Management consulting digression and discussion from the What were you thinking thread

In My Humble Opinion
46

In my thirty-year career I went from being dragged in as a subject matter expert for consultants working for my company, to the person who directed them. My overall feel is that about 25% of those engagements were very useful, 25% somewhat useful, and 50% net negative.

McKinsey (who I worked with rather a lot because they had the ear of every fucking executive at my company) lowered the success ratio. I worked with them (either directing or as a principal SME) maybe a dozen times, and exactly one of those times went great, though I had to corral them into making that one work. The rest were just, as others have said, them recapitulating whatever the interviewees said, while also trying to upsell upsell upsell. Got, I hated them, especially knowing that those little corporate quislings were reporting to senior management on me.

Since there are so many examples of bad outcomes in these discussions, I’ll give you a good one. We decided to merge two large internal organizations (one coming in via acquisition) in our company, and we put someone internal in charge of integrating their IT platforms. What a neverending clusterfuck. After 18 months of wasting time and money, we hired in PWC to manage the integration, plus a boutique consultant to manage some of the tricker bits, and it worked well.

ETA I did just think of something else. Twice in my career, management consultants were brought in to re-evaluate decisions I’d made, because some executive didn’t like something I’d done. To their credit, both times the (two different) consultants validated what I’d done, though one didn’t like how we’d done some implementation. So, consultants can very much be venal, but not always.

47

Even to someone who was very aware of many of the issues of management consulting firms, that video was scathing, brilliant, and scathing in its brilliance.

48

Oh, hey, one other thing: this book is still on my bedside table because I’m thinking about rereading it. The Big Con talks about how consultancies, like parasites, embedded themselves into business but also very much government, and drain their victims of not just resources, but also the long-term infrastructure to manage themselves. Very depressing book.

Mariana Mazzucato : Mariana Mazzucato

49

Ironically I think I only really worked in an “industry” company one time where I had to deal with consultants. I was in my mid 20s and had actually left (well..laid off / fired technically) from the consulting firm I was working for so I took regular corporate programmer/business analyst job at the headquarters of a retail clothing company. They had an army of consultants there from CSC building some big inventory system that was way over budget. Honestly I didn’t have much to do all day and a guy sitting next to me introduced me to this board called the SDMB.

I would imagine in a number of large homes in places like The Hamptons and Aspen. These guys don’t give a shit. At best everything is just numbers on a spread sheet to them. At worst, that’s the whole point of the job.

50

Might be interesting to give a perspective on what it’s like actually working for a consulting firm. I’ve worked for a bunch over the years:
2 Big-4 firms
A few mid-sized firms
A couple of boutiques (less than 200 people)
I’ve also tried a couple of stints working in “industry” (regulator companies) and tech firms (including one that was founded by and consisted of mostly ex-Mckinsey data scientists).

There are different “levels” obviously. Usually about 6 between entry level analysts and partner or equivalent. Within the partner level they might own different businesses or regions. Loosely divided into “grinders”, “minders”, and “finders” (which should be obvious what they do).

Typically the way it works is we hire a bunch of junior folks out of undergrad or business school. You go through a couple weeks of training and then you go to “the bench” and wait to get staffed. You’re supposed to go around and try and meet as many people as possible, sign up to help on various internal projects, assist with sales efforts and responding to RFPs (proposals), basically just stay busy doing busywork until a suitable project materializes for you.

Kind of works that way at all Grinder and Minder levels. Finders (partners and sales) are out there either looking for new logos or expanding existing accounts while Minders are usually split between billing, managing, and finding. But your main metrics are how much you bill, how much you manage ($ budget) and how much you sell.

For reference, my level is a sort of very senior Minder/Finder below the partner level.

Some might ask “so what do you ACTUALLY do?”. That is an awesome question. Because ultimately someone has to pay me to do it. It has varied over the years depending on my level and the specialty of the firm or practice area. But some examples:

  • Write custom software (in my case, a lot of back-end database procedures using SQL)
  • Project management
  • Client stakeholder interviews ( “what would ya say ya DO here?” )
  • Facilitate client workshops
  • Document business processes
  • Produce pretty PowerPoints
  • Data analysis / reporting
  • Time and motion studies
  • Building KPI/OKR dashboards
  • Vendor selections
  • Write opinion / thought pieces
  • Industry research
  • Go-to-market analysis / strategy recommendations
  • Gap analysis / maturity assessments (basically reports on how good your company is at doing something compared to industry standards and benchmarks)

Like think of these as components in a broader strategic initiative. So for example, I had a client who called us in because their project management was kind of a shit show. So I interviewed about a dozen PMs, IT, and business people to understand how they ran 5 of their largest projects. We put together a 2 day workshop with about 40 senior stakeholders where we did some fun exercises teaching them Agile, presented our findings back to them, and helped them build out their project roadmaps for the year. We presented our findings to the COO in the form of a big PowerPoint deck and everyone loved it. My clients were treating us like we were superheroes.

