The Trusted Firm: How Consulting Firms Build Successful Client

The Trusted Firm

The Trusted Firm How Consulting Firms Build Successful Client Relationships

Fiona Czerniawska

John Wiley & Sons, Ltd

Copyright © 2007

John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex PO19 8SQ, England Telephone (+44) 1243 779777

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Contents

Preface Acknowledgements About the author Part I INTRODUCTION 1 The changing client–consultant relationship 2

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Promises, promises: excellent relationships from a client perspective

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3

The invisible firm

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4

The trouble with the status quo

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5

The client–consultant–consulting firm relationship

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Part II PEOPLE

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6

Personal chemistry and relationship skills

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7

Recruitment, retention and remuneration

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Part III PROCESS (1): MARKETING AND SELLING

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8

Brand versus specialization: the race to the top?

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Handling the sales process

105

Thought leadership: as much culture as intellect

117

10

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Part IV PROCESS (2): DELIVERY

135

11

Managing consulting projects

137

12

Three types of teamwork

155

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When is a methodology not a methodology?

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Innovation – beyond the borrowed watch?

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The two-way mirror: listening and talking to clients

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Partners and parents

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Part V

VALUES

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Values

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Living the values, valuing the lives

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Conclusions

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Index

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Preface

Trust: it is a word that carries particular resonance in the consulting industry. Even consultants sometimes find their work hard to describe and the value they add even harder to articulate. While some consulting projects have clear boundaries and measurable deliverables, many do not – and are bought on trust. Trust is the foundation of the most successful client– consultant relationships. Trust is what consulting firms are built on. But the way in which a consultant and client can rely on each other and work together in order to achieve a common goal is only the tip of the trust iceberg. For a consultant to be able to do what a client wants, they need the support of a “firm” behind them. Indeed, as consulting projects become more specialized and complicated, it has become harder for a single person to be able to do all the work. Even independent consultants, accustomed to working by themselves, are searching out networks of likeminded individuals. For consulting firms, irrespective of their size, the challenge is to demonstrate that the firm, as well as its individual consultants, can deliver value to clients. That is a challenge because the industry faces a generation of clients who are increasingly cynical, not so much about the value offered by individual consultants, but about the rationale for buying services from a consulting firm. There are several reasons for this. The shakeout of the consulting industry between 2001 and 2004 resulted in many well-qualified and experienced consultants leaving the larger firms. Some went into line management roles, where their jaundiced views of their ex-employers have made them sceptical of the promises consulting firms make. Many more became independent consultants or joined smaller firms. Without the

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overheads carried by larger firms, they could offer clients a better deal: the same experience for lower fees. When you talk to them, many clients say that they look for consultants – people – they can work with; once they have found the right people, the consulting firm itself has little value to add. This perception is one reason why fee rates have fallen in recent years: price reflects perceived value, or lack of it. Consulting firms have responded to these trends by transferring more and more weight onto the shoulders of their consultants – the human face of consulting. Leaf through the average consulting brochure, dotted with profiles and case studies, and you see how much consulting firms are trying to personalize their image. But this strategy is not solving the problem: in some ways, it is making matters worse as it pushes the firm further back behind the stage. What consulting firms need to do is re-establish the rationale for the firm, not try to hide it. That is the purpose of this book. It tries to see the consulting firm from the client perspective: how can a consulting firm’s internal processes – recruitment, resource allocation, project management, business development, and so on – be designed to add value from a client’s point of view? What are the problems which get in the way? Why do firms find this hard to do? Trust between clients and consultants at the individual level is essential, but so too is trust at a more collective level. We do not just need trusted consultants, but trusted teams and trusted firms.

Acknowledgements

There is an embarrassingly large number of people who need to be thanked for their help in putting this book together. I am grateful to the wide range of people who were willing to be interviewed, to the public relations staff who opened doors on my behalf and the support staff who patiently scheduled and rescheduled our conversations. However, I am particularly indebted to Mark Radvanyi and Laura Ryan at Accenture, Julian Goldsmith at Arc Business, Heather Smith at PA Consulting, Louise Briggs at Booz Allen Hamilton, Jo Williams at Rossmore Group, Cathrine Brabbin at Boxwood, Julian Haslam at BT, Nille Skalts at Implement and Aviva Tropp at Marakor. I would also like to thank Peter Hill and Joy Hewgill at the Management Consultancies Association for their support and for allowing me to use so much of their valuable data; Leon Chandler, Angela Garg, Shahid Nazir and Ronell Vermaak, who helped with much of the research for the book; and Sarah Taylor, for help in clarifying the structure of the book and for undertaking many of the original interviews. I would like to acknowledge the sources of the following material, all of which has been used here with permission: Chapter 1 Some of the material in this chapter has been extracted from a booklet, also written by the author, A Better Place to Be: How the Last Fifty Years Has Changed the Consulting Industry, published by the Management Consultancies Association in 2006. Chapter 2 The data in this chapter were all drawn from a survey, carried out by the Management Consultancies Association, Perceptions of

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Consultancy in 2005. The chapter itself is an expanded version of the author’s “Issues and Trends” column which appeared in the June 2006 issue of Consulting to Management. Chapter 3 Some of the material in this chapter has been extracted from a report, also written by the author, From Bottlenecks to Blackberries: How the Relationship Between Organisations and Individuals is Changing, published by the Management Consultancies Association and Management Today in 2005. For further discussion of the concept of “preventing advantage”, see Corporate-Level Strategy: Creating Value in the Multibusiness Company. by Michael Goold, Andrew Campbell and Marcus Alexander (John Wiley, 1994). Chapter 11, 14 and 15 The figures in these chapters come from a report, also written by the author, Ensuring Sustainable Value from Consultants, published by the Management Consultancies Association and Management Today in 2006.

About the author

Fiona Czerniawska is one of the world’s leading commentators on the consulting industry. Fiona is the founder and managing director of Arkimeda, a firm that specializes in researching and consulting on strategic issues in the consulting industry (www.arkimeda.com). She is also the Director of the UK Management Consultancies Association’s Think Tank. Fiona has had more than 15 years’ experience as a management consultant, primarily working in the areas of marketing and strategy, and now speaks, lectures and writes extensively on the consulting industry and related issues. Her most recent books are The Intelligent Client and Management Consulting in Practice: Award-Winning International Case Studies. She is also the co-author of Business Consulting: A Guide to How it Works and How to Make it Work, published by The Economist in spring 2005.

PART I Introduction

1 The changing client–consultant relationship

“The consulting industry,” says Vernon Ellis, International Chairman of Accenture, “is on a journey of discovery.” Consultants have always been – and continue to be – in the forefront of business change. Whether restructuring shipyards in the aftermath of the Second World War, pioneering the use of new technology in the 1960s and 1970s or transforming the delivery of public services today, consultants have been there, helping. But it is not just the work they do with clients that has changed, it is also the very nature of the relationship they have with those clients. And, as Ellis points out, the journey is by no means over.

A Brief History of Consulting You don’t get clients like Walter Niehoff today. When Peter Isaac, a consultant with Proudfoot, walked into Niehoff’s office in Germany in the early 1960s, it was decorated with photos, medals and other war memorabilia. Niehoff, a former Panzer tank commander, had returned from the Second World War to run his family’s factory making knitting machines, but the business was failing and the banks were making threatening noises. Isaac told the old man he had to cut costs, including making 100 of his 400 employees redundant, and that he should call in the trade union leader to explain this. Niehoff refused point blank, saying he hadn’t spoken to “that idiot” in two years and had no intention of doing so now. He sent Isaac instead. Seeing the writing on the wall, the trade union leader agreed, but only if Isaac would also look at how sales could be improved. “We make a good product which people want to buy, but we’re

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hopeless at selling it,” he said. Isaac suggested he should deliver the message himself to Niehoff but the union leader refused, saying he hadn’t spoken to “that idiot” in two years and had no intention of doing so now. Once again, Isaac was the go-between, and he succeeded in getting Niehoff to agree. When, after six months, the firm was in a position to hire 150 new staff, the old man literally wept with gratitude. Post-war businesses were changing, but not fast enough. Philip Burnford joined the consulting industry in 1964 when he was offered a job with MSL, the firm that dominated the market in management recruitment. Many of his clients were medium-sized manufacturing companies. “Often they were pretty cosy places,” he recalls. “People were promoted simply because they were next in line. They had no training for management, and no real understanding of what it required. They were very set in their ways and suspicious of anyone from outside the company, particularly of anyone better qualified than they were.” He remembers visiting a well-known manufacturer of agricultural machinery: “I was talking to the black-suited company secretary, who was fairly typical of the time and who doubled as a quasi-staff manager. We had agreed the specification for the development engineers they urgently needed when we were interrupted by the shuffling entrance of a very old gentleman, with a resplendent watch chain. It was the chairman and founder of the company. He listened for a while and then said: ‘Don’t go sending us any of those graduates. You can’t learn engineering at university.’ The company survived about another ten years.” “We were agents of change, trying to get managers to take a more enlightened approach,” says Burnford. But change came at a price. Sir George Cox, the co-founder of Butler Cox which later pioneered multi-client programmes on the impact of technology on business, joined Urwick Orr in the late 1960s, attracted by the glamorous image consultants had already acquired and the training and variety of work on offer. His first six weeks were spent at the company’s management school, studying different disciplines and listening to presentations by prominent business leaders and trade unionists. “But my first assignment was with a mid-sized manufacturing company in the north of England,” he recalls. “I arrived on the Sunday night: it was cold and my plane was late. The next day I was taken on a tour of the plant, but it became clear that the local management resented me being there – and I realized I’d been imposed by their head office. I was put in a glass-sided office, by myself, in the middle of the factory with just a

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experience. Resourcing and efficiency were driven by leverage, an approach borrowed from law firms in which the expensive and limited time of a firm’s most experienced and senior partners could be divided between multiple teams of more junior staff. But consulting firms took leverage to new extremes: while a law firm or a strategy consulting firm might have been content with leveraging the time of a partner across half a dozen individuals, those working on implementing new technology, where the average size of projects was typically much larger, were looking at a ratio of one partner to 30 or even 50 junior staff. Such ratios could only be achieved by codifying, and to some extent standardizing, the approach a firm would take. This in turn meant codifying their knowledge so more of it was more accessible to more people, and by increasing the level of training they provided. Vernon Ellis joined Andersen Consulting in 1969 and became a partner ten years later. Although it had not yet opened its training facility for consultants at St Charles, Illinois, one of the first things the firm did was send Ellis on a computer programming course. “The firm had already woken up to this new way of doing consulting,” says Ellis. “When people thought about consulting then, they thought of the McKinsey model; they weren’t thinking about implementing technology or business change. We were one of the smaller consulting firms at the time, but we started to focus on technology.” Needing a definitive way to approach increasingly complex projects, Andersen Consulting developed Method 1, building on individual bits of the jigsaw already put together by different parts of the firm. “But it wasn’t particularly visible to clients,” says Ellis. “We didn’t go in with it under our arms. The idea was always to use it as a tool.” The proliferation of computer systems, the increasing use of minis as well as mainframes, and the focus on reducing costs all meant consulting services were in demand as never before. When Pat Sherry returned to Coopers & Lybrand’s London office after managing to extend a two-year posting in Bermuda to five years, he found a tough, commercial and hectic environment. “It wasn’t so much hot-desking, as hot-rabbit hutching.” The partner in charge of his business unit would walk round the office on Monday morning and if he saw someone there two weeks running he’d ask them to see him the following Monday. “Utilization was never a problem.” Within a year of returning, Sherry had a team of 30 people working for him on financial systems and technology projects. Vicky Wright joined Coopers & Lybrand in the mid-1980s, before moving to Hay Group, where she was the

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metal desk and two chairs – to the obvious amusement of all the other staff! It was nothing like the glamorous strategic-level advisory role I’d envisaged!” Cox had an advantage, however. Like many consultants, he joined not only with considerable management experience under his belt, but direct experience of some of the most advanced deployments of computer technology. “I was the equivalent of the one-eyed man in the kingdom of the blind, not just consulting but running seminars on the lessons we’d learned.” Technology, together with the human and operational change it brought with it, was already starting to take consultants far away from their advisory roots. At Proudfoot, Peter Isaac remembers feeling slightly insulted when Sir Ian McGregor, grappling with the mammoth task of restructuring British Steel in the early 1980s, told him that what distinguished him and his colleagues from other consultants was that they had dirt under their fingernails. It was a compliment, McGregor assured him: “You work at the coalface where things really happen, other consultants work in offices.” Like their clients, consulting firms had to change too. Most of Burnford’s and Cox’s fellow consultants had been retired army officers; the rest had been industrial engineers; most were in their fifties. Work came through referrals and repeat business: if a client didn’t know a consulting firm to use, they’d place an anonymous ad in a newspaper. The majority of sales calls resulted in chargeable work. But, while someone joining the consulting industry in the 1960s would probably have had an engineering background, those joining in the 1970s were mostly accountants. Pat Sherry joined Coopers & Lybrand’s audit division straight out of university in 1969, before moving to its consulting practice in 1973, but didn’t know whether to feel complimented or insulted when the senior partner told him he’d be better off in the firm’s embryonic consulting practice. It didn’t matter: the consulting practice wasn’t prepared to have him anyway, saying he was too young and didn’t have enough experience. When he reapplied two years later, having worked for a stockbroker in the interval, the firm accepted him. “But my father was a bit bemused,” remembers Sherry. “ ‘How,’ he asked, ‘could a client pay for someone so wet behind the ears?’ ” Sherry’s father wasn’t the only person asking this. As consulting firms became increasingly involved in implementation, they needed more people, and there simply weren’t enough with experience. By the end of the decade, the average age of a consultant was falling, as were his or her years of

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UK Managing Partner. “Even when I joined consulting – and consulting firms were comparatively small in those days – there was a sense of unease around how consulting firms should best organize themselves internally. Like many firms today, Coopers had a matrix structure: individuals would be assigned to both a skills team and an industry group. Often, there would be a conflict between the two.” Growth fuelled the desire for more growth, and bigger firms were already reaching the point where they couldn’t rely on a handful of senior people with excellent contacts to drive business. The buoyant market was also attracting new players. Vernon Ellis recalls a seminal meeting at Accenture at the end of the 1980s when the consulting partners decided that they needed to be globally integrated, independent of the Arthur Andersen management in each country. “We’d done some research on the way we thought the consulting industry would evolve during the 1990s and come to the conclusion that our main competitors would be IBM and EDS. Everyone was surprised at the time – but it proved to be quite right. At the time, we were still regarded as one of many consulting firms and we felt it was important to try and create a separate brand, positioning and image. We knew that, if we were to win the big projects which made a substantial difference to a client’s business, then we had to be more disciplined.” By the 1990s, the market had indeed changed decisively, creating yet more pressure on consulting firms internally. Demand was polarized between very large-scale projects, typically involving technology but increasingly involving outsourcing too, and much smaller-scale, traditional advisory work. At the same time, clients, more accustomed to using consultants, were taking a more sophisticated approach to hiring them. “The whole nature of the client–consultant relationship had changed,” says Philip Burnford, who by 1991 had become Chairman of Hay Group. “Whereas before we’d been helping clients do something they couldn’t do for themselves, now it was more a case of working with the client.” Consulting firms had to choose: they could either thrive as small, but often highly profitable boutiques, or they could go for growth. Thus, while Coopers & Lybrand continued to be something of a cottage industry, focused primarily on advisory work, Deloitte and Pricewaterhouse moved into industrial-scale systems integration work, largely around packaged solutions such as SAP. And what growth: much came on the back of a series of waves – of management ideas (total quality management, business process re-engineering)

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and of technology (enterprise resource planning) – which affected both large and small firms. And by the end of the 1990s, the industry was riding the biggest waves of all – the year 2000 and e-business. But the surge in demand which accompanied the dot.com bubble masked the fact that the industry had yet to resolve some of its most serious underlying problems. The priority was recruiting sufficient people, rather than looking for people with specific capabilities. For many firms, the sheer scale of activity overwhelmed their core values. An even bigger problem was client expectations: with so many people entering the industry, with their average age and level of experience far lower than had been the case in the 1970s and 1980s, many clients were poorly served, paying too much for projects that yielded little or no tangible benefit. The underlying problem was that the business model of consulting firms had not kept pace with the times. While advising their clients on how to become global, how to exploit the opportunities of new technology and how to restructure their organizations, the consulting industry itself was struggling with all of these things behind the scenes. The first years of the new millennium couldn’t have been a period of starker contrast. By 2000, consulting firms were unable to recruit fast enough: the “war for talent” was at the top of everyone’s agenda. The surge in demand for consultants had pushed prices through the roof. But by 2002, demand, no longer inflated by preparation for the year 2000 and the dot.com bubble, was falling rapidly; the consulting industry was left with what has been estimated to be 25% overcapacity. Between 2001 and 2004, consulting fee rates fell by between 10% and 20%. Pat Newberry was head of PricewaterhouseCooper’s financial services practice at the time: “Prices fell in a frighteningly short space of time: it was as though the tide went out and stayed out; the average daily rate halved. We weren’t equipped to deal with this, and the whole idea of the one-stop shop, offering a full range of professional services, had proved to be rubbish. We might have had a wide range of expertise, but it was unbelievably arrogant of us to claim to be expert in everything.” Falling prices weren’t just the result of overcapacity, but of changes in the way clients bought consultants. Everyone talked of clients becoming more sophisticated: many were themselves ex-consultants, laid off in the post-millennium shakeout, and they knew the tricks of the trade. The decision to bring in consultants moved from functional heads to central procurement teams, many of whom focused exclusively on getting the

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lowest possible price. They were buying bodies, not consulting teams or solutions to problems, and their approach rapidly commoditized some services. This meltdown has triggered, although not resolved, a serious and longoverdue reappraisal of how consulting firms work. Peaks and troughs of demand are the inevitable consequence of today’s business world in which capital and information flow more freely than ever before. The key question for consulting firms is therefore not simply which products and services to provide, but how they can deliver them flexibly and profitably. Globalization means that there’s always someone out there who is inventing something cheaper, smaller and faster than the existing players can offer, and no company – consulting firms included – can afford to rest on its laurels. Offshore companies have undercut the prices of established firms; new technology means entire swathes of work can be done from places as far afield as India, Taiwan and South Africa, rather than in London or New York. Demographic change and clients’ desire for specialist knowledge have combined to squeeze firms’ ability to get the people they need. Consulting firms used to be up or out, and they could afford to be because they received so many more applicants than they had places. But the flow of people isn’t what it was, so the industry has had to become more concerned about the work–life balance and being able to offer flexible working. “The industry is transforming itself,” says Pat Sherry. “We don’t want to go through the recent boom-and-bust cycle ever again.”

Why Read This Book? The evolution of the consulting industry has taken it far from its roots. Today’s consulting firms are bigger than ever; the projects consultants take on are far more complex and challenging. Yet, when you talk to clients about how they view the relationship they have with their consultants, one thing becomes very clear: they continue to view it in personal terms. Did they get on with the consultant? Could the two of them work together effectively? Success is attributed to the personal qualities of the consultants: they knew their stuff; they rolled up their sleeves and got on with things. By contrast, failures tend to be associated with consulting firms: the firm wants to sell more work; the firm did not staff the project with the people they had promised; they put their interests above those of their clients.

