concern clients are the members of
the project team and the knowledge they bring with them. The implication here is that
clients want what they are paying for. They want, and expect to get, experienced,
knowledgeable professionals. Failing to provide a top-quality consultancy team will cause
the client to lose confidence from the outset, and this is bound to affect impact.
The composition of the consultancy team comes up again under experience of the
engagement, but here the emphasis changes. Here we can see that the client’s impression
of impact is heavily influenced by the process, not just the result. Metrics that rely purely
on value creation or financial metrics will miss a rich range of issues that contribute to
client satisfaction. The McClellan research suggests that clients value the process of the
engagement nearly as much, or even as much, as the results.
Certainly clients are looking for professional competency on the part of the consultants,
and they will scrutinise the process and expect data-driven investigations; these give them
more confidence in the outcome. But they are also looking for direct contact with the
consultant through the process. ‘Accounting for the competency of the management
team’, means that the consultants are able to work at the same level as the management
team, identifying strengths and weaknesses, understanding where the management team
has gaps and helping to fill those.
Further, ‘minimising disruption to the organisation’, certainly does not mean the
consultants should be invisible. On the contrary, they must be very much present, for
this is how learning by osmosis occurs. What they must not do is unnecessarily distract
staff or take them away from their own important tasks. This leads us to the conclusion
that a consultancy engagement should as far as possible blend into the ordinary working
life of the client organisation. Consultants must fit in.
The view that the engagement process, whether problem solving or capacity building
or both, is as important as the outcome is reinforced when it comes to assimilation of
results. All five issues in this category are noted as being highly important. I will single out
just two here, reframing mindsets and fostering cohesion among key decision makers.
Impact here means (a) changing people’s perceptions of the world around them and
(b) creating consensus as to how to respond to those new perceptions. This is change at a
deep level, a long way below pure problem solving; this goes right to the heart of
capacity building, not just giving people knowledge and tools but changing the way they
think. With new perceptions, greater confidence and greater cohesion, companies are
better equipped to go forward.
With determination of the outcomes, on the other hand, the results are fairly predictable.
The implication of this research suggests that clients are not so much interested in the
metrics of change, the value that change might create; rather, they want to know that
change has occurred, and that this change has the potential to make the company more
effective and more efficient. A further implication is that clients themselves are less
focused on the notion of measuring value than are consultants themselves, a conclusion
partly supported by the work of Wright and Kitay (2002). In other words, clients know
that the future is uncertain and nothing can be predicted, and won’t necessarily blame the
consultant if things go wrong in future. (This will not stop outside observers in academia
and the media from doing so, of course.)
Under incidental benefits, the one issue singled out was the provision of learning. Clients
clearly value the new knowledge that consultants bring, but as we saw in the last chapter
there are several kinds of learning, and once again consultants need to be careful not to
be seen as gurus, wise sages who have all the answers to all the problems at their fingertips.
Learning by osmosis and co-created learning are more likely to produce impact than
lecturing or teaching clients.
Finally, we should note that several issues not highlighted are nonetheless vitally
important. Clients may not see them as things that are essential to be done; but assuredly,
if they are not done, there will be negative impacts on the engagement. Examples
Impact 109
include engendering comfort to the project sponsor, exploring and bringing forward
relevant options, maintaining integrity, crafting a compelling storyline and presentation,
and preventing disaster. The highlighted items are those on which the client is most
likely to directly assess the consultant; that does not make the other issues any less
important, or mean they do not have to be done.
Impact over time

One thing missing from McClellan’s model, and from most discussions of impact, is the
concept of time. Research still needs to establish whether the relative importance of
some of these dimensions increases and decreases over time. Anecdotal evidence from
clients suggests it does: in the immediate aftermath (up to six months or a year after the
conclusion of the engagement), the client places most value on outcomes, changes in
inputs, process, outcomes and so on. In the medium term, two to three years, the focus
shifts to learning and clarity of thinking and cohesion. Longer than that, there is very
little evidence, and it is possible that three or four years marks the point at which the influ-
ence of a consultancy engagement starts to wane; changes in the market, in technology, in
competition and so on mean that the company now faces a new set of problems. This
has, however, to be proven.
How can impact be stated?

Another problem with impact is that it can be very difficult to make a clear impact
statement. Thus when someone asks the question, ‘what impact did this engagement
have?’, it can be very difficult for either client or consultant to answer coherently. Both
sides know that there was impact; both sides know that the client organisation is now in a
better place than it was before the engagement started, but that knowledge is tacit
knowledge and they struggle to make it explicit.
One way of getting around this problem is to agree on some key measures of impact
during the negotiation process, using McClellan’s framework above or other suitable
methodologies. If both sides agree at the beginning what impacts they are looking for
and state them clearly, both can then agree at the end whether they think those impacts
have been achieved. Metrics can be used, but simple yes-no questions will often suffice.
Client and consultant can then both say clearly that this agreed impact was achieved.
Shareholders may well want to know the monetary value of each impact, and as we have
seen that can be very difficult to estimate; but at least a reasonable, agreed case can be
presented.
The impact measuring process: what consultants should do

When attempting to assess or measure impact, whether using the framework above or
any other framework or methodology, consultants should follow five rules.
First, agree with the client what things will constitute impact. What does the client
value most, and what do they need to get from the engagement? It is important that
impact measures relate only to outcomes directly related to the goals of the engagement,
not to the client’s wider goals and mission.
Second, a time frame should be agreed. How long is impact likely to last? This will
depend on the nature of the work being carried out, but as we said above, it is
uncommon for a consultancy engagement to still be yielding assessable value after three
or four years, though the feel-good factor may well last longer than that.
Third, agree with the client how impact will be assessed, quantitatively or qualita-
tively? What limitations are there on measurement and what caveats must be applied to
the results?
Fourth, measure and assess impact during the client engagement, and check to see
whether the client is satisfied with and deriving value from the process.
Lastly, continue if at all possible to measure impact at intervals after the project is over.
There may be problems in doing so; for example, if the CEO or others who brought the
consultants in depart and are replaced by other people no longer interested in continuing
the relationship, then doors may be closed to the consultant. Care must be taken also not
to intrude too heavily on the client or waste their time. Often, key impact measures can
be discussed in a single phone call with the client every six to nine months, and a
qualitative assessment derived from the client’s opinions. This is not exactly precise, but it
should satisfice.
Chapter summary
This chapter dealt with the difficult issue of assessing impact and understanding what
it means. We looked at some of the problems and difficulties with assessing impact, and
at defining impact as a measure of quality, determined by the client. The definition at
which we eventually arrived was the combination of qualitative and qualitative value enjoyed by
the client over a defined period of time.
We then moved on to discuss the measurement of impact, arguing that purely quan-
titative measures will not suffice and suggesting the McClellan framework as an example
of how to include more qualitative measures and move the focus to the client. We dis-
cussed the importance of measuring impact over time, as some impact measures will
change with time, and we looked at how impact can be stated and described in a more
explicit manner. Finally, we offered some suggestions as to what consultants should do in
order to obtain better and more explicit understanding of their impact in any given
engagement.
Of course, there are times when there is no impact, or negative impact. No matter
how much care is taken, things do go wrong in consultancy engagements, and it is to
this issue that we turn our attention in the next chapter.
Student exercise
Go back to Table 8.1 and look at the impact measures, referred to there as ‘dimen-
sions of evaluation’. If time permits, look at each measure; if not, use the highlighted
fifteen as a sample. For each measure, answer this question: as a client, how would
you expect to see those impacts demonstrated during a real consultancy engagement?
What evidence would you want to see?
Write down as many things as you can think of next to each item. Then, as a con-
sultant, refer to the lists you have created and think how you would do in the course of
your daily work to demonstrate impact to the client. Again, write down as many
behaviours and actions as you can think of that would help you to demonstrate
impact.
Impact 111
Case study: Handyman Building Supplies

Handyman is an American building supplies chain headquartered in Lincoln, Nebraska
and with a chain of 146 outlets across the western half of the USA. Fifty-two of these
outlets are directly owned; the rest are franchises, with fourteen franchise holders
dividing up the outlets between them. Each franchisee holds the franchise rights for
one American state; Handyman has kept direct ownership of outlets in Nebraska,
California and Washington state.
Handyman was founded just over forty years ago, originally as supplier of tools and
materials to the house construction industry. Over time it has evolved into a consumer
retail business, and today more than 90 per cent of sales are to the home improvement
or ‘do-it-yourself’ market, householders who want to make repairs or improvements to
their homes as a hobby or leisure time activity.
Each Handyman outlet stocks the same range of goods, and around 8,000 varieties
of tools, fixings and raw materials are carried in each store. In order to keep stock
costs down, Handyman has a warehouse in each state, and each store has a com-
puterised just-in-time ordering system; the aim is to ensure that all stock orders are
fulfilled within twenty-four hours, sooner if possible. This system has so far worked
well, but it is predicted that if customer demand increases any further, the system will
come under strain. Failure to fulfil orders could lead to empty shelves, and dissatisfied
customers.
Although the home improvement market in western USA has flattened out, Handyman
has continued to grow, winning market share from some its larger rivals. Handyman is
famous for its smiling, friendly staff, and products are always available when needed.
Handyman has also invested significantly in advertising in key markets, supporting both
the company-owned stores and the franchises.
However, Handyman now reckons it has reached the end of its growth potential in
the western states. Its board have been considering several options. One is to expand
existing stores to create a larger range of products; an expansion into gardening sup-
plies, or into fitted kitchens and bathrooms, have both been discussed. A second option
is to invest in a new chain, again perhaps concentrating on gardens or fitted kitchens,
but to spin this off from the core business and run it as a subsidiary. A third option is
to expand the Handyman brand east of the Mississippi, especially into the more
populous north-eastern states, although it is known that competition is more severe
there and Handyman will have to work hard to establish a brand presence.
Handyman has engaged your consultancy firm to carry out a strategic review to
look at these and other options.
What impact measures do you think will be most important to Handyman? How will
you go about demonstrating impact?
Case study: Fatermékek Temesvárról

Fatermékek Temesvárról was founded in southern Hungary in 1994 by Ferenc Nágy, a
former official in the state forestry service. Nágy is still the primary shareholder, but he
has handed over control of the company to his daughter Erszébet, who serves as
managing director. The company is privately owned. It had a turnover last year of €143
million, and profits of $4.6 million.
Fatermékek Temesvárról produces wooden domestic and office furniture, and also
products such as wood panelling for walls and hardwood floors. It has several markets:
panelling and walls go mostly to the building trade, while office furniture is sold to B2B
office furniture specialists and domestic furniture – mostly chairs and tables – goes to
consumer retailers. The company has no direct retail presence itself.
The office furniture market was formerly very profitable, but that industry experi-
enced a slowdown as Europe’s economy faltered after 2008 and the sovereign debt
crises; the German market, formerly very lucrative, has seen a sharp decline in sales.
The market for panelling and floors also declined as the European house construction
industry went into a slump.
Domestic furniture, on the other hand, is doing well, and Erszébet Nágy thinks there
is real potential in this market, especially if she can get her products into furniture
showrooms in Western Europe and the UK. A combination of good quality and low
cost base means Fatermékek Temesvárról’s products should be very competitive. One
UK department store chain has already expressed an interest.
Two things are holding Fatermékek Temesvárról back. One is lack of capital. To
really push for export growth, Fatermékek Temesvárról will also have to expand its
production facilities in advance of growth, and this would require more capital than the
company has. Bank lending in Europe remains tight thanks to low interest rates, and
Hungarian banks have declined to back what they see as a risky export venture. Nágy
is wondering about pursuing a listing on the stock exchange in either Budapest
or Vienna.
The second is lack of management competence. Nágy herself has an MBA from
INSEAD and has worked in France and Germany, but most of her fellow directors lack
experience outside of Central Europe. Nágy doubts too whether they have the finan-
cial and managerial skills to run a considerably expanded company operating across
international boundaries.
Nágy has engaged your firm to conduct a review of the firm and advise on three
issues: (1) general strategy going forward, (2) whether to pursue a stock market listing
and launch an IPO, and (3) how to build capacity and strengthen the management
team. She has warned your firm that some of the other directors disagree with this
move: they resent outsiders coming into the firm and think the spend on consultants is
a waste of money. You get the impression that this is not the first time Nágy and her
fellow directors have disagreed on important points.
What impact measures do you think will be most important to Nágy and the rest of
her company? How will you go about demonstrating impact?
9 Failure and recovery
Every consultant has failures, and the longer and more illustrious the consultant’s
career, the more failures there will have been. One of the measures of a good con-
sultant is, when failure occurs, how well does he or she recover and retrieve the
situation?
Failure is a sensitive subject, and consultants and executives alike are often reluctant to
discuss it. As Witzel (2015) points out, there can be a tendency to sweep failure under
the carpet, to see them as one-off, unforeseen and unforeseeable events. In fact, problems
and failures are an inevitable part of managerial life; not everything we try will work.
The experience of failure at some level is inevitable. Preparing for that eventuality and
responding to problems as they arise, however, can make us and our organisations more
resilient and better able to cope with failure. Instead of hiding from failure, we need to
confront it head on. This chapter is therefore devoted entirely to dealing with failure
from a consultancy point of view: what can go wrong, and how to fix it.
As will by now have become apparent, the things that can go wrong during a consultancy
engagement are many and varied. It should be clear that when we talk about failure here,
we are not talking about small mistakes or errors, or procedural problems that arise
during the course of an engagement and need to be ironed out. Small misunderstandings
and lapses are bound to happen, especially on more complex engagements, and provided
these are corrected quickly and there is no damage to the client–consultant relationship,
there will be no further consequences.
Failure, in the sense we are using the term here, means failure to have impact. Failure
means the client did not get the value they were expecting. In worst cases, the client sees
only a negative impact, lost money and time spent on a project that did not deliver.
Just as it is possible to have impact on a number of different dimensions, so too it is
possible to fail on an equal number of dimensions. Below, we will discuss some of these
dimensions in more detail and the most common problems that lead engagements to
suffer failures. One critical element in the consultancy process is monitoring for potential
problems that might lead to failure. In consultancy as in medicine, prevention is always
faster, more efficacious and more cost-effective than cure; spotting potential problems
before they occur, heading them off and preventing them from happening is something
every consultant needs to become good at. And when despite the consultant’s best efforts
problems do occur, they need to be fixed at once, without delay. Waiting until the end
of the engagement and then going back to apply band-aids to open wounds is not a
viable option.
When failures occur, it is the consultant’s responsibility to ensure that the failure is
dealt with promptly and to the consultant’s full satisfaction. This is so for three reasons:
1 The consultant has a moral duty to the client. When engaging with the client, the
consultant promises to serve that client’s best interests. Letting failure stand, or
walking away from it, is not a morally acceptable option.
2 Accepting failure can be deleterious to consultants themselves. People become con-
sultants because they want to make a difference; they want to make a positive
impact on the world around them. If a consultant can accept that he or she has
failed a client and not want to do anything about it, then this calls into question
whether they should really be consultants.
3 Any failure has the potential to do damage to the reputation of the consultant and
the firm that employs him or her. However, recovering from a service failure and
fixing whatever problems have occurred can in some cases actually increase client
satisfaction and improve reputation. Clients are aware that things can and probably
do go wrong; they will judge the consultants on the basis of how quickly they put
the matter right.
And finally, it is important to learn from any problems that occur during an engage-
ment. To paraphrase George Santayana, those who do not learn from their mistakes are
condemned to repeat them. We will conclude this chapter by looking at how to learn
from failure and, hopefully, prevent the same mistake from happening again.
What constitutes failure?

