CHAPTER 1
What Does a ManagementConsultant Do?
1.1 Why Do Companies Hire Consultants?
Never, Always, or Sometimes?
"Why would anyone in his or her right mind hire amanagement consultant?" This is a point of view thatmany executives have, especially executives who areused to succeeding. They may see hiring a consultantas a symptom of failure. They may feel that there isa problem that they're not able to solve or that theirleadership abilities are weak.
On the opposite end of the scale, there are executiveswho are overly dependent on consultants. No majordecisions can be made without seeking advice from anexternal consultant, and all strategic projects are led byconsulting teams.
There is no optimal model for how much consulting acompany requires. It depends on the company's situationand management's knowledge and experience. Mostcompanies will, however, benefit from using consultingservices from time to time.
When to Consider Hiring a Consultant
Someone once said, "Insanity is doing the same thingover and over again and expecting different results."Customer satisfaction may be declining, sales dropping,or costs escalating. If management has prior experiencewith successfully addressing a major business problem,they may be well equipped to solve a similar one.
If, however, a completely new situation arises, previousexperiences may not be sufficient. Maybe the companyis in a mature industry, and new competitors have startedtargeting the most profitable customer segments withnew product offerings or distribution channels.
Perhaps the industry is undergoing major restructuring,and there is a need to consider merger and acquisitionoptions. Or maybe the business is experiencingdifficulties of a more operational nature that theyhaven't been able to resolve.
The consulting market is huge and continually expanding.There are many providers of management consultancyservices. No matter which industry, function, or phasea company is in, there are management consultantsready to help.
There will always be a market for consultants. Inprosperous times, consultants are called upon to developgrowth strategies. During recessions, consultants enterthe arena to assist in consolidation and cost cutting.Consultants may also be asked to give advice on howto continue to be successful.
Case: For several years, the market leader in the retailbanking sector had been losing market share in mortgageloans, especially among first-time homeowners. A newand attractively priced loan product had been launchedand was being marketed expertly.
Salespeople were trained in how to sell the new loan, andgood incentive systems were in place. A web solution hadbeen in place for several years to effectively handle onlineloan applications. New loan customers were very satisfiedwith the product, but market share continued to decline.
Finally, an external consultant was hired to analyse thewhole loan process to find the cause of the problem. Theanalysis showed several problems that management wasunaware of: (1) The bank's call centre could not handlethe large number of phone calls from loan applicants.Customers were put on hold, and many prospectivecustomers hung up. (2) To save costs, the call centre referredloan applicants to the online loan application form.Testing proved that the form was technically unstable andvery complex to fill in. These problems resulted in manyprospects giving up during the application process.
After being presented with the fact-based analysis fromthe consultant, showing how many prospective customerswere lost due to deficiencies in the call centre and websolution, a comprehensive action plan was implemented,and sales slowly started to rise.
1.2 What Does the Consultant Have toOffer?
What Does the Consultant Bring to the Table?
In general, management consultants are experts inidentifying, diagnosing, and solving business problems.They are trained to pinpoint a problem and suggestsolutions for fixing it.
The consultant is an external and objective third partywho can bring in an outside view, unbiased with regardsto internal politics in the organization and emotionsof management. When consultants have the relevantexperience, know-how, and wisdom, they can oftenfind ways of doing things differently.
What Are the Consultant's Goals?
Obviously, management consultants want to get paidand collect their fee. To achieve this, at least overtime, the consultant has to deliver value for money tothe customer. The perceived values must be greaterthan the consulting fees incurred. This usually meansthat the business will become more successful afterimplementing the consultant's advice than it was priorto hiring the consultant.
The goal of the consultant should, however, always bethe same: help the customer become more successful.A successful customer will be satisfied and more thanhappy to pay the consultant's fee.
1.3 Why Is Change Important?
Why Change?
Since the beginning of time, change has been going on; it isa never-ending process. In business, change is happeningeverywhere: increasing globalization, new technology, newindustries, and new business models. Change can seldombe stopped, but many do their best to slow things down.