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Consulting firms have responded to this divergence between perception and reality by transferring more and more responsibility to individual consultants. They have pushed their consultants into the limelight – then tried to hide behind them. Of course, they are not alone: organizations in all sectors are pursuing a similar philosophy; it is the dark side to the empowerment we strive to achieve. But the peculiar problem for consulting firms is that neither clients’ attitudes nor their responses work well in an environment in which trust between individuals, while still vital, is not enough. Multidisciplinary projects and the focus on delivery not just advice, mean that clients need teams – firms. In these circumstances, consulting firms cannot afford to rely on one-to-one relationships: they need corporate relationships as well as personal ones. As an industry, consultancies spend a great deal of time thinking about individuals: Who is the best person to put on this project? Who should go where in the matrix structure? Who are the partners or directors of the future? How can we build better, more effective relationships with our clients? I wouldn’t dispute that these questions are important, but I would argue that we don’t spend anything like enough time thinking about the role the firm has to play in answering them. What kind of environment, infrastructure, support and culture do individual consultants need if they’re to do their job properly? What can the consulting firm do that its employees cannot do for themselves? Is the role of the firm to invest in innovative ideas and new approaches? Is it to assure the quality of the people who call themselves consultants? Is it to provide comfort to clients in the form of a global brand? If consultants cannot answer these questions, then it is hardly surprising that their clients cannot either; nor is it surprising that clients see consulting firms as part of the problem. In 2000 David Maister published a seminal book. The Trusted Advisor has rightly become the gold standard by which consultants judge their own behaviour. No one wants to be a mere contractor: everyone wants to be a trusted advisor. Yet this is now – after six years of turmoil in the consulting industry – only part of the solution. What good is it if your client trusts the handful of people in your firm who truly excel at building and sustaining long-term client relationships if they are not prepared to extend that trust to other people in your business? What good is it if they think “their” consultants are brilliant if they also think they are undermined by the com-

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mercial self-interest of the firm? The trusted advisor should be the tip of the iceberg: what good does it do you to have trusted advisors if you don’t have a trusted firm? “The concept of the trusted advisor still has enormous merit,” says Steve Gunby, Head of the Boston Consulting Group’s Americas region. “If your child were ill, there would be lots of people who would profess to be helpful, but if you found someone who was prepared to take the time to talk to you and your child, to understand what was going on and invest effort in finding precisely the right treatment, then you’ll return to that person again and again in the future. The same is true in business. Most companies are not in the business of replicating historical success but in identifying the changes they need to make in anticipation of future changes: they’re sailing into uncharted waters. These organizations want someone they can trust, to help them do what they need to do, not simply tell them what they need to hear; they need someone who can look beyond their own self-interest. Personal trust remains, and will continue to remain, an essential element of the relationship between a client and consultant. But today’s consulting projects are complex and multifaceted, taking them from pure analysis all the way to change management, the human principles of making the technology required work effectively, and the corporate implications of a specific decision. Most people cannot be an expert in all of these things – and that’s the challenge for consulting firms. A client cannot have a trusted relationship with everyone, but equally one person cannot have all the expertise in the world. Behind the trusted advisor there have to be people – an organization – who can deliver the skills and services the client needs.” The purpose of this book is to examine how consulting firms are responding to this challenge. The rest of Part I explores these points in more depth: • Chapter 2 looks at why clients use consultants and the extent to which their attitude to them has become polarized: consultants good, consulting firms bad. • In Chapter 3, we look at the way in which consulting firms are part of a broader trend across business as a whole, which weakens the role and responsibility of organizations. • Chapter 4 analyses the trouble with the status quo. Clients’ preference for individual consultants over consulting firms is not enough in today’s

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complex environment. Indeed, clients themselves implicitly recognize this, as the changes to the way they buy consultants demonstrate. Similarly, consulting firms’ desire to empower their consultants may sound laudable, but it does not necessarily equip them to succeed. • Chapter 5 introduces the conceptual framework for this book and argues that instead of thinking of the client–consultant relationship as binary, we should recognize there is a third party involved – the consulting firm.

2 Promises, promises: excellent relationships from a client perspective

Consulting firms that think about how they build and sustain relationships with their clients tend to see it from their own perspective, from the inside looking out. If we begin by asking clients how satisfied they are with their use of consultants, we find there’s a mix of good and bad news. The good news is that the overwhelming majority of managers who use consultants are pleased with the results. A recent survey undertaken by the Management Consultancies Association found that 98% of managers were completely or partly satisfied; and more than half were completely satisfied. Satisfaction levels were sufficiently high that 80% of those interviewed said they would use the same consulting firm again. The bad news, of course, is that this still leaves plenty of room for improvement: 47% were only partly satisfied; and 2% were totally dissatisfied.

What Do Clients Want from Consultants? The single, most important reason why clients use consultants is that they need access to specific skills not available internally. In a recent survey of managers, more than two-thirds rated this factor as crucial in their decision to bring consultants in (Figure 2.1). This was particularly marked in organizations commissioning larger-scale projects. There are two sides to this. Consulting firms are unquestionably seen as the repository of important skills and experience. Consultants are the people clients turn to when they want to find out something new, benchmark themselves against rivals or understand lessons learned by others. But many

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100% % of respondents citing this factor as important

90% 80% 70% 60%

66%

50% 40%

45%

30%

34%

20% 17%

10%

17% 10%

To validate or test an internal decision

To gain access to tried and tested methodology

No appropriate mgt time available

To get independent, objective view

To get original thinking

Staff has not the particular skill

0%

Figure 2.1 What is the single most important reason why you hire consultants?

organizations clearly lack the knowledge and expertise they need to develop new strategies and change their capabilities, systems and processes to help them achieve these. There is a significant gap between this first reason – the access to specialist skills – and the next most important reasons for hiring consultants. Forty five per cent of respondents use consultants as a source of fresh thinking, either because the consultants do not necessarily accept the assumptions made by people working in an organization, or because the consultants’ experiences of a wide range of situations allows them to provide new insight. Objectivity was rated as crucial by 24% of those interviewed, although what they mean by this varies. For some clients, objectivity is synonymous with independence: they want to work with consulting firms that have no ties to other organizations, particularly software vendors or outsourcing suppliers. But for others, objectivity simply means having the ability to stand back from the pressures and politics of a client’s organization – to see the wood for the trees. Big spenders are slightly less likely to use consultants because they lack the skills to do a piece of work internally. Increasingly, multinational corporations, staffed with executives who’ve been through business school, are able to find the know-how they need among their own people. The thing they find harder to source is innovative thinking: consequently, access to original thinking is significantly more important to these clients.

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Figure 2.2 The crucial factors in choosing between consulting firms

Consultants are often accused of being used to rubberstamp decisions already made: in fact, only a very small proportion of clients use consulting firms in this way. The dominant factor which determines whether a consulting firm will end up on a client’s short-list is its reputation for successful work (Figure 2.2). The bigger the project and the more an organization spends on consulting annually, the more likely this is to be important. Other factors – whether the client has used the consulting firm before, a recommendation from a colleague or other business, or if the consulting firm has a well-known name – are all much less important. Indeed, 60% of interviewees said the name was comparatively unimportant, something that was true among even the highest-spending organizations. But this raises the curious question of how a consulting firm acquires a reputation for successful work if it is not through previous projects, referral or brand. In reality, all these factors do make a difference, but not in a way that clients either perceive or consciously admit to. Reputation is in a sense the tip of the iceberg – the part of the consulting firm that clients evaluate – but previous work, referral and brand are the nine-tenths below the water.

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An Anatomy of the Best Client–Consultant Relationships Clients view consulting relationships in two distinct ways: the personal interaction they have with the consultants (the people); and the results delivered (the promises they make). The People It was Mary Poppins who, having measured the two children in her charge (“stubborn” and “inclined to giggle”), was asked to turn her measuring tape on herself: “Practically perfect in every way” it showed. Ask any manager how they view their relationship with consultants and they will almost always begin at the most personal level. If the project went well, it was because those involved were “good” consultants; if it went badly, it was because they were “bad”. The better the people, the better the project; the better the project, the better the people. Clients believe that good consultants are knowledgeable, dedicated, honest and able to engage with people on the client side. But, like Mary Poppins, they are not absolutely perfect: indeed, it is often the fact that they do not have the answer to everything that creates the strongest, most binding client relationships. If anything, you could sum up the attributes of a good consultant as different, but the same – different in that they have to bring something specific to a client, typically in-depth expertise in a field with which a client is unfamiliar (without this essential difference a client would have little reason to hire the consultant, after all); but the same in so far as consultants also need to be able to work closely with their clients, to be part of the same, seamless team if they are to add value. Knowledge As we have noted, clients hire consultants to plug gaps in their skill sets, to bring experience acquired across a range of organizations and situations. “We wanted to work with one consulting firm, to join us as a part of our team,” said one client. “Of course, we needed a suitable approach, but essentially we needed the right people. The firm we chose provided us with people who not only gave us the necessary expertise, but also the confidence and knowl-

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edge to implement this massive project.” It follows that the most serious criticism clients level against “bad” consultants is that they did not know enough: “They were inflexible generalists, lacking any specific or detailed expertise,” complained one. Dedication It is hard work being a good consultant: clients expect nothing less than absolute commitment to the work in hand. “The consulting team put in an incredible amount of effort and emotion into the project,” was the critical factor for one manager. “You can’t work at this pace, making commercial decisions of this scale and complexity without excelling in knowledge, competence, professional judgement and, most importantly, courage.” “We never worried about them dropping the ball,” was another manager’s perspective on the same point. Honesty Most clients – the best clients – do not like yes-men. They are not hiring consultants to agree with them all the time or flatter them, but to tell them what they need to know. “They have to think independently and be willing to say unpopular things,” is how one manager put it. “They need to work with us while also challenging us as an organization in a constructive way.” “Over the years I’ve worked with a number of consultancies,” said another, “but this team has been the most challenging – which is what I asked them to be. They are thoughtful yet practical and are not afraid to be honest and say what they think rather than what you want to hear.” Mutual respect Clients also value consultants who can be honest about themselves. There is little a client hates more than arrogant upstarts who think they know the answer before they have listened to what the client has to say, or who pretend to be above the kind of humdrum detail on which projects succeed or fail. Modesty is better than setting false expectations; “You become a bit sceptical about things,” said one client about a project he’d been involved in, “but this firm has had a very honest and clear approach. It’s applied

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common sense, not a magical mystery tour. The consultants pointed us in the right direction and gave us the tools to do more. We are impressed with the speed with which your people picked up our business. Simply put, they are nice guys: there is no holier-than-thou attitude here.” Flexibility and a willingness to admit when things are not working out are better than trying to apply a rigid methodology. “They’ve bent over backwards to help us during this challenging period,” was how one client put it. “The many streams of communication were fundamental to this project and these built a strong relationship between the consultants and clients involved. Feedback between the two was open, often frank, always constructive. Where ideas or processes did not work, they were changed.” The recognition that neither side is perfect but has something distinctive to add creates mutual respect. “This programme brought many different skills and experiences together,” said another client. “We have been frustrated together, laughed – and sometimes nearly cried – together, but we have always had drive and determination in the face of adversity. Most importantly, we have always had respect for each other’s ways of working and different cultures.” Engagement If you add knowledge, dedication, honesty and mutual respect together you get a single, overarching attribute: the capacity a consultant has to empathize with the client and the ability to motivate and enthuse a client’s staff as a result. Typically, clients talk in terms of partnership, integration and collaboration. “These consultants were able to achieve terrific rapport with our people; their attitude fitted in perfectly with our vision and working style.” “They worked collaboratively with us to drive out a hugely successful outcome and integrated very well into our team. They were able to build a rapport at all levels in our organization.” “It was their ability to adapt to our cultural environment and be part of a team which made this consulting team stand out.” Consultants who feel empathy for their clients are more likely to spend time helping them develop at a personal level. This might involve coaching them for an important presentation, advising them on their next career move or giving them constructive feedback about their strengths and weaknesses as a manager. When clients talk about good consultants, they often

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say how much they have learned from them: “I enjoyed working with the consultants hugely. I’ve learned a lot and I truly believe that the joint team, which spanned a range of functions in our business, gives us a benchmark of how we should work together in the future.” It is often reciprocal: consultants who give something to their clients get something back – insider information on company politics, the opportunity to talk about additional work in the offing. But the crucial thing that empathy drives is engagement. Arrogant consultants, who have little time to listen to their clients let alone empathize with them, are unlikely to inspire those around them. Good consultants do just that: “The consultants’ insight and analysis, together with their pragmatic approach, have engaged our staff and proved to be a more effective catalyst for change than any of our previous approaches,” said one client. Another made it even more personal: “The feeling from my team has been very positive: indeed, they’ve literally been jumping up and down with enthusiasm.” Engagement in Action The Department for Work and Pensions (DWP) pays the pensions of around 12 million pensioners in the UK. Introducing the Pension Credit in 2002 was part of the government’s goal to reduce pensioner poverty, but it was also the most radical change in income-related benefits for pensioners for 50 years, requiring more than 3000 staff to be trained, over 300 forms and leaflets to be produced, all existing business processes to be updated and new software to be developed. Managers at the Pension Service hired a team from Capita Advisory Services (formerly Capita Consulting) to help plan and implement these changes. It was work that required a balanced approach by the consultants involved, combining energy and focus to ensure that the benefits would be available on time with partnership-style working which engaged people at the Pension Service rather than steamrolling them. “Capita’s practical and focused input to the capacity improvement programme was crucial to achieving the first stage of our targets for Pension Credit,” recalls Charlie McKinnon, the Pension Service’s Transformation Director. “Their independent challenge and hands-on approach was just what was required to help our managers increase their operational capacity when it was most

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needed.” “Capita worked alongside us, developing and implementing practical solutions and changing the way we work by coaching people individually and in teams,” adds Tony Cooper, the Pension Credit project manager. “Their approach has challenged our thinking and helped us make lasting improvements in our operational management capabilities. The people from Capita blended in well and got on with the task in hand.” But good consultants are not enough: they have to deliver on their promises. “We helped create a sense of urgency and corporate responsibility which meant that the new credit was delivered to 2.4 million people on time,” says Gordon Wilkinson, Managing Director, Capita Advisory Services. Performance improvement work with the pension centres resulted: an increase in caseload capacity of more than 40%; a 30% reduction in the number of Pension Credit cases outstanding; more than 20 000 cases moved to alternative pension centres across the county as a means of making best use of capacity in order to manage and clear backlogs. “Our work with the pension centres has strengthened the operational management of the organization and has supported staff during a time of rapid change,” says Graham Waller, Account Director of Capita Advisory Services. “Facing initiative overload, the pension centres have been coached towards success, focusing on cooperation and sharing good practice. These principles have been bedded in and have made a real difference to ways of working.” “Capita has been part of the engine room of this project,” agrees Cooper, “adding fuel and oil to help bring the project in on time.” The Promises “The team were complete all-rounders, working with us and our customers and delivering brilliantly in both arenas. Their attitude is hungry, they are ambitious and they deliver beyond our expectations every time.” Although consulting firms habitually talk about “exceeding expectations”, it is what a firm promises that is really at stake here. Every consulting project has promises embedded in it: they may be small or large, explicit or implicit, but they are there none the less. Indeed, the single most important thing consultants do is keep their promises. The promise that all consulting firms make – and most keep – concerns time and money. Even where a consulting firm is charging by the day, there will be a budget for the work and a completion date. But most consulting

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work is now done on a fixed-time basis, so the most explicit promise a consulting firm makes is to complete the work within the stipulated timeframe and for the agreed sum. “This highly ambitious project was managed on time and within budget,” said one satisfied client. “The implementation was a 100% success.” Going further up the “promise pyramid” (Figure 2.3), clients expect consultants to do what they said they were going to do – implement a new IT system; coach a group of staff; analyse a market. Such promises may relate to inputs (“We’ll run half a dozen brainstorming sessions for your executive team”), outputs (“We’ll analyse your options for entering the Asia-Pacific market and report back in a month”) or business outcomes (“We’ll improve your time to market”). They may be more or less ambitious: but they will be what the consulting firm has stated them to be. “Put simply, the consultants came in, stated what they would do, and then did it,” said one client. On-time, on-budget delivery and doing what they say they will do are promises clients expect consulting firms to deliver; they are also almost always explicit, embedded in the terms of reference and contract. In addition, there is a promise clients hope will be achieved – that the positive results of a project will be sustained, that the benefits, once delivered, will remain with the organization long after the consultants have left. This is something that consulting firms can rarely make explicit: there are too many

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Figure 2.3 The promise pyramid

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variables to be able to say with certainty that the recommendations the consultants make will stand the test of time or that an application they have installed will be deployed effectively by its users. Both client and consultant may strive to achieve this, but neither side can guarantee the result. Not surprisingly, few make such promises explicit: they represent the aspiration rather than the immediate goal. That said, where the hope is realized, clients are unstinting in their praise. “The transformation has been just phenomenal,” said one. “To change a business of this size at the speed it happened and to help us to deliver a dramatic improvement in financial performance is an incredible success story. We are now well positioned to continue to grow the business.” “The consultants’ analysis has provided us with a competitive advantage because it has allowed us to compete in the market at prices of up to 30% less than before while still maintaining our margins,” said another. “In monetary terms, we will have earned more than 100 times in increased income than we paid out to the consultants in fees.” Beyond the hoped-for promises consultants make, there are other potential promises. These are almost entirely unwritten and are results a consulting firm may be able to deliver above and beyond a client’s expectations. Indeed, it is these potential promises that clients talk about when they say that a consulting firm has exceeded their expectations. Potential promises fall into two groups. First, by bringing in consultants it may be possible to raise the standard of thinking and working in an organization. This may seem an outrageously arrogant suggestion: after all, most managers in client organizations are thoroughly experienced and have as many business qualifications as the consultants who work with them. But remember, we are talking about good consulting here, not just the workaday standard. Good consulting firms, which set great store on the quality of work they do, can change how client managers see themselves and what they expect from their own staff. “The consultants said, ‘Let’s not settle for less, let’s go for something better’,” recalled one client. “Looking back, that was the right thing to do.” “The success of this programme was increased by the way in which we could work closely with the consultants,” said another. “It’s felt ‘joined up’, not only in terms of delivery but also in relation to a shared passion for excellence. It’s been refreshing to work with professionals who are clearly in touch with the demands of the business and able to add real value.”