Taking our definition of failure as failure to have impact, it should therefore be a relatively
simple matter to identify a failure once it has occurred, provided we are aware of the
possibility of failure and are on the lookout for the symptoms.
Why do failures occur? The four most common reasons are mismatched expectations, poor
communications, lack of competence on the part of the consultant and lack of competence on the part
of the client.
Mismatched expectations occur (1) when the client expects the consultant to do things
the consultant does not realise the client wants them to do, or (2) when the consultant is
under the impression that he or she is required to do something which the client does
not want or is not interested in. Examples of the first case would be the client believing
that the consultancy team will help to implement whatever recommendations they
make, while the consultants are under the impression that their involvement will end
with submission and acceptance of their final report, or the client believing that the
consultant will deliver results by a certain milestone when the consultant was not aware
that the milestone existed. Examples of the second case would be consultants suggesting
wholesale restructuring when the client has already made it clear that this is off the table,
or the consultant implementing a costly IT system which the client did not ask for and
does not want.
The best way to deal with the problem of mismatched expectations is to be sure that
the expectations of both parties are clear and agreed, in writing, before the engagement
contract is ever signed. Even so, misunderstandings are bound to occur at some point,
and the best course then is to ensure that lines of communication stay open, and for both
parties to talk regularly and ensure that each is clear about what is happening and what
will happen next as the project proceeds.
Poor communications are sometimes responsible for mismatched expectations, and for
other problems as well. It is essential for client and consultant to talk to each other
Failure and recovery 115
regularly, and for each side to have a first point of contact on the other side, someone
who can always be reached by telephone or email when needed. If that person goes on
leave or falls ill, a surrogate needs to be provided at once. Many of the problems that
arise during engagements can be nipped in the bud, provided both sides are able to talk to
each other and sort things out quickly. Problems that are left alone always grow in size.
Lack of competence on the part of the consultant is an unforgivable sin by the con-
sultancy firm. No consultant should ever be assigned to a role which he or she is not
competent to fill. When this happens, it is usually because of either carelessness or inat-
tention on the part of the consultant or engagement manner running the project, or
because the consultancy firm did not fully understand the nature of the engagement at
the outset and assigned the wrong people to it. Once again, it is critical to get these
details right at the beginning, to avoid problems as the engagement progresses.
Lack of competence on the part of the client refers to the sophistication and ability of
the client’s management team to understand the ideas and concepts the consultancy team
proposes. It sometimes happens, with inexperienced management teams in particular,
that consultants end up talking over the heads of managers. This is never good, as it
leaves managers feeling baffled and resentful of consultants who cannot speak their
language. Once again, it is essential to get to know the client and their capabilities at the
beginning, before contracts are signed, and the consultant must then make a judgement
as to whether they can work with and have impact with this client.
Failures of impact
In Chapter 8 we looked at the work of McClellan (2010) and his dimensions of
evaluation and impact, in particular the dimensions he highlights. In the interests of
continuity, let us look at those same dimensions and see what happens when impact does
not occur, and some of the reasons why. I have not picked all fifteen highlighted
dimensions – some overlap each other – but have picked the ones where failure is most
common.
The consultancy firm failed to bring appropriate qualified personnel to the project.
This could be a matter of competence, as discussed above; perhaps one of more of the
project team members, no matter how skilled they might be in other areas, lack the skills
needed to deal with this client. Alternatively, perhaps in the client’s view one or more
team members may have failed to exhibit appropriate professional standards: turning up
late for meetings, being discourteous to members of the client’s staff, talking indiscreetly
and so on. It only takes one team member to behave badly or lack competence for a bad
impression to be formed in the client’s mind; the good conduct and hard work of other
team members will be outweighed by this one bad impression.
Why does this happen? Inattention on the part of the engagement manager is one
problem, but simple lack of understanding by consultants of what is expected of them is
another. There must be fit between the consultancy team and the client’s expectations;
otherwise, the risk of failure begins to ramp up. At best the client may form a bad
impression; at worst they may become dissatisfied with the team’s work, and demand
that the consultancy firm replace some members or even the entire team. Failure to do this
can lead to the client breaking off the engagement altogether, on the grounds that they
can no longer work with the consultants.
The consultancy team failed to meet contractual milestones for deliverables.
This can include cost overruns, late delivery or failure to deliver what was agreed to an
appropriate standard. For example, the client might ask for a progress report at the end of
each month, but discover that this month’s progress report looks remarkably like the last
one; or the consultancy might suddenly present the client with a bill for additional,
unagreed costs. In either case the client will feel that the consultants did not deliver on
their promises. Most clients will overlook one lapse, but repeated failures to meet milestones
will in the client’s mind seem like incompetence. This can lead to early termination of the
engagement, withholding of the consultant’s fees until obligations have been met, or
both. Either will create an unfavourable impression in the client’s mind, and will damage
the consultant’s reputation.
Failure to meet milestones suggests incompetence on the part of the team, especially
the engagement manager, but there are other possible causes too. Poor communications
might mean the consultants have difficulty getting the information they need to keep to
schedule. In cases where there is a political element to the engagement, managers
opposed to the consultants or to the executives who hired them will sometimes engage
in defensive routines, passive or even active resistance to the consultants in hopes of
slowing them down and thwarting their work. Often, too, unforeseen problems come
up; key data may suddenly prove difficult to access, or investigations may turn up a new
problem which has to be solved. In these cases, some clients will be sympathetic and
understanding. Others will not.
The consultancy team did not collaborate with the client’s management team or include
them in decision making.
The client feels that they have been left out of the loop by the consultants, who are
making decisions without consulting with or informing them. This can lead to the client
in effect withdrawing from their side of the engagement, failing to collaborate with the
consultants in turn, meaning the consultants will find it difficult to get the information
they need. The client will also become less sympathetic towards any final recommenda-
tions the consultants make, and client managers will feel that a solution has been imposed
on them, rather than owning it themselves. This could lead to recommendations being
implemented half-heartedly or even ignored altogether, and thus there is no impact. The
client is also unlikely to speak favourably of consultants who behave in this fashion.
When this problem arises, it is usually because of poor communication. If the client
has nominated members of their own organisation to the consultancy team – which they
should have done – these may not be reporting fully to their superiors what the team is
doing. Sometimes the client is too distracted by other things to pay attention, and slowly
drifts out of the feedback loops. Confronted with the real situation, some clients will
understand and make an effort to re-engage; again, others will not.
The actions of the consultancy team were a disruptive influence on the client organisation.
Here, the consultants will be accused of wasting the time of client organisation managers,
distracting them from their ‘real’ duties, slowing up other projects by requests for data,
interfering with operations so that they can observe more fully and so on. Clumsy con-
sultants sometimes do all these things in their zeal to collect data; in other cases, the
perception of disruption does not reflect what has really happened. A single manager
having a bad day, irritated at a consultant’s request and responding sharply, can set off a
chain of perceptions of ‘nosy consultants’.
The consultancy team’s investigations were not thorough enough and were not properly evidenced.
Put simply, the client thinks the consultancy team did not do their job. The report might
be sketchy and full of holes; it might tell the client things they already know; it might be
full of assumptions and suppositions with no evidence to give the client confidence in its
conclusions. This is usually an issue of consultant competence, though sometimes less
sophisticated clients might not fully understand what has been put in front of them.
The consultancy team did not deliver credible answers to the problems and questions posed.
Similar to the above, the consultancy team delivers recommendations which clients
know from their own experience are not realistic and will not work. If the consultancy
team recommends that the client make a $100 million acquisition, and the client knows
their own cash flow and gearing will not permit them to do so, then this is not a credible
alternative. This situation usually arises because the consultants have not been thorough
enough in their initial examinations. Of course, this becomes a tricky issue if the client
has withheld or concealed some of the data needed to make recommendations, and
highlights the need for transparency and strong relationships of trust from the outset of
the engagement.
The consultancy team did not gain the trust of key decision makers.
This might be a matter of lack of professional standards; the consultants did not behave in
a way that made them seem trustworthy or competent, leading the client to have doubts
about them. It is a matter of simple human nature that if we dislike someone’s personal
conduct or manner, we are more likely to distrust them and less likely to listen to what
they have to say. Alternatively, weak recommendations backed by lack of evidence can
also lead to failure of trust; the client is unlikely to trust the consultant unless the latter
offers them something of interest or value.
This highlights the relationship between value and trust. If trust is initially established
on the basis of reputation and strong professional standards, as the engagement goes on it
will be won or lost on the basis of what the consultant delivers. If the consultant starts to
deliver value straight away, the client will be impressed and will want to hear more. If
the consultant delivers platitudes, or things the client already knows, or nothing at all,
the client will soon become disillusioned. For this reason, at the start of an engagement
consultants will sometimes go for ‘low-hanging fruit’ or ‘quick wins’, solving small pro-
blems or coming up with ideas quickly in order to make an impression. There is nothing
wrong with doing so, but these early impressions have to be followed up with real
substance later in the engagement.
The consultancy team’s recommendations led to dissent among key decision makers.
This can be a difficult area to manage. Consultants are bound to speak the truth as they
see it, and to be honest with clients at all times. It can be argued that if the consultant
presents a complete, coherent, well-evidenced set of recommendations and the clients
disagree over them, then that is the client’s problem and they should sort it out them-
selves. Problems arise along two dimensions. First, the disagreement may be so strong
that it paralyses the client’s board of directors, who cannot agree and end up making no
decision at all. Thus, no impact is made. Second, if there is a political struggle going on
within the client organisation, and the CEO who hired the consultants is faced with
entrenched opposition from other directors who refused to accept what the consultants
have recommended, the CEO himself will have failed. He or she might not thank the
consultants for this.
Consultants need to be aware of the background on the board and among the
executive team. The requirement to be honest is still there, but consultants might need
to temper some of their recommendations, or ask the CEO whether some should be left
out altogether, so as to improve the chances of getting a decision. There is an old saying
at the British Foreign Office: the truth, nothing but the truth, but not necessarily the
whole truth. In these highly charged situations, clients and CEOs may decide that they
have to temporise and adapt to the situation.
The consultancy project did not meet the goal(s) of the executives who commissioned
the consultants in the first place.
Paralysing disagreement among directors is one example of the goal not being met.
Others include inadequate or unworkable solutions based on poor analysis, failing to
challenge or stretch the client’s thinking, failure to provide desired expertise and learning
and failure to build capacity in the desired areas. If this, rather disastrous situation is the
outcome, then either the consultants failed to do what was asked of them, or they failed
to manage the client’s expectations of what could be done, or both. Once again, two
primary principles come into play: (1) be very clear from the outset of the project what is
expected of both parties and (2) always, always do what you promised to do. If both
those principles are followed and both parties deal fairly with each other during the
engagement, then this problem should not arise.
The consultancy team failed to initiate change.

Failure to initiate change spans a broad spectrum of outcomes. Perhaps the consultancy
team’s recommendations were not accepted; more serious, perhaps their recommenda-
tions were accepted but proved impossible to implement, or were implemented but did
not work. In a few very extreme cases, faulty consultancy recommendations have led to
the collapse of client companies. All of these are serious failings. The consultant has failed
in their duty to the client, and client and consultant both will suffer as a result.
All options for change presented to a client must be realistic in that (1) the client finds
them acceptable and (2) they will work. Making unrealistic recommendations for change
is one of the most dangerous and irresponsible things a consultant can do. All recom-
mendations must be tested using the techniques discussed in Chapters 6 and 7 before they
are formally presented, and all costs and risks must be worked out and fully disclosed.
Otherwise the consultant runs a very strong risk of, at the least, making no impact, and at
worst initiating a disaster for the client.
The list above shows the most frequent and most damaging kinds of failure that can
and do occur during and after consultancy engagements. This list should not be treated as
complete; other, unexpected kinds of failure are always possible. Recovery from any of
these failures requires first, the ability to detect their emergence early on, and second, the
ability to respond before the failure becomes acute.
Detecting failure
There is no great mystery to detecting the signs of failure. The only requirements are
self-awareness, an attention to detail, and a strong relationship with the client.
Throughout a consultancy programme, from the very beginning to the final sign-off,
the consultancy team needs to regularly ask themselves the following questions:
Are we satisfied that we are delivering the best value we can?

Are we satisfied that our behaviour and conduct are fully professional?
Are we satisfied that we are keeping to schedule and budget?
Are we satisfied that we have a good working relationship with the client?
Are we satisfied that we are gathering sufficient verifiable evidence to reach conclusions?
Are we satisfied that the recommendations we are offering to the client are practicable,
workable and will meet the client’s needs?
And most important of all,
Do we know that the client is satisfied on all of these points?
Answering the last question requires regular, frequent contact with the client. It may
not always be necessary to ask the client the question(s) directly, although there is no
harm in doing so; often, once a conversation begins, the client will tell the consultant
their problems without further prompting. However, it is up to the consultant to ensure
that these conversations take place. Do not wait for the client to come to you and tell
you they are unhappy, because clients tend to delay these matters: time pressure, other
distractions, embarrassment at broaching a difficult subject and even general uncertainty
as to what the true nature of the problem is can all be inhibitors. Go to the client, often,
and find out their views.
Early warning signs of problems can often be very small, almost trivial things. A
member of the consultancy team shows up late for a meeting; a presentation is vague or
garbled and leaves the client puzzled; a client manager complains that too much of her
time is being taken up answering consultants’ questions; draft proposals and recommen-
dations meet only a lukewarm response from the client; client managers working with
the consultancy team seem disengaged or disinterested. Time and experience will give a
good consultant a ‘nose’ for problems, an intuitive feeling that things are not quite right
and need sorting out. And once again, the earlier the signs are detected, the easier the
problem will be to solve and the less cost and risk are involved.
Particular attention needs to be given during the run up to the presentation of the
final recommendations. One of the worst things that can happen during an engagement
is for the client to reject all the consultant’s recommendations; this represents a complete
failure and can have devastating consequences for the morale of the consultants on the
team and the reputation of the consultancy firm. If during this final phase of the project
the consultants detect any hesitancy or unease among client managers and senior executives
or body language, they must follow up and find out what is wrong. Discuss with the
CEO or other project sponsor what the recommendations are likely to be and get
their views before the final presentation. If they say amendments are needed, then so
long as both sides agree that these amendments are practical and workable, then
implement them.
It sometimes happens that consultants, having worked very hard to develop their
recommendations, become attached to them and are reluctant to give them up. They
become convinced – because they have convinced themselves – that they are right and
all other points of view are wrong. This is understandable from a human perspective, but
wrong. The purpose of the engagement is not to allow the consultants to show how
clever they are. The purpose of the engagement is to provide value to the client, and as
we saw in the previous chapter, it is the client who determines what that value is. If a
client rejects one of your most prized recommendations, despite your most persuasive
efforts to the contrary, swallow your pride.
There is another category of failure that we have not yet discussed, and that is
dysfunction on the part of the client. Of course, as we have already discussed, consultants
should only work with clients where they know a relationship of trust can be built and
impact made, but even the best due diligence sometimes overlooks flaws. Consultants
can find themselves trapped in relationships with client companies that become
dysfunctional, either because of political infighting inside the company or because of a
spreading culture of dishonesty and corruption.
If this happens, the signs will quickly become apparent: unhappy managers, sudden
departures from key posts, rumours spreading around the organisation and so on. The
consultancy team might even receive a tip-off from a sympathetic executive. If this
happens, move swiftly to verify the situation; if the client genuinely has become
dysfunctional then the consultant’s chances of making an impact are probably nil. The
team should meet privately away from the client’s premises as soon as possible, and dis-
cuss the options. Some of the problem-solving techniques we discussed in Chapter 7
may be helpful at this point.
Failure after the engagement

