Management Consultants - Help or Hazard?

Just read a wonderful article by Jack Trout on the management consulting profession.

If you have the time to read it all, please do. Otherwise, fast forward to the foot of his article to the anecdote about the Shepherd and the Consultant. Priceless!

OK, Jack’s point is that corporations often bring in management consultants when they don’t know what they want them to do. And that bringing in the large consulting firms rarely has a positive effect.

When you look at the large consulting firm’s business model, there are several observations:

1. Large consulting firms make their money by charging out a lot of people to the client for as many hours as possible at much higher rates than those people are getting paid.
   
   
2. The "longer we take, more you pay' business model of the large consulting firm is obviously in direct conflict with the client’s interests.
   
   
3. The client might really need some help, but that help might never come through in the way the large consulting firm wants to deliver it.
   
   
4. Large consulting firms get hired because 'nobody ever got fired for buying IBM'. If you hired the largest global firm in town and their advice was wrong, how could you have known that would happen? You're in the clear!

It's time for a change. The art of the management consulting engagement is figuring out what kind of consulting work is going to provide value to the client, and explaining to them how that is going to work for them.

The consulting project must be clearly defined and agreed, and the scope and cost fixed in advance.

Of course, either or both can be varied as the project progresses. But the client and the consultant would only vary the scope and the cost by negotiation and agreement. And that makes sense - if something that could not have been known at the start of the project arises, or is uncovered during the consulting work, it may have to be included.

There must be a way to determine the return on investment to the client. How often is that one forgotten?

These are all things that professional members of the Institute of Management Consultants agree to do when they are admitted into the Institute.

What has been your experience working on projects with management consultants ?