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The second potential promise is much greater in scale and scope. Sometimes – and if we are honest it really is on a very small number of occasions – consultants can do something an organization thought was impossible. “We wouldn’t be where we are today,” is typically how clients see this. “The consulting team recognized our strengths and challenged us to achieve more than many of our managers would have thought possible. They have helped our business release valuable capacity and delivered an approach to performance management that will support our future business growth,” said one client. “I can hardly believe it: we’ve been involved in this programme for less than two months and our average sales value has already increased by almost a third,” said another. And the Bad Relationships? If people and promises are the two cornerstones of the way in which clients view their relationship with consultants, what is it that goes wrong? Unsurprisingly, clients cite poor quality consultants first. “Bad consultants are those who trot out platitudes and charge a lot,” was how one manager put it. “They offer little insight and add nothing new.” “They only do what they’re told to do,” complained another. “There’s no leadership.” Yet others talked of the arrogance consultants so easily slip into: “They think they are the sole owners of intellect in their area; they can’t relate to other people.” “A bad consultant is someone who either doesn’t listen or pretends to listen while coming up with a pre-packaged solution.” And from the people, clients quickly move on to talk about the broken promises. “A bad consulting firm is one that sells you a project with one set of people but tries to deliver with another. You expect the organ-grinder but get the monkey.” “They promise the earth and can’t deliver; they make powerful presentations but have no substance.” The striking thing about these comments is how quickly an unhappy client moves from blaming the individual consultant to blaming the consulting firm which supplied them. That is not unreasonable: it is the consulting firm which is, after all, providing the service. But it is noticeable how the same connection is rarely made when it comes to good work: then, it is the good consultant who gets the credit, not the firm. Also worth noting is the way in which dissatisfied clients often criticize the consultants who work for them for putting their consulting firm’s interests above those of

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their clients. According to one manager, a good consultant “will always act in our best interests, rather than imposing an overused solution or looking for future business and sales”. By contrast, bad consultants “aim to get as much money as possible out of us in the short term at the expense of any long-term relationship”. From a client’s point of view, individual consultants add value because they bring specific expertise, and this allows them to make good their promises. “The key thing is the people in the firm assigned to the project. The people are more important than who they work for.” Consulting firms only get in the way of this, putting pressure on consultants to divide their work between other clients or look for additional sales opportunities. Consultant good, consulting firm bad.

3 The invisible firm

Never mind the client–consultant relationship for the moment: let’s look at the pressures on employers and employees.

The Strained Relationship between Organizations and Employees Increased outsourcing, more remote working, greater autonomy and better technology have resulted in a workforce which believes it’s more productive than ever. In June 2005, the Management Consultancies Association and Management Today (MCA/MT) carried out a survey of around 1200 managers, from all types of organization, in order to understand their attitudes to their employers and how these are likely to change in the future. In all, 70% of respondents judged themselves to be more productive; and 38% a lot more productive. But increased productivity has come at a cost: respondents were more than twice as likely to agree rather than disagree with the statement: “I work long hours and find it hard to switch off”. A substantial minority saw themselves as having to work harder than their parents. The real costs here are frustration and resentment: while many people are working longer hours and achieving more, most think it’s in spite of, not because of, their managers. Thirty per cent of respondents said they thought the management skills of their organizations were poor; 15% said they had little or no respect for their managers. People in large organizations are more than twice as likely as those in small ones to be cynical about their bosses.

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In perhaps the most damning part of the survey, respondents made it crystal clear that their managers aren’t delivering – and are unlikely to do so in the future. Asked what they thought managers should focus on, twothirds said they should concentrate on developing their teams (Figure 3.1). Asked what they thought managers would actually focus on, only 16% believed this is what they would do in practice; 45% thought that managers would continue to be occupied by project management and internal administration, although only 3% thought this should be an important activity; and 16% believed that managers would continue to spend most of their time on office politics. (The remaining 20% did not express an opinion.) There’s a tension here between what individuals are prepared to do and the way that organizations treat them. The more people give in terms of effort, the more they expect to get back – not just in terms of money, but also job satisfaction, flexible working and a whole range of other benefits – but the less organizations appear to be delivering. If this is not confronted and resolved, it will prompt people to start questioning why they work in an organization at all. Paul Sanchez is a consultant at Mercer Human Resources Consulting: “Every 50 years or so organizations face a paradox which threatens their

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Figure 3.1 Managers are unlikely to meet employees’ expectations

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survival, and we’re seeing it again today. Outsourcing and offshoring are just two of the factors which are changing the relationships organizations have with the individuals who work for them: employees are more vocal about their loyalty to a profession and their own self-interest, but not necessarily to their employers. At the same time, while there’s an almost palpable desire for organizations to have employees who are committed and put in extra, discretionary effort, those same organizations are distancing themselves from their obligations to their employees. The economic and political environment is pushing organizations and individuals apart.”

The Forces Shaping Organizations Four interrelated forces are driving change, each of which brings organizations and individuals into conflict: 1. outsourcing and the continual redefinition of what constitutes an organization’s core business; 2. the distribution of work across different people, organizations and locations, and the extent to which this makes work fragmented; 3. changing demographics and expectations which create an employees’, rather than employers’, market; 4. the doubled-edged sword of technology which enables people to do more but tempts organizations to do too much. What’s in? What’s out? According to the MCA/MT survey, 61% of organizations have outsourced all or part of their information technology (IT) function, a figure that rises to more than 70% among the largest corporations; and 43% have outsourced at least some of their facilities management, rising to 63% in big organizations. But outsourcing is not confined to these two well-established areas: 41% of those surveyed outsourced some of their marketing activities; 29% part of their finance function; and 14% some aspects of customer service. Large organizations are more likely to outsource their IT operations, marketing and human resources (HR) departments than small ones, and are twice as likely to outsource parts of their customer service. Small businesses are more likely to outsource their finance function. Forty-six per cent

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of people expect the level of outsourcing in their organization to increase in the future; only 5% believe it will fall; the rest expect it to remain the same. The Extended Organization One of the consequences of increased outsourcing is that the boundaries of organizations are becoming blurred. More than two-thirds of respondents said that a significant amount of time is spent working with people outside their company. Over a third said that remote working – from home or at a customer’s site – was now common in their organizations. Most think remote working has had a substantial impact on how they and their colleagues work. The involvement of third parties and increased remote working means that more and more people accept that they no longer have to be sitting next to someone in order to work with them effectively. Moreover, geographical dispersion is contributing to the fragmentation of work: more than two-thirds of respondents said that more of their time was spent on project work, as opposed to line management, than was the case in the past. This was true across all sizes of organization and all sectors. Traditionally, the structure of firms was totally rigid, but that’s had to change to allow companies to respond to constantly shifting customer demands and competitive pressures. The result is that, while some work has to remain repetitive and prescribed, more and more people don’t have jobs so much as a series of assignments that continually change. It’s a shift that can go too far: many organizations suffer from too many projects. Indeed, we seem to have reached a point where working on a project is seen to be a badge of success: you don’t get promoted for “just” being a line manager. Another ramification is that production has become increasingly independent of delivery: you can design and start an activity in one location, but deliver it elsewhere. People are specializing more, and the more they specialize, the more work is compartmentalized. People Power It follows, too, that as people are expected to operate more autonomously, so their responsibilities grow. Across the board, three-quarters of respondents to the MCA/MT survey said that their organizations were making them

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more accountable for their work; more than half said they were allowed to get on with things more than they used to. Greater personal autonomy suggests greater fluidity in the workforce as a whole, and this is borne out by the survey. Two-thirds of respondents expect to be employed by many different organizations during their working lives; almost half expect to make a significant career change at some point. People increasingly believe they have a right to do what they want to do. Indeed, their demand for autonomy may well be outstripping the pace at which organizations are evolving. They do not trust corporations or governments: choice isn’t a luxury – the gift of a generous institution – it is an expectation. Technology: Friend or Foe? Technology has changed employees’ expectations of what organizations are capable of. Fiona Driscoll is a leading consulting to the public sector. “We think the organization of the future should be able to recognize us, as customers, by our DNA and find us in the great database in the sky. It should be able to make connections and use knowledge to be more responsive and deliver better services – the equivalent, say, of applying the Amazon model to a public institution. Equally, employers expect people to work 24/7 and have hugely increased the amount of information they generate, but they haven’t used the technology to improve people’s working lives.” Organizations also persist in over-reliance on technology to change the behaviour of their people and to increase their productivity. But technology only tells organizations what they can do, not what they should do. Anne Bennett, who works for ER Consultants, a firm specializing in people and organizations, argues that misguided investment at corporate level ignores the way in which individuals interact with technology. “We need to be aware of the psychological levers here,” she says. “Individuals have to be in control and, at the moment, there’s a gap between how people experience and understand technology, and how they’re being driven in their organization. Factories evolved because people realized there were things they couldn’t do in cottages. Technology may have brought people together, but it’s social capital – networking among people, usually characterized by trust, cooperation and community involvement – that leads to the accomplishment of common goals and that keeps them together.”

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Doug Neal, at the Leading Edge Forum at CSC Computer Sciences Corporation, makes a similar point, but from a different perspective. “People take technology personally,” he says. “You’ve only got to see how people put their mobile phone on the table at meetings to see that they’re making a statement about who they are. What we’re seeing in the workplace is the consumerization of technology: people often have better equipment at home than they do at work. Someone with a digital camera downloads pictures to their computer, they may fiddle around removing the red-eye from a flash and then email the picture to a friend. In the process, they learned about data transfer and e-commerce without the IT department being involved. Yet, despite the fact that people are becoming smarter at using technology, organizations remain unwilling to trust them: most IT departments still treat their users as stupid. Moreover, standardization – the key strategy of most IT departments – shifts costs on to individuals: it just pushes the costs around. People buy phones that make them look good but which are completely at odds with their corporate IT standards. The challenge therefore is how organizations balance the need to drive down corporate costs with individuals getting the kit they want. There are organizations that, if you pass a competency test, will allow you to buy the equipment you want providing you promise never to darken their door asking for support; they’ll just treat you as an adult and give you the money. But organizations still need to change some of their technical interfaces so that they can connect to any hardware, not just their own highly customized version. Web-based applications will enable employees to access corporate data irrespective of the hardware they’re using. But what we’re really talking about here is a change in philosophy that allows individuals to build their IT department from the bottom up.”

Consulting Firms as Models for the Future The consulting industry has not just been telling its clients about these trends, it has been living them. Outsourcing and the Redefinition of What Constitutes an Organization’s Core Business For all the talk about back-office processing and call-centre jobs moving to low-cost locations, it is probably the consulting, outsourcing and IT

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services sectors which have suffered most at the hands of offshore companies. Most major suppliers now offer their clients a combination of on- and offshore services, ensuring they can continue to deliver high-quality work while keeping costs low. Many middle-tier and smaller firms are following suit. As clients become familiar with the idea of offshoring, it is likely that more and more services will move, changing irrevocably the balance of personnel. Gone will be the days when an offshore facility might house just a few hundred people out of tens of thousands in Europe and North America: soon, a quarter, perhaps half, of firms’ employees will be based in India, China, South Africa or Eastern Europe, creating new challenges for management, quality, career progression amongst others. Distributing Work across Different Teams and Locations Working on clients’ sites has always been a part of what consultants do. Indeed, as clients complain about lack of transparency among consulting firms who turn up at the client’s site only for meetings and presentations, but do most of the work in their own offices, working where a client can see you has become ever more important. Moreover, if you can work offsite, then you are sending a message to your client that you do not need to interact with them face-to-face: if you do not need to do this, then – a client may decide – you do not need to be based round the corner. In other words, out of sight becomes offsite – and that rapidly becomes offshore. An Employee, Rather than Employer, Market Recruitment is at the top of most consultancies’ agenda. Consulting has long been one of the prime destinations of top business school graduates, attracted by a combination of varied, challenging work, excellent salaries and a high degree of personal autonomy. But the industry has lost some of its sheen of late: variable economic performance, long hours, relentless travel and salaries which are scarcely better than those of line managers all mean that empowerment takes on a wholly new meaning. Few people want jobs for life from consulting firms any more than they expect them. Firms have proved fickle employers – on average laying off around a fifth of their employees between 2002 and 2004 – so why should their employees be different? What goes around comes around.

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The Doubled-edged Sword of Technology Consultants love gadgets. Indeed, with comparatively flat organizational hierarchies, hot-desking and half their lives spent in airports, there are very few other visible perks they can boast about. It is therefore ironic that consulting firms have been some of the most tardy when it comes to getting their own IT house in order. A typical consultant will show off the highend phone he has been able to wangle, but complain bitterly about the speed of his office email server. The key to all of this is what economists call externalities. In the search for ever greater efficiency, consulting firms, like other organizations, have streamlined and simplified themselves – and often left employees to deal with business and organizational complexity on an individual basis. Outsourcing and offshoring have allowed organizations to shift from a fixed to a more variable cost base, but potentially at the expense of individuals in particular locations, who have to seek alternative employment. Remote working enables organizations to be more productive, but largely leaves individuals to bear the costs. Empowerment has been a means of shifting responsibility to individuals – and may ultimately backfire as demographics change the balance of power between employer and employee. Technology has become one of the ways in which people construct their public persona and signal status – the twenty-first-century equivalent of the brass plate on an office door – but it’s usually the employee who pays for it. Nowhere is this contradiction more apparent than in people’s views on career development. People are proverbially a consulting firm’s greatest assets. In the light of this, you would think that training and people development would be one of the areas where organizations would be most eager to retain control. In fact, that same shift of responsibility and, indeed, funding from employer to employee is evident here, too. Most people replying to the MCA/MT survey were positive about their own skills and the willingness of their organization to invest in them as individuals. They overwhelmingly rejected the idea that they didn’t have the right skills for their current job and that the training they received might be a waste of time; most had had management training of some sort. Respondents were, however, more ambivalent about their organization’s wider commitment to developing people (Figure 3.2). While

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My organization My organization I invest in My organization would be willing doesn't developing my invests a lot of to fund me if I understand what business skills in time and effort in wanted to obtain skills will be my spare time training and a business important in the developing its qualification future staff Agree

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Figure 3.2 People are ambivalent about their organization’s wider commitment to developing people

just over half disagreed with the statement “My organization doesn’t understand what skills will be important in the future”, a significant minority (20%) agreed with it, and the rest didn’t express an opinion. Similarly, a third said their organization did not invest a lot in its staff and 23% said it would not be prepared to finance a business qualification. A massive 67% of people said they were prepared to invest their own time in building up their business skills. These figures did not change significantly by sector or size of organization. That same ambiguity emerges when people were asked about who is responsible for their training and career development: 32% said their employer was in charge of this; 39% disagreed (the rest didn’t express an opnion). From some perspectives, this is good: “People in South Korea hustle,” says Doug Neal at CSC. “They don’t feel they’re owed anything; they take the initiative and responsibility for their own careers rather than waiting to be told what to do. That kind of behaviour ought to be a wake-up call for western economies, where the attention has been focused on institutional

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human resource issues such as setting standards, securing employee protection, getting long holidays. The era of entitlement is over: people have to be working today on the skills they’ll need tomorrow. Personal and corporate life are being more interwoven, just as they were in the pre-industrial period.” Employers, too, will benefit where people take greater pride in their skills. The people who spend a lot of time working away from the office or with people from different organizations have to be self-disciplined, flexible and good at communicating. One of the key things organizations need is better engagement. Getting the various parts of a dispersed team, some of whom may work for different employers, to work together will necessitate a new set of core skills. People will take more responsibility for keeping their skills up-to-date. The responsibility and cost of people development is being externalized along with so much else. It all raises some important questions.

Are Managers Really Necessary? The shift of responsibility from the organization to the individual is provoking something of a crisis where managers are concerned. With more people working in different locations, taking more responsibility for their work, what is the role of management? Ironically, a time when people appear to require less management is also a time when they want it more than ever. Half of all respondents to the MCA/MT survey felt their bosses spent insufficient time actually managing their staff, a figure that was highest among employees of large organizations and in manufacturing, financial services and the public sector. Respondents were twice as likely to agree as disagree with the statement: “The managers in my organization spend too little time actually managing people” (Figure 3.3). A similar number expect their managers to be kept busy with project management and general administration; a significant minority think that, whatever shape organizations adopt, their management will continue to be obsessed with office politics. It’s a depressing picture, but does it mean that management has reached the end of an evolutionary cul-de-sac? Will management be the next thing organizations externalize? Indeed, with notions such as empowerment, perhaps they are already doing so. Geographical dispersion and outsourcing will make traditional management more difficult. The increasing specialization of work is another issue.

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Percentage of respondents who expressed an opinion

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Figure 3.3 Managers spend too little time actually managing

“The era of the generalist is dead,” says Fiona Driscoll. “If you look at the public sector, it’s quite clear that formulating and implementing policy requires two very different sets of skills. The people who draft policy need to understand how the whole system works, but they need to work with delivery people who’ll be much more specialized. Pulling those two groups of people together can be very difficult. Who’s driving the car? Can we assume that the delivery specialists will know what to do, or do we need a new breed of super-managers?” At the Rossmore Group, the chief executive, Alan Marsden, agrees that a new style is needed. “There’ll be fewer middle managers, but they’ll have more general skills,” he says. “Management will be more about coaching. It’s easy to play the dictator when everything’s going wrong, but you need a totally different approach in a buoyant market. Organizations aren’t particularly good at recognizing that leaders have a sell-by date: the UK is littered with leaders who stayed beyond their time.” If managers are to survive, they need to reinvent themselves.

Do We Still Need Organizations? “The days when a company like Ford did everything have gone,” says CSC’s Doug Neal. “But, as we add more and more layers, we’re increasingly faced with the question of what constitutes a viable layer. The layers get thinner

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as they become more specialized, but at what point do they disappear altogether?” There’s a parallel here between the relationship employees have with their employers and that of business units with their corporate centre. Ten years ago, when the viability of holding companies was very much under scrutiny, Michael Goold and Andrew Campbell floated the concept of “parenting advantage”. Essentially, they argued that the ability of a holding company to create value depends on an “activity fit” (the extent to which the parent company can add value to a subsidiary – for example, by helping the latter sell its products in new markets) and a “people fit” (the extent to which the critical success factors of the subsidiary match the skills and norms of the holding company – for example, a shared recognition of the importance of innovation). Subsidiaries where the activity and people fit are both high constitute a corporation’s “heartland”; where they are both low, the subsidiaries are “alien territory”. Sylvia de Voge, at the HR consulting firm Hay Group, argues that the same way of thinking needs to be applied to individuals. “It’s too easy,” she says, “to assume that the organizations of the future will simply be more virtual, have more remote working and outsource more of their jobs. Every sociological study on this subject has shown that, for people to establish trust with their colleagues, there has to be physical contact. Without this, the idea of the virtual company may well backfire, with people questioning why they should give their valuable time to an entity which offers no equivalent of the parenting advantage to their individual ‘franchise’. If you deconstruct an organization, the unit value will at some point be an individual: people will ask if they’re worth more because they’re part of a team – and leaders and managers need to pose themselves the same question.” So where will the parenting advantage of the organization lie? Not, we can be sure, in the particular services they provide or the products they make. The parenting advantage of the twenty-first-century organization is far less tangible. Teamwork The basic unit of production used to be the factory (the command and control structure of an industrial economy); then it became the individual

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(the empowerment of people in the information age). It’s now rapidly being recognized to be the team. “Teams will drive the structure of organizations in the future,” argues Alan Marsden at the Rossmore Group. “The realization is dawning that more gets done through collective action. Much as Charles Handy [the management guru] predicted, organizations will be smaller and many more people will be self-employed and acting as consultants or working on short-term projects, but the activities of those involved will be much more interrelated – overlapping circles rather than tiers of boxes we’re accustomed to seeing in organizational charts. The ability to network will be key.” One of the most important ways in which organizations will add value is therefore in enabling effective networking, irrespective of the extent to which their structure is “networked”. In other words, the ability to facilitate networking will be as important in an organization where no functions are outsourced and where everyone works in a single location as it is in a virtual organization whose activities are distributed across different companies and locations. Organizations suffer if they are not sufficiently networked – you’ve only got to look at consulting firms to see this. Consultants may be spread across the world; they may work on their clients’ sites as much as in their own offices. For consultants involved in long-term projects away from “home”, there’s a danger that the firm becomes nothing more than something that supplies a telephone and a pay cheque. Teams also provide people with the motive to work. The main reason why most people work is to be with people they like: technology may help people work effectively when they’re away from the office, but it can’t replace social interaction, which is a fundamental part of doing our jobs well. You can’t brainstorm new ideas and implement them if everyone’s working in isolation. Training and Development Our greater ease with technology and our access to the Internet create new possibilities to change the way organizations train and develop people. But technology, however effective, can cover only a part of people’s development, and one of the core rationales for organizations is that human interaction provides the opportunity to develop in other ways. Mentoring and

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coaching programmes need people to be physically present. You need to be able to see your manager and observe what he or she does: that’s not the kind of thing you get from a software package. Yet the role organizations play in nurturing their employees’ skills has been increasingly “outsourced” to business schools, a trend which has some important drawbacks. “An MBA has become a more and more generic qualification,” argues Roy Barden, a director of Catalise, a consulting firm specializing in portfolio management. “People see the process of developing their management skills as building a kitbag of concepts and models rather than gaining insights from practical experience. Moreover, in a world where people turn to business schools for management skills, you have to start questioning where that practical expertise will come from – if there’s no one to build it or learn from it, it’ll wither on the vine.” “Are organizations doing enough to train and develop their people?” asks Doug Neal at CSC. “The answer is no. You can’t separate growth of the individual from the growth of the organization; you have to build people as well as businesses.”