Continued contact with the client and monitoring of impact will also determine whether
the consultants’ conclusions were implemented and with what effect. If there is no
impact, or negative impact – the client runs into problems as a result implementing the
consultants’ recommendations – then failure has occurred. The consultant cannot ignore
this failure, and a response will be called for. However, it should be stated again that
preventing failure during the engagement substantially reduces the chances of failure after
it, though it never eliminates them entirely.
Responding to failure
The exact response to any failure during an engagement depends on the nature of the
failure and the quality of relationship with the client, but there are several general principles
to follow.
First, act promptly. When the signs of failure emerge, do not delay. If you are a junior
member of the team, report your concerns at once to the engagement manager. If you
are in more responsible role, take immediate steps to find out the true nature of the
problem. This does not mean leaping to conclusions; the consultant needs to be in
possession of the facts before acting. But the consultant must also make it clear that he or
she is aware of the problem and is investigating.
Second, take responsibility. If a problem emerges during an engagement, it is up to the
consultant to take the initiative and resolve the matter, even if the source of the problem
is on the client side. There is of course a difference between responsibility and fault. The
consultant may not be to blame for what has gone wrong, but that does not matter.
Impact depends on the smooth running of the engagement, and impact will not be
served if the problem persists. The consultant must step in and take charge of the situation
and deal with it, whatever it is.
And if the consultancy team is to blame for what has gone wrong, that must be fully
and honestly acknowledged. Otherwise, the trust relationship with the client will begin
to erode.
Third, be calm and courteous. Consultants must avoid recriminations and blame games,
and if parties in the engagement start to trade accusations, restrain them. Above all,
consultants must never publicly lose their temper when things go wrong. If you want to
kick the furniture, do it in your own office, never in sight of the client. High profes-
sional standards must be maintained, even in the face of potential disaster. Afterwards,
people will remember how coolly and courteously the consultant behaved during the
crisis, and this will create a favourable impression.
Fourth, investigate swiftly and thoroughly. Speed is of the essence when dealing
with failures or potential failures, for the longer the consultant delays the greater the
likelihood that the problem will escalate. At the same time…
Fifth, once the investigation is complete, take decisive action. This is one case where
doing nothing is not an option. Move quickly and, if necessary, ruthlessly, to restore the
situation. Underperforming or unprofessional team members must be replaced. Weak
teams need to be strengthened by bringing in more people. Communications and con-
nections between consultant and client must be restored. If the team is going down the
wrong track with its analysis and recommendations, bring them back and get them
focused on what the client needs. When recovering from failure, the client must do
whatever is necessary, and not take ‘no’ for an answer.
Sixth, explain what has been done in a transparent manner, to the client, the consultancy
team and the rest of one’s own firm. Make sure that everyone is clear about the source of
the failure – even if it is yourself – and clarify what has been done to repair matters and
what the expected outcome should be.
Seventh, be prepared to bear the costs if necessary. If the consultant has made a mistake,
then the consultancy firm must bear the costs. No client firm should ever be out of pocket
because of an error by consultants. If that wipes out the consultant’s margin on this
engagement, so be it. Better to lose money now than to lose reputation in the future.
And lastly, stand up for what is right. Be courageous and honest in all assessments. If that
means that the consultant and the consultancy firm suffers, then again, so be it. But
equally, if the client is being dishonest – for example, blaming the consultants for an
error made by the client’s own managers, or accusing the consultants of dishonesty
without foundation or reason – then the consultant also needs to make a principled
stand. Here again we come to the difference between responsibility and blame. The
consultant should always take responsibility for fixing the problem; that does not mean
he or she needs to accept blame for something which was not their fault.
I know of cases where consultants have been fired because clients have accused them
of being unprofessional or dishonest, when in fact they had done nothing wrong. Their
employers dismissed them in order to preserve the goodwill of the client and avoid
reputational damage. I understand why the firms in question acted as they did, but this is
dishonest behaviour and it will not add to the reputation of the consultancy firm if this
gets out.
There may come a time – indeed, in any consultant’s career, there probably will come
a time – when relations break down irretrievably. I have seen two such cases: one when
the consultant believed the client could no longer be trusted, and one when the client
persistently refused to pay or meet other deadlines. In both cases, the consultancy firm
reluctantly took the decision to terminate the contract, having first double-checked that
the contract allowed them to do so. Firing clients is not easy, and there are financial and
other consequences, but there are times when it is the least worst option. This should
only be done, however, when all attempts to save the situation have failed.
Responding to failure after the engagement

And what of cases where the engagement appeared to go smoothly but then things go
wrong afterward? It is a fair assumption that if the client runs into serious problems or
goes bankrupt a year or two after the engagement, the consultant will get part of the
blame. There is very little that can be done about this. The consultant cannot rebut
claims without breaking client confidentiality. In some cases the client can be persuaded
to rebut the accusations and explain that the problem is not the consultant’s fault; but if
the client is the one making the allegations, that will clearly be impossible.
The consultant has few options other than to accept the situation, and then try and
make good the ensuing reputational damage in other ways. If the consultant already has a
loyal customer base, then most clients will understand and realise the truth of the situa-
tion. If there have been other recent failures, however, then the reputational damage
could be serious. One failure will be tolerated, two will be tolerated with reservations;
three or more failures in quick succession could be enough to put a consultancy firm out
of business.
Learning from failure

Making the same mistake over and over again is a peculiar kind of madness that affects
many businesses. Some manage to get away with it, but consultancy firms will not. After
a failure event has happened, there should always be a post-mortem. Questions asked
during this process should include:
What happened?
Why did it happened? Use problem solving and analytical tools such as Why–Because
analysis to answer this.
Why did no one see the failure coming sooner? What early warning systems should
have been in place?
Who was responsible? The purpose here should be to determine responsibility, not
assign blame. Responsibility will usually rest with more than one person.
How were those persons responsible? What did they do, or not do, to contribute to
the failure?
What else might those persons have done, or not done, to avoid the failure?
What should we do in similar situations to avoid failure?
Understanding what happened generally means focusing on the people – who was
involved – and the process – what they did or did not do. The final question, how to
avoid this happening in future, is the most critical, and the post-mortem should aim to
produce a clear and unambiguous set of recommendations.
Learning from failure can be horrible and painful, but it should also be seen as part of
the experience-building process. As time passes, observations of the failures of oneself and
others become part of the consultant’s stock of knowledge, helping him or her to
understand what to do and what not to do, and one’s own strengths and weaknesses.
When failure does occur, it is essential that there is a learning process. That is the best
chance of ensuring the problem does not happen again.
Chapter summary
In this chapter, we have looked at the tricky and sensitive subject of failure during or
after an engagement. We discussed the nature of failure and the dimensions on which it
can occur, and concluded that failure, like impact, is largely driven by client perceptions
both during and after the engagement.
We went on to discuss how failure can be detected, and urged the importance of spotting
problems and dealing with them early, before they have a chance to develop and grow. We
then discussed responses to failure and some of the generic responses that need to be made
when signs of failure occur during an engagement. We noted that it is almost impossible to
respond adequately to failures after the engagement is concluded, especially after a period of
time has elapsed. Getting the process right first time is essential if later failures are to be
avoided. We closed with a short section urging the importance of learning from failure.
Student exercise
Look at each of the failures of impact listed above:
The consultancy firm failed to bring appropriate qualified personnel to the project.
The consultancy team failed to meet contractual milestones for deliverables.
The consultancy team did not collaborate with the client’s management team or
include them in decision making.
The actions of the consultancy team were a disruptive influence on the client
organisation.
The consultancy team’s investigations were not thorough enough and were not
properly evidenced.
The consultancy team did not deliver credible answers to the problems and
questions posed.
The consultancy team did not gain the trust of key decision makers.
The consultancy team’s recommendations led to dissent among key decision makers.
The consultancy project did not meet the goal(s) of the executives who
commissioned the consultants in the first place.
The consultancy team failed to initiate change.
Then, bearing in mind the generic responses to failure, think of some of the ways
you would go about recovering from each type of failure. What would you do to
recover the situation and make good any damage done?
Case study: Siyah Dağ Telecoms

Siyah Dağ is a Turkish telecoms company operating throughout Turkey, with subsidiaries
in Uzbekistan, Turkmenistan, Kazakhstan, Pakistan and Albania. It has recently won
licenses to operate in two North African countries, Algeria and Morocco. It now plans to
expand operations into both countries and has designs on further expansion in northern
Africa. Your consultancy firm has been engaged on a six-month basis to help draw up a
strategic plan, advise on how to integrate the new subsidiaries into the existing structure
and determine what additional management capacity will be needed.
Your firm was chosen because it employs a very experienced consultant who has
worked with a number of North African clients over the years, and this man was
designated as engagement manager. Unfortunately, after the contract was signed and
just as work was starting, he fell seriously ill. The consultancy firm replaced him with
another engagement manager, someone of equal experience as a consultant but with
limited knowledge of North Africa, or indeed of telecoms. This was not ideal, but the
firm is very busy at the moment, and he was the only experienced engagement man-
ager; the contract had been signed, time was pressing and the client was expecting
work to begin.
Three months into the contract, it became apparent that all was not going well. The
engagement manager was floundering; his inexperience of North African culture and
the sector was beginning to tell. His team lacked experienced also; two of them had
only been with the firm a few months before being assigned to this engagement. A key
milestone for presentation of interim findings has been missed. Siyah Dağ managers
are complaining that the consultancy team are plaguing them with questions and
requests for data which are interfering with their own jobs; moreover, some of the
questions seem to the managers to be trivial, and they cannot understand how these
relate to the project. A great deal of data and information has been handed over, and
not much output has yet been received.
Siyah Dağ’s chief executive has now written to the managing partner of your firm
requesting an explanation. In the letter, he says he is losing confidence in the con-
sultancy team. The managers he assigned to the team are unhappy and want to go
back to their day jobs. He asks that the firm tell him what it plans to do to rescue the
situation, and if he does not get plausible answers he will terminate the engagement
without payment of further fees, which the contract entitles him to do.
What should the consultancy firm do to rescue the situation with Siyah Dağ?
Case study: Kassel Dieselmotoren

Kassel Dieselmotoren is a maker of diesel engines based in the German city of Kassel,
in the state of Hesse. The company makes diesel engines for a variety of purposes
including marine engines, for the German market and also exports to Poland, Hungary
and several other countries in central and eastern Europe. Last year it had a turnover
of €440 million, but profits had slipped to just €5 million and the company’s private
shareholders are alarmed. Your consultancy firm was called in to advise on a
turnaround strategy.
The engagement went smoothly. An expert project team was assembled, com-
plemented by two young managers from the client side. Data were quickly gathered
and analysed, and the team working together came up with three recommendations to
present to the final meeting of the board:
1 strong investment in an increased sales and marketing presence in Eastern

Europe in an effort to boost sales.
2 a move into Scandinavia, where there is believed to be significant market
demand, also with a strong investment in sales and marketing to establish the
brand there.
3 cost reductions including several hundred redundancies at Kessel’s German
operations so as to improve margins.
The two managers from Kassel agreed that they would make a preliminary
presentation to the CEO and report any feedback. No feedback was received, so the
engagement manager assumed that the CEO was happy and no amendments were
needed.
The day of the presentation came, and the team presented their findings to the
assembled directors. After the presentation was over the board sat in silence. The
CEO, aghast, turned to the engagement director. ‘None of these recommendations is
remotely acceptable’, she said. ‘Did you not understand our situation? Our share-
holders will not support investment on the scale you propose. And if we try to make
staff redundant without consulting the unions, they will go on strike, and a protracted
strike could ruin the company. Everything you have proposed is completely
unworkable.’
What should the engagement director do next?
Part III
Issues in management
consultancy
10 Ethics in management consultancy
In Chapter 4 and subsequently this book has reiterated the need for management
consultants to have very high professional standards and to behave ethically. But what
does ‘behaving ethically’ mean? We usually take this to mean something simple like
‘doing the right thing’, but as McNamara (2006: 32) points out, in consulting ‘the right
thing is not always easy to identify’. Poulfelt (1997: 65), in one of the very few academic
studies of ethics for management consultants, agrees, commenting that consultants
‘operate in situations which are characterized by ambiguity, ignorance, uncertainty and
sensitivity’. Poulfelt also makes the important point that it is not just the consultant who
needs to have a strong sense of ethics; clients also need to behave in an ethical manner,
and Poulfelt characterises consultancy engagements as having a set of ‘dual ethics’.
Poulfelt also suggests that it is not always possible for consultants to apply ethical rules
when working with clients. I take the opposite point of view: consultants must apply
ethical rules at all times. It is a mistake to believe that consultants, or any business people,
are guided by a different set of ethics from the societies in which they operate. I shall
demonstrate why very shortly. First, though, let us be clear what we are talking about.
What does ‘behaving ethically’ mean?
Four ways of looking at ethics

There a number of ways of looking at ethics and what constitutes ethical behaviour, and
there are frequent contradictions between approaches. I will summarise the four
approaches briefly, and then look at these contradictions and the problems they raise.
The four approaches are derived from the philosophical study of ethics. They are:
1 deontology
2 consequentialism
3 virtue ethics
4 pragmatism, or situational ethics.
Deontology is what McNamara (2006) referred to when he described ethics as the dif-
ference between right and wrong. Deontology holds that some things are always right,
and some things are always wrong; the situation one finds oneself in makes no difference.
It argues further that everyone has a duty to do what it is right (McNaughton 1998b).
Deontology itself does not attempt to define what is right and what is wrong; it is down
to society to make these definitions, which it does through laws, codes of conduct, sets
of socially acceptable behaviours and so on. Importantly, deontology does not consider
130 Issues in management consultancy
the consequences of actions and whether they are good or bad; even an action with
good consequences will still be prohibited if it is considered wrong. Stealing money to
buy food for starving orphans is still wrong, no matter how well-intentioned.
For a management consultant, this means that professional standards of behaviour, the
regulations which bind the industry and, of course, the law of whatever country the
consultant is working in, are absolutely binding. On no account must they be breached.
For example, consultants have a duty to tell the client the truth at all times, even if that
truth would be painful or harmful to either or both parties. At first glance this would
seem to be in keeping with the professional standards we discussed earlier in this book.
But what about client confidentiality? A consultant is duty bound not to reveal infor-
mation about a client’s affairs; but does that mean the consultant cannot take away any
learning from the client to apply to other engagements? And what if a second client asks
a direct question about the first? The consultant is duty bound to confidentiality but also
must be transparent and tell the truth: which does he or she choose?
Consequentialism on the other hand, defines an ethical action by its consequences
(McNaughton 1998b). An action is ethical if it has a good outcome; that is, it benefits
people other than the one carrying out the action. An action is unethical if it has nega-
tive consequences for other people. The more people who are positively affected, the
better the outcome is, and of course, the more people who are negatively affected, the
worse and more unethical the outcome. There is recognition that not every action will
have positive outcomes for everyone, and there will be winners and losers from any
action. A subset of consequentialism, utilitarianism, takes the approach of ‘the greatest
good for the greatest number’.
Just as with deontology, ‘good’ and ‘bad’ are what society defines through its mores,
codes of conduct and so on. An action can be considered ethical even if it violates the
law. Feeding starving orphans is considered a good thing to do, so according to con-
sequentialism, it is acceptable to steal money to feed them, provided the act of theft does
less harm than the good that comes from feeding the children; i.e. if you stole money
from one group of orphans to feed another, there would not be a net good outcome and
so consequentialism would deem this unethical. If you stole the money from someone
who was so rich they did not even notice the money was missing, however, that could
potentially be acceptable.
Consequentialism offers a trap for business people that is easy to fall into. Corruption
very often begins with a consequentialist argument: it is all right to engage in insider
trading/purloin office stationery/borrow money from the cash float without asking
permission, because we are doing it for good reasons and no one will suffer harm. For
consultants, the temptations include things like revealing sensitive data about clients to
other clients, using client facilities such as computers for personal reasons, and failing to be
objective in judgements and views about clients because one wants to ‘help’ the client.
Virtue ethics has its origins in the ideas of Aristotle (Crisp 1998), although Indian and
Chinese thinking also have analogues to this idea. Virtue ethics holds that the root of
ethical behaviour lies not within society’s expectations, but within ourselves. It is not down
to others to show us how to behave ethically; we ourselves should know, instinctively,
what is ethical and what is not. Rather than talking about or discussing ethics, we should
simply live them, demonstrating them through our actions in our everyday lives. Rather
like deontology, virtue ethics holds that some things are always ethical: kindness, gener-
osity and humility, for example, are things that have a strong ethical component, while
their opposites, cruelty, miserliness and arrogance, will always be unethical.
Ethics in management consultancy 131
Virtue ethics will probably strike a chord with anyone who has studied the lists of
values and professional standards discussed in Chapter 4. Consultants are required to live
their values and put them into practice constantly during their working lives. Yet virtue
ethics are among the most problematical and difficult of the four ethical frameworks to
get right. No matter how well-intentioned we are, we are never quite certain what
constitutes virtue in a given set of circumstances, and there is always the nagging fear that
our virtue is actually doing other people harm. We know it is wrong to steal and so we
leave the money where we found it, but the picture of the starving orphans begging for
food will haunt us just the same.
Pragmatism, also sometimes known as situational ethics, takes the opposite view (Tiles
1998). In the pragmatic view, rather than searching within ourselves for the knowledge
of what to do, we instead look around at the situation we are in and work out a range of
options for ethical action depending on the circumstances. Pragmatic ethics holds that
there are no absolutes of right or wrong, good or bad, only what is right/wrong/good/
bad for the time and place. For example, pragmatic ethics recognises that there are dif-
ferences in ethical standards between cultures, and that things which are acceptable in
one culture will be unacceptable in others. Recall for example that in the USA and UK
it is often considered wrong for consultants to accept even small gifts from clients,
whereas in many Asian countries gift-giving is an important part of social protocol and
refusing a gift can cause grave offence.
Pragmatism seems at first sight to be more realistic and allow for a certain give and
take, but does it allow too much? A purely pragmatic approach could be used to justify
any behaviour on the grounds that it is right for that time and place. Pragmatism, like
consequentialism, offers a slippery moral slope down which it is easy to slide.
Contradictions between ethical schools of thought