And then I think they basically did jack shit with it. The big “win” for the COO was he got a bunch of high level plans but there was no interest in actually spending the money to have us come in there and training them on proper modern delivery techniques or help them run the projects for them.

I’ll pause there for any questions…

51

So, you hire someone to tell you what to do then discharge them if they say to change what you’re doing. Sound like not all of this can be laid into the consultants’ laps.

52

Did they recommend moving it to Cafe Society, cutting the moderator, and charging a fee to post in it?

I recently proofread a deposition of a McKinsey mucky-muck who was trying to defend the company’s court case demanding some millions of dollars from a former client when McKinsey had somehow neglected to get a signed contract laying out the project and its terms. Real management acumen there, eh?

53

Not even a generic Statement of Work?

54

I think there was a draft SoW but the two sides are also wrangling about whether that ever got finalized, among other issues.

55

“Quality” programs are one of the things frequently ridiculed in the Dilbert strip (I know, I know, Scott Adams is a far-right lunatic, but his cartoons used to be funny).

I have no direct experience with these “quality” initiatives, but I do with a closely related one – CMM, the “Capability Maturity Model”. The idea of CMM pitched to management was that if you just adopted their model of software development, even the useless dweebs and moronic pinheads that work for you could produce excellent software. CMM was, in a sense, the essence of management consultancy wrapped up in a neat saleable product that could be sold by … well, who else but CMM consultants!

Was CMM a scam? Not completely. It came out of Carnegie-Mellon and had many valuable checklists to support reliable software development methodologies. But in essence that’s all it was – checklists and documentation guidelines. It was hugely oversold to management as a panacea to their incompetent software development staff.

I even remember one of our VPs (at that unfortunate job I held that I mentioned before) repeating the CMM mantra “there are no heroes in software development”. Of course there are, you dimwit! Great software – highly functional and highly reliable – is conceived and architected by people who know what they’re doing, not by the incompetents you like to hire simply following protocols.

56

In the world of public education, consultants are among the biggest boondoggles.

Funds are thin on the ground. Staff members are underpaid, turnover is high, facilities are falling apart, and families are turning to charters and private schools, abandoning a bedrock of civic society.

So when a school board signs a six-figure contract for consultants to come in to tell teachers how to build community, or eliminate racism, or improve meetings–or whether a district should merge with a neighboring district–those consultants better goddamn be worth it. Those six figures could instead have gone toward better staff pay, or more staff, or better facilities.

The consultants are almost never worth it. They make staff engage in trivial, demeaning behaviors (“Find a partner, and read this unsourced statement about racism, and then discuss how it makes you feel as you agree with it!”), create meaningless data (“Drop a poker chip in the box next to any word that describes how you feel about the district, and we’ll turn it into a graph!”), and mandate new protocols that don’t help (“Start every meeting with a question like, ‘What Bed Bath and Beyond candle scent are you showing up as today?’”) and the staff are all side-eyeing each other like, is this for real, can we please get back to our classrooms now?

As near as I can tell, classroom educators judge success by a variety of metrics, chief among them whether students are engaged in meaningful learning. Every day you see whether you’re having success. A certain level of management is removed from these metrics, though, and it’s not clear to them whether their jobs are even meaningful, much less successful. So they create work for themselves, and judge their success, by seeing how many initiatives they can initiate.

The consultant class serves these mid-level managers. They create opportunities for initiatives, create a chance for these managers to feel successful. It doesn’t really matter whether these initiatives help the schools’ mission, because that’s almost impossible to measure; what’s easier to measure is whether the managers have spent money on initiatives and gotten consultants to show up.

I’m a little skeptical of the whole thing.

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I don’t find fault with the consultants at all. Their advice was useless, but no one forced my boss to hire them. It was just a perfect example of how a lot of consultants are hired to give an excuse to do what the boss wants to do anyway.

When I moved to Silicon Valley and worked building computers, there were zero consultants in my departments. We knew what we were doing and didn’t need anyone to tell us how to do it. One project was a disaster, but I don’t think hiring a consultant would have helped a bit, and just would have made it even later.

58

Well if we can’t fix the problem, at least we can make a lot of money prolonging it!

A lot of times consultants also exist to give the boss someone to blame.

Having spent most of my career seeing it from the inside, our advice is often useless because the business model is fundamentally kind of fucked up. As I said, we tend to hire a lot of young, physically attractive, smart people out of school. Then they get stuck on whatever project is available. Unless they have some particular technical skill set, most big firm consultants aren’t deep experts in “education” or “banking” or whatever client they are stuck with. Last month they might have been working with an insurance company. Six months prior it might have been a retailer.

So basically you will get a highly presentable group of 20-somethings who are smart enough to be able to pass themselves off as knowing your business, but won’t really know it too deeply.

Consulting firms also hire a lot of senior people who do have deep experience who may actually BE experts in their particular industry. But their job is usually to use their pedigree and connections to sell work, not deliver it.