Knowledge Organizations can be repositories of information in a way that individuals, however well connected, can never hope to be. But today’s organizations need to think more carefully and more creatively about how to fulfil this role. How does a geographically dispersed organization that outsources many functions tap into employees with good ideas? If people don’t know what’s going on in an organization, they’ve no opportunity to build on it. This has to change: innovation isn’t something people are going to do by themselves at home; it comes from pooling knowledge and bringing people together.

Leadership Another important facet of an organization is that it provides leadership. However, in a team-based environment, the nature of that leadership may be very different from the charismatic leadership of recent times: “it’s going to be leading by example and leadership through team effort,” says Alan

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Marsden at the Rossmore Group. “The day of the solo leader is fast disappearing; more and more organizations are talking in terms of the strength of their management teams, rather than their reliance on a single individual.” “Leadership has to change because people will no longer do just what we tell them to do,” agrees Doug Neal. “People will do things because they want to and that means having leaders they respect, who value their opinions, who understand and work with the social networks of their organizations and who provide role models for the kind of behaviour they want to see.” But outsourcing, decentralized structures and dispersed teams all raise the question of where the leaders of the future will come from. “Take outsourcing as an example,” says Roy Barden at Catalise. “One of the key issues organizations should consider before they outsource a function is whether their future leaders are likely to come from it. If your finance director tends to become your chief executive, then outsourcing most of your finance function may be a bad idea.” “Moreover, organizations will need teams which are resilient and flexible and which have strong communication skills. Leadership becomes all the more important in this context, but it’s quite different from ‘managership’,” says Paul Sanchez at Mercer. “Leadership will be more about the ability to create and engage communities of people to fulfil a common vision. While many organizations recognize that leadership is a crucial issue, they’re far from cracking the code of what makes a leader. The one thing we are sure about is that you have to have ‘bench strength’ – the critical layer in an organization where potential leaders can acquire the skills and experience they need.” Values Finally, the role of the organization is social as well as economic. Consulting firms very much fit the model of the knowledge-intensive, networked organization of the future, but the glue that holds them together is cultural. People are inherently promiscuous, but what makes them stick with an organization is that they share a common set of values. The more people want greater autonomy in their lives, the more important it is that organizations have strong values. Without these values, people will be quite mercenary; with them they get a buzz out of staying.

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How will these points play out where consulting firms are concerned? Chapter 4 looks at the pressures on clients which challenge their preference for thinking about the relationships they have with consultants in personal terms and which challenge consulting firms’ ability to offload responsibility to the consultants who work for them. Chapter 4 suggests a different model, which takes into account the role the consulting firm plays in the client–consultant relationship.

4 The trouble with the status quo

Christina’s (not her real name) office was everything you’d expect the office of a senior executive in an international bank to be: magnificent view of Manhattan; expansive desk; tasteful artworks. The only problem was that none of it was hers any more. Five years earlier, walking round the IT department as its newly appointed Chief Information Officer, Christina had been struck by how backward it all felt. There were too many people tapping away at desks working on schedules that ran for years. The project plans and specifications were literally endless. The department’s internal customers, out there in the business, were frustrated by lack of progress and were installing their own systems without consultation. Under pressure to cut costs and improve performance, Christina had done what so many other CIOs did: she had chosen to outsource the bank’s IT department. What was the point of trying to change embedded working practices – a process that could take years – when the bank needed immediate changes? But, as a veteran of outsourcing deals in her previous company, Christina had also been wary of repeating some of the mistakes she’d seen. Outsourcing, she knew, could become a straitjacket, binding a client to the same supplier, service and costs for far too long. She had wanted a different relationship, one in which both sides would work together rather than be at loggerheads; one which could change as the needs of her company changed. That didn’t mean that she had been immediately won over when one of the potential suppliers started talking about “transformational outsourcing” – another buzzword, was her first reaction. But she had liked the idea of

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using a combination of consulting and outsourcing to redesign the creaking business processes and move to new, more up-to-date technology. She had also liked the governance structure the supplier wanted to put in place: part of the fees would be held back until specific milestones had been achieved. Some were project deadlines – a new system going live – others were intended to reflect the impact of the new systems on the business as a whole – rising staff morale and customer satisfaction. But what she had really liked was Bruce, the programme manager who would be in charge of the contract. He was direct and honest; having worked on similar projects with other banks, he also knew his stuff. Christina knew she could work with him. “You can have all the terms and conditions in the world,” she had told a banking magazine two years into the contract, “but it’s who you work with that matters. I can go to Bruce with a problem; we can get all the relevant people – their side and ours – to sit down round a table together to thrash out a solution. We have, but we don’t need, an escalation process to resolve particularly difficult problems: we roll up our sleeves and work together.” Christina hadn’t anticipated that the new chief executive, who’d joined the company just a year earlier, would see things differently. Faced with wide-ranging, deep-rooted operational problems, he badly needed some quick fixes with sceptical investors. From his point of view, he was on the outside of the highly effective personal relationship Christina had built up with the bank’s outsourcing company. He was always looking in, often through rather a dark window. When a relatively minor target was missed he used it as an excuse to blame the supplier for failing to deliver – and made it the scapegoat for a whole range of bad results. A less honest person would have bent with the wind, but Christina had invested too much of herself in the relationship to do that. The press release had been the point of no return: she hadn’t been allowed to defend the project’s record or her own position. She felt she’d been portrayed as naïve, hoodwinked by a bunch of unscrupulous consultants. The supplier was still spitting tacks, Christina remembered. Who wouldn’t be, having met every other target to date? She recognized now, too late, that she should have put more time into explaining the deal to her fellow executives and bringing the CEO into the relationship. The supplier, too, could have communicated with the business better, managing expectations rather than magnifying them.

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“The trust has gone,” she said in her resignation letter. “There’s no way we can rebuild it.”

Personal Relationships Are Only Part of the Story In Chapters 2 and 3 we looked at how both clients and consulting firms focus on the relationships between them. Clients like and respect the individual consultants they work with, but are suspicious of the motives of the firm. Consulting firms want to devolve authority and responsibility to their front-line consultants; they rely on “trusted advisors” to build trust and win business. In fact, neither attitude is wholly sustainable in the light of the radical changes the consulting industry is undergoing. Let’s be clear: people are important. Clients don’t start out trusting their consultants. They can’t because they don’t know them. What they do know is the firm: they may recognize its brand or have heard on the grapevine that they have a reputation for doing good work; they may have worked with the firm before on a different project or know someone who has. These are all the qualities that get a consulting firm on a long-list for a particular piece of work. They get them a seat at the table. Going from the long-list to the short-list is all about approach (both the attitude of the firm to the project in question and their methodology), price and the return on investment the client can expect, and relevant experience. But winning the business undoubtedly does come down to people. If you are a manager who is considering hiring a consulting firm, you want to know that you can work with the people you are paying for. You will watch their presentations with polite interest. You will listen to how thoughtfully they respond to your questions. You may interview them just as if they were applying for a job on your team. But all the time the questions you are really trying to answer are: Can I work with them? Do I trust this individual? The more the client and consultant have to work together, the more important this is. A service that will largely be done away from a client’s site – market research or applications development – is much more likely to be bought on approach, price and track record, but personal chemistry is going to be critical in one that requires constant interaction between the client and consultant.

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If anything, personal chemistry seems to have become more important in recent years. One of the lessons of Enron was that even the biggest brands are vulnerable: you cannot trust a corporation in the same way you trust an individual. Consulting firms have reinforced this shift by making their services as tangible as possible by putting a human face on them. As a client, you are encouraged to think you are no longer buying Company X, but John Smith, your regular, down-to-earth consultant; not Company Y, but Jane Brown, energetic, incisive and accessible. A personal relationship can also be valuable if things go wrong. No amount of running back to check who is responsible for what in the contract will help when a client encounters a problem, but knowing someone well and being able to trust that they have the client’s best interest at heart may well defuse an increasingly tense situation. The trouble is that delivery – the bulk of those things that happen after the contract is signed – depends on a lot more than one personal relationship. In the first place, very few consulting projects these days involve only one “discipline”: there are virtually no straightforward operational improvement projects, any more than there are simple HR projects. Even strategy, traditionally the most self-contained of all consulting services, is rarely “pure”. In clients’ eyes, just about every project, irrespective of size, requires a combination of skills. A recent survey of clients by the UK Management Consultancies Association showed that less than 10% of all projects involved just one consulting service. By contrast, 40% were seen to have a change management component, and just under a third involved some strategy. This profile is quite different from the one that emerges when you talk to consultants. According to UK consulting firms, change management accounts for only 3% of fee income to consultants and 7% from strategy. Business process re-engineering, regularly declared defunct by the consulting industry (and accounting for just 2% of fee income in the UK), featured in 30% of projects as defined by clients. Combining consulting services like this is the result of three factors: • Specialization: Specialist expertise is always at the top of clients’ agenda. Focusing on their core business, clients inevitably want their consultants to follow suit, to be, in the jargon of the moment, world class in their areas of expertise. They are no longer buying a team of bright consult-

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ants who can put their hand to everything without being skilled in any one thing. This means that clients are taking an increasingly fine-tuned approach to deciding which consulting firm (and which consultant) belongs where in a particular project. • Complexity: Having broken their business down into components, clients need to be able to put it back together, to link processes in a seamless fashion, even when those processes are being carried out by different companies. The shape of consulting projects is evolving to match this: no one person or firm can be expected to have the full range of specialist skills required for a particular piece of work. Clients may instead choose to multi-source – to pick individuals for a range of different suppliers to work together in a virtual team for the duration of the project. • Innovation: Many of the most creative business ideas come from crossovers from one sector to another, and the same is true in consulting. Access to original thinking is one of the most important things clients are looking for when they hire consultants, especially if they spend a lot of money on consulting, and clients are looking to obtain this by putting people with different skills together. “It’s in the gaps between conventional consulting disciplines that we’re finding new ideas,” is how one client put it. The second problem with relying on a key individual is scale. In the traditional consulting model, it was possible for the partner of a firm to work closely with the board of directors, for example, to develop options around investing in a new market. Choosing between those options and putting the decision into practice was the responsibility of the company’s management, not the consultant. The role of the consultant was confined to shaping the company indirectly, by influencing the board to act. Scale was not an issue: it was the client’s problem. By the early 1990s, clients had begun to react against this, demanding that consultants become more involved in the implementation of their ideas rather than relying on clients to do it for themselves. This has required scale: you cannot expect one person, however brilliant, to be able to implement a project single-handed. Even if they did have all the right skills, they simply cannot be everywhere at once: they need a team. That team may vary from the very small (perhaps just two or three people) to the very large (the kind of combined outsourcing and consulting project which requires hundreds of people), but it involves a

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fundamental shift in how both sides think about the relationship. A client may have an excellent relationship with a project manager, but if that project manager doesn’t have similarly excellent relationships with his or her team members, then the personal trust invested by the client is a waste of effort. There have to be other people who share the project manager’s approach and values; there has to be an organization behind the project manager which supports them. These two factors – multidisciplinary consulting teams and the need to effect widespread change – are putting the central client–consultant relationship under immense pressure, pressure that is being felt by clients, individual consultants and consulting firms themselves.

The Depersonalization of Consulting The irony is that, despite the extent to which clients talk about the importance of the personal relationships they have with the consultants who work for them, the process through which they buy consultants has been evolving in the opposite direction. Formalized procurement processes increasingly keep clients and consultants at arm’s length: three-quarters of large-scale organizations monitor how much they spend on consultants centrally; two-thirds have preferred supplier lists; more than half have framework agreements with a small number of key consulting firms; a fifth use specialist consulting firms to advise them on how to use consultants. E-auctions, in which consulting firms enter blind bids for projects and never meet the client before the contract starts, are used by 15% of organizations that rely heavily on consultants. It’s depersonalization which is also behind the commoditization of consulting services. Like any other product, consulting services have a life expectancy. In the early days, interested clients will leap on the burgeoning bandwagon and growth will be exponential. As the service becomes more accepted and standardized, and the benefits stemming from it shrink, demand falls and the service becomes a commodity. Like good economists, we see this process as inexorable, that excess supply brings prices down. This in turn cuts margins, and tighter margins mean that less time and money are invested in the service. And we complain that more and more consulting services are being commoditized.

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But perhaps this rational approach underestimates the extent to which clients want to take the personal element out of consulting. There are three types of consulting projects: 1. Effectiveness projects, where a client is concerned to get the best results or to do the right thing. These projects focus on outputs more than inputs; indeed, a consulting firm engaged in such a project will undoubtedly be thinking on its feet because there is no set approach. 2. Efficiency projects: here the aim is to get to the desired results as quickly as possible. Clients know where they want to go, but lack the process or momentum to get there within a reasonable time, and so look to a consulting firm to provide these things. 3. Economy projects: these are commissioned by clients who know not only what they want but also have a fair idea of how to go about getting it. What they now want to do is bring down the price. The service has become a commodity. Effectiveness projects are most likely to be commissioned during economic booms, when organizations are looking to expand or to adopt innovative ideas. Economy projects are, inevitably, the feature of downturns, when consulting budgets are at their lowest ebb. Efficiency projects dominate in the periods of low growth in between these peaks and troughs. Because the prevalence of these projects is tied in to economic cycles, it is tempting to see falling prices as the main force which moves projects from effectiveness to efficiency, and ultimately to economy. But perhaps it is depersonalization which brings down the prices, not the other way round. Perhaps clients, confident in their abilities to achieve their objectives and keen not to let their consultants over-reach themselves, want consulting projects to be less dependent on the individuals involved. They want the system and the process, but not necessarily the people – and it is this, not falling prices, which turns a consulting service into a commodity.

The Wrong Standard for Consulting Firms? Every consultant wants to be a trusted advisor: this is the benchmark against which they judge themselves. They see their bosses using their networks to identify opportunities and their relationships to win new business, and they

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want to emulate them. But the ramifications to being a trusted advisor are not always positive. The most obvious problem is that it puts too great a burden on a single individual. Independent consultants can only afford to pitch for work they know they can do in terms of both capacity and expertise. If they take on too much, they risk annoying clients when they cannot deliver to the deadlines agreed; if they try to work outside their own sphere of expertise, clients will see through them. But someone who works for a consulting firm may find themselves trying to finish a project they didn’t specify or marshalling resources that turn out not to be available. They may end up working in areas where they have no experience or committed to two projects when they are already behind on one. Small wonder, then, that one of the most common complaints is that consulting firms don’t keep their promises. In fact, the relationship between individuals and consulting firms has never been easy. On the one hand, an individual whose personal brand is too high-profile can cause problems for a consulting firm: prima donna behaviour is hard to accommodate and gurus are an inflexible resource, hard to redeploy when the market moves on. As individuals gain in expertise and stature, they are likely to move beyond the confines of one firm and start a consulting practice of their own. On the other hand, the business model of many firms is highly dependent on being able to hand over as much responsibility to individual consultants as possible (which is why the partnership model remains so prevalent). They do not have the infrastructure to be able to manage what is often a wide array of activities centrally. Nor, these days, do they have the margins to be able to afford much in the way of managerial oversight. Moreover, by empowering individuals on the front line, consulting firms have created a line of defence. If a client complains, the firm can treat the problem as an isolated incident: “So-and-so went out on a limb over this. He’s had his knuckles firmly rapped. We’ll make sure he doesn’t do it again.” It becomes hard, if not impossible, to point to a systemic weakness in the firm as a whole: the individual consultant carries the can. The irony is that putting so much emphasis on relationships between individuals does not work particularly well from a consulting firm’s point of view either. Most obviously, it makes the firm too dependent on a small number of people (its “greatest assets”): if those people leave, they take their clients with them. The stronger the relationship, the more likely this is, and

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the harder it is to bring new people into the relationship even while the key person is still there. Two’s company, but three’s definitely a crowd. It also exposes the consulting firm to questions about what it’s there for. In a world in which clients are looking for specialist know-how, what value does the firm add? To be sure, it may help clients identify the relevant expert, and its brand will provide some reassurance of quality. It may even be that clients appreciate the fact that they benefit from a firm’s training process or knowledge management system. But the agent who delivers that value is a person: if that is who a client puts their faith in, then the firm will only ever play a supporting role. This brings us to another irony. Clients who are satisfied with a consulting project are likely to praise the key individuals. Those who are dissatisfied and who want redress are more likely to blame the firm (there can be no redress at the individual level: a bad consultant is a bad consultant is a bad consultant). Thus, strong personal relationships mean that firms get all the blame and little of the credit. No wonder the reputation of consulting firms, at least at a generic level, is poor.

The Rule of Three As Diana, Princess of Wales famously remarked, “there are three people in this relationship”: the client, the consultant and the consulting firm. The relationship between the client and consultant is, without a doubt, important: it is crucial to winning business and it can help diffuse problems at an early stage. But it cannot deliver the combination of specialist expertise, large-scale complexity and innovative thinking that clients are looking for in isolation. To do that, it needs a consulting firm behind it. The trusted advisor needs to be seen as someone who succeeds as a result of their firm, not in spite of it.

5 The client–consultant–consulting firm relationship

“Trust only builds when you have delivered,” is how Detica’s chief executive, Tom Black, puts it. Lis Astall, Managing Director of Accenture in London, agrees: “What matters is how we build trust, and that comes down to delivery – not one delivery but every delivery. We have to beat client expectations not once, but over and over again.” Delivery generates trust, and trust builds relationship (Figure 5.1).

Delivery

Trust

Relationships

Figure 5.1 The building blocks of a relationship

“Success comes down to speed and how well we can execute,” says Alan Buckle, who heads up KPMG’s re-formed consulting practice in London. The consulting firm, he argues, has to deliver to both clients and its own staff. “We don’t just need excellent people, but we have to have the infrastructure to support them. If they come in the morning and it takes an age for their computer to get up and running, or if they can’t easily find a document or track down someone to speak to, then we as a firm are failing them. If we have the right people, then we need to provide them with the right kind of environment to work in. They should be thinking, ‘it’s good to work here’. Smart people generally want to work with other smart people, and they need to be able to network with them if they’re going to make use of all our capabilities. The firm has to facilitate this process.”