It will have become apparent by now that there is no agreement among these four
schools of thinking as to what constitutes ethical behaviour, and this is of course one of
the reasons why we so often find ourselves in ethical dilemmas, where every choice we
make is somehow unethical. The contradictions between deontology and con-
sequentialism are very marked indeed. Stealing money is wrong, but leaving children to
starve is bad. Lying to a client is wrong, but telling them the truth might damage the
client–consultant relationship, which is bad. Similarly, things which are good are not always
right, and vice versa. Indeed, the real dilemmas in ethics are usually not making the choice
between right and wrong – which is comparatively easy – but between right and good.
The contradiction between virtue ethics and pragmatism is not dissimilar. Virtue ethics
says that we must do what we believe is ethical at all times; pragmatism suggests we must
make compromises depending on the time and place. Too much of one, and people
around us will perceive us as inflexible and self-centred; too much of the other and we
risk coming to a place where we can justify any behaviour as ethical if the circumstances
seem to call for it.
Why are ethics important for consultants?

Given these contradictions, this seems a very fair question, and we could even go deeper
still and ask, why do we need ethics at all? There are two answers to this question, what
we might call the natural law argument and the social cohesion argument.
The natural law argument is that there is a natural order of things, some of which are
right/good and others of which are wrong/bad, and as human beings we naturally seek
the right/good and shun the wrong/bad. (Those who choose the other option are
deviants and sociopaths whom we should avoid.) If we want to uphold the natural order,
what Indians call the dharma, then we should always choose the right/good.
The social cohesion argument, on the other hand, argues that ethics are largely a social
construct designed to create a framework inside which trust can develop. Rather than
behaving entirely in our own self-interest, we establish relationships with others because
that is how society works. We need those relationships, and we need to be able to trust
other people, so that we can work together to reach commonly held goals. Behaving
ethically means behaving according to the norms of society, or whatever society we are
in at the time. If we behave ethically, people will trust us and we can work with them; if
we behave unethically, people will not trust as and we can work with no one. If all
ethics were to disappear, no one would trust anyone, social cohesion would collapse and
civilisation would fall apart.
Look at these two arguments closely, though, and you will see that they are in fact
two halves of the same coin. As human beings, we are naturally disposed to work toge-
ther to achieve common ends, as both Plato and Confucius recognised two and a half
thousand years ago. Social cohesion is the natural law; it is the state of affairs that we as
people desire most. Ethics exist, ultimately, to prevent that chaos and anarchy that would
reign if it really was a matter of everyone for themselves.
To go back to the first question, then, why do consultants need ethics? Consultants, even
more than other people, work in relationships of very deep and intense trust. Demonstrating
ethical behaviour allows clients to trust them; the more strongly demonstrated the ethical
behaviour, the easier clients find it to build trust. Of course Poulfelt (1997) is absolute right,
and this goes the other way too; consultants need to be able to trust clients, and will find it
very difficult to work with clients they do not trust. So, trust is the natural order of things for
consultants, and they must make its preservation one of their first priorities.
And how do consultants resolve the contradictions between right and good, between
virtue and pragmatism? The answer is that they do not. They seek solutions for clients
that are all four of these things; right and good, virtuous and pragmatic:
right, because they are legally and morally right and ensure the client is compliant
with the laws, regulations and expectations of society;
good, because they create value by delivering value to customers and creating
revenue and profits for the company;
virtuous, because value creation builds sustainable prosperity that benefits society as a
whole;
pragmatic, because consultants seek individual solutions to individual problems and
adapt to each situation in which they find themselves.
If the earlier general discussion of ethics seems too philosophical and abstract, it should
not. Consultants confront these kinds of moral issues and dilemmas in real life, very
often, sometimes even every day. It can be easy to flounder, to not know what decision
to make, to struggle as Poulfelt and McNamara both said to know what is ethical and
what is not, and then fall into the kinds of traps described in Table 10.1. Returning to
the first principles of ethics should help to clarify the position and lead us to a set of
ethical principles for consultants.
Table 10.1 Examples of unethical behaviour by consultants
Collusion with the client. Because the consultant wants to maintain a good relationship with
the client, he or she agrees with the client on all things and never voices a contrary opinion.
Failing to account for client competence. The consultant offers advice or solutions that are
beyond the ability of the client to implement. Subsequent attempts by the client to do so fail,
causing harm to the organisation.
Failing to fully analyse the client’s position. As the consultant did not conduct enough analysis
or discovery, the client implemented action plans that were incomplete or destructive to the
organisation.
Forcing one’s own view on the client. The consultant insists that the client follow their advice or
recommendation and pushes the client into agreeing, even though the recommendations are flawed.
Failing to tell the whole story. In order to make their recommendations sound attractive so
that the client will accept them, the consultant holds back information about risk, viability and
so on, so that the client makes a decision based on deliberately faulty information.
Doing more work than contracted. In a mistaken bid to ‘help’ the client, the consultant does
more work than he or she is contracted to do without seeking the client’s permission. The
problem is compounded if the consultant then bills for the extra work.
Breaching confidentiality. In order to get investors to back the consultant’s recommendation,
the consultant passes information to investors which had been confidential to the client and
consultant only.
Going over the CEO’s head. The consultant has concerns about the CEO’s confidence or
probity, so arranges a meeting with the rest of the board of directors to discuss the problem,
without first telling the CEO or inviting him or her to the meeting.
Using the client as an unwitting guinea pig. The consultant learns of an interesting new
technique or model and determines to try it, so creates a non-existent issue with the client’s
organisation or products in order to convince the client to give them a chance to apply the
new learning.
Going behind the CEO’s back. During negotiations or analysis, the consultant tries to gain the
trust of other executives or managers by telling them his or her own confidential impression
of the CEO.
Source: Adapted from McNamara (2006: 33–4).
Ethical principles for consultants

Most consulting firms will have their own statements of ethical principles, and most are
quite similar. Most take the form of lists of standards to be adhered to, such as those
found in McNamara (2006) and Institute of Management Consultants USA (2005)
(Tables 10.2 and 10.3).
Scanning the two lists, we can see different ethical principles at work. McNamara’s list
is oriented towards consequentialism, the outcome of the actions of consultants. For
example, keeping client information private, avoiding dependence and avoiding conflicts
of interest are all there because failure to do these things could have negative con-
sequences for the client. This is an example of a ‘client first’ approach to ethics, in which
the main purpose of a code of ethics is to create and preserve the bond of trust so as to
allow the relationship to function, the social cohesion argument.
The Institute of Management Consultants (IMC), on the other hand, follows some-
thing closer to the natural law argument, and its principles are much more deontological
(though there is still a strong element of consequentialism). This code of conduct lays
Table 10.2 McNamara’s ethical standards for consultants
Do no harm to your client
Keep client information private unless the client or law requests otherwise
Do not create dependence by you on your client, nor by your client on you
Anticipate and avoid conflicts of interests (for example, representing two opposing interests at
once)
Do not act in an official capacity as advocate for your client
Do not go beyond your own expertise
Do not skip the discovery phase of consulting (i.e., the initial analysis of the client’s situation)
Source: McNamara (2006: 32).
Table 10.3 IMC USA code of conduct

My Commitment 1.0 I will serve my clients with integrity, competence, independence,
to My Clients objectivity, and professionalism.
2.0 I will mutually establish with my clients realistic expectations of the
benefits and results of my services.
3.0 I will only accept assignments for which I possess the requisite
experience and competence to perform and will only assign staff or engage
colleagues with the knowledge and expertise needed to serve my clients
effectively.
4.0 Before accepting any engagement, I will ensure that I have worked with
my clients to establish a mutual understanding of the objectives, scope,
work plan, and fee arrangements.
5.0 I will treat appropriately all confidential client information that is not
public knowledge, take reasonable steps to prevent it from access by unau-
thorized people, and will not take advantage of proprietary or privileged
information, either for use by myself, the client’s firm, or another client,
without the client’s permission.
6.0 I will avoid conflicts of interest or the appearance of such and will
immediately disclose to the client circumstances or interests that I believe
may influence my judgment or objectivity.
7.0 I will offer to withdraw from a consulting assignment when I believe
my objectivity or integrity may be impaired.
8.0 I will refrain from inviting an employee of an active or inactive
client to consider alternative employment without prior discussion with
the client.
My Commitment 9.0 I will agree in advance with a client on the basis for fees and expenses
to Fiscal Integrity and will charge fees that are reasonable and commensurate with the services
delivered and the responsibility accepted.
10.0 I will not accept commissions, remuneration, or other benefits from a
third party in connection with the recommendations to a client without
that client’s prior knowledge and consent, and I will disclose in advance any
financial interests in goods or services that form part of such
recommendations.
My Commitment 11.0 If within the scope of my engagement, I will report to appropriate
to the Public and authorities within or external to the client organization any occurrences of
the Profession malfeasance, dangerous behaviour, or illegal activities.
12.0 I will respect the rights of consulting colleagues and consulting firms
and will not use their proprietary information or methodologies without
permission.
13.0 I will represent the profession with integrity and professionalism in my
relations with my clients, colleagues, and the general public.
14.0 I will not advertise my services in a deceptive manner nor misrepresent
or denigrate individual consulting practitioners, consulting firms, or the
consulting profession.
15.0 If I perceive a violation of the Code, I will report it to the Institute of
Management Consultants USA and will promote adherence to the Code by
other member consultants working on my behalf.
Source: Institute of Management Consultants USA (2005).
down hard and fast rules, and at the end urges that any violations of the code be reported,
presumably so that sanctions can be taken. There is also an element of virtue ethics here,
for example in item 7.0 where it is up to the consultant to withdraw from the engage-
ment if they feel they are not suited for it, without waiting for anyone else to identify
the problem. The IMC code requires the consultant to conduct continuous self-examination,
to ensure he or she is doing the right things.
Of course the two lists often use different language to say the same things, but the
language is important. How we express ideas is often as important as the ideas them-
selves, and in this case the forms of expression do show a slight but significant variance,
between McNamara’s principles of behaviour and the IMC’s hard and fast rules.
What do the ethical codes of most consultancy firms look like? Not surprisingly, most
are strongly deontological and rules-based; there are lines that consultants must not cross
and penalties – often involving instant dismissal – if they do. This does not mean that
consultancy firms themselves see the world solely in black and white terms, with right
and wrong being absolutes; but they do often encourage their employees, especially
junior ones, to do so. The reason for this comes back once more to reputation. Con-
sultants must not only behave ethically, they must also be seen to behave ethically, and
actions that might be undertaken for the best of motives can still be misinterpreted by
outsiders and used to damage the firm’s reputation. There is no room for ambiguity;
what is wrong is always wrong, with no exceptions.
Privately, many consultants will admit that this is extremely difficult, and that there is
often an element of ambiguity in ethics. Good consultancy firms will also introduced
consequentialist, principles-based elements into their ethical codes and explain why cer-
tain behaviours and actions are unethical in terms of their impact on both the client and
the firm. Senior consultants also have the duty to explain these principles to junior
consultants and analysts. An understanding of the principles behind ethical rules can
often – but not always – help to resolve ethical conflicts and ambiguities.
There will come times, however, when the consultant is faced with a situation where
it is hard to know immediately what is right and what is wrong, what constitutes good and
what represents bad. Our old friends experience and common sense are vitally important
here, and the more consulting experience one has – and indeed, the more experience of
ethical dilemmas one has – the easier solving ethical problems should become.
Ethical problem-solving frameworks
There are also a number of ethical problem-solving frameworks that can be employed to
help with difficult ethical problems (and again, some consulting firms have their own
bespoke frameworks). We will conclude this chapter by looking at three examples of
frameworks, and discuss how they can be used.
Nash (1981) problem-solving framework

The first framework is drawn from Nash (1981). It asks a series of questions which we
are meant to ask our teams and ourselves in event of an ethical problem needing to be
solved, as follows:
1 Have you defined the problem accurately?