There must be balance between the amount of changeinside the organization and the business environment.When the rate of change inside the business becomesslower than outside, the end is near. The only question iswhen. So, to be successful over time, every organizationhas to continually adapt to its business environment.
What Is Change?
Change can be viewed in many perspectives. Asimplified way of viewing change is the scope of it:
1. Small (incremental) changes continually improvethe business and align it to requirements fromthe environment. This requires good managerswho, together with their employees, always lookfor more effective and efficient solutions.
2. Large changes require entirely new solutionsand ways of working. This means a lot of hardwork to analyse and evaluate alternatives beforedeciding on the right solution to implement.Project groups and change management skillsare usually needed.
Change Agents
All consultants are dependent on change. Change isfuel for the consulting engine. One could argue thatwithout change, there would be no need for consultantsto give advice or participate in projects.
Consultants can be viewed as change agents, hiredto assist organizations in their change process in oneway or another. The consultant's purpose is to help thecustomer change to become more successful.
1.4 What Services Do Consultants Provide?
Many see consultants as potatoes—they can beutilized in many different ways and cover differentneeds. Professional customers will have a very precisedescription of what kind of consultant they are lookingfor and what service the consultant will provide.
The Expert
Sometimes, consultants will be called upon to givetheir expert advice or opinion. The consultant mayhave in-depth knowledge about a certain function(M&A, finance, etc.) or a specific situation or process.Typical questions for the consultant include, "What isthe best solution to the issue at hand?" and "How doyou suggest that we proceed?"
The Process Driver
Very often, the organization will possess the necessaryskills and knowledge to solve a problem. But they mayrequire an experienced and independent consultant tolead the process of finding a good solution.
To be a good process driver, having experiencefrom similar situations is an advantage, as is havingsufficient time to ensure that planning, involvementof key personnel, necessary analysis, workshops, anddocumentation are performed, thereby ensuring agood process.
Management for Hire
For important projects or programs, management willwant an experienced project or program manager tolead the work. Very often, a standalone consultant or aconsulting team will be hired to secure successful projectmanagement. But consultants are also sometimes hiredto fill ordinary line manager positions for a definedperiod of time, for example, if the manager movesto a new position, and there is no good candidatein the department to fill the gap while hiring a newcandidate. Hiring consultants as management for hireis often used to test out a candidate the organizationis considering hiring on a permanent basis.
Quality Assurance (QA)
In high-risk situations (for example, introducing amission-critical IT system), management should considerusing a consultant for independent walkthroughs of thesolution, process, or project. This will secure an unbiasedopinion and aid in uncovering risks. In large IT projects,you will often find one consultant (or consulting team)leading the project, while another consultant functionsas the quality assurer. The quality assurer will usuallyinterview people in and around the project and dostructured reviews of project documentation. Findingswill be documented in a QA report and presented tomanagement.
The Facilitator
Quite often, a consultant will be called upon to functionas an independent or neutral facilitator of discussionsor workshops. The facilitator will lead the meeting orworkshop and ensure a good process. This is similar tobeing a process driver but downsized to functioningin a meeting or workshop. The facilitator will oftenbe asked to secure necessary documentation and willtherefore often bring in a colleague as documentationsupport (secretary).
The Secretary
All projects require documentation. The final results(recommendations, implementation plans, etc.) mustbe comprehensively documented. This is necessaryto ensure that decisions are based on facts and well-foundedarguments. Documentation also works ashandover material to the people who are going toimplement the consultant's recommendations.
In addition, a project will require temporarydocumentation to drive the project forward. Mandatesand plans, minutes from meetings, action logs, and soon are necessary to ensure effective communicationand efficient follow-up. The secretary (or "documentor")is therefore an important role in all projects, meetings,and workshops.
CHAPTER 2
How to Become aManagement Consultant
2.1 Starting Out on a Consulting Career
How to Start Out on a Consulting Career
The traditional way of becoming a managementconsultant is to join one of the large and well-knownconsulting firms after finishing your universitydegree. Companies like Accenture, McKinsey, and theBoston Consulting Group provide formal training,methodologies, and customer engagements whereyou can learn the consulting trade one step at a time.There are great career opportunities in these pyramid-orientedfirms.