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That word “process” is an important one. Andrew Pawlowicz became a partner in what was then Ernst & Whinney in 1984. Head-hunted first by CSC Index and subsequently by PA Consulting, he was PA’s global head of operations consulting until 2002. In the late 1960s, he had been working in industry and saw at first-hand what sort of impression consultants could make on their clients: “We had a consultant come sniffing around the business,” he recalls, “looking to see where computerization might add value. But what struck me at the time was just how traumatic an experience this was for the middle manager of the period, to be faced by someone saying, ‘Hey, we can now do this by pressing a few buttons; we won’t need your skills any more’.” It brought home to him even then how important it is to address the personal impact of a change fully – the “change implication”. Working later as a systems analyst, he felt his role was not just to state the obvious requirements, but to look at how people worked and behaved, and at what motivated them. Only by understanding these things – by getting under the skin of a business – could you possibly design a system that people would be prepared to use. The 1980s was a period of phenomenal growth for the consulting industry: firms were going from a small team of people to several hundred in a just a few years. But it was the culture and behaviour of the times that stuck in Pawlowicz’s mind. “I turned up to start my first ‘proper’ consulting job and discovered they had a novel form of hot-desking,” he remembers, “one large room with telephones dotted around a single large desk, populated by very smart and articulate people loudly showing how effective they were at doing deals. It was more like a trading room than a conventional office.” In many ways, he thinks, consulting has not changed that much as far as clients are concerned: “People, albeit they are often better qualified and experienced, are making precisely the same sort of mistakes. Now they don’t lack knowledge so much as time, which means they delegate too much and there’s nowhere near the level of supervision or governance required to ensure that projects, or indeed day-to-day business, are done properly. A complementary problem for the consulting industry is that very few consultants, if they discover they are not adding value, will walk away. The result is under-delivery. It’s quite ironic: consultants spend a great deal of time agonizing over whether they have enough content – whether they know enough – and not nearly enough on whether they have the right clients and governance processes in place!”

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Client

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Consulting firm

Individual consultant Values

Figure 5.2 The delivery triangle – values, people and process

The Delivery Triangle: Values–People–Process Consistently successful delivery therefore involves three parties: the client, one or more consultants, and the consulting firm, and the relationship between each of these three parties is mediated in a different way (Figure 5.2): • Client–consultant: As we have noted, the relationship between clients and consultants is based on people, the personal interaction between those involved in a project on a daily basis. • Client–consulting firm: The relationship between a client and a consulting firm is based on process. While the individual consultants provide the intelligence, personal commitment and energy required to do a piece of work, a client who wants to see something delivered relies on the firm to understand their requirements, tender for work and provide a structure and approach for implementation. • Consulting firm–consultant: By contrast, the relationship between a consulting firm and the consultants it employs is based on values. Culture, behavioural norms, social networks – these constitute the glue which binds people to firms, and firms to people.

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Moreover, each of these three parties needs something from the other two: • Clients want to work with high-quality people and they need firms to bring processes which support that one-to-one relationship. They may choose to rely most on process – in which case the qualities of individual people will matter less; or they may put their faith in the people – in which case the processes add little. But invariably, when you talk to clients about what made the difference in an outstandingly successful project, they’ll cite the values of the consulting firm which allowed it genuinely to collaborate with them. • Consultants have two relationships. One – often the more personal one – is with their clients; the other – a more dispersed one – is with the firm and is typically mediated through the firm’s culture and the extent to which an individual consultant identifies with a firm’s values. However, for consultants to do their job, they need process: they need the firm to know what clients are looking for, sell work for them to do and provide the support and infrastructure required to do that work well. Without process, the impact of a consultant is limited to what he or she can achieve independently. • Consulting firms provide the culture which determines how well their consultants will want to do their job and the processes that enable them to do it. Some firms rely more on process to keep their clients happy; others trust to culture. What consulting firms need, quintessentially, is people. People are the basic input, the raw material of this industry. What does this mean in practice? Managing Values at Ernst & Young “This firm has a very strong culture,” argues Nick Pasricha, Ernst & Young’s Managing Partner – Client Service, “but it’s not something we’d ever take for granted.” As one of the accounting firms seeking to redefine a segment of the consulting market after a moratorium imposed by the sale of its consulting business to Capgemini in 1999, integrity is critical. “We have to be independent,

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objective and transparent,” says Pasricha. “We left the consulting market because we could see that the consulting practice was moving further and further away from the rest of our business. This trend has continued and most of the traditional consultancies are now dominated by their systems integration and outsourcing activities. That has created something of a vacuum for clients who are looking for independent and objective advice, something clients don’t think the IT houses and systems integrators are in a position to provide. This is the segment we want to occupy – providing independent and objective advice to our clients on how to improve the performance of their business. We aren’t re-entering the consulting market as currently defined. We want to redefine our segment of the market so as to capitalize on the strengths of our brand and our values.” Alongside integrity, the firm also values relationships and a genuine enjoyment of working with clients. “But clients wouldn’t necessarily see these as values,” says Pasricha. “When you ask clients why they bought something from us, the answer we usually get is, ‘because I liked the people and I believed they could deliver the job’, not ‘because I liked the values’. We don’t have a monopoly on the best people or the best methodologies. There’s nothing unique in our business in that sense; there are no magic bells or whistles. But what can be special is the way our people work together to create a distinctive experience for the client – our teams and the way they work together are the manifestation of our values. And we have mechanisms for ensuring that we reinforce them: how we build teams; our recruitment process; the way we organize our firm; the process we have for starting an assignment; our reward structure.” Relationships are built through constant focus on clients’ needs. Rather than grouping its people according to their specialist skills, Ernst & Young organizes them around clients. “We believe in the power that comes from integrating our services,” says Pasricha. “We have business units that will look after and address a particular grouping of accounts within an industry; within that, we will have auditors, risk assessors, regulatory and financial management experts – all within one organizational unit. We go for people who like to work in teams and who have a sense of integrity, independence and those who will operate to our ethical standards. We want people who will have fun and not take themselves too seriously – in other words, their values have to match ours.”

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Managing Process at PKF Consulting If you’re a middle-sized accounting firm, offering a range of professional services including advisory work, you might reasonably be worried that the legal agreements preventing accounting firms, such as Ernst & Young, from undertaking certain types of consulting work have come to an end. But not Cath Hardaker, Head of Management Consultancy at PKF Consulting. “The big accounting firms never really left the market,” she argues. “Their clients would say, ‘Look, I’ve got this problem’ and they weren’t going to say they couldn’t help. The only difference is they’re now being much more open about it: they’re putting consulting back into the fabric of their business model and we expect to encounter at least two of them on every pitch we make. Our job hasn’t changed: the market has never been anything other than tough.” It’s a battle the firm is winning, however. 2005 was a vintage year for its consulting practice, with more and bigger projects being won in its core sectors of government, the hotels and leisure industry. “Buoyant would be too strong a word perhaps, but we’re building a strong business internally at a time when the market has picked up,” says Hardaker. “That’s a pretty powerful combination.” It’s not just winning business that is tough, but recruiting the right calibre of employees. “We’re all looking for the same highly tuned skills,” says Hardaker. “The people we want aren’t sitting around at home waiting for the call; they’re already working for someone else. They’ll spend two years with one firm, two years with another: everyone’s moving. In order to attract and keep the best people, we have to show what PKF is, what we can give that they wouldn’t get at a very large firm or a very small one.” Keeping that difference while the firm grows and new people come in is the biggest headache Hardaker faces. “We’ve been in a market where the smaller firms have thrived, but many of us have also worked for the very big ones. So we want to have the best of the small with the quality, capacity and reputation of big firms. Our processes have to be as slick as the big firms’, but we want the emotional commitment of a niche specialist. How do we ensure our business processes grow at the same rate as our businesses? How can we be sure that we don’t end up spending all our time looking for stuff that should be at our fingertips because we haven’t put the right systems in place?”

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An example would be the information a firm like PKF has on prospective work: What’s in the pipeline? What proposals have been won or lost? It is something every firm needs to know, whether they have 50 people or 50 000. “And every firm will have a mechanism for keeping track of this,” says Hardaker. “The question is whether it’s automatic. If you have to remind people or pester them to record this kind of information, then the process will fall apart as you get beyond a certain size, and you won’t know what you’ve won or where you’re winning business; you can’t rely on people’s memories. Our business has to be sophisticated enough to sustain growth. In five years’ time, we can’t afford for anything to be hand-to-mouth. “When you’re small, you can talk a lot about your aspirations, but when you’re big you actually have to realize them. We have to be as shiny and slick on the inside as we are on the outside – that’s the core challenge the firm’s management faces as we grow.” Managing People at Booz Allen Hamilton The wind of delivery is blowing through all types of consulting firm. “You cannot have a great relationship with a client if you are not adding value,” says Victor Koss, Booz Allen Hamilton’s Vice President of Financial Services in London. Booz Allen’s traditional market – bringing good ideas into business – is a shrinking one. “Having the greatest framework is not enough,” says Koss. “We have to be able to develop a pragmatic approach which can be implemented in our clients’ organizations. We have to be able to start the delivery process.” That imperative has raised the stakes when it comes to managing people. Teamwork is essential: “We need people who are strategists, who are experts in particular industry sectors, and who have strong functional skills such as operations, IT and change management. If such a person exists, we would like to hire them, but the reality is that that’s too much to expect from any one person. The only way to demonstrate our breadth of skills to a client is to field a group of people. More than that, we need to show that this isn’t a team of individuals, but individuals who are part of a team, who can work together. From our point of view, we need people who are willing to introduce their colleagues to their clients so we build up multiple points of contact. We place a lot of emphasis on peer-to-peer relationships, and we strongly encourage junior people to get to know people at their own level

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– relationships should not be limited to partners. We also try to ensure we know people in client organizations who have different types of relationships with us – they may be buyers or influencers, procurement people or end-users.” Booz Allen does not and cannot rely on personal chemistry to make its relationships work, externally or internally. Resources have to be deployed intelligently across the world; consultants have to trust each other in a dispersed and disparate organization. “We put a lot of emphasis on crosspractice teams,” says Koss. “It costs a lot of money: we spend more than we probably need to on getting on planes, having conference calls, organizing special events where everyone gets together, but we have to create opportunities for people to share their knowledge. If a client of mine has a particular issue which I know a colleague in Australia has experience of, I’ll have absolutely no hesitation in getting in touch. And that personal link is important because it will have allowed me to gauge how relevant my colleague’s knowledge will be.” The firm has formal mechanisms for capturing, institutionalizing and distributing knowledge: Koss and his colleagues can enter a diverse subject like restructuring the horse racing industry and be able to look at all the work done in the area, the top five issues and pinpoint someone in the firm who knows about the subject – all in a matter of minutes. “We have a culture in which, if someone contacts you, you have to get back to them straight away. Most of our incentives are based around the firm, not individual performance.” You get the sense that the firm is Marine Corps in feel – this is not a bunch of creative types hanging out together – and it is perhaps no coincidence that Booz Allen does a substantial amount of work for the US Department of Defense and Homeland Security. “A $3 billion-plus global business cannot run on chaos,” says Koss. “You need a certain level of organizational disciplines or systems to make things happen; the scale forces you to make it work.” Governance is critical: senior partners’ primary task is to build and protect the firm and its reputation. But there are, as in any good constitution, checks and balances: the firm’s board of directors is not just made up from those senior partners, but other grades as well. There is an “up-or-out” or “perform-or-go” system of career progression: even highly successful partners will be asked to leave if they put their own interests or those of their immediate team above those of the firm as a whole. “The reputation of the

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firm is paramount,” says Koss. “It’s what opens doors for us and we have to protect it. And that’s what we stress to everyone who joins.”

The Structure of This Book Consulting firms have spent a long time emulating other businesses: they have modelled their structures and processes on law firms and IT companies; today’s ideas on multi-sourcing come from the construction industry. But success has been limited: no other industry faces the challenge consulting firms face in terms of delivery – people, processes and culture, operating in a complex environment, often at scale. The aim of this book is to examine how – by exploiting those people, processes and culture in a unique way – consulting firms can deliver, create trust and build relationships. The rest of the book is divided into four parts. Part 2: People We start with the people issue because it is so critical. Good consultants do not appear by coincidence: they belong to a firm because someone has been able to spell out the characteristics clients are looking for, someone has gone through the process of recruiting them, and because someone has taken the time to work out how such people need to be recognized and rewarded if they are to be retained. • Chapter 6 examines the skills consulting firms look for in addition to technical know-how: the ability to be part of a team; self-motivation; dependability; openness and honesty; and – most importantly – empathy. • If these are the attributes consulting firms are looking for, how do they find them? And, once they have found them, how do they retain and reward them? These are the questions Chapter 7 seeks to answer. Part 3: Process (1): Marketing and Selling Historically, consulting firms did not have to try very hard to win business: demand for their services far exceeded their capacity, putting consultants in

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the front line when it came to determining terms of reference and negotiating fees. But the ups and downs of the consulting industry in recent years have changed this out of all recognition. Consulting firms are commercial enterprises, but the need to make money often continues to be seen as inimical to client service. Individual consultants often feel uncomfortable doing it – it is something the firm puts them under pressure to do, not something they particularly want to do. Clients rightly resent the ramifications: account managers who are not involved in delivering real work; partners whose role seems to be to ferret around for future work; the relentless creep of projects beyond their original scope. What, if anything, can a consulting firm do to counteract these perceptions? • Brand versus specialization: this is the choice today’s consulting firms have to make (explored in Chapter 8). Do they want to be known for their overall brand or for their level of specialist expertise? What happens to firms that fall between these two stools? • Chapter 9 looks in detail at how firms handle the sales process. In particular, as clients’ procurement of consultants has become more professional, how have consultants professionalized their sales efforts? • Chapter 10 takes this a step further to look at how consulting firms take ideas and disseminate them in the marketplace. Thought leadership often seems a misnomer: much of what claims to be leading-edge falls far short of the mark. How can thought leadership be used to build and cement client relationships? Part 4: Process (2): Delivery It is the word on everybody’s lips, from banks to government departments, from systems integrators to human resource consultants. • Chapter 11 goes back to basics. Asked what constitutes good consulting, clients cite project and budget management: they want a consulting project to cost what they expected and finish when it was supposed to. Managing a consulting project has its own, quite distinct challenges: gaining the buy-in of the clients’ staff, stakeholder management, transparency, resource allocation, the ability to respond quickly and the speed with which a consulting team can be mobilized.

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• Successful delivery is rarely the result of one person’s efforts, however superhuman they may be. Indeed, one of the most important ways in which a consulting firm can differentiate itself from the legions of lowcost, independent consultants is by demonstrating that it can pull together an effective team. How consulting firms do this and build client relationships at the team level is analysed in Chapter 12. • Chapter 13 looks at the methodologies consulting firms use. These often appear to play an important role in winning business, and consultants themselves regard them as essential. But methodologies are like high explosives – liable to blow up in your face if you do not handle them carefully. If you rely on them too much, clients will think you’re inflexible. • At the opposite end of the spectrum to a tried-and-tested approach is innovation, the subject of Chapter 14. Developing original ideas is rarely the core business of a consulting firm: the money in consulting comes from fielding thinking which is new, but not too new. However, as many established services become eroded by creeping commoditization, the pressure is on firms to identify the tools and techniques which will guarantee its premium pricing in the future. • Listening is an essential consulting skill, but how does this work when applied at a corporate level? Chapter 15 examines how some consulting firms are adopting truly open and honest ways of communicating with their clients. • Barriers also have to be overcome within the extended families in which so many consulting firms now operate. While cross-selling between parts of a multidisciplinary professional firm (tax to audit to consulting, for example), the synergies between consulting practices and parent companies whose businesses range from construction to telecommunications may make more sense. Chapter 16 analyses how consulting firms exploit their internal markets.

Part 5: Values A consulting firm can have good people and sensible processes, but it is its values which will ultimately dictate its long-term success. Yet “values” can often be interpreted in vague terms, yet quite specific values are needed.

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• Chapter 18 describes two projects of extraordinary commitment and endeavour, both of which illustrate those necessary values. • Of course, having the values is one thing, keeping them another entirely. By way of conclusion, Chapter 19 analyses the steps four consulting firms take to keep their values intact.

PART II People

6 Personal chemistry and relationship skills

Lytham St Anne’s isn’t exactly a name that trips off the tongue, even if you’re in the know. Located just outside Blackpool, it is dominated by highrise blocks built in the 1960s, and by the biting wind that sweeps in from the Atlantic. But for a period in the mid-1980s this otherwise unremarkable place was the focus of one of the most complex and demanding IT projects in the world. It was a time of rising unemployment: the traditional manual systems for processing social security payments could barely keep pace with rising demand. The solution was obvious – automation – but nothing like this scale of systems development had ever been undertaken before. The resulting database would have to hold information on all 60 million UK citizens and would have to be capable of applying complex entitlement rules and distributing billions in payments. Nothing in Ian Watmore’s consulting career could have adequately prepared him for this environment: he’d cut his consulting teeth on a variety of IT projects which, although large by the standards of the day, would be dwarfed by the scale and ambition of the project planned by the Department of Social Security (DSS). Most had been undertaken for clients in London’s well-heeled financial district – culturally a world apart from Lytham. “People said it couldn’t be done,” recalls Watmore, “but there was also a worry that, if we didn’t do it, the country would have real social problems on its hands. The existing system would grind to a halt; people wouldn’t receive their benefits; there’d be rioting in the streets.” In fact, it became one of the most successful programmes ever carried out by the UK government: the systems developed then are still running today.

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Watmore was a consultant with Accenture (he went on to become the UK Managing Director and is now in charge of a special unit set up by Prime Minister Tony Blair, to deliver improvements in public services). Working with the likes of Fujitsu and BT, he spent six years commuting between London, Lytham and the DSS’s other major offices in Newcastle. “Citybased companies were all quite similar,” he says. “Moreover, in the run-up to financial deregulation, they all recognized they needed outside help and welcomed the input of consultants. Lytham was very different: in a sense, we weren’t just being hired to design, develop and implement a new IT system, but to effect a cultural change. The culture was very much one of stay-as-you-are, and part of what we were bringing was a more positive view of change and a can-do attitude.” That inevitably meant that Accenture’s consultants were regarded with suspicion at best: many saw them as a threat, replacing experienced public sector managers with sharp-suited graduates. “I learned a lot about being culturally aware,” says Watmore. “We couldn’t just march in, issue orders and expect things to happen.” Although starting as a relatively junior person on an enormous programme – a small fish in a big, murky pond – Watmore had to be able to carry his immediate team with him. “There is always a moment of truth in any kind of project. Mine came at a meeting about the citizen index we were designing, the mechanism which would allow the computer programs to identify the right person in a database of 60 million. The index was being designed in Newcastle, but implemented in Lytham, so on top of all the tensions around using consultants, we also had to deal with Civil Service rivalry between the north-east and north-west of England.” People were under a lot of pressure, deadlines were tight and tempers frayed, but a decision had to be made. “There was a pivotal meeting when we managed to get all the people round the table and hammer out a way forward that was acceptable to both sides,” says Watmore. “Nothing after that was anything like as difficult: the system went live on time. Quite simply, we had, individually and collectively, decided we were a team.”