2 How would you define the problem if you stood on the other side of the fence?
3 How did this situation occur in the first place?
4 To whom and what do you give your loyalties as a person and as a member of the
institution?
5 What is your intention in making this decision?
6 How does this intention compare with the likely results?
7 Whom could your decision or action injure?
8 Can you engage the affected parties in a discussion of the problem before you make
your decision?
9 Are you confident that your position will be as valid over a long period of time as it
seems now?
10 Could you disclose without qualms your decision or action to your boss, your CEO,
the board of directors, your family, or society as a whole?
11 What is the symbolic potential of your action if understood? If misunderstood?
12 Under what conditions would you allow exceptions to your stand?
The Nash framework is very simple to use, and relies on qualitative answers; there is
no scoring or metric involved, simply a common sense and pragmatic approach to pro-
blems which treats every ethical problem as an individual case. Its main weakness is that
there is no follow-up; once a decision is made, the problem is considered to be solved,
and there is no post-action monitoring to verify whether this was indeed the case. The
main advantage of the Nash framework is that it can be employed quickly in meetings or
correspondence, and simple brainstorming sessions can usually tease out the answers.
Rather than black and white answers, the Nash framework is likely to tease out nuances;
for example, question 10, ‘could you disclose without qualms your decision or action?’
might well result in answers of ‘yes, but…’, in which case, the qualifications need to be
discussed and the risks and consequences taken on board before a final decision is
reached.
Josephson Institute of Ethics (1999) problem-solving framework

The Josephson Institute’s ‘Five Steps of Principled Reasoning’ is a more complex
framework than Nash. The five steps each have a cascade of subordinate steps, as
follows:
Clarify
1 Determine precisely what must be decided.
2 Formulate and devise the full range of alternatives.
3 Eliminate patently impractical, illegal and improper alternatives.
4 Force yourself to develop at least three ethically justifiable options.
5 Examine each option to determine which ethical principles and values are involved.
Evaluate
1 If any of the options requires the sacrifice of any ethical principle, evaluate the
facts and assumptions carefully.
2 Distinguish solid facts from beliefs, desires, theories, suppositions, unsupported
conclusions, opinions, and rationalizations.
3 Consider the credibility of sources, especially when they are self-interested,
ideological or biased.
4 With regard to each alternative, carefully consider the benefits, burdens and
risks to each stakeholder.
Decide
1 Make a judgment about what is not true and what consequences are most likely
to occur.
2 Evaluate the viable alternatives according to personal conscience.
3 Prioritize the values so that you can choose which values to advance and which
to subordinate.
4 Determine who will be helped the most and harmed the least.
5 Consider the worst case scenario.
6 Consider whether ethically questionable conduct can be avoided by changing
goals or methods, or by getting consent.
7 Apply the three ‘ethics tests’:
Are you treating others as you would want to be treated?
Would you be comfortable if your reasoning and decision were to be
publicized?
Would you be comfortable if your children were observing you?
Implement
1 Develop a plan of how to implement the decision.
2 Maximize the benefits and minimize the costs and risks.
Monitor and modify

1 Monitor the effects of decisions.
2 Be prepared and willing to revise a plan, or take a different course of action.
3 Adjust to new information.
Although the Josephson framework covers most of the same points as Nash, it does so
in more detail and adds the missing additional dimension of monitoring the effects of
decisions and modifying future behaviour on the basis of feedback. Its main drawbacks
are its complexity, which can make it time-consuming to use. In cases where a quick
decision is required, the Nash framework will have more utility.
The Markkula Center (2010) framework
The Markkula Center for Applied Ethics at Santa Clara University has developed a
decision-making app which can be used to assist decision thinking. It is based on key
aspects of philosophical thinking about ethics, namely a utilitarian or consequentialist
approach, a rights-based approach which also has its roots in consequentialism, a justice-
based approach grounded in deontology, a ‘common good’ approach which has elements
of pragmatism, and finally a virtue ethics approach. The app asks users to follow these
steps and answer a series of questions:
1 Get the facts.

2 Look at the utility. Does this action produce the most good and do the least
harm for all who are affected? What good and what harm will or may result?
How will we measure a good outcome? Happiness? Financial impact? While
the potential harm from this action may affect only a few people, is the harm
so great that it would outweigh the good this action might bring to many
others?
3 Look at the rights. Does my action best respect the rights of all who have a stake?
Does this action respect the dignity of others? If we take this action, are we treating
others simply as a means to an end? Does the action hurt or help others in securing a
minimum level of well-being?
4 Look at the principles of justice. Does this action treat people equally or
proportionally? Does it give each person affected his or her due? Might we have
some prejudice or interest that might make us favour one person over another?
Are we treating each individual the same way, or is there a valid reason to treat
someone differently?
5 Look at the common good. Does this action best serve the community as a whole,
not just some members? Will this option be equally to everyone’s advantage? Does
this action contribute to the conditions of social life that give everyone an oppor-
tunity to thrive? How will my action affect the resources everyone must share, such
as the environment?
6 Consider virtue. Does this option lead us to act as the sort of people we want to be?
What character traits would we be exhibiting if we chose this action? Honesty or
deceit? Compassion or selfishness? Prudence or irresponsibility? What habits of
character would we be developing if we took this action? What would a person we
respect say about this choice?
7 Weight the perspectives. Assign a number between 1 and 100 to indicate how much
weight you want to give to each approach. The five numbers must add up to 100
(for example, see Table 10.4):
Table 10.4 Example of a Markkula Center exercise

Utility 10
Rights 20
Justice 30
Common Good 10
Virtue 30
The Markkula Center framework is interesting in that it refers specifically to the
philosophical concepts of ethics that we described above, and thus tries to take a variety of
different perspectives on problems. It is questionable whether the numerical scoring really
adds much value: although it can sometimes help to bring focus, it can also lead us to shoe-
horning concepts and ideas to fit the numbers (or vice versa). Considering the issues and
answering the questions will add value, however, provided a quick decision is not required.
Ethical decision-making frameworks, like all decision-making frameworks, are tools for
assisting decision making; they will not make decisions for us. Ultimately, making decisions
on ethical issues is down to us, and what we decide will depend on the kind of people we
are, what we ourselves value about other people and about ourselves, and about the kind
of people we want to become. Very often there are no hard answers; instead of black and
white, there are just shades of grey. Sometimes ethical decisions are easy to make; some-
times they are very hard, and we will live on for long after wondering if we did the right
thing. That is just as true of management consultancy as it is of the rest of our lives.
Chapter summary
We began this chapter by looking at the issue of ethics in management consultancy
and what role the concept of ethics might play. We then delved into ethics itself,
looking at four key principles of ethics and the differences and contradictions
between them and how this can lead us, as consultants and as people, into ethical
dilemmas.
So complex is the subject that we are entitled to ask why ethics is so important.
We discussed the reasons why consultants must have high ethical standards, looking
at some of the most commonly found unethical behaviours and their consequences,
and then at some generic models of ethical principles for consultants. We concluded
by looking at three frameworks for ethical problem solving and decision making, the
Nash framework, the Josephson Institute framework and the Markkula Center
Framework.
One issue where ethics often plays a role in consultants’ decision making is sustain-
ability. This is an issue of growing importance, in the profession and in the world of
business more generally, and it is to this subject that we turn our attention now.
Student exercise
Examine the lists of ethical principles in Tables 10.2 and 10.3. What, if any, ethical
principles for consultants are missing from these tables? How would you state those
missing principles so they could be added to the tables?
Student exercise
Compare and contrast the three problem-solving frameworks presented above,
Nash (1981), Josephson Institute (1999) and Markkula Centre (2010). What are
the strengths and weaknesses of each? How could any of them be improved
upon?
Case study: De Vere Group

The De Vere Group is a publicly owned food distribution and logistics group with a
turnover last year of £1.2 billion. The group is headquartered in London, but has
operations in the UK, Scandinavia, the Benelux, Germany, France, Austria, Poland, the
Czech Republic, Slovakia and Hungary. In the UK, the largest market, the company is
divided into three business units: frozen food, chilled food (dairy products, meat, sea-
food, etc.) and ambient (products which are stored and delivered at same temperature
as the external environment, such as tinned goods and so on).
De Vere operates in a fiercely competitive market and has two main rivals, Oxbow
Logistics and ADT. All three companies are very keen to win market share from each
other, and there have been some strong competitive battles over the years. Recently,
De Vere has seen its market share begin to slip, and its share price has fallen as a
consequence. Your consultancy firm has been called in to conduct, as a matter of
urgency, a review of De Vere’s strategy and operations. De Vere made it clear at the
outset that it is keen to benchmark against its rivals, and selected your firm because it
has worked for several food logistics and distribution companies in the past, including
both Oxbow and ADT.
There was from the outset a clear understanding with the CEO of De Vere that
confidentiality would be fully respected and your firm would not provide details of any
of its work with Oxbow or ADT.
Your team has been assigned to the operational review, and you have held your first
meeting with the managing director of the frozen foods division. In the meeting, the
MD was scathing about the board of De Vere in general and the CEO in general. They
have, he says, no idea what is really happening on the ground. The figures supplied by
the board to your firm cover the firm in general; they have concealed the fact that the
frozen foods division has lost more than 20 per cent of its market in the past year with
several key clients defecting to Oxbow. The MD cites issues such as timely distribu-
tion, rates of spoilage and lack of warehousing space for the loss of customers, and
blames the board for failing to invest enough in the frozen foods operation.
This can be remedied, says the MD, if he can build a strong case for investment to
put to his board, but he needs help building that case. After making several personally
offensive remarks about the CEO, he pointed out to the board that the survival of this
division could be at stake, including several thousand jobs around the UK and parts of
Europe, and moreover, if the frozen foods division begins to make heavy losses, the
future of De Vere itself could come under scrutiny. Support from the consultants would
help him to validate his case and get the attention of the CEO (more offensive remarks
about the CEO then followed).
The MD of frozen foods has a further request. In order to help build his case, he
needs to benchmark his division in more detail against the operations of Oxbow
Logistics and ADT. He knows that two consultants on your team have worked on
engagements with Oxbow, and one with ADT. The engagement manager has pointed
out that consultants cannot divulge confidential information about clients. The MD
responded in an irritated manner, saying that of course he was asking for no such
thing; he merely wants to know in what areas his operations have lagged behind those
of his rivals, and what he needs to do in terms of investing in technology, facilities,
vehicles, staff and other operational issues to bring his division up to the point where it
can compete equally with De Vere’s rivals. He then makes it clear that his willingness
to cooperate with the consulting team and supply them with data and access to key staff
will depend on whether they can help him with the advice and information he needs.
What ethical problems are to be found in this case? Apply each of the four con-
cepts, deontology, consequentialism, virtue ethics and pragmatism, to each of the
problems, and compare the results and consequences. Then formulate a response to
the MD and tell him what you are willing to do and not do.
Case study: Neftcom

Neftcom is the former state oil company in the oil-rich Central Asian republic of
Tazhbekistan. The company was sold to its chief executive, former Soviet-era appa-
ratchik Leonid Aliyev, in 1993. After his death in 2002, the chairman, chief executive
and majority shareholder is Aliyev’s son Zoryn. Neftcom had revenues last year of
$11.2 billion, making it a large and valuable company but nowhere near as large as
some of the global giants.
Zoryn Aliyev cherishes ambitions of turning Neftcom into the next Shell or BP, and
intends to expand by acquisition. He has already bought out most of the oil and
natural gas producers in Tazhbekistan and made a number of small acquisitions in
neighbouring Central Asian republics. Now he wants to expand elsewhere and has
asked for Western help. Tazhbekistan has always been very independent of Russia
and has a pro-Western government, and the Aliyev family are also very pro-Western
and on friendly terms with many European government leaders. In the aftermath of the
Ukraine crisis, the European Union has determined to bolster the pro-Western factions
in Tazhbekistan as a counterweight to Russian influence, and to give the Aliyevs all the
assistance it can.
The EU, through its Overseas Development Fund, has engaged your consultancy
firm to work with Neftcom and develop a strategy for expansion, and if possible
recommend targets for acquisition and geographical regions around the world where
expansion might prove most profitable. Neftcom in the beneficiary of your team’s work
and the cooperation of its managers will be essential if the engagement is to succeed,
but the EU is the main sponsor and is paying your fees.
During the initial analysis phase, the team tried to gather more detail about
Neftcom’s finances so as to understand what financial resources it had available to
make acquisitions. Neftcom’s financial director provided some data, but not a clear
picture. When he was pressed for more, he at first failed to reply, then provided some
more, rather meaningless data which partly contradicted what had first been received,
and then announced that he was going on an extended holiday. His deputy says she
can give out no further information without the authority of the finance director, and he
cannot be contacted while he is on holiday.
Your engagement manager then spoke directly to Zoryn Aliyev, asking him to
intervene and get the team the data it needs. Aliyev asked why the team needed so
much financial data. The engagement manager responded that his team could not
make realistic recommendations for acquisitions unless it knew how much money
Neftcom could spend on acquisitions without jeopardising the financial health of the
current operation. Aliyev’s response was dismissive. The team need not concern itself.
Neftcom had plenty of money, and whatever money was needed for acquisitions
would be found. The team should stick to its brief and concentrate on finding target
energy firms that would be suitable for acquisition. When the engagement manager
tried to insist, Aliyev terminated the meeting.
The engagement manager reported this to the partners in the consultancy firm, who
in turn contacted their sponsors in the EU. The latter have pressed the firm to carry out
its engagement; the goodwill of the Aliyev family and Tazhbekistan are essential.
However, one of the partners made inquiries through contacts of his own in Lux-
embourg, and has learned that both Zoryn Aliyev and the finance director have been
channelling hundreds of millions of dollars from Neftcom into tax haven bank accounts
around the world. Much of this activity would seem to be illegal. This too was reported
to the EU sponsors, who replied angrily that this was none of their business or the
business of the consultancy. Unless the firm wants to lose this contract, and perhaps
future contracts as well, it should stop asking questions and get on with the job.
Describe the ethical situation facing the consultants at this point. What options do
they have? Which should the consultants choose? Use the three ethical decision-
making frameworks and see what conclusions they lead you to.
11 Consultancy and sustainability
Until quite recently, sustainability occupied a niche position within the consulting
profession. There were specialist consultants who advised on sustainability, and larger
consulting firms developed their specialist consultancy practices within the larger firm,
calling on these when sustainability issues arose. In the latter case, sustainability con-
sultants were called in on a case-by-case basis, when needed; there was no question of
them being involved in most or even the majority of engagements, largely because
companies themselves were not particularly interested in the issue.
Until a few years ago, sustainability was largely dismissed as a fad, and even today some
still see it as such. But times are changing, and sustainability is rapidly becoming
mainstream. More and more companies, including some of the very largest, are taking
sustainability seriously and putting it at the heart of their business plan: some out of
conviction, others out of self-interest, still others because they are being pressed by
shareholders, who themselves are often under pressure to move towards more sustainable
business models.
Sceptics who dismiss sustainability are increasingly in danger of being left behind. For
the purposes of this book, it does not matter whether climate change, rising demo-
graphics or social inequality really do pose a threat to business (though I will declare my
own position and say that, over the long term at least, they do). What matters is that
world is increasingly behaving as if these things do pose a threat, and must be responded
to. Governments and regulators are compelling companies to adopt increasingly high
standards on a variety of fronts. Shareholders, as already noted, are making their voices
heard at annual general meetings and through non-executive directors at board meetings.
Public opinion is becoming increasingly vocal and demanding, and customers are
increasingly prepared to switch to what they regard as sustainable options and demand
that companies provide them with sustainable products and services.
Companies have two choices; they can move quickly to anticipate the changes, or
they can lag behind and only change when forced to do so by public opinion, customer
demand or regulation. The case for taking the first option is extremely strong. To take
regulation for example, Siedel and Haapio (2011) have shown that a proactive stance
towards regulation, cooperating and engaging with regulators during the process of drafting
and implementing regulations and conforming to new regulations at an early date has very
strong financial advantages and can lead to further competitive advantage over those
firms that lag behind. Engaging with regulation is far less costly than fighting against it.
Changes in public opinion and customer demand likewise offer many opportunities; for
example, sustainability-related technology sectors (renewable energy generation, energy
storage and so on) are experiencing growth at rates far in excess of the economy as a whole.
What does this mean for consultants? First, they need to be aware of the rising tide of
sustainability regulation, and they have a clear duty to advise clients on both the oppor-
tunities and the risks that regulation poses. This means knowledge of what is happening
in this field, and what is about to happen. Second, consultants need to keep an eye on
the economic, social and environmental changes taking place and, indeed, threatening to
take place in the near future and again advise clients on the risks and opportunities.
This has a further consequence. Every consultant needs to be aware of the issues and
master them if he or she is to serve clients. Sustainability practices, though they will
doubtless continue to be useful, will no longer be the only means of delivery of sus-
tainability consultancy. Increasingly, clients expect every consultant to have expertise in
this field. And that means that no matter what their personal feelings on these issues,
consultants must comply. It will take a very brave or very stupid consultant to advise
companies to ignore sustainability and concentrate on fundamentals because, increasingly,
sustainability is becoming a fundamental in its own right.
In this chapter we will go on to discuss what sustainability is, broadening out the
definition beyond the usual fairly narrow focus on environmental sustainability, and look
at what consultants need to know about the subject. We will look at both sustainability
problem solving and sustainability capacity building as necessary parts of the consultant’s
toolkit.
What is sustainability?
The word ‘sustainability’ has been badly overused and is in danger of becoming deva-
lued. Some, even in organisations devoted to sustainability, are turning away from it and
seeking alternatives. I will continue to use the word ‘sustainability’ because, so far, no
suitable alternative has been devised, but I understand and sympathise if some readers
find the term makes them uncomfortable.
Instead of focusing on the word, let us look at what lies behind it and the original
purpose the word was meant to serve. While in the 1970s and 1980s the word ‘sustainability’
largely referred to environmental sustainability, it became quickly clear that broader issues
were involved. In the 1990s writers such as Elkington (1997) began introducing the idea
of the ‘triple bottom line’, comprising environmental sustainability, societal sustainability
and last but not least, organisational and financial sustainability. Other models have been
developed since, but all emphasise the interdependence between the three concepts.
Financial sustainability is essential. An organisation that is not financially sustainable
cannot and will not meet its goals. An organisation that is not structured properly, that
has no clear and coherent strategy, that lacks the resources and people and technology
that it needs, cannot and will not meet its goals. The consultant’s first duty, therefore, is
to the client organisation that he or she serves; and to that extent, nothing has changed.
Sustainability is sometimes confused with longevity, but that is not necessarily so.
Some organisations are deliberately designed to have short lives. Charities are set up for a
specific purpose and, when that purpose is fulfilled, wind up their affairs and close.
Companies set up limited-life partnerships and consortia to conduct innovation or mar-
keting projects and then disband them when their role is complete. ‘Sustainable’ in this
context, then, means making an organisation able to meet its goals, not to last forever.
Societal or social sustainability refers to the symbiotic relationship that all businesses
have with the societies in which they operate, be it marketing goods and services or
running a production facility. Businesses need customers, and they need employees, and
Consultancy and sustainability 145
those customers and employees are drawn from society. It follows that if businesses want
to keep having customers and employees, they need to pay attention to the society that
produces them, a point made by Kotler (2015) who argued that companies paying low
wages actually damage their own prospects by reducing workers’ spending power and
dampening down demand. Companies have an impact through their operations on the
societies around them.
For their part, consultants need to understand what that impact is, and also what
impact their own recommendations might have on those societies. If their recommen-
dations lead to societal damage or decay which then rebounds on the company’s head,
then the company’s best interests will not have been served. If on the other hand the
company has a positive impact on society, this will translate into improved reputation,
greater respect and trust on the part of customers and employees, higher brand value and
increased sales.
Contributing to societal sustainability can go further. Prahalad (2004) argued that with
markets in developed countries becoming increasingly saturated, companies seeking
competitive advantage will increasingly need to develope country markets for growth
opportunities. However, says Prahalad, most Western business models are not designed
for dealing with these ‘bottom of the pyramid’ markets, nor do they find it easy to adapt.
From Prahalad’s reasoning, it follows that consultants that can help companies change
their way of thinking and doing things and enter these complex low-income markets
will add considerable value for their clients.
Much the same is true of environmental sustainability. Overuse of resources does more
than just damage the natural environment; it creates hostile public opinion that damages
brand value. What is more, as Senge et al. (2008) show in some detail, it also increases
costs. Senge and his colleagues show numerous examples of companies like Coca-Cola
which, by reducing its water usage, has cut its costs worldwide by tens of millions of
dollars. Similarly, switching to renewable energy does more than just reduce carbon
outputs, it can reduce companies’ energy bills by one-half, or even more. Ingenious
methods of reducing environmental impact have also resulted in massive cost reductions,
freeing up money to reinvest in other projects or return to shareholders.
Consultants need to be aware of these kinds of issues, and to know how to calculate the
investment costs and opportunity costs of, for example, switching to renewable energy or
reducing lighting. The best interests of the organisation are still the first priority. But
how are organisations best served? By advising them to carry on as before, business as
usual? Or by seeking innovative solutions that will help them become more financially and
organisationally sustainable while at the same time contributing to the common good?
Sustainability is not just a matter of ideals. Many practice sustainability for idealistic
reasons, but ideals are never enough. Consultants need to be able to analyse the business
case – or lack of it – behind sustainability initiatives. In effect they need to be able to face
both ways. To clients who are sceptical about sustainability as a concept, consultants need
to be able to provide real-world advice about the cost, brand, reputation and other
benefits of adopting at least some sustainability initiatives. To more starry-eyed clients
eager to embrace every sustainability initiative regardless of cost, consultants need to
provide focus and help them prioritise, identifying the things they can do and can afford
now and putting off others until later – and weeding entirely out others that, no matter
how well-intentioned, would cause harm to the client organisation.
Ultimately, sustainability is part of the consultants’ continuing search for best practice.
In the past, consultants searched for solutions that would help clients improve their
business in the short term, without much thought for the future. Today the focus has
shifted, and clients increasingly want ideas and tools and techniques that will simulta-
neously lift and boost their organisations, reduce the environmental costs of operation
and make a greater contribution to society. There is no choice between the three legs of
the triple bottom line; all three matter equally, and all three are inter-related.
Sustainability and risk

