1.

Operations Consultancy

improving costs, speed and quality

they are measurable

2. Organization and Strategy Consultancy

a. Organization Consultancy

improving organizational structure

may be measurable

b. Strategy Consultancy

fit between the organization and its environment

difficult to measure

3. Information technology (IT) consultancy

they are measurable

Risk of using external management consultancy

Over-dependence: becoming overly dependent on external consultants
Isomorphism

if more organizations in the same sector rely on management consultants, the sector
may run the risk of isomorphism, or similarity of organizations

if they adopt same practices and structure

4 situations that cause isomorphism:

1. standardized advice — when the consultancy firm gives same advice to each
client

2. herd behavior of consultants — when all consultancy firms provide similar

advices

3. herd behavior of clients — when all clients asks for the same advice

4. catch up — clients ask for the same solution that competitors have
implemented, in order to catch up with these rivals

Opportunism

can cause knowledge spill-over

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 how can we reduce the risk of knowledge spill-overs:

consultancy firms may offer safeguards from one client to another

assigning different consultancy teams to competing clients a.k.a ‘Chinese walls’

no more than one client per sector

Management consultants’ practices for generating demand

Consultants’ rhetoric: the art of effective or persuasive speaking
Clients’ experience: rhetoric lose its effectiveness with increasing client experience
because clients have been hiring former consultants (alumni)

Chapter 4

Why is the management consultancy industry so difficult to analyze?

1. No definition

there is no commonly accepted definition of what consist of management

consultancy

2. No obligation

there is no obligation for management consultants to register themselves

because it is not a legally enforced profession

only voluntary registration is possible through associations

because of most consultancies are private firms, they are not obliged to publish
annual reports

3. No interest

clients have no interest to provide information

also consultancy firms are unwilling to share information about their clients

However, governments collect industry data on a country-wide basis.

Also private sources like Kennedy Information collects data.

Three key drivers of demand for management consultancy

Client organization

change: mergers, acquisitions, entering a new market, offshoring

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