Responding to the Moments of Truth Every consulting relationship has its moment of truth, the few seconds when you are tested as a consultant and which dictate client attitudes to you as

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well as your own self-confidence. Moments of truth like the one Watmore describes may be spontaneous, but are by no means accidental. How they are resolved comes down partly to a consultant’s technical know-how in the broadest sense. Consultants are brought in as experts, perhaps in a particular industry or issue, or because they have a track-record of being able to work through a certain type of process or problem. Technical excellence – having the right answer or the ability to identify the right answer – is, and will remain, the bedrock of consulting. But, leaving aside technical know-how, what personal qualities are required for a consultant to survive that personal moment of truth? “This is the most elusive bit of consulting,” argues Jules Beck, Head of Transformational Consulting at CSC Computer Sciences Corporation. “Very few consultants have a real understanding of what ‘consulting’ is about on a personal level. If we’ve built a good relationship with a client, we often assume that it’s simply because they like us as people, have specific expertise relevant to their issues and challenges and because we deliver on our promises. While all these things are critical, successful long-term client relationships also require other capabilities – excellent listening skills, the ability to see the bigger picture, a sense of independence and strong empathy for the client at a personal as well as an organizational level.” Of course, it’s dangerous to generalize: consulting work is so varied that no one person or set of skills will be perfect in all situations. Indeed, most consulting firms would be hardpressed to list the core attributes of the people they recruit, the qualities that mark them out as the “right” kind of person. But common attributes do emerge. Playing in a Team Detica specializes in intelligence systems with a strong emphasis on security. Like many other firms, it offers a comprehensive service, ranging from help in drawing up the requirements and business case for a new system, project management and systems integration right through to operational support of the completed application. What’s special about Detica? “We drum into our people that the success of a project is far more important than getting paid for extra work or overtime,” says Tom Black, the chief executive. “We put the client first, sit in their seat and see success as they see it.” Most

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consulting firms would say the same, but they have not all been growing as quickly as Detica, so what’s different? The firm’s heritage is in systems engineering and it still retains a strong engineering dimension to its culture, which means that it takes pride in the quality of its technical solutions. People at Detica like building complex but intelligent systems: they have to be smart and flexible, both of which come out in its client feedback. The vast majority of its consultants are mathematicians, engineers, physicists or computer scientists. About two years ago Detica realized that three-quarters of its income came from information intelligence – helping people to acquire, analyse and act on sets of information – and it has since rebranded itself as an information intelligence specialist. “We’re gradually rebuilding the brand along these lines,” says Black. “It plays to our existing strengths, yet also provides a clearer association for our clients. When they hear our name, they can attach something quite specific to it: it’s our key differentiator.” But, like many other analytical cultures, it has found the softer skills – change management, training, ensuring the take-up of completed systems – more of a challenge. “We’re bringing in more people with these skills, but it is still not the norm for us as a company,” says Black. Moreover, the leftbrain focus of the business could limit growth if these softer skills are not properly assimilated. “A corporate relationship does not exist without a personal relationship. People buy from people they like, so if there is no personal relationship there will be no corporate relationship.” So what else does Detica look for when it recruits new consultants? What are the skills it wants to inculcate in its existing people that take the firm above and beyond its engineering roots? Team orientation is the first thing Black mentions: “We need people who, while they’re technical experts in their own field, recognize they can’t have all the answers. They’ve got to be prepared to put their colleagues forward and work with them effectively.” Clients will not tolerate a bunch of dysfunctional prima donnas. That’s particularly important in today’s environment where consultants have to work closely with their client counterparts, and sometimes with people from competitor firms. “Managing teams and the aspirations of all their individual members is a real challenge in this context. We might be the prime contractor on one project, but the subcontractor on another. We can be working with a consulting firm for one client, while competing with them for another client’s business. We need people who can be grown-up about this, who are

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neither so egotistical nor insecure that they can’t have a professional relationship with whoever is round the table at the time.” Seizing the Initiative Self-motivation is the next skill consulting firms look for. “Our people shouldn’t need to be managed from above; they shouldn’t be sitting around waiting to be told things. They have to be highly autonomous”, is the typical comment. A consulting firm, sending out people across a range of different projects, cannot micro-manage all its activities, but has to depend on individuals to exercise reasonable judgement and take good decisions, decisions which balance the needs of a client with the commercial security of the firm itself. It follows that other valuable qualities are dependability, openness and honesty. Most consulting firms would agree that the willingness to take the initiative is an essential attribute. As David Oliver, Vice President of Kurt Salmon Associates’ London office, consultants to consumer product and retail clients, puts it, “We depend on people who want to do a good job for clients. That driver will always come across; it means that we’re less arrogant than the stereotypical image of the consultant and we engage well with the client. Simply put, we’re easy to get on with.” Duncan Craig, at AT Kearney, makes a similar point: “We want smart people; people who have already achieved something in their lives, not necessarily in business, it may be in relation to their hobby or in sport. The most important thing is to have done something they’re proud of.” Being Believed For John O’Rourke, who runs Catalise, a much smaller consulting firm – 25 people to Detica’s 500 or AT Kearney’s 3000 – these would also be the qualities he’s looking for in a consultant. “The most important thing we do is invest in our client relationships,” he says. “It’s a personal thing: it might take a few weeks or many months until they reach the stage where they really trust you, where they know they’re in the rapids and need lifejackets, helmets and boats to cross the stream. The ability to keep that relationship going is vital, because the economic cycles consultants have traditionally

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relied on to drive business are much less certain than they were. It only takes one breath of cooler economic air for a client to pull the plug on an important project. Although we have long-term relationships, much of our work takes the form of high-value, short, sharp interventions – and we have to be able to keep going.” “But,” he cautions, “some of the attributes we need appear contradictory. For example, the ability to listen is very important: every client is different and you can’t go in with a predetermined solution because you’ll miss the nuances of that particular situation. But there comes a point where your opinion as a consultant is much more important than the listening part. Consultants have to have and be able to articulate opinions; convince a client that they understand their problem and are proposing a feasible approach. Clients have to believe in us if we’re going to achieve anything.” Credibility would also be top of Andy Chestnutt’s list at Compass Consulting. “When we’re hiring consultants, we don’t hire lifelong consultants,” he says. “We take operational people and train them to be consultants. We prefer to recruit someone who has been a senior director and who has operational experience so that, when they talk to a senior director at the client, they can do so from the vantage point of having done this job themselves. That generates a lot of trust with the client.” But experience is not the only source of credibility at Compass. The firm differentiates itself via its fact-based approach: typical projects start with gathering detailed information about the client’s operations in a pre-defined model. This information is then analysed and compared with other, similar organizations, allowing the consultant to identify problems and opportunities through root cause analysis. “When one of our consultants arrives for a client meeting with a wealth of data about the performance of the latter’s competitors, it breeds trust,” says Chestnutt. “We’re not asking people to make a leap of faith, to trust us purely on the basis of our experience. Experience backed up by factual evidence carries a different weight to a consultant who is simply speculating.” Demonstrating Empathy What all these factors have in common is that they are as important to the client who hires a consultant as they are to the firm that employs them. At

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first sight, this is not surprising. Clients want consultants with specialist technical knowledge, so it makes commercial sense for a consulting firm to hire consultants with that knowledge: the client wants to buy it and the consulting firm wants to sell it. A consulting firm, with its resources spread across multiple projects, organizations and locations, relies on individuals to act with a fair amount of autonomy. Similarly, one of the most important reasons why clients hire consultants is to get things done – speed up a stalled project, create a sense of focus in a dysfunctional team; they do not want to deal with people who have to keep running back to their office for decisions or moral support. But perhaps there is an even more fundamental theme that emerges from this: empathy. Strictly speaking, empathy relates to the way a person understands – indeed identifies with – someone else’s situation, feelings and motives. Where consultants are concerned, this translates into their ability to listen to and respect their client’s agenda and to feel personally involved in the process and outcome: in other words, not just to try on their client’s shoes for size, but to put them on and walk around in them day in, day out. There are a lot of aspiring “chiefs” at DiamondCluster: the firm defines its career tracks in terms of a consultant’s progress towards a position as chief marketing or strategy officer, chief operating officer, chief information officer or chief technology officer. “Everybody in the firm is designated to one of these four career profiles,” says Stephen Warrington, the firm’s UK Managing Director. “Each profile requires a different set of skills, but all require general consulting. The consultants are all bright, practical and respect each other’s opinions. We take people from different sources. A minority join us straight from college as analysts, but most come with many years of experience in line management or consulting. We’ve a close-knit, highly collegiate environment.” Extending that culture to include clients is a crucial differentiator. “Personal empathy is the most important factor in establishing a good client relationship,” says Warrington. “I relate to this person, and he or she relates to me. Our proposition is around helping people execute their strategy: that means being down-to-earth, flexible, collaborative, willing to roll up our sleeves and get on with things. It doesn’t mean sitting on a high horse and looking down on the world.”

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Cath Hardaker, who runs PKF management consulting practice, agrees. “The specialist knowledge a client is seeking will clearly vary from project to project,” she says, “but the underlying thing people are looking for is empathy, someone who can say, ‘if I were in your place, this is what I would do’. It would be someone who wouldn’t ride roughshod over their constraints and lecture them about their failings, but who would accept their position as the starting point, however imperfect; someone who would genuinely care about the problem and help them to solve it.”

Empathy in Action Creating empathy, even among a small group of people, can be hard enough. Doing so across a much larger team, spread around the world, and constantly being reconfigured, is imaginably harder: but that is the challenge consulting firms face. It is hard to grasp the scale of an organization the size of BT. Serving over 20 million business and residential customers with more than 29 million exchange lines, it generates £13 billion in annual revenues and employs 48 000 people. Its customer contact centre alone employs 13 000 people across 33 sites, two of which are in India. Offline is the back-office for BT’s contact centre operation and deals mainly with customer enquiries and complaints. Set up in 2003, Offline lacked the frameworks and organizational “glue” needed to ensure consistent performance across its 1300 people. Managers were not equipped with the right tools; there were no reports and key performance indicators to provide meaningful metrics of individual performance; there was an inconsistent approach to monitoring quality, coaching and mentoring, setting targets and briefing teams. As Sue Lennox Lamb, Offline’s General Manager, put it: “Offline was created from a range of disparate offline groups who came together with little reporting, few targets and measures, no communication infrastructure, different operating processes and a mix of management styles and experiences.” Trinity Horne has specialized in productivity improvement consulting since 1992: in 2004, BT commissioned it to help improve customer service and employee attitudes at Offline. Success here led to the firm being asked to help improve productivity in BT’s front-line operation, Online. The key in both pieces of work was not redesigning processes or retraining staff, but changing the behaviour of operational managers so that they

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could help their staff work better. And this was achievable only if the behaviour of the consultants matched the behaviour they wanted to encourage among BT’s own staff: it was empathy in action. The first thing that strikes you about the project was the level of teamwork involved. This was not a question of the consulting team disappearing back to their office to talk about the client behind its back; there was no superior-than-thou attitude. All the ideas were put together by a joint client–consulting team; people at BT had the sense that the solutions were theirs, not ones imposed by the consultants. But that was only the start. Both BT and Trinity Horne believe that the role of first- and second-line managers is to optimize the effectiveness of the resources under their control; an “active” manager should be like a sports coach providing guidance, assistance and support to their players. The trouble was that not many of Offline’s managers were in a position to perform this role. Trinity Horne therefore ran a series of management development workshops to help people understand the distinction. It backed these up with a programme of one-to-one sessions focusing on individual management styles and by working side-byside with Offline’s managers, showing them how to put the advice they had been given into practice. Soft and fluffy? Not a bit: alongside the coaching and guidance, Trinity Horne had helped BT design a new management framework for Offline, including performance measurements, target-setting and monitoring, giving its managers a much clearer sense of what was expected of them and their teams. After all, the primary aim of the project was a 20% improvement in productivity. In the event, the project resulted in an improvement almost double that. Personal relationships were inevitably critical to success. “No one thought this was rocket science,” says Trinity Horne’s David Turner. “We weren’t coming in to wave a consulting wand. The magic as such lay in the process: how we could instil coaching and management skills so thoroughly that the managers we dealt with could pass these same skills on to their staff. That meant we had to be involved: just as you can’t show someone a car manual and expect them to drive a car, we had to show them how to do it.” Indeed, it’s one of the reasons why clients like BT use Trinity Horne: they don’t just get the talk, but the warts-and-all experience. “We’re there for them in the good times and the bad,” says Turner. “Empathy is hugely important: it’s the first thing we look for when we recruit people. Obviously, we need clever and experienced people, but we’re also looking

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for a cultural fit and an ability to work with people at all levels in an organization. Some consulting firms tend to feel more comfortable liaising with people at a senior level: we’re just as happy to deal with people at the coalface. As a consultant, your outlook can’t be clouded by the organizational hierarchy you’re dealing with. You have to be able to translate what’s going on at the top to what people are concerned about at the bottom. You have to be able to listen to people and take things on board. To us, an organization is less a reporting structure than a giant jigsaw puzzle, and part of our job is to see how all the pieces fit together.” But empathy is not just about making people feel good: there is an unwritten promise that it is a two-way process. If the consultants gain the commitment of those involved on the client side, the latter acquires skills and opportunities which would not otherwise have been available. “It was crucial we made it clear what BT’s managers would gain from this process. As with any process of large-scale change, around 10% of the managers there were already enthusiastic, around 20% were doing the wrong job and needed to be moved somewhere else, but the remaining 70% were people who’d never really had a chance to develop themselves – and it was really those people we had to win over. In a sense, we’re offering them a deal: profit as an individual from the big decisions being made about the business.” Turner’s colleague on the project, Martin Haynes, backs this up. “People have to take things personally, otherwise changes simply wash over them, so we ensured there was time to sit down with each manager separately and get them to think about what they’ve done, how they could manage differently in the future. We encouraged them to see how their management style might also have some resonance in their private life, to see connections between their life inside and outside work. If you have this time, you can re-energize people on a variety of levels.” “I’m a great believer in what I’d call authentic conversations,” says Garry Johnstone, who sponsored the Online project at BT. “If I think something about you, I’ll tell you to your face, not talk about you behind your back. If you engage consultants as extensions of your own management structure, then you have to show them the same consideration and respect you would show a colleague. At the same time, you should expect the consultants not to lord it over your own team: they can like to be aghast at how awful things are. The Trinity Horne team was one of the least judgemental or hierarchical set of people you could come across. The whole emphasis was on engaging

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people, not disenfranchising them. The scale of what Trinity Horne achieved has been amazing. The customer contact centres employ thousands of people, working across multiple lines of business, many of whom are agency staff, not full-time employees, who collectively have more than one million customer contacts a day. Yet, just a handful of people from Trinity Horne have created changes right across this giant organization.”

7 Recruitment, retention and remuneration

Consider these salient statistics: • Approximately 15% of people recruited by consulting firms are recent graduates, less than it would have been ten years ago. The focus has shifted: today more than half of all people joining consulting firms have between five and ten years’ experience and around 35% have more than ten years’ experience. • In 2004, consulting firms recruited the equivalent of 15% of their workforces. On average, they also lost around 11% of their existing chargeable staff, a figure that was down from 15% in the two previous years. • On average a consulting firm will spend around 1.5% of its total costs purely on recruitment. If personal relationships are the most immediate and pivotal point of the client–consultant relationship, it follows that recruitment and retention are always at or near the top of almost every consulting firm’s agenda. Even in lean times, the competition for experienced people who can build client relationships and win new business is intense. When demand is high, staff attrition may reach 30% or more, firms poach each other’s high-flyers and salary expectations rocket.

Winning the “War for Talent” Balancing Effectiveness and Efficiency in the Recruitment Process It’s no surprise that recruitment is something consulting firms have to invest in heavily to ensure they have access to the kinds of skills and people they

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need. The 1.5% of costs spent on recruitment may not sound much, but when you consider that firms’ investment in knowledge management, research and thought leadership typically accounts for 0.75% of its total costs, you get some idea of the position recruitment occupies on a consulting firm’s list of priorities. There are three factors that make recruitment particularly – and increasingly – expensive for consulting firms: • There is no or little alternative to a time-consuming round of interviews and assessments if firms are to find the people they need. Ironically, consulting firms are in the same position as their clients are when they come to deciding which consulting firm should do a particular piece of work. They are therefore interested in similar issues: the quality of the individual, their track-record in a particular field and their ability to work as part of a team. Like their clients, consulting firms don’t always find these attributes easy to evaluate. • Carrying out such a labour-intensive evaluation process with the regularity required for a firm to meet demand. With attrition rates comparatively high, firms have to run fast just to stay in the same place. Moreover, there is a real risk that, if you standardize your process too mercilessly, you will end up with too many people of the same type. The days when consulting firms looked for a relatively similar profile of business school graduate have passed. But the more diverse your employee base, the less it becomes feasible to realize economies of scale by adopting a onesize-fits-all recruitment process. Moreover, in a volatile market, one big project can have a disproportionate impact on the availability of certain kinds of skills – making it very hard for consulting firms to keep pace, let alone predict demand. • As consulting firms discovered during the dot.com boom of the late 1990s, you can’t cut corners without compromising quality. In the race to keep up with a whole host of new entrants, many consulting firms bypassed established processes and selection criteria – and ended up taking on poorly qualified staff. So what are the options for balancing rigour, speed and quality? “We have never stopped recruiting, even during the 2001–3 downturn,” says Accenture’s Lis Astall. “Globally, we’ve grown from 90 000 people

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to 129 000 in two years.” Like many firms, Accenture’s challenge is complicated by the diversity of skills and experience it is looking for. This in part reflects clients’ continuing search for ever more specialized expertise, but it is also the result of Accenture’s broad range of services. “We look for very different people,” Astall points out. “For our consulting practice, we still look for the top universities, people with excellent degree results, team players, the people who were achievers at university, but we also have quite a few experienced hires – people that have done three or four years in industry – in our consultancy. On the outsourcing services side, we recruit people who might be new to the job market to people coming up to retirement. Additionally, we are very focused on the diversity of our workforce.” It is John Campagnino’s job to oversee that Herculean level of recruitment, not just across all of Accenture’s different workforces, but across all its worldwide locations. He joined the firm 12 years ago, when it was less than a quarter of its present size. Not surprisingly, a lot has changed. “The number of people being recruited is an order of magnitude greater than it used to be, but the market is also much less predictable,” says Campagnino. “When I started here, as the Recruiting Director in New York, we planned our recruitment at the beginning of the year and spent the rest of the year implementing it. Today, we have to be far more nimble, hiring precisely defined skills on a rolling monthly basis. In order to do that we have had to evolve a process that balances high technology with high touch, speed and efficiency with the right level of face-to-face interaction.” How do he and his team do this? “We undoubtedly rely more on technology than we used to,” says Campagnino. “We help candidates pre-screen themselves. Via our website, candidates can create profiles to indicate their interests and preferences. As relevant opportunities arise, details can be sent to the candidates via email. However, we also continue to put an emphasis on face-to-face interactions: we like to get as many people as possible to meet candidates, so the decision whether or not to offer someone a job is a shared one. We’re very clear about what we expect to get out of interviews. Conversations are carefully structured so that the expectations on both sides are managed.” Accenture has a proprietary interview methodology in which interviewers have to be trained before they are allowed to evaluate candidates. Typically, questions focus on behavioural issues – how did someone handle a

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particular situation in the past? But this approach is backed by a range of tests. Someone applying to Accenture in one geographical area might have their level of English tested, while someone in another location might be tested on relational thinking. Finally, many candidates will also have the opportunity to meet the leadership of the business to which they are applying. “People are the raw material of our business,” says Campagnino. “We’re very selective about who we bring in.” The upside to this is that it ensures that Accenture recruits high-quality candidates, but the downside is that it might take Accenture longer than other firms to reach the point where it is prepared to make a job offer. “Sometimes I get the question, ‘If one of our competitors can give someone a job in a week, why does it take us a month?’,” says Campagnino, “but it comes down to the amount of due diligence we do. Some companies might be prepared to take more of a risk: we’re not.” Campagnino cites two lessons learned over the years. “In the first place, you can’t repeat something too many times. The interview process is about expectation management. We know interviewers and candidates can be very selective about what they hear. Sometimes there are hard questions on both sides which should – but don’t – get asked. That’s one reason why we use such a structured, consistent interview process. Secondly, we must never forget that we are dealing with people, and as long as we are dealing with people, we will always need other people in the process. We cannot rely solely on technology.” The firm cannot afford to rest on its laurels: the recruitment market moves too quickly for that. “One of our challenges now is to ensure we better accommodate individuals with a wide range of skills and backgrounds,” says Campagnino. “For example, we need to continue to look at how we support working mothers or how we leverage the opportunities of homeworking.” The other key challenge is globalization: a combination of employment regulations and cultural preferences means that recruiting by definition is a very localized activity. “Recruiting the right employees is something all our people feel passionate about,” he says, “but one of the critical success factors for our business in the future will be our ability to be creative and nimble in how we identify, hire and move qualified people into appropriate positions in the company – effectively tapping into non-local/non-traditional sources of qualified people to meet our business needs.”