Laudicina (2005) identified five key areas of risk faced by companies around the world.
The precise nature of the risk will vary from society to society and geography to geo-
graphy, and the balance between the five areas will vary too. However, Laudicina – a
respected senior management consultant and former chairman of the consultancy firm
A.T. Kearney – makes it clear that these are all areas that will concern every company
sooner or later. It follows that consultants need to be aware of them too. Table 11.1
summarises the five areas:
Table 11.1 Five areas of global risk

Globalisation Economic integration
Political integration
Social networking
IT connectivity
Demographics Urbanisation: size and growth
Ageing and youth
Gender balance
Education
Migration
Consumption patterns Market evolution
Buying power
Ageing and youth
Product innovation
Social norms
Natural resources and environment Energy
Water
Climate change
Regulation and activism Empowered government
Leadership deficit
Corporate credibility gap
Networking capacity
Globalisation
Source: Adapted from Laudicina (2005: 173).
Globalisation here refers to the levels of interconnectedness and integration in the

world. Laudicina does not believe that globalisation will necessarily continue; it is possible
that the world will become more interconnected, but it is equally possible that protec-
tionist and isolationist barriers will rise and the tide of globalisation will recede. If the
latter, the differences between developed and developing nations could increase and
inequalities become more marked. For consultants, the main thing is to look at currents
and trends and see what is most likely to develop. Will companies continue to serve
increasingly global markets, or will they be compelled to concentrate more on local markets;
and if so, which ones? All this has relevance for the financial sustainability of businesses, for
making the wrong decision now could have severe consequences in the future.
Under demographics, Laudicina includes factors such as gender balance and ageing as
well as migration and urbanisation. These issues will affect the size and location of future
markets, and of labour and skills pools, and could therefore determine how and where
companies are able to operate profitably. Education will also help to determine not only
skills but incomes and therefore propensity to consume. Education also has other impacts
which Laudicina does not mention; for example, educated, prosperous communities are
the ones most likely to understand issues relating to resource use and environmental
degradation, and come up with sustainable solutions to these problems.
Companies do not need to be purely reactive to these trends, however. As populations
shift and new communities form, companies can recognise that symbiotic connection
between communities and themselves. Along with serving community needs, as Prahalad
(2004) points out, companies can also help reinforce communities and make them more
sustainable, thereby ensuring the presence of future markets and future labour pools. By
understanding how this circular process of customer satisfaction, community reinforcement
and future development works, consultants can help companies make more informed
strategic choices.
This leads us to consumption patterns, an area where consultants have traditionally pro-
vided advice and analysis. The main change consultants will see is changing consumption
patterns based on greater environmental and social awareness; for example, demand for
products for which the labourers who made them have been fairly paid, or for products
whose manufacture has not caused unnecessary environmental harm or wasted resources,
and/or which can be recycled so as to reduce levels of waste. Anticipating these demand
changes and understanding them will again help consultants to improve the quality of
advice they give.
That leads on to natural resources and environment, and here as we saw earlier there are
two key areas of interest for the consultant: reduction in resource use, which leads to cost
reductions, and compliance with social expectations and regulations so as to ensure
compliance and boost reputation and brand. Consultants need to be aware of issues
around energy use, water consumption and contamination, air pollution and carbon
emissions, all of which are powerful and emotive topics, and all of which can have an
impact on the financial bottom line of businesses. Jia et al. (2016) provide examples of
companies in China that have developed sustainable practices that have also played a
major role in brand-building and created powerful competitive advantage. These
practices can be benchmarked and more widely spread by consultants, to the benefit of
their clients.
Finally there is regulation and activism, and here the issue of societal sustainability should
be foremost in the thinking of companies and executives. Once again, Laudicina thinks
the future could see things go either way: increasing regulation coupled with rising anti-
business rhetoric and more protests against companies and boards as the social climate
turns against businesses, or a much more pro-business environment with a positive
approach to regulation and support from a public appreciative of the beneficial effect that
companies have on their lives. Of course, to reach this latter situation the impact of
businesses on people really has to be positive. Consultants can play a strong role by
advising clients of the risks of unsustainable behaviour, and pointing out the benefits of
social responsibility in terms of improved reputation, stronger brands and increased sales.
Laudicina’s five categories of risk, which are themselves grounded in consultancy
practice, are a useful reminder of the world that consultants may face in future, and in
particular of how attention to sustainability is increasingly important. I said in Chapter 2
that in future, all consultants will become sustainability consultants at least in part,
because the tools of sustainability practice are becoming increasingly important in value
creation, strategy making and achieving competitive advantage. This includes both
problem-solving and capacity-building engagements.
Problem solving and sustainability

As we said earlier, it was formerly the case that sustainability-related problems were
separated out and handed over to specialist sustainability consultants. But with sustainability
increasingly becoming a mainstream concern, general management consultants need to learn
to recognise the sustainability issues their clients face. ‘Ordinary’ strategy, organisation and
process problems now often have a sustainability dimension. If consultants can deal with these
and provide a single integrated package of recommendations and solutions – rather than
one package of conventional solutions and then a sustainability ‘bolt-on’ – then this will be
more cost-effective and value-adding for the client and will build reputation for the consultant.
Here are a few examples, drawn from real life, where a mainstream business problem
has a sustainability dimension that consultants must also deal with:
A Brazilian property management company wishes to undertake a cost reduction

programme. One significant variable cost is electricity (primarily for temperature
control and light), and as part of the programme the company would like to see
recommendations for reduction of energy consumption.
A Spanish fast-moving consumer goods manufacturer plans to launch a new brand
of soap powder. As part of the brand strategy, it wants to create a product and brand
which reduces environmental impact to the lowest possible level, and then build this
feature into the brand image.
A British manufacturer of children’s toys wants to enter the German market. Aware
of German sensitivities where sustainability is concerned, the company wants to
demonstrate that it is socially and environmentally aware as a means of getting the
attention of the German public.
A large American bank has realised that American Hispanic communities are poorly
served by high street banks (for example, hardly any of its staff speak Spanish). It
wants to launch banking services that would appeal to Hispanic immigrants, but
lacks experience and knowledge of the culture of these communities.
A French food and beverage manufacturer has taken the advice of Prahalad (2004)
and wants to enter bottom of the pyramid markets in sub-Saharan Africa. It wants to
know how it can make important societal contributions in these African markets
that will enable it to establish a reputation and build its brand.
A British clothing retailer is aware that social networking can be very valuable in
marketing, but is not quite sure where to start. Simple online advertising seems
expensive and risky unless the company can get to know more about the people
who use social networking. How can it begin to understand the societal expectations
of customer segments that use social marketing?
An Italian luxury leather goods manufacturer with worldwide brands is developing a
range of new handbags. Leather goods require large quantities of water in their
production, and the company’s main manufacturing centre is in a region where
water is often scarce. For societal, environmental and marketing reasons, the com-
pany would like to find ways of reducing water consumption while making the new
product range, and then build a brand around this concept as a means of creating
competitive advantage.
A Canadian firm has developed a viable hydrogen-powered city bus, but lacks the
marketing skills to take the product to market. It needs a strategy and a marketing plan.
A large clothing manufacturer has come under fire because some of its Asian sub-
sidiaries are using sweatshop labour. Having dealt with the issue internally, the com-
pany now needs a strategy for rebuilding its reputation and recovering lost customers
by developing and demonstrating a clear commitment to social responsibility without,
however, reducing profitability any further.
Consulting on sustainability issues does not require any special skills set. Analysing and
solving these kinds of problems requires the same skills and processes that we described in
Chapters 6 and 7. The steps of situation analysis, problem analysis and solution analysis
still need to be worked through, using the same qualitative and quantitative methods
(and if I may add an observation, the use of quantitative methods and big data analysis in
sustainability is still very much in its infancy, and represents a chance for a consultant or
consultants to develop distinctive capabilities).
The real difference lies in the knowledge and world-view of the consultant. The first
step is to realise that sustainability issues are important. For consultants, this does not
require an ideological commitment to sustainability. Far from being necessary, such a
commitment, if taken to extremes, could even hamper the consultant’s ability to do his
or her job impartially. What is required is a dispassionate, neutral analysis of the client’s
needs and possible solutions, taking into account the changing environment in which we
live as outlined by Laudicina (2005), Senge et al. (2008) and others. Where sustainability
is concerned, just as with any other issues, consultants need to think first about the
client’s needs, and not about their own beliefs in – or opposition to – sustainability as a
philosophical issue.
And, of course, consultants need requisite knowledge on the various aspects of sus-
tainability that will affect their work. For those who do not think that issues such as
climate change or demographics are important, or that their importance has been over-
stated, this might pose personal difficulties. These must be overcome: once again, client
needs must come first.
Gathering knowledge in this field can be difficult, as much of what has been printed
or posted online is clouded by ideological preconceptions. Consultants need to develop
the ability to sift the information presented to them, discarding that which is obviously
wishful thinking – one way or the other – about sustainability and looking for definite
trends and serious issues under discussion. One important source is the success stories,
companies that have tackled sustainability-related problems successfully and built lasting
advantage, such as the ones Jia et al. (2016) and Senge et al. (2008) describe. Benchmarking
may indeed be the best source of knowledge in this field for some time to come.
Capacity building for sustainability

