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

In My Humble Opinion
66

I worked at a large regional bank. Sometime in the 2000s our executive management decided we weren’t making enough money, so they hired a firm called The Earnings Group to help us become more profitable. A group of four or five men (yes, all male) spent about six weeks with us, interviewing managers (me among them) and observing our work processes.

A few weeks later they gave us their findings. Their solution: raise the prices on our products.

I don’t think they got the full fee they were asking for.

67

When I was working every day on a project with McKinsey for about six months, every month or so the Partner would casually wander by my office and ask how things were going (even though his team was reporting to him in meticulous detail, including their evaluation of me). Eventually, he would turn the talk to ‘areas of concern’ he had seen in other parts of the company and mention how it might benefit me to stick my nose into them.

“Someone needs to be thinking about _____, and that really seems like something you would be good at.” Predatory indeed.

68

The used to be mostly accounting (Audit and Tax) for decades they have all had large “Advisory” arms. Now they are just broadly viewed as “professional services” firms, of which Audit and Tax accounting are still major businesses.

They used to consult for their accounting clients, but thanks to the Arthur Andersen fiasco and subsequent passing of Sarbanes-Oxley, that is no longer the case.

Well…we know what happened to all those guys.

69

I don’t even agree with that. From what I’ve seen is that they employ technical sales to back up their salespeople with just enough knowledge to bullshit a non-technical person into thinking they know what the fuck they are talking about. I have met plenty of smart people who work for McKinsey or Bain, but I have never met someone who was highly skilled in any area that would help our business. Not marketing, not management, not technical skills, none of that. Their very best were smart people with shit tons of confidence who were at best mediocre in their supposed area of expertise.

ETA an example…
When I worked for a company whose bread and butter was a set of websites, they were advising us on a path of “self-disruption” (and that is something I actually agree with, but don’t need an outsider to explain why it’s important), regaling our CEO with phrases like “fail, but fail fast” and “escaping conformity”. Then they’d work with product to constantly try new things and do multi-variate testing to see how things went. None of that are problematic, but none of that required outside help. The problem was that when they’d present the results to the C suite, the primary metric they used was success rate of the changes they were testing. They were actually proud that 96% of the things that they had tried proved successful or at least not harmful to web traffic numbers.

As anyone who is actually being disruptive will tell you, if you’re not failing, you’re not fucking trying. Instead of trying to rethink breadcrumb navigation or some other major change that was high risk, high reward, they were doing things like changing a light blue button to ever so slightly darker blue. Did I mention that that company is now bankrupt?

70

I meant the collective knowledge of the firm.

I don’t think what you describe is unique to consulting. I think it’s a function of Corporate America. When I was growing up, the big concern was America was moving away from a manufacturing economy to a services economy. People wondered if services could create enough jobs. So basically you have all these people coming up with new services. It’s not good enough just to have regular accountants, engineers, lawyers, and managers supporting products. Now we have all sorts of consultants helping them do their jobs better. And other consultants advising those consultants how to consult better or grow revenue or scale strategies and whatnot. And each layer of services has to sound more “strategic” and specialized with their own “secret sauce” for unlocking revenue.

Take the example you provided. If I understand what you are saying in plain english:

You worked for a company that generated revenue through their web sites. Presumably some sort of subscription service or online store or something? So when you say “disruption” from the examples you provided it sounds like it’s really just redesigning the website (or UX)? Or do you mean “disruption” in fundamentally changing the business model? Either way, for some reason we can’t just say “we’re going to redesign the web site to make it prettier, more modern, easier for our customers to use.” Probably because you can get an art school grad who majored in digital design to actually do that for a fraction of what you pay a bunch of Bain MBAs to create Powerpoint decks theorizing it.

71

You’d be surprised how vague our SOWs are sometimes.

When my coach (what we called our direct managers in my firm) would put tell me about a client opportunity, I would ask reasonable questions about the scope, scale, deliverables, budget, etc.

He would jokingly reply “I feel like you are asking a lot of questions where you know the answer is ‘we don’t know yet’.”

72

You’re certainly confirming every impression I took away from that deposition.

73

My experience wasn’t in consulting. But my software firm produced a small suite of highly configurable and customizable products.

We often got into a catch-22 where the customer (often a government agency constrained by acquisition laws) wanted a rock solid price and delivery schedule when they still had no specific idea what they wanted. And they were unable / unwilling to pay for a serial voyage of discovery through their need space and our deliverable space.

Of course our sales force loved to say “Whatever you want we easily can do quickly” no matter how far out of scope or flat scientifically impossible it was.

And of course the bigger the orgs on either end of this kind of transaction, the more likely the people actually at the negotiating table and signing the deal have no idea what’s really needed or really doable. All that knowledge resides 3 or 4 levels removed from them.

It’s really nothing like a homeowner discussing scope and price with a one-man house painting or landscaping “company”.

74

Not surprised at all. The biggest project I ever did with McKinsey (or in my whole career, really) billed at $700K/month under their most basic/generic SoW, which is why they kept trying to shoehorn in additional/side projects…it was a constant battle to contain a scope that lived in conversations and emails.

75

Management consulting IMHO is a part of the general “enshitification” of Corporate American that has been happening for decades.

At the top of the food chain are the investment banks, hedge funds, venture capital, and private equity firms that own everything. Their goal is to make as much money and drive out as much cost as possible.

Then you have your CEOs and their executive teams who are responsible for P&L and general oversight of companies and their subdivisions. They don’t really do much besides fire or outsource work or approve major initiatives.

Then you have your middle management and FTEs. The objective is to outsource or automate as much of these people as possible.

The consulting industry sit parallel to this big pyramid as a big contingency workforce. Firms like Mckinsey, Bain, and BCG at the top, the Accentures and Big-4 in the upper middle, with offshoring firms like Wipro, TCS, and Cognizant providing the grunts.

Consulting firms not only provide workers but they also train them and provide experience for large companies (Mckinsey alum become CEOs and managing directors, Accenture alum become directors and sr managers, etc, etc).

What this has created is an economy where no one really knows how to do anything of value. Except maybe write apps and software. This may be my own bias because I live near NYC and everyone is in finance, but even in my extended network, I feel like I know very few people who have jobs like “I work in the breakpad division for a company that services the auto industry.”

I question how much we can keep support the economy by creating layers of highly paid bullshit jobs that don’t produce anything. Middle managers at least serve a certain administrative purpose, but then add in consultants advising them, then all the specialist consultants advising the consultants on specific management trends, trainers, coaches, professional keynote speakers, consultants coaching people on how to become professional keynote speakers, so on and so forth. Like how many people earning six figures do you need talking about how to do something?

76

This sentence, and the rest of the post, is my new boilerplate response whenever anyone says we should run government like a business.