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Retention: One in the Hand . . . Sir George Cox is Chairman of the London-based Design Council, but he started his career in the 1960s as a management trainee in industry. Having had early exposure to the use of computers in manufacturing companies, he moved into consulting, joining what was then Urwick Orr. In 1977, he cofounded Butler Cox, which pioneered specialized consultancy alongside multi-client research reports on information technology. Having sold that business to CSC after its flotation in 1990, he moved on to senior roles at PE International and Unisys, before becoming Director General of the Institute of Directors. When you listen to Cox talking about his career a theme emerges: how the different firms he worked for treated their staff. There were three levels of consultant at Urwick Orr: associate, consultant and senior consultant. The company was a good employer in many ways, but rigidly structured. Although no one joined straight from college and most recruits had, like Cox, considerable experience, only senior consultants could sell work: you had to have been with the firm for five years before you could get promotion from consultant to senior consultant. “The fiveyear rule was ridiculous even at the time,” recalls Cox. “Some of the most inept sales people were the senior consultants. I remember watching a particularly bad presentation that one of them made to a government client: he had to refer all the questions to the ‘junior’ people who worked for him.” Matters went from bad to worse during the downturn in consulting at the start of the 1970s: “The firm reacted too slowly,” says Cox, “and cut people almost entirely on a last-in-first-out basis, including lots of people with immense promise, but no senior consultant lost his job.” Alienated, Cox left. As one of the founders of Butler Cox, he was well placed to put his ideas on good management into practice. “For example, our pay system was quite different from the norm of the time. Everyone was paid on performance, even the word processing department,” he says. The department’s pay was based on throughput set against the cost of achieving what it was asked to do, but it was still important that quality was not compromised. “So we set up a panel of people to ensure the overall quality of work, but then allowed the people in the pool to manage their own efficiency. It had a dramatic

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effect: peer pressure kept costs low and quality high. Poor performers didn’t survive, and no temporaries were ever required to cover holidays or sickness. As a result we ended up with the highest quality, best motivated, best value-for-money – and best paid – document producers in the business.” Cox applied the same philosophy to managers and support staff. The performance-related part of everyone’s pay was calculated and paid quarterly (“because an annual performance element only affects behaviour from October onwards!”). Consultants were paid a flat salary, but the annual review was largely formulaic, largely dictated by fees earned and sales made. The philosophy was simple: “If you double your contribution to the business, we will double your salary.” Equally, “If you’ve done no more for the business this year than you did last year, what’s the justification for expecting more pay?” The results were startling. Cox remembers giving a consultant a good increase in her salary at an annual review, only for her to come back the following day asking for a pay rise because, now that she understood the system, she’d unilaterally put her fees up! Shocked at the response, Cox explained that she had no authority to do so; moreover the increase was based on the previous year, so this would make no difference. “I understand that,” she replied, “but I got the client to agree to backdating it!” “Whilst not condoning or encouraging such behaviour, it illustrated an important point,” says Cox. “Things like fee rates, utilization, control of costs and effective use of time should be shared concerns across an organization. Everyone should give them attention, and the benefits should be shared fairly.” The consulting industry attracts plenty of high-achievers, many of whom enter it with the aim of spending a few years gaining exposure to a wide variety of organizations before returning to a more senior line-position in industry. A level of employee turnover is beneficial, providing a consulting firm with a steady stream of new thinking and up-to-date industry knowledge from the new joiners, and new, potentially lucrative relationships among past employees. Some turnover is also inevitable: clients will want to recruit consultants they have enjoyed working with; consultants typically have a range of career choices – another consulting firm, a different industry, even business school. But, except during real recessions, most consulting firms will admit to staff turnover rates of around 15%. Even assuming they are playing down the issue, that means that roughly every six years they are dealing with a completely new employee base – and that has implica-

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tions for training, continuity with clients and a firm’s ability to build its intellectual capital. “You accept a high turnover rate among junior consultants because they’re often ambitious and attractive to client companies,” says Vicky Wright, who was the UK Managing Director at Hay Group in the 1990s and is now an associate at Watson Wyatt and President of the Chartered Institute of Personnel and Development, “but turnover among more senior people can have a significant impact on client relationships and the perception of trust. If consulting firms are to build trust with clients, then how the firm builds and maintains relationships with its current employees, partners and alumni is an important element of the mix. Yet consulting firms tackle this issue very differently – all the way from their rigour in selecting who should be a partner or senior member, the psychological and actual contract, to the management of departures (both voluntary and involuntary) and the restrictive covenants that they deploy which can draw a client into a conflict between a firm and its former employees/partners.” Trust, like charity, begins at home. So what encourages consultants to stay? Money Does Matter Consulting firms like to play down how important money is as a motivator, preferring to hint at a rosier-tinted picture of the altruistic consultant putting client service above mercenary considerations. That’s all very well, but money remains an unavoidably important factor in offering a competitive basic rate and attractive bonuses. The first of these is much simpler than the second: many firms now subscribe to studies which benchmark their salaries against similar firms so they can offer the going rate. Salary inflation is one of the big threats the consulting firm faces, especially in today’s market where prices are relatively static, so it makes sense for firms to act in concert. Of course, that equilibrium can be upset by a spike in demand, but at that point consulting firms can put their prices up to compensate. The real problems occur when new entrants intensify the competition for resources as they try to build their businesses. This was what happened during the dot.com boom of the late 1990s: firms whose names have now largely been forgotten – Icon Media Lab, IXL,

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Razorfish and Scient – all grew rapidly on the back of e-commerce. Riding an enormous wave of demand, these firms pushed up competition for recruits to an unprecedented ferocious pitch. Even at the time it became apparent that, if even the biggest consulting firms were to achieve their targets for winning new business, there simply would not be enough people to go round. And that is what happened: supply could not meet demand and standards fell. Today’s “new” entrants are accounting firms, looking to re-enter a booming consulting market after several years – and for a variety of reasons – when they redirected their attention to their core audit and tax businesses. Already, incumbents are complaining that this is pushing up demand for recruits and inflating salaries at a time when fee rates remain depressed. But even new entrants are wary of pitching the industry back into the days of the late 1990s when astronomical offers were made, often to under-qualified people. “We pay people market salaries,” says Nick Pasricha at Ernst & Young. “In general, we don’t pay bonuses. No one has figured out a bonus structure that is not damaging to team values, so we deliberately employ a much more judgemental view of how people contributed. We look for overall, sustained performance, not one-off sales.” However, if firms do not want to make widespread use of short-term labour (subcontractors) – and many do not – some level of variable element to pay is essential if they are to manage their costs in a volatile market and spread some of the risk/reward payments they are increasingly taking on. There are two challenges here: 1. input: choosing the most appropriate basis on which to calculate the variable element; 2. output: choosing the most appropriate “currency” in which to pay it. Calculating Variable Pay Consulting firms have a portfolio of possible remuneration options (Figure 7.1), none of which is mutually exclusive. These differ according to: • The “unit” that gets rewarded: too much emphasis on individual rewards fosters internecine competition, but giving the same bonus to everyone allows poor performers to hide.

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Utilization Share price Metrics Client satisfaction Clientoriented

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Figure 7.1 The reward portfolio

• The factors that determine reward: most firms have historically relied on the most easily quantifiable metrics – utilization, contribution to sales, and so on. However, a better bedrock for long-lasting client relationships are softer, more qualitative measures, such as satisfaction. Today’s conventional firm will place most emphasis on firm-oriented metrics, not least because they are easier to measure. Some – a minority – have begun to invest in gathering and analysing client-related data. Similarly, most firms have tended to oscillate between applying these metrics at a corporate level and at an individual level – again, largely because these were comparatively easy options. Some – again a minority – have begun to find a middle way, rewarding the team. “The money is part of what keeps people at a consulting firm,” says Andy Chestnutt at Compass Consulting, “so it’s important that we pay competitive rates. Our consultants receive a bonus based on the overall success of the company, a profit-related incentive and our account managers, like any field sales force, have sales targets and commission plans. But we have to measure more qualitative performance as well, otherwise we’ll be ignoring the extent to which our culture also plays a part in keeping our

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retention rates low. For that reason, we’re fairly religious about measuring client satisfaction and quality, and basing the individual bonuses for our consultants on these types of metrics. It’s mutual self-respect, as much as money, that keeps people here – and we have to foster that.” Finding the Right Currency But money comes in different forms. Equity is important, not because it creates overnight paper millionaires (as it did during the dot.com boom), but because it encourages people to make a longer-term commitment. That’s certainly the view of Stephen Warrington at DiamondCluster: “Our attrition rates are quite low for this industry, around 10%. I think those people who like working here like it very much. And, if we get our recruitment right, we don’t get too many people who don’t like it. We pay competitively, but there are firms that pay a bit more. What attracts and keeps people, I think, is our value proposition: we try to get at the issue from an employee’s perspective. What are they trying to get out of working here? We offer equity in the firm and our benefits package is designed to encourage people to stay: our salary is competitive, our cash bonuses are on par or occasionally lower than others’, but over time our equity payments could amount to a significant amount. But it does mean people have to take a longer-term perspective.” At Accenture, high-performing managers and above can earn shares. “Everyone in the business gets ranked each year,” says Lis Astall, “and the top two tiers get options. Partners all have to own a certain amount of shares, some of which you’re given when you get promoted to partnership.” Although not a partnership in a legal sense, it is through initiatives like this that Accenture has worked hard to retain a partnership ethos in a publicly owned corporation. “We have three areas we measure,” says Astall, “value creator, people developer and business operator. People, from the most junior up to senior partners, are expected to deliver on all three of these. This metric culture drives our delivery culture: if you go and ask a client what we deliver, what they say will match what we have in our metrics.” At PA Consulting Group, Jonathan Cooper-Bagnall, a member of its management group, has no doubts that the firm’s ability to recruit and its overall culture reflect the fact that the firm is owned by its employees. “In practice, it means we’re accountable to ourselves: there is no group of exter-

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nal shareholders who can put pressure on us to behave in a way which we think is counter to the firm’s long-term best interests. It also means we can be more frank and open-minded about the work we’re asked to undertake, even if that results in our walking away from it. People here aren’t hesitant to speak their mind.” Not having to bend with the wind saved PA from the boom-and-bust excesses of the late 1990s and has given it a level of stable growth unusual in such a volatile sector. But, crucially, by tying people’s pay to the performance of the firm as a whole, the structure promotes internal collaboration. “Our model is such that, while the practice area you work in needs to be successful in its own right, it can’t be so to the detriment of all the other practices in the business. We either succeed as a firm, or we’re really not succeeding. It’s very important to create an environment where people collaborate, where we cross-fertilize our knowledge and skills, and where people can move relatively freely from one practice area to another.” PA’s ownership structure, and the behaviour it encourages, also has an indirect impact on the firm’s relationship with its employees. “PA is a structured firm and it has operating standards and formalized procedures, all of which are audited through people’s reviews,” says Cooper-Bagnall, “but there’s only so far you can go with control mechanisms. We have to trust our people a lot. In fact, it’s precisely because we trust them and because we don’t monitor or measure every little action, that we’ve been able to build this collaborative culture and sustain solid growth.” Leaving Money Aside “Retention isn’t based on money,” says Ernst & Young’s Nick Pasricha, “but by recognizing people’s contribution and giving them an environment in which they enjoy working and which evidently values them as individuals. You need to value people. If you don’t they’ll leave.” Tom Black, Detica’s chief executive, agrees: “We benchmark our salaries to industry norms, and continually find they’re better than average. But we operate an equity scheme on top of this which provides an additional reward to our high-flyers, the top 10–20% of our workforce, in order to keep this particularly valuable group of people with us. But the challenge of the work they do is right at the top of why people stay with Detica.” Adrian Atkinson is one the world’s leading business psychologists and Chairman of Human Factors International. He’s also not a big fan of

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consulting firms: “The essential function of a consultant is to reduce uncertainty, whether that’s giving a chief executive the information he or she needs to take a decision or to make sure a new IT system is up and running on time. Consulting firms used to understand this, and most did a good, straightforward job, but they’ve become much more metaphysical. They’ve invented complicated theories for things which they believe in more than their clients; they aren’t sufficiently self-critical; they focus on selling at the exclusion of delivery; and they also don’t think deeply enough about how they add value.” The result, he believes, is patchy performance at best. Those are issues which carry all the way through to the way in which consultancy firms succeed – or fail – to motivate their staff. “There are three main factors which influence people’s choice of careers,” says Atkinson. “Some people have a need to appear successful in the eyes of their peers; others want security and the avoidance of anxiety; others are driven by a desire to learn. Consulting appears to offer people status and high salaries, so it’s a common career choice for people who want to impress others: it has all the trappings of success. What these people don’t realize is how tough consulting is; they tend to have high expectations which are almost invariably disappointed. People who join the consulting industry and are motivated primarily by the avoidance of anxiety usually leave quickly, irrespective of how much they are being rewarded. Lots of people come into consulting because they are highly ambitious for rewards yet they’re afraid of being seen to fail. The crucial thing about this group of people is that they don’t want responsibility: typically, they’re excellent in technical terms, often highly specialized in a particular field, but they don’t want to move into a sales or management role. Yet consulting firms often try to push them in those directions, trying to motivate them with sales targets or management opportunities – precisely the things these people don’t want.” A better strategy would be to do more than pay lip-service to the idea of a technical career ladder, allowing people to deepen their expertise and avoid the anxiety of working in roles they do not feel suited to. Finally, there are the people who want to learn. “These people make the best consultants,” says Atkinson. “They are often people for whom going into academic life would have been an alternative career path. But they want greater financial rewards and they are fascinated with trying to understand how their area of expertise can add significant value to the success of private and public organizations. These are the two things which will deter-

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mine whether these people join and stay with a particular firm: first, that they have the opportunity to learn new skills and/or attain ‘mastery’ in a particular field. Secondly, to keep these most valuable people isn’t a question of pure money or status, although these inevitably play a part. What the consulting firm can do for these people is to provide a thoughtful, stimulating and challenging working environment where new ideas are brought in frequently from outside.” That is also what Grahame Russell, the head of Penna’s human resources consulting practice, believes. It is an especially important issue for Russell because half of Penna’s consultants are associates, subcontractors who work with him on projects but who are not employed full-time. While this guarantees the firm flexibility in the face of a volatile market, it also has significant risks which need to be managed. “Penna was founded in 1996 and grew further through acquisition, offering consulting across the employee life-cycle – recruitment, development, remuneration, career transition and outplacement,” says Russell. “But creating this proposition means we need access to people who are experts in a wide range of fields, many of whom choose to be freelance consultants, so we don’t have exclusive access to them, nor can we manage them in the same way that we’d manage our full-time employees. The key is to give them a sense of home, a professional community to which they want to belong.” Money plays a part, but no more than that: “We’re very transparent,” says Russell. “Forty per cent of our fees go directly to the associate, and that also makes us very competitive in straightforward salary terms. But we also treat them as colleagues so far as we can – inviting them to away-days and regular networking meetings, and making sure they get to work on interesting projects. They are proud to represent Penna, but they will also have a portfolio outside of Penna.” In return for providing stimulating work and a network of likeminded colleagues, Penna expects consistently high standards of delivery. There are close parallels here between Penna’s client work, says Russell: “Engagement is vital: it is what creates meaning for people, how you win over their hearts as well as their minds. Businesses have spent the last 20 years telling employees they are responsible for their own development, so much so that it’s completely accepted. Now, we’re reaping a whirlwind of our own making: we’ve created a generation of employees who have taken control of their own careers and feel little in the way of commitment to employers.

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Reversing that trend isn’t just about money – for clients or ourselves – but about creating a first-rate psychological contract between us as an organization and our people.” Consulting firms, too, are discovering that being a trusted firm also means being a trusted employer.

PART III Process (1): Marketing and Selling

8 Brand versus specialization – the race to the top?

In these days of creeping commoditization, what can consulting firms do to resist what appears to be relentless pressure on price? Consulting firms have traditionally competed on many – too many – fronts. They may have boasted about the range of services they offer or taken pride in the quality of their relationships and stable client base. They may have written books and articles that illustrate their intellectual prowess. Yet all this activity has had remarkably little impact on a market in which clients still complain that they find it hard to tell consulting firms apart. Every consulting firm likes to tell itself it has bucked the trend, but the feedback they base this on invariably comes from clients they already know. No one would dispute that consulting firms can feel very different to work with: the question is how best to communicate that difference before you have won the work. Here, the competitive lines are beginning to be drawn more clearly: you fight on brand or niche expertise. Have neither, and you will fail.