Increasingly too, sustainability is an area where companies want to build capacity. Rather
than calling in a sustainability consultant to deliver a fix, they want to develop the
capacity to analyse and solve sustainability issues themselves. Only once they have done
so will they be able to truly put sustainability into the heart of their business models.
In Chapter 7 we saw how capacity takes three forms: systems capacity, knowledge capacity and
people capacity. Let us look briefly again at each of the three in the context of sustainability.
Systems capacity includes capacity in areas such as production, innovation, sales,
communications, management systems and the like, and of course includes both tech-
nological systems and management systems. Some of the issues consultants might face
when building in systems capacity for clients include:
helping to design production systems which are more sustainably oriented, i.e.
reduce wastage and cost of low materials, reduce energy consumption and so on
introducing a design philosophy in innovation which sees reuse and recycling built
into the core design of products, rather than added on afterwards
improving communications on sustainability issues so that it becomes easier to
benchmark and share best practice within the client company
helping clients to better understand how sustainability creates brand value and then
manage brands accordingly
develop lower energy, lower cost logistics and distribution systems.
Sustainability systems building might still have an aspect of problem solving about it, in
that consultants may be asked to advise on either how an existing system can be adapted
to make it more sustainable, or design a new system which meets the client’s sustain-
ability goals. Either way, the purpose should be to design a system which the client can
then adapt and build on as the company grows, creating long-lasting value.
It therefore follows that sustainability systems must, before all else, be fit for purpose.
One of the first requisites of any sustainability system is that it should itself be sustainable,
capable of lasting until the client company has reached its immediate goals.
Knowledge capacity means the ability of organisations to create, assimilate and use
knowledge in an effective manner, and sustainability knowledge capacity simply means
the ability to do all these things in order to make the organisation more sustainable. It
could be seen as a sub-set of large knowledge capacity – there is knowledge about
sustainability and then knowledge about everything else – but given that many com-
panies are looking at putting sustainability at the heart of their business model, it might
seem wiser to add sustainability as an additional dimension to other kinds of business
knowledge. Thus, when a client company does its market research, it needs to know
about the social expectations and environmental implications of introducing its products
to a new market, as well as numbers of customers, their socio-economic profile, their
propensity to consume and so on.
In the near future there will probably continue to be a strong teaching role for
consultants, who are seen as sources of specialist knowledge which can be passed on to
clients. In the medium term, however, companies are placing a premium on capacity
building which will enable to them to create their own knowledge. How this is done will
vary from company to company, but one place to start might well be the unlocking of tacit
knowledge that we discussed in Chapter 7. Companies that pursue sustainable objectives
often find that their own staff are a valuable source of inspiration and ideas, and other
companies seeking to go down the same road might be assisted to follow these examples.
People capacity in this context means developing the human capacity of a client
organisation to deal with sustainability issues in a realistic way. The same methods
as described in Chapter 7 – direct substitution, mentoring and coaching, and enabling
systems and structures – are all valid methods. At the time of writing, direct substitution,
clients hiring consultants who have knowledge of sustainable issues and bringing them
into the organisation with a remit to think and teach others, is fairly common, and using
sustainability consultants to mentor and coach management teams to think more deeply
about sustainability issues is also a rising trend. Looking ahead, we can foresee much
more emphasis in future on developing enabling systems and structures, and this is an
area where some consultancy firms are starting to concentrate.
All three capacities are important, and capacity-building engagements will probably
focus on all three at some point during their lifetime. To repeat, the principles are the same
as with any other kind of capacity building; the aim is to assist the client to be better able
to meet its goals in a way that is financially, environmentally and socially sustainable so as
to create long-term value. That and nothing else should be the goal of capacity building.
Chapter summary
In this chapter we looked at sustainability and its importance to the consulting profession.
We spent some time discussing what sustainability is, looking at each of the three
dimensions, and we used the framework provided by Laudicina (2005) to categorise and
analyse sustainability-related risks.
We went on to look at deliverables to clients in the form of sustainability problem
solving or sustainability capacity building. In both cases we made the point that the tools
and techniques are very much the same as those consultants have been using all along.
The only difference is a change of mindset, in particular a willingness to engage with
sustainability as an issue that affects growing numbers of clients. Following on from that,
consultants will need to enhance their knowledge bases in order to understand the issues
more fully themselves; only thus will they be able to advise clients from the basis of
expert knowledge that professional standards demand.
In the next chapter, we go on from this point to discuss careers in management con-
sultancy, where among other things we shall see that would-be consultants must start
accumulating knowledge long before the beginning of their careers.
Student exercise
Go back to Table 11.1 and look at the issues in the right hand column:
economic integration, political integration, social network, IT connectivity

urbanisation, ageing and youth, gender balance, education, migration
market evolution, buying power, product innovation, social norms
energy, water, climate change
empowered government, leadership deficit, corporate credibility gap, networking
capacity, globalisation.
Considering each of these issues, think of some of the ways in which they might
affect the work of consultants on a day-to-day basis. What problems might clients
bring to consultants? What kinds of solutions might they need? What kinds of capacity
would help clients to deal with these issues more effectively?
Case study: Stradabella

Stradabella is an Italian luxury leather goods manufacturer and marketer based in
Milan. The company has been privately owned by the Giacomelli family for three
generations, ever since its foundation in 1962. Stradabella produces a range of goods
from luxury suitcases and travel bags to handbags, vanity cases, wallets and other
personal items. Its speciality is high-quality tooled leather, durable and beautifully
designed. Stradabella keeps up with the latest fashions and trends, and its products
have won numerous awards at fashion shows.
The European luxury fashion market has consolidated over the years, with groups
like LVMH buying up many smaller firms. Stradabella is determined to remain inde-
pendent, but knows that in order to do so it must raise its game further. To do so, it
plans to launch a new range of women’s handbags that will take its established design
skills out of the couture world and into the mass market. The target market is affluent
young middle-class female professionals around the world. Stradabella’s plan is to
create a brand that will appeal to these women, wherever they are. The bags them-
selves are still at design stage; no prototypes have as yet been created, nor has a final
design been decided on.
Many of Stradabella’s products are made on a craft basis by sub-contractors, who
are carefully vetted and constantly monitored for quality standards. The company does
have one factory-type production facility making suitcases and travel bags at Cosenza
in the largely impoverished southern Italian region of Calabria. The Cosenza factory
employs 140 people. It was established in the 1970s as a part of a social responsibility
initiative by the company with a view to creating employment in the area. The factory is
expensive to run, requiring large amounts of electricity and water, and the technology is
now largely out of date. Calabria has also been plagued by frequent water shortages of
late, partly due to rising population and consumption, and partly thanks to declining
rainfall in the region, which scientists have ascribed to global warming. Stradabella’s
factory is one of the major consumers of water in the Cosenza area.
In Milan, management have considered the idea of investing in the Cosenza plant
and upgrading it in order to produce the new handbag range. There is however
another possibility. The company has an option on a greenfield site near Ankara in
Turkey, and the Turkish authorities are keen for the company to build a new plant
there. They believe this will provide employment and development for the region,
which like Calabria is poverty-stricken despite its proximity to the Turkish capital.
However, this area in the central plateau of Turkey is also increasingly short of water
thanks to urbanisation and the drying of the climate in summer.
In order to make their handbags distinctive in the market, Stradabella wants to
create a brand that will appeal to young professional women. Its own initial market
research suggests that these customers identify with products that are responsibly
made and sourced. Management believes that if Stradabella can create a brand which
combines style and fashion with social responsibility and environmental stewardship, it
has a good chance of creating a distinctive and successful product.
Your consultancy firm has been hired to review the situation. In particular, you have
been asked to make recommendations about the identity and name of the new brand, its
key features, its strategy for launch into world markets, and also options for production.
What are the main sustainability-related issues that need to be analysed? What
early-stage recommendations might you make that can be tested and discussed?
Case study: Ras Hotels

Ras Hotels is an international luxury hotel chain headquartered in Abu Dhabi. Founded
eleven years ago by a group of entrepreneurs including two former executives from
Etihad Airways, Ras has expanded largely through acquisition. It has specialised in
buying up older hotels which have a certain faded grandeur, run down in recent years
but still in excellent locations and capable of being refurbished and revived. It now
owns high-profile hotels in New York, London, Shanghai, Tokyo, Capetown, Cairo,
Munich and Buenos Aires, as well as a number of newer, less prestigious hotels in
other centres. Its main markets are the luxury business and independent holiday
sectors; the chain does not market to the package or mass tourism segments.
Ras’s executives are old-fashioned hoteliers who make customer comfort their first
priority. They are good at marketing and also at finance; the chain is very profitable.
However, over the past year concern has been building among investors and execu-
tives alike that the chain is not sufficiently distinctive. Other rapidly expanding hotel
chains such as Indian Hotels, Sahara, Fairmont and the like offer service and facilities
equal to those of Ras, and at very similar prices. Ras has very little to make it
distinctive.
There is also some concern about whether the structure is fit for purpose. The
company is very decentralised, with local managers given near complete autonomy so
long as they hit their financial targets, and there is little or no sharing of knowledge and
best practice between hotels. Technologically, the company is also behind the market
leaders; money has been spent on refurbishing guest facilities and making them world
class, but very little has been invested in back-office support.
Ras’s board have taken particular note of the rise of Fairmont, the Canadian hotel
chain that has put environmental and social responsibility at the heart of its business
model. Fairmont has undertaken a number of practices including sustainable sourcing
of food for its restaurants, local sourcing where possible and practicable, measures to
reduce energy and water consumption, local hiring, investment in local communities
ranging from apprenticeships to supporting environmental clean-up and waste
management programmes, and much else besides. Fairmont has created a distinctive
image around these competencies and in some parts of the world, especially North
America and more recently China, has gained a following of loyal customers.
Ras does not wish to copy Fairmont exactly – that would not be distinctive – but it
has ambitions to move in the same direction. Rather than simply learning from what
Fairmont and others are doing, it wants to develop an innovation capacity that will
allow it to evolve its own distinctive sustainability policies. However, the company and
its systems will need overhauling and that it lacks the knowledge and people capacity
to move forward swiftly. Ras has engaged your consultancy firm to determine what
capacity improvements it needs and where.
What would you need to analyse in order to come up with recommendations for
Ras? What preliminary recommendations could you make, which could then be
discussed and tested?
12 A career in consultancy
In the course of my own work I have several times served, officially and unofficially, as
careers advisor to business school students. As we discussed in Chapter 1, consultancy is
one of the favourite career options for business students, but many of those who con-
template such a career do not have an entirely realistic view of what is involved. When
they think of consultancy they think of global travel, of working with clients across a
variety of industries, diversity of experience, the excitement of interacting with board
members and CEOs of large and powerful companies, of the challenge of problem
solving and making a difference to those companies, of the opportunities for
self-development.
Many young consultants find the reality is rather different. ‘I thought I was signing up
for a glamorous and exciting career’, one told me. ‘In fact, I spent the first year in a
windowless cubicle working twelve hours a day, crunching numbers and preparing
spreadsheets. I never saw a client during that whole time. I never saw daylight.’ Not
every experience is as bad as this, and some consultancy firms are very good about
training and growing their junior consultants, but even the best employers require their
young business analysts and apprentice consultants to prove themselves, and do not give
them significant responsibility until they do.
Some consultancy firms are definitely better than others to work for. Some really are
the Jesuits of industry, with high moral and intellectual standards. Others resemble the
inept, bumbling firm portrayed in Sidin Vadukut’s novel Dork (2010). Vadukut was a
management consultant himself, and while parts of the novel are very funny, others are
frighteningly realistic.
Why do you want to become a management consultant?

It is important not to view consultancy through rose-tinted glasses and to realise that like
every other career option, consultancy has its highs and lows. The work is extremely
hard and challenging, and consultants work famously long hours. The pressure can be
very intense. Long-distance travel quickly loses its glamour; you may indeed be in exotic
foreign lands, but most of your time will be spent in airports, hotels and meeting rooms,
most of which look very much the same wherever you are. If you want to be a good
management consultant, you have to really want to do it. People who choose con-
sultancy because they can’t really think what else to do (a) rarely get hired in the first
place and (b) usually wash out fairly quickly.
If management consultancy interests you as a career, the first step is to ask yourself the
question: why do I want to become a management consultant? If you don’t yet know
A career in consultancy 155
much about the profession, do some due diligence. Read about it; read the memoirs of
successful consultants; talk to former and current consultants and see what they think of
their jobs, what they liked and disliked. There are some people for whom management
consultancy is the ideal career; there is an absolute fit between what they want to do and
what consultancy offers.
To find out if you have that fit, ask yourself the following questions:
1 What are your personal values? What do you think is important in life and work?
What are the things that sustain you in your work when things get tough? Write
down your values, and then compare them to the list of consultancy professional
values in the first section of Chapter 4. How much congruence is there? Do you
think your views fit those of the consultancy profession?
2 What are your professional standards? What behaviours and actions do you think are
acceptable, and what unacceptable, in the workplace? Again, write down as many
things as you can think of, and then compare your list with Table 4.1. Do you think
you have the professional standards of a consultant?
3 What are your career goals and objectives? What do you want to achieve in the
course of your business career? A question I often ask is: what do you want people
to say about you at your retirement party? How do you want them to remember
you? When you have answered these questions, think about this book and what it
has said about consultancy as a profession. Will becoming a consultant help you to
reach your goals?
Of course, not everyone is a consultant for their entire career, and the great majority
of people who become consultants move on after a few years. People evolve and change,
and after a while the peripatetic life of the consultant no longer suits. And quite a few
people go into consultancy with no intention of spending more than three to five years
in the profession. Their plan is to use consultancy as an opportunity to learn and
develop, and then having achieved that goal, move on to something else. Consultancy
firms are quite aware of this, and indeed some rely on this; people leaving on a regular
basis means there is room to bring in fresh blood and fresh skills.
But whether you intend to make consultancy your life’s work, or whether it is a stage
in a larger plan, you need to be clear about your own objectives and goals. Recruiters
from consultancy firms will be looking for that clarity and objectivity about yourself.
They will also be looking for a realistic appraisal of yourself, confident but not over-
confident. They need to know what your capabilities are and what your weaknesses are.
(Never worry about demonstrating weaknesses; if the firm likes your capabilities, they
will help you to overcome the weaknesses.)
What you will need to do

Having decided on a career in consultancy, there are then certain things you need to do
before you ever fill out an application form or see a recruiter.
1 Research the industry thoroughly. You will have already learned about the role and
work of the consultant, but now go out and research the industry structure. Find
out which firms are prospering and which are struggling and perhaps in danger of
takeover. Learn what each specialises in, what they are good at, what their
reputation is. Target particular firms whose interests match your own; instead of saying
to yourself, ‘I want to be a consultant’, say, ‘I want to be a consultant with this particular
firm because…’ Then, work out how you will say this to a recruiter, so as to compel
him or her to think you might be an ideal candidate for their firm. Draw up a shortlist
of firms you want to work for and learn everything you can about them.
2 Make yourself interesting. Recruiters will see dozens, even hundreds of applicants for a
handful of posts. Why should they pick you over any of the others who have
applied? What makes you special? What are your distinctive competencies and
abilities? Once you have identified these, set about strengthening them. Perhaps you
play sport or music; perhaps you have a particular intellectual interest. Whatever it is,
think how your competencies in this field could give you a unique and interesting
perspective on management consultancy and the challenges faced by clients.
3 This will require you to think laterally, which is what all good consultants do. An
early American consultant, Harrington Emerson, once said that the three most
important influences on his thinking had nothing to do with business: they were a
railway surveyor, a breeder of champion racehorses and a conductor of classical
music. Stop for a moment and think what ideas and concepts from those three
professions might be useful to a management consultant. Then apply that thinking
to your own life and interests, and see what you might have to offer the consultancy
profession. Remember, it is not enough for you to be interested in consultancy;
consultancy also has to be interested in you. So, once again: make yourself
interesting.
4 Acquire an area of expertise. As we have seen throughout this book, and especially at
the end of Chapter 3, the old days of the general consultant are fast disappearing.
The T-shaped consultant still has a role to play, but the vertical bar of the T has to
be longer and its point sharper than ever before. Do not expect the consultant to
provide all the training and development you need. They will provide plenty of
both; but they need to see that there is raw material there to work with.
5 What are you good at doing? Do you have any special skills as an analyst or problem
solver or capacity builder? Do you have any areas of expert knowledge? If you do, set
about developing and improving these; if you do not, then think about acquiring
some, quickly.
6 Get international experience. If you have only ever lived and worked in one country
and only speak one language, you will not be particularly attractive to a consultancy
firm. Today’s clients are multinational and diverse in nature; corporate teams are
drawn from many countries and many continents. Good consultants have a rich
variety of cultural experiences and understanding. If you do not yet have such
experience, make a point of gaining it. Holidays are not enough; you need to live
and work or study in another culture to understand it.
7 Develop team working skills. Consultants work in teams. There is no room in con-
sultancy teams for those who are awkward or uneasy working with others. Practice
your team-working skills at every opportunity.
8 Develop communications skills. Consultants live and die by their ability to communicate
their ideas to other people, to fellow team members and to clients. Every form of
communication is important. Learn how to engage with other people in dialogue,
to listen and understand as well as to speak. Learn how to present ideas in an engaging
way so that people will pay attention. Develop an easy, confident style of oral pre-
sentations, rather than boring people to sleep with PowerPoint. Learn how to write
A career in consultancy 157
well, succinctly, confidently and with an excellent style. Eliminate text speak, poor
grammar and spelling errors; learn to write like a professional.
9 Have a Plan B. Only a small percentage of those who apply for consulting jobs
actually get hired. However good you are, if the consultancy firms you have
targeted do not feel that you fit with what they need, you will not get a job. You
can then opt for a less good job at a less good firm, but there are obvious risks in
doing so. Alternatively, you may get hired but then after a year or so decide that the
profession is not for you after all. My strong advice is, have another career alternative
to which you can turn if consultancy does not work out for you.
What the professionals say