You may start as an analyst, but when you develop andprove your skills, you will be promoted to consultant, seniorconsultant, and manager or principal. The most successfulmay even be offered a partnership. The structuredapproaches and work ethics you learn are beneficial nomatter what you choose to do later in your career.
Consulting can also be a career choice for very highlyexperienced managers. There are many niche consultingfirms that provide specialized advisory services ormanagement-for-hire to their clients. They expect theirhires to be masters within their fields. These firms mayhave their own methodologies, but their competitivestrength is usually the very high expertise level of theirconsultants. They therefore spend little resources trainingtheir employees but expect them to draw on their ownexperiences from successful careers in management.
Consulting Is Harder Than It Looks
With experience and training, many become goodconsultants. However, like in all other occupations, onlya few become truly great.
Not everyone succeeds as a consultant. It's never aboutnot being smart enough. It usually boils down to a lackof understanding the consulting role, which will bedescribed in section 2.2. You have to know what to doand when to do it. You also have to learn what to sayand when to say it. Timing is very important.
A lack of understanding of the consulting role can bemagnified by insufficient interpersonal skills (section2.3) or not being able (or willing) to learn the necessarytechnical skills (section 2.4).
2.2 The Consulting Role
Being a consultant requires a thorough understandingof your role. As a consultant, you are first and foremostan advisor. A consultant gives advice, but it is theclient who makes decisions based on the consultant'srecommendations.
The following is expected from you in the role ofconsultant:
* Integrity and accountability. You mean whatyou say and believe in your recommendations.
Someone once said, "Integrity is the holy grailof consulting." And Arthur Andersen said, "Thinkstraight, talk straight."
* Objectivity. You collect facts, perform analysis,and make unbiased recommendations.
* Professionalism. The content and packaging ofyour work into deliverables is of high quality.
* Credibility. Recommendations you present areplausible and believable. Facts and fact-basedanalysis give you the necessary credibility. Youfocus on meeting or exceeding the customer'sexpectations.
* Confidentiality. You handle all information andresults with great care and do not reveal them toothers without prior consent from the customer.
* Value for money. Your contributions and resultssubstantially exceed the fees the customer pays.
2.3 Interpersonal Skills
A consultant gives advice when asked for it. You arenot expected to run around telling everyone what youthink they should do. As previously discussed, you haveto understand not only what to say and do but when.
To succeed as a consultant, you therefore have todevelop excellent interpersonal skills:
* Active listening. You ask questions and use theanswers to gather valuable information aboutthe issue at hand, the organization, its practices,and its people.
* Flexibility. You are easy to get along with andlook for solutions instead of problems.
* Availability. You are easy to get hold of andrespond quickly to phone messages and e-mailrequests.
* Timeliness. You show up ten minutes beforemeetings and prepare so that the meeting canstart on time.
* Agility. You adapt to working in differenttypes of teams, often put together from severalorganizational units.
* Communicative. You present yourrecommendations in a structured andtrustworthy manner. You always have yourelevator pitch ready so that you can explain toanyone, in a few words, what the essence of aproblem or solution is.
2.4 Technical Skills
In addition to a good understanding of the consultingrole and having good interpersonal skills, themanagement consultant also needs to master technicalskills:
* Problem solving. You are analytical and havea structured approach for defining a problem,structuring it, and solving it.
* Project management. Since almost allconsulting engagements become projects,you are skilled in participating in and leadingprojects.
* Documentation tools. As a consultant, youwill usually be responsible for writing minutes,crunching numbers, and building presentationmaterial, so it is important to be proficientin text editors (such as Word), spreadsheets(Excel), and presentation tools (PowerPoint).
* Methodology. You will often be chosen asa consultant based on having a structuredapproach or method (for example, a businessstrategy methodology) for the business issue tobe solved.
* Knowledge about the business issue. Eventhough you are not an industry or functionalexpert, the customer expects you to havea good grasp of the business issue you areworking on. This is why most consultants overtime develop expertise in a limited number ofareas. "Content is king" means there has to bereal substance in the recommendations that aremade to management.