In fact my old firm had a weird symbiotic relationship with the banking industry. It seemed like it was mostly former back and middle office executives from big banks and insurance companies in the senior / partners slots using their connections to sell junior staff who mostly left after a few years to go work back and middle office jobs at big banks and insurance companies.

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I did some consulting myself. I worked for a guy who designed specialized equipment in a niche industry. I installed the equipment and trained the engineers and took calls when things went wrong to talk them through fixing the issue or flew out to do it myself.

I also did a sales presentations for him. Guess what I did when they were ready to buy something but I could tell that it wouldn’t work for their particular company and they would be wasting their money? I was honest with them and didn’t make the sale.

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Specialized consulting is often worth paying for. On some level, that’s what you are doing when you hire an accountant to prepare your taxes.

Even management consulting is occasionally worthwhile. I assume. But i just want to point out that it’s management consulting that’s the topic of this thread, not any old consulting.

61

Absolutely correct. My point was that if the situation is hopeless, an ethical management consultant (if there is such a thing) should forgo the sale and be honest with the potential client.

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If the situation is hopeless, or your product is simply wrong for your potential customer, an ethical salesperson of any capacity should forgo the sale.

[Narrator: IME, they don’t.]

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That’s the challenge though, right? What are you defining as “management consulting” vs “any old consulting”?

If we are talking just about Mckinsey, that is a very specific sort of elite “strategy” consulting that predominantly hires Ivy League MBAs and Rhodes Scholars, primarily for the “Big-3” or “MBB” firms (Mckinsey, Bain, BCG). They tend to be the ones whispering in the ears of CEOs with these often abstract business strategies. Like the Cojoined Triangles of Success. You can’t make this stuff up. And yet someone literally made it up and now they teach it in business schools!

The next tier down is widely considered to be the “Big 4” professional services firms, which used to be accounting firms - Accenture, Deloitte, EY, KPMG, and PwC. Don’t ask me why there are 5 of them. Probably because when they were accounting firms they used to be the “Big-8”, then the “Big-6” with more accounting firm-sounding names - Arthur Andersen (which went defunct sometime after spinning off Andersen Consulting), Deloitte & Touche, Ernst & Young, Whatever KPMG stands for - something Pete Markwick something, Price Waterhouse, and Coopers & Lybrand. I don’t remember what the other two firms were.

These firms have hundreds of thousands of consultants that do pretty much everything and anything you can think of.

I single those firms out because like big amoeba, they are the source of all other consultants and consulting firms. Everyone wants “ex MBB” or “ex Big 4” when they are looking for those skills. Every other firms looks at them as the benchmark when they are competing for bids. Much like they used to say about IBM, you don’t get fired for hiring Mckinsey or one of the Big-4. IBM, ironically, now a big consulting firm.

Sure, the concept of an “any old consultant” makes sense in that you have people who are experts and you pay them money to do a job or advise you how to do a job that they are experts at because they have done it a thousand times.

“Management consultants” - which I consider anyone who works at any sort of management consulting firm, whether its an Ivy League strategy consultant at Bain or your building websites for some small boutique firm spun off from the Digital practice of some larger firm - are different in that you are paying for the supposed expertise of the firm, not the consultants.

What I mean to say by that is these firms represent a collection of highly skilled individual with a lot of industry expertise. So it’s correct to say the firm “does these things” but the people who actually come to work on your project may not have ever done them before. So for example, if you’re an automaker who wants to do an Agile transformation for your IT organization the firm will pitch you their expertise in doing Agile transformations for automakers. They will give you examples of their work with Ford and Toyota and show examples of all these cross-industry Agile transformations. You will meet the head of the Automotive practice and Agile SMEs. You’ll see a bunch of pretty PowerPoint decks with lots of methodology and best practices. But the actual team might be a couple of SMEs with a bunch of junior staff who maybe if you’re lucky went through a couple of days getting certified in some Agile project management stuff.

64

That’s interesting. Because some of those firms i think of as accounting firms, or even as actuarial consultants. And of course it makes sense to hire outside actuaries from time to time, either for “independence” in the required audit of the work the in-house actuaries do, or because you don’t need a full-time actuary. For instance, my first actuarial job was with a pension consulting group. Every pension plan needed a qualified actuary to sign off on the reserves every year. That was, for most of our clients, maybe a hundred or two hundred hours of work, mostly by junior staff with only a few hours of work from the expensive qualified actuary. It totally made sense for them to hire consultants to gather the data, analyze it, recommend how much of a contribution to throw in this year, and sign off on the plan. And we were, as a team, completely qualified to do that work, which our client didn’t want to do in-house.

But my husband briefly worked at EY (which i think of as accountants) but he said that they also do management consulting, using their knowledge of your company (gained by doing accounting work) to make a case for why you should hire their management consultants.

Maybe that’s the predatory part that @Maserschmidt was talking about.

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The place where I worked in the 90s hired Arthur Anderson in to do some kind of annual auditing. I walking into the building when one of them was at reception to meet one of my co-workers. He literally said, “I’m here to see X. I’m Y from Arthur Anderson. I’m here to save your life.” Fucking tool.