In Chapter 3 I introduced four senior management consultancy professionals: Dominic
Barton, managing director of McKinsey & Company; Matt Krentz, senior partner and
head of the People team at Boston Consulting Group; Andrew Hooke, chief operating
officer and head of government practice at PA Consulting Group; and Simon Hayward,
chief executive officer of Cirrus Connect. I asked them what advice they would give to
anyone interested in a career in management consultancy today. Here are their answers.
Dominic Barton: First, familiarise yourself with technology and data. A basic under-
standing of how to leverage and manage massive amounts of data is a tool that everyone
will have to have in their toolkit. You don’t need to become an expert in data analysis,
but you do need to understand how it works and how it can be used to create value.
Second, gain experience of working in a front-line organisation. It doesn’t matter
what it is; it can be the Catholic Church, it can be a McDonald’s restaurant, it can be a
steel plant, but you need the experience of getting things done. The role doesn’t
matter – in fact, the more junior the better – so long as you get a sense of how things get
done in organisations. People can sometimes be a bit naive about this, and think that in
businesses everything happens for rational reasons, but businesses are human organisations
and irrational things sometimes happen too. Get some real, practical, front-line experience
so that you understand this.
Third, develop a habit of being curious and reading voraciously. This is a muscle that
everyone needs to have, and to exercise regularly, in order to keep up and know what is
going on in the world. Everyone has to keep learning.
Fourth, get some experience of working in other cultures. It doesn’t have to be China
or India, anywhere outside your home country will do. But you have to get out of your
box, and be exposed to other cultures.
Matt Krentz: Consultancy puts a premium on a breadth of problem-solving capabilities
and on being able to work in teams. During your education, focus on building your own
skills and abilities, whether it is things you do in class or outside of class. Develop your
abilities to problem solve and build structure.
You also need global experience. Seeing different environments and having multi-
cultural experiences builds a core tool set, one that will continue to serve you later in
your career. Getting diverse global experience early in your career is highly valuable.
The more senior you are, the harder it can be to move; not just because of family
commitments, but because of the local connections and relationships you build up with
clients. You can’t feel and touch our product the same way you can go kick the tires on
an automobile, so the relationships you have are very important. Moving means having
to re-create those relationships elsewhere.
Andrew Hooke: Before applying, research your firm. Consultancy firms’ websites all
look quite similar, but their culture and the work they do is very different, and the
experience you gain will differ too. Some firms are very structured, others will persona-
lise the experience to a greater degree. Choose the firms that fit you. Also, try to really
understand the work the firm does, what its projects are and how interesting they are.
Find out what their client base is. Try to ensure the work matches your own interests.
In order to get a feel for the organisation, try to speak in a more relaxed way, outside
the confines of a formal interview, with analysts or junior consultants and get their
impressions of the firm. Also, ask to look at some customer feedback, rather than just
having it described to you. People in the firm will of course cite glowing reviews from
clients, but if you look at the feedback you will see the negatives too. Probe to find out
what the firm’s reputation really is.
This can be quite a scary thing to do for someone new. But if I as a senior consultant
were to hear that question from someone junior, I would think that this was a very
confident question, and the person asking it must have a certain level of maturity.
Finally, get some experience. As a consultant, you need to have a level of expertise, and
you don’t usually get that expertise just by doing consulting projects. You get it by working
directly for companies in the industry. Get practical experience first; or join a consultancy
firm for two or three years, then go work in industry to gain expertise, and then come back.
Simon Hayward: Go and get a proper job first. Go and work in a client-side organisa-
tion for a period of years, in a Mars or a Unilever or an IBM, so that you can learn how
organisations function from the inside, how things work, how metrics operate, how
management information flows. It is very difficult to appreciate some of the things that
make large organisations function unless you’ve actually worked in them. Get as much
in-depth experience as possible.
Also, gain as much international experience as possible. The world is shrinking, and
the centre of gravity is shifting to the East. Even mid-sized businesses are being affected
by this. International experience is increasingly essential.
Chapter summary
In this short concluding chapter, we have looked at some of the things you will need to
do if you wish to become a management consultant. I have deliberately avoided giving
direct careers’ advice, because that is best done in person, face to face. In this chapter I
have tried to make three key points.
The first is: only apply for a job in consultancy if you really want to be a consultant.
Don’t apply because you can’t think of anything better to do.
The second is: be realistic about consultancy as a profession. Do not romanticise it. It is
hard work, it can be tedious, and as we saw in earlier chapters there are personal repu-
tational risks if you make a mistake. The satisfaction of successful consultancy work is
immense, but don’t rule out the downsides when you make your decision.
The third is: if you are determined on a career in consultancy, then there are certain
skills and experiences and capabilities that you need to develop if you are to attract the
attention of recruiters and make yourself stand out from the crowd. I offered a short list,
and our four professionals have given further and more detailed advice. Read their views,
study them carefully and follow their advice.
And if you have decided on consultancy as a career, then I hope this book will be
your first step on the path to becoming a professional consultant. Good luck!
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Index
7-S framework 83 consultant 66–7, 69; importance of 3,

8Ds model 87 47; interests of 41; involvement of 11, 21,
67–8, 95, 116; reasons for engaging
abstraction 89 consultants 55–8
Accenture 34, 36 client-consultant relationships, see relationships
action learning 3, 18, 73–4 co-created learning 97
algorithmic complexity 74 company doctors 29
analogy 90–1 competence, lack of 114–15
analysis 3, 5, 17–18, 48, 57, 73–84 competitive advantage 104
analysis paralysis 81–2 confidentiality 16, 23, 42–4
analytical techniques 82–4 consequentialism 129–30
Andersen Consulting 34, 36 consultancy, process model of 12–20, 25
appearance 46 consultancy, client engagement model of 12,
Arthur D. Little (ADL) 30–1, 33–4 20–5
AT Kearney 12, 31, 34 consumption patterns 147
culture 62, 65, 77
Bain & Company 11, 34 customers (of clients) 17, 77
balanced scorecard 82
Bedaux Company 30 data, complexity of 74
beauty pageants 60–1 data, quantity of 74
benchmarking 57, 82 data, reliability of 75
bias 93–4 data analysis 74–5
Big 4 accounting firms 9 Deloitte 9, 28, 37
boards of directors 17, 42–3, 77 defining projects 61
Booz, Allen & Hamilton 30, 32, 34, 37; see also definitions of management consultancy 9–10
Strategy& demographics 147
Boston Consulting Group (BCG) 11, 33–4 deliverables 116
boutique consultants 38 deontology 129–30
business goals 10 development economics 23
disclosure of interests 44
cash flow analysis 82 disproof 92–3
capacity building 4, 10, 21, 23–4, 58, 86, 94–8, dissent 117–18
104–5, 149–51 double-loop learning 73
careers in management consultancy 1–2, 5, 46,
154–8 enabling systems and structures 98
CEO 17, 77, 110, 118, 120 Enron 36
challenge and stretch 56–7 Ernst & Young 9, 37
change 58, 66, 118 ethics 4, 41, 129–39; contradictions in 131;
change agents 58 importance for consultants 131–3; principles
clients 3, 11, 16, 21, 55–8, 60–9; choice of of 134–5; problem-solving frameworks
consultants 60–2; communication with 136–9
60–1, 105; dysfunctional 120; expectations excellence 41, 43
of 16, 60–1, 65–6, 68; fit between client and expertise 57
166 Index
failures 4, 113–23; after the engagement 120, McKinsey & Company 11, 13, 31–2, 35
122; definition of 114–15; detection of 119; mentoring and coaching 98
learning from 122–3; of impact 115; mergers and acquisitions 24
recovery from 4, 114, 120–22 methods-time measurement (MTM)
fear 60 mission 17
fees 15, 20, 35, 102 models 89
finances 17 Monitor Group 34, 37
financial health 77 monitoring engagements 61
financial structure 77 moral courage 41–2
financial systems 104 MOST 83
five forces 82
five whys 76 negotiation and contract signing 12–14
flexibility 37 net present value computation 83
four Ps 82
objective advice 10, 56
gap analysis 68 options 18
gifts, offering and acceptance of 44, 46 organisational structure 17
global management 24
globalisation 38, 146–7 PA Consulting Group 30
paradoxes of management consultancy
history of the consulting profession 28–39 50–2; of knowledge 50; of similarity 50;
honesty and integrity 41–2, 65, 67 of the future 50–1; of change 51; of
hypothesis testing 91–2 humility 51
people capacity 97–98
impact 4, 11, 19–20, 35, 38, 102–10; definition performance measurement 83
of 103–5; measurement of 4, 19–20, 25, PESTLE 83
105–10; over time 105, 109; statement points of contact 17
of 109 politics of organisations 59–60, 116
impartiality 41–2, 56 pragmatism 131
implementation 10–11, 19, 36, 38 PricewaterhouseCoopers 9, 12, 28–9, 37
independence 41–2, 49–50 pricing 15; cost-plus 15; benchmark 15;
innovation 17, 95 value-added 15
Institute of Consulting 44 prioritisation 79
Institute of Management Consultants 10 pro bono 15
integrity, see honesty and integrity problem analysis 78–9
international expansion 24 problem-solving frameworks 86–7
international management 24 problem-solving tools 86–93
problem solving 4–5, 24, 48, 55–6, 86–94,
knowledge 1–2, 17, 95–7, 149; capacity 17, 103–4, 148–9
95–7; explicit 96; importance of 1–2; problems, identification of 18, 73
tacit 96 process flow analysis 83
knowledge transfer 21, 23, 96–7 process improvement 105
KPMG 9 production systems 17, 77, 94–5
professional competence 41, 43
language, clarity of 46 professional services 9
leadership 17, 38 professional standards 5, 42, 44–7
learning 87, 108, 122–3; by osmosis 87 purpose 17
linear thinking 21
qualitative analysis 74–7, 104
Management Consultancy quality management frameworks 83
Association 10 quantitative analysis 74–5, 77, 104
management competencies 82–3
management teams 17 reduction 89–90
market analysis 83 reference clients 13
market conditions 77 regulations 143–4, 147
marketing of consultancy services 13 relationships 14, 55, 62–70, 77, 105
marketing systems 17 relationships, establishment of 65–6
Index 167
relationships, maintenance of 66–7 sustainability 4, 24–5, 43, 143–51;
relationships, models of 62–3 capacity building and 149–51; definition of
relationships, types of 63–4 144–5; financial 144; societal 144–5;
repeat clients 13 environmental 145
reputation 13–14, 60 supply chains 17, 77
resilience 24 SWOT 84
restructuring 105 systems capacity 94–5
return on investment 83 systems design 95
risk 41, 65, 96, 146
risk management 24 T-shaped consultant 49
Roland Berger 37 team facilitation 21, 23
role conflict 49–50 time-keeping 46
role theory 47–50 time and motion study 30
roles of management consultants 3, 40–53, time scale of projects 14–15
47–50; expert 47–8; analyst 48; problem training 58
solver 48; critical friend 48; builder 48; transparency 42
partner 48–49; leader 49 trial and error 88–9
TRIZ 90
scientific management 29–30 trust 14, 23, 117
shared ownership of problems and
solutions 21–3 unpopular decisions 59
situation analysis 17–18, 77 Urwick Orr 31
Socratic questions 75 utilitarianism 130
solution analysis 79–81 validation 59
solutions 18–19, 79–81; choice of 19, 79–81;
effectiveness of 35; implementation of 19; value chain analysis 84
options for 18–19, 79–81 value creation 41, 43–4, 77
specialist consultancies 11 values 17, 40–41, 65
statistical quality control 32 virtue ethics 130–1
strategic thinking 24
strategy 17, 24, 104 weighted options 87–8
Strategy& 12–13, 37 why-because method 76
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Management Consultancy

ISBN: 978-1-138-79883-0 (hbk)

Structure of the book

What to do once you have read this book

Management consultancy is a professional service which oﬀers advice to businesses and

Management consulting is the providing to management of objective advice and

Management consulting is the practice of creating value for organisations, through

Process and engagement

The process model

1 negotiation and contract signing

Negotiation and contract signing

Analysis of the situation

 the purpose and values of the organisation, including its history

Identiﬁcation of the problem

Options for solutions

We will discuss McClellan’s framework in more detail in Chapter 8.

Summary of the seven-step process model

1 negotiation and contract signing

The client engagement model

1 shared ownership of problems and solutions

Shared ownership of problems and solutions

Table 2.1 Comparison of old and new models on key dimensions

Summary of the client engagement model

Case study: Qiang Tractors

Origins of management consultancy

The consulting boom

Low relative High relative

Figure 3.1 The ‘Boston Box’

Figure 3.2 The McKinsey 7-S framework

Challenge and crisis in consultancy

 Management consultancy was not delivering value for money.

Values of management consultancy

Professional standards in consulting

Source: Institute of Consulting 2015

Five paradoxes of management consultancy

1 the paradox of knowledge

1 putting the client’s interests ﬁrst

Case study: Breitenlee Diagnose

Case study: TurningPoint Media

Why do clients engage consultants?

1 identifying and solving problems

1 needing a change agent to get things moving

How do clients choose consultants?

1 deﬁne the project carefully from the outset

The client–consultant relationship

Types of client–consultant relationship

Silent partner relationships exist in management consultancy too, typically where a

1 signalling ability and integrity

1 What are your mission, vision and guiding principles?

Maintaining relationships with clients

1 integrity and, in particular, putting the client’s interests ﬁrst

When client relationships go wrong

1 The client feels the consultant has displayed a lack of integrity.

Case study: Alcorta S.A.

Quantitative and qualitative analysis

Q: Why did the Titanic sink?

 A transport company failed after consultants recommended a strategy of acquisitions,

 the client’s product/service range and key brands

Q: Why is sales growth ﬂat?

In this case, the client acted on the consultant’s recommendation to substantially

1 What has worked in similar situations in the past?

2 Will this solution work in the present circumstances?

Analysis paralysis: how much analysis is enough?

the purpose and values of the organisation, including its history

Management consultancy was not delivering value for money.

A transport company failed after consultants recommended a strategy of acquisitions,

the client’s product/service range and key brands

production systems for making and creating products and services

buying an established fashion footwear manufacturer in either the UK or USA and

A Brazilian property management company wishes to undertake a cost reduction

economic integration, political integration, social network, IT connectivity