How Consultants Create Value

I’m sure you’ve heard the jokes about management consultants (they borrow your watch to tell you the time, etc.), and there’s some truth to them.  Overall, though, organizations get a huge amount of value by working with high-quality consultants.  Here’s a non-exhaustive list of a few reasons why they can be so helpful, in my experience.

Painstaking analysis

A lot of businesses are run on gut feel.  Even at large corporations with massive reporting and analysis resources, there is a limit to how much analysis can be run and to how much executive time can be spent understanding it.  Consultants are most valuable when they help you shortcut this constraint.  I’ve heard war stories where consultants from high-powered firms have spent weeks driving around town to understand soda delivery routes and territory assignments, logging airline arrivals and departures to assess the best gate patterns, and talking to hundreds of building contractors to analyze buying behavior for garage doors.  Consultants are used to drilling down much deeper on topics than your team is, and they put highly capable people on it because brilliant insights can come out of this mind-numbing analysis if done well.

In a nutshell, a good consulting team will run through more data hoops than your internal team and do it faster.  They can help you understand aspects of your business that were never clear before.

Domain expertise

Domain expertise simply means experience in either an industry or a functional area (e.g., marketing, supply chain management, merger integration).  Consultants often over-sell this quality.  Trust me, the team may have only done one project like yours before, but they will be sold as experts.

If you truly need domain expertise, you should do some due diligence on this point.  Make sure you know the specific team that will be working on the project, and go through the background of at least the partner and manager in some detail.  Ask probing questions about previous projects or about industry trends to identify the ones who have really walked the walk.

For reliable domain expertise, solo consultants who were formerly executives in the industry, as well as professors in a field, can make excellent choices.  But you may find you don’t need as much expertise in a subject as you thought.  Sheer intellectual horsepower is often more important – mediocre consultants with a lot of industry experience often just end up recycling the same ideas.

Objectivity

People like to talk about consultants being objective, which I think combines a few different concepts.  One, they’re likely to come in with a fresh perspective, questioning things that people inside the company take for granted.  Two, they see the big picture across departmental priorities and can help facilitate the organization to agreement on a strategy.  Three, they are in a better position to be the bad guy and call BS on internal constituencies based on deeper data and analysis, if it comes down to it.

Of course, in some situations consultants are just brought in to rubber stamp someone’s pet strategy.  I’ll go into that in another post on the dangers of using consultants.

Better information

Whether talking to customers or people inside the company, consultants will likely get more unvarnished information from them.  Why?  Because people are much more honest with a third party.  They don’t want to criticize you to your face, get their salesperson in trouble, or risk some kind of reprisal.  Consultants also spend their entire careers interviewing people for information, and they get pretty good at it.

Speed

Finally, consultants can help increase the speed of change in your organization.  Most organizations, especially large ones, suffer from a certain amount of inertia.  People are comfortable doing things the same way every day, and they may not even know how to change and how to coordinate those changes across the company.  Consultants can help figure out what’s blocking change, come up with a detailed plan for how to fix it, and work with you to execute on that plan in a way that makes sense for the business.  They are used to moving big ships to different courses and understand the level of planning and communication required.

Of course, not all of these points hold true for all consultants.  Some firms have a bias towards exhaustive analysis and strategy discussions, others towards managing execution and keeping the organization on the same page.  Depending on what you need, you should emphasize the aspects that will be most important.  But I’m curious to hear from your – do these generalizations hold true in your experience?


Related Posts:

  • No Related Posts
  • http://topsy.com/trackback?utm_source=pingback&utm_campaign=L1&url=http://www.brekiri.com/blog/277/how-consultants-create-value/ Tweets that mention How Consultants Create Value « The Business Research Blog — Topsy.com

    [...] This post was mentioned on Twitter by Greg Gentschev. Greg Gentschev said: How do consultants create value? New blog post: http://bit.ly/bNL0Lg [...]

blog comments powered by Disqus