The Value of Brand “High performance. Delivered”, the strap-line of Accenture’s advertising, has to be one of the most ubiquitous slogans in the world today, emblazoned over everything, from business magazines to airport terminals. As Andersen Consulting, the firm was the first consulting company to invest in a massive advertising campaign in the early 1990s – experience that proved immensely valuable when it had to create a new brand from scratch following its break with Arthur Andersen. It took the firm just 18 months to return to the level

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of brand recognition it had enjoyed before the name change. Today, the brand’s connection to success is underlined by sponsorship deals with the golfer Tiger Woods, involvement in major sporting events and by association with other leading brands. Branding is now an important challenge for all consulting firms. “A brand like ours has to play to three different audiences,” says Steve Gunby at the Boston Consulting Group. “Our brand is critically important in attracting the strongest people. No matter how strong your image is in the market, you are only as good as the word-of-mouth that follows the work you do, and what we do requires very bright people. The second role our brand plays is in relation to our client base: a huge amount of our work is repeat business, or comes to us either from people who leave existing client organizations and then ask us to help them in their new positions or from referrals from a colleague or friend they trust. Finally, there are our non-clients. Important though our brand is in this context, the most it can do is put us on a shortlist, it can help open doors, but it won’t build relationships by itself.” Of course, the effect brand has on employees and clients is interrelated: the best people do the best work which attracts the best clients; the best clients commission the most interesting work, and that helps attract the best people. The difference between the two sides is that clients pay for it, and brand doesn’t come cheap. So what is it that clients get for their money when they “buy” the brand, and what can consulting firms do to maximize the value of the brand they are “selling”? Resources, and the Ability to Leverage Them Branded consulting firms promise high-calibre people: they have the variety of work which creates a stimulating working environment and training programmes which reward employees for their considerable efforts. In fact, a branded firm is more likely to have high-quality junior people, many straight from college or business school, because the work and training programmes they offer are particularly attractive to this group. They are not necessarily as good at recruiting more senior people, nor do they necessarily want to be. More senior people, entering the firm directly, bring the baggage of different cultures with them; junior people are more likely to adopt common values and working practices, creating a more cohesive team. What these firms are offering instead is an almost bottomless pool of bright

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people who are able to put their hands to almost anything, plus individual experts in a very wide range of specific areas. Here, the value of the brand translates into scalability – the ability to resource any project almost at the drop of a hat – and coverage – the ability to respond to just about any issue a client raises. Maximizing brand value therefore partly depends on doing both these things right. A firm looking to charge premium rates on this basis will need to demonstrate it has the capacity to resource even the largest projects virtually on demand: how quickly can it move its people around the world, while still ensuring they deliver to the same, consistently high standards? It will also need to show that it can tap into its internal network in order to find precisely the right specialist at the right time. Phoning around to see who is available who might fit the bill is not acceptable; a firm would need to demonstrate it can do this efficiently and effectively, and that it has done so on many occasions in the past. Moreover, while bright, young business school graduates may be enthusiastic and energetic, they cannot be completely wet behind the ears: as extra pairs of hands, they still need foundation-level understanding of business issues and standard analytical tools to be able to do whatever work is required of them. Maximizing brand value therefore also depends on being able to show a client that sufficient training is in place for this to be the case and that even the most junior consultants are given exposure to a wide range of challenges and issues. Ideas and experience are resources too, and branded firms are under an obligation to demonstrate that they can exploit these as effectively as they deploy their people. What use is it to a client that you have carried out work on a similar issue in another sector if the consultants you are using have had no direct contact with those involved in the previous work, cannot access information on it and/or do not know how to apply that information to the specific circumstances they are dealing with? What is more, a firm’s brand will be damaged if it claims to have collective experience of working on a particular issue and then is unable to demonstrate that during a project. Brand value translates into a firm’s ability to leverage its intellectual capital. To maximize the value of its brand, a firm has to be able to take ideas from one sector and apply them in another, so that, for example, a public institution can improve its efficiency by applying lean techniques used by manufacturing companies. Similarly, it has to be able to apply technology or business practices it has found effective in one area of a business

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and implement them in another – enabling, for instance, a human resources team to improve (internal) customer service. Finally, a branded firm should be able to take work it has done in one country – perhaps where that country has a lead in terms of government policy – and help other countries grappling with similar issues. Brand value also translates into having some genuinely good thinking and being able to get that thinking in front of the clients who need it. Ideas need as much investment in them as people if they are to develop. Branded consulting firms have to show that they have a sustained investment in new ideas and innovative working practices. They also need to show that these ideas have an impact, that a new approach to product development, for instance, has reduced time-to-market in other organizations. Quality of Relationships Consultants who stand up in a presentation and claim to have had more dinners with chief executives in the preceding week than there are evenings to have dinners are stereotypical hate figures among clients. Rightly, they are taken to epitomize an industry that can be arrogant and complacent. While these people are by no means confined to branded consulting firms (or, for that matter, to the consulting industry), they are perhaps more prevalent there because their business model is more dependent on relationships and the experience of past clients than a specialist firm that is more likely to win business on the basis of precise expertise. But leaving hate figures like this aside, the quality of relationships a firm has may be of genuine value to a client. Someone looking for advice on an especially difficult issue might well benefit from being able to talk to someone in another business or sector who has had direct experience of the same issue: if a consulting firm has good relationships (in terms of the length of the relationship, the seniority of the people involved and the extent to which it feels it can “call” on that relationship), it may be able to facilitate such conversations. It puts itself in the position of a broker, connecting a client to its network. There is another side to quality of relationships – the quality of internal relationships. Many clients, specifically those in unwieldy multinationals or government departments, find it hard to know what their own organization is doing, let alone anyone else’s. A consulting firm that has spent substan-

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tial time working for one client will inevitably have built up contacts in different areas, an internal network which clients themselves can plug into. This can be helpful where an issue is politically sensitive: the client can rely on the firm to know whom to speak to and how to get buy-in from key people. This isn’t confined to branded consulting firms, of course. However, specialist firms tend to have narrower webs of relationships simply by virtue of the fact they concentrate on a specific area. From a client’s point of view, these facets translate into two quite distinct characteristics – characteristics which a branded consulting firm must be able to exhibit if it is to use its brand to fend off commoditization. In the first place, a branded firm has to be able to demonstrate that it has more, better and more accessible relationships than its competitors. This is not just a question of assertion: any firm, like our stereotypical consultant, can produce a long list of clients it has worked for in the past. Furthermore, any firm will claim that its most senior people have extensive contacts. Rather, the branded firm has to show that more of its middle-ranking consultants can facilitate these types of connection; after all, what value does quality of relationships have for clients unless the consultants they work with on a daily basis can do this? But that does not mean that every consultant needs to know a handful of chief executives – that is the kind of thinking that leads to name-dropping. Useful contacts are not necessarily senior contacts: if you are working for a marketing manager in a consumer products company, then the person he or she most wants to talk to is the marketing manager in (say) a financial services company. This is about peerto-peer contacts, and seniority is not always an advantage (people may clam up because they do not want to look stupid). The same applies to a consulting firm’s internal relationships: these shouldn’t be confined to its most senior people. But there is a second aspect here which a client might reasonably expect to see in place. Internal relationships do not happen by accident or osmosis any more than external ones. Even a consulting firm working on several projects for a single client might well find it hard to move outside its distinct pockets of activity, especially if the demarcation between different parts of the organization is strong. Consulting firms have to build good internal relationships, something that usually takes place under the auspices of account management. There is a difference here between the type of account management which accompanies pre-sales and sales activity and that which takes place once a contract

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has been signed. Most firms – branded, specialist and unbranded generalists – would be prepared to invest in walking the corridors of an organization they thought they were going to win substantial business from; far fewer are prepared to do that once the work has been won and its scope determined. One of the ways in which the brand values of a branded firm translate into real value for clients is in being prepared to do the latter. Equally, one of the key ways in which a branded firm can defend the premium rates it charges is by demonstrating just how much effort it is willing to put into post-sales account management. Willingness to Bear Risk Resources and quality of relationships are important – indeed, for some clients they are invaluable – but when most clients talk about the value of a consulting firm’s brand, they are probably referring to the firm’s willingness and ability to take on risk. Risk here can be a host of different things: delivery, reputation, financing. While many consulting firms would claim to manage delivery risk, only branded firms cover all three key areas: • Delivery risk: Risk is often, although not always, closely linked to size and/or strategic impact. A delay in implementing a massive IT system can lose a company millions; failing to spot an emerging market can have a huge opportunity cost; underestimating a competitor’s new product can decimate your market share. What consulting firms offer here are the people, processes, technology or tools that make it more likely that the system goes in on time, that the opportunity is identified or that an effective response is formulated. Indeed, minimizing delivery risk is not the preserve of branded firms: a niche firm may specialize in negotiating outsourcing in short timeframes, for example. • Reputational risk: The “nobody ever gets fired for hiring . . .” principle is important in the context of branded consulting firms. When difficult decisions have to be made or the progress of complex projects checked, clients want consulting firms that can protect them. Even if something goes wrong, they have the consolation of being able to say to their board or shareholders: “We did all that could be reasonably expected of us, we hired X to see what was going on. The fact that X, who are experts in

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this field, believed everything was all right proves that we couldn’t have been reasonably expected to spot that anything was amiss.” What a consulting firm is putting at risk here is its reputation, and clearly the greater the reputation (or brand), the more reluctant the firm will be to allow it to be damaged, so the greater comfort a client will have that the firm will do its job properly. • Financial risk: The client’s test here is “Can I sue them?” Comparatively small consulting firms can have big reputations: while this means they will do everything they can to ensure they protect it, it is not necessarily of value to the client if something goes wrong. Why should a client worry that a consulting firm’s reputation has been destroyed? If a firm loses its reputation, that’s no benefit to the client. If something goes wrong, a client should reasonably want to recover the money it has spent, and perhaps some more in the form of penalties to allow it to reinvest or sort out whatever mess has been created. Some consulting firms deal with financial risk at the outset, by being prepared to put at least some of their fees on the line, dependent on performance. Others simply know they have been selected for a piece of work because if their ability to reduce the delivery risk and protect their client is not enough, the client will be able to claw back any money it considers to have been wasted. Either way, the ability to minimize financial risk is related to a firm’s size: in the event of something going wrong, it is hard to get money from a small firm – it will simply fold. Only large branded firms have the financial means to underwrite sizeable projects.

The Value of Specialization When Mercer Oliver Wyman began life as a strategy firm in the 1990s the only thing to set it apart from all the other strategy firms at the time was that it focused exclusively on the financial services sector. Although the services it offers have evolved – the firm concentrates on risk management these days and has just started to apply some of its thinking in other sectors – the firm has largely resisted the temptation to diversify on a massive scale. It is a strategy that saved it from implosion during the dot.com debacle and enabled it to grow as demand from financial services clients recovered. It now employs around 900 consultants worldwide. “Financial services have been a strong market in the last 12–18 months,” says Geoff Nicholson, a

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managing director in the firm. “Companies are facing a complex set of strategic issues. Should they separate distribution from production? Why aren’t growth rates translating into the price/earnings ratios of other sectors?” Answering questions like these requires a profound understanding of the industry. There’s a difference, Nicholson argues, between firms that did financial services work as part of a broad portfolio and those, like Mercer Oliver Wyman, that have elected to focus on the sector: “It comes down to strategic intent. Back in the 1980s, many consulting firms recognized that the financial services sector was undergoing enormous change, primarily driven by deregulation. That created substantial opportunities for consulting firms and many strategy firms set up dedicated financial services practices then. The difference with us is that we’ve continued to specialize: short-term revenue in other sectors can be appealing to chase, but it can destroy you in the long term.” But specialization brings its own challenges. “You have to stay in particularly close contact with the market developments in order to anticipate the way demand will evolve,” says Nicholson. “When we started, getting basic information about market size was difficult for clients to do. The Internet has changed all that, so the work we do today is very different.” So how do the three attributes of consulting brand value play out when it comes to specialist firms? Resources, and the Ability to Leverage Them While branded consulting firms excel at recruiting high-quality junior staff, specialist firms do better at recruiting more senior ones. Niche firms offer experts the chance to deepen their knowledge rather than the chance to work on an array of different projects. Essentially, both specialist firms and the specialists they attract are committed to a particular field: neither side has any incentive to diversify. Quite the opposite: specialists are more likely to attract other specialists, clients as well as employees. The value this specialist focus has for clients is that it means the consulting firm has access to a level of specialist knowledge not available to generalist or even branded firms. This comes in two forms. First, a specialist firm will have individuals who have much more experience and know-how because they have been working in the field for longer and have done more projects in that field. By contrast, specialists in branded firms often find their metier later in their careers, as the early years have been taken up with

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absorbing the wide range of experience their firms put a premium on. Second, there will be a proportionately larger number of people with these skills than in a branded firm. This in itself has several important implications: experts who work together will obviously develop their thinking faster than someone who is working in comparative isolation; a firm that employs multiple experts in the same field will get economies of knowledge, developing new ideas more quickly; it is also likely to have better links with relevant academic institutions and interested clients; there will be fewer internal or cultural barriers to knowledge-sharing, as everyone shares a common skill set; finally, the sheer number of contacts a firm has in a particular field provides it with an opportunity to gather comparable hard data on what they do – benchmarking them in effect. Specialization breeds specialization. Quality of Relationships Like branded firms, the quality of relationships a specialist firm has is an important source of potential value to clients, but only if it converts it into practical benefits (Figure 8.1). To be able to charge a premium rate for its specialist expertise, a firm needs to demonstrate that it is part of a wider community of experts. Once again, this is not a question of namedropping, of knowing which academic in which institution has written what, but of being able to bounce ideas or problems off such people at short notice or of knowing who in that broader network might be the greatest expert on a specific issue. The firms that do this best involve their contacts in regular events or workshops; they carry out surveys of them as a means of gathering data and of staying in touch. Whether these relationships are with the all-important “c-level” that consulting firms perennially target depends on a firm’s area of expertise: a specialist marketing firm may have a network of chief marketing officers or it may focus on particular sub-groups – the people who manage market research or those who measure marketing effectiveness, for example. What matters is not that the specialist firm has the ear of senior people as such, but that it knows the one person in that organization responsible for work in its field. By contrast, quality of internal relationships is rarely part of the picture where specialist firms are concerned. Precisely because a niche firm will tend to work in one area, the extent to which they can help clients influence

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people elsewhere in their organization or overcome internal barriers to communication is limited. Willingness to Bear Risk But how do specialist firms compare when it comes to minimizing risk? To what extent can they charge higher than average rates based on their ability

Resources (1): People

Branded consulting firm

Specialist consulting firm

• A pool of bright generalists

•

experts

• A broad array of specialists • An ability to field both sets of

Attracts teams of world-class

•

Specialization means the firm has uniquely intensive

resources on demand

experience in its chosen field Resources (2): Intellectual capital

Quality of relationships

• Takes ideas from one

•

Takes ideas from one

sector/country and applies

sector/country and applies

them to others

them to others

• Ability to put a client in touch

•

Ability to put a client in

with someone at a similar

touch with someone at a

level in another

similar level in another

sector/organization

sector/organization

• Willingness to invest in post-

•

Benchmarking

sales account management and make internal relationship work Willingness to bear risk

• Use of experience/techniques to reduce delivery risk • Has sufficiently well-known

• Use of experience/techniques to reduce delivery risk • May have a sufficiently well-

brand to give a client

known brand to give a client

confidence

confidence

• Can be successfully sued if a project fails

Figure 8.1 Where can value be added?

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to do this? The answer is (probably) to some extent, but not to the extent that branded consulting firms can. A niche firm’s expertise is primarily focused on delivery risk. As specialists, they should have the people, processes and tools to ensure a piece of work has a better than average chance of success. The fact that a niche firm will be so well known in its chosen field means that its reputation has to be protected here just as much as among the branded consulting firms. While the poor quality work of a branded firm may well hit newspaper headlines, that of a niche firm will travel round the market by word-of-mouth. Indeed, the more specialized and closed the market, the faster it will travel. As specialist firms are not necessarily small, loss of reputation can be converted into financial reparations from a client point of view; however, their capacity to bear financial risk is undoubtedly not as great as that of the very large, branded firms.

In Summary It is easy to say “Brand value translates into . . .” from the point of view of a consulting firm, but how should it work for clients? Or, turning the question around, what is it that a consulting firm has to do to give it the right to call itself a branded or specialist firm and charge accordingly?

9 Handling the sales process

Richard Owen began his career with the consulting practice Touche Ross Bailey and Smart in 1964, and went on to become Chairman of what was by then Deloitte & Touche in 1987. There were no glass and steel palaces that consulting firms inhabit today: “My office was a rabbit warren, shared with umpteen other people – the accounting firm had just doubled in size – I didn’t even get my own desk.” He was charged out for £200 a week, largely for carrying out work studies aimed at making post-war businesses more efficient. One such client was the engineering company Rolls Royce. Like most other organizations at the time, its administrative tasks had been broken down into their component elements, making the work brutally repetitive; not surprisingly, there were serious motivational problems. Owen’s remit included the punch room where 300 young women, in row upon row of desks, had to transfer the information from paper forms onto punch cards. “We also needed to save space, so we turned some of the desks around so they faced each other in groups,” he recalls. “A few days later we noticed the girls on these desks were smiling and working better – because they didn’t have to turn round to talk to their friends – so we moved all the desks around. It worked like a charm and saved space into the bargain.” Owen was very pleased when he won his first assignment only a few months after his transfer to the consulting practice: it was for £1,500, which represented five weeks’ work plus supervision. “It was a bit presumptuous of me really,” he says. “I’d only been there a couple of months and, when an opportunity came up to do some more work for the client I’d been with, I sorted it out myself rather than bringing a partner in.” Marketing was unheard of: clients saw consultants as experts and it wasn’t unknown for

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them to ring up in the morning and ask the firm to send a consultant round in the afternoon. Indeed, it was quite common for businesses looking for a consultant to place an advert in the press. Invitations to tender were a rarity, especially in the private sector where even very substantial pieces of work could be won on the nod from the chief executive. But that didn’t mean clients were a walkover: “They thought the fees were telephone numbers,” says Owen. “They always haggled over the price.” With the exception of the arguments over fees, it seems a world away from consulting today. Yet even in the 1960s you could detect signs of how the process of buying and selling consulting would change. Owen was not the only junior consultant to find himself selling work: rapidly evolving computer technology meant that middle-ranking and junior consultants might have better, hands-on experience than their senior partners and could respond to clients’ requests promptly because they were based on site; surging demand also meant that partners could not cope with all the sales opportunities single-handed. As consulting firms started to put more effort into selling, clients responded by putting more effort into buying: invitations to tender became standard; even in the private sector most work had to be won competitively.

The Rise and Rise of the Procurement Department In the last five years, that evolution has taken a new twist. Shrinking demand and excess supply in the early years of the millennium shifted the balance of power to clients. Many of those clients are former consultants who were laid off during this downturn and who understand the economic model of consulting well enough to be able to negotiate effectively. On top of this has been the professionalization of procurement, something consultants contributed to: much of the advice given by consultants to large corporations about how to save costs by reducing the number of suppliers, winning bulk discounts and formalizing the procurement process has now been applied to consulting firms themselves. Though they may complain, consultants are reaping the harvest they sowed themselves. Nor is this changing as demand for consulting grows. Many consultants hoped that the recovery the consulting industry has experienced in the last two years would sideline these changes: client managers would be so keen to use consultants, and consultants’ skills would be in such demand, that

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clients would no longer have the whip-hand. But that has not been the case. Research now shows that: • 80% of organizations monitor their use of consultants centrally; • 65% have a list of preferred suppliers, and a similar number have framework contracts with selected consulting firms; • 30% have a pre-specified budget for consulting, rather than bringing consultants in on an ad hoc basis; • 15% use specialist and/or independent consulting firms or freelance consultants to advise them on how to use consultants and on which consulting firm to use for specific pieces of work. “Framework mania is driving us round the bend,” says Peter Illsley, who runs the consulting practice at the outsourcing company Serco. “We had one instance where we had to say what proportion of our people have programme management skills: this is core business for us, so the majority of our 80 consultants are experts, but the number we had to put in was less than 1%, because we had to express it as a percentage of our entire employee base of 42 000. This is typical of the clumsy way firms are judged when bidding to be on frameworks. Yet we had no choice but to bid, which costs us a great deal of money, and which of course the client pays for in the end.” It is not just that getting a framework agreement is a demanding and sometimes frustrating process that particularly annoys Illsley, but that Serco sometimes finds itself repeating the process for different parts of the same organization, each of which has its own framework contracts. “And, at the end of the day, we often don’t get invited to bid for much business through them,” he adds, “which I suspect means it’s not adding much value to their end-users – the people we work with – either.” The rise of the procurement function radically changes the relationship between a consulting firm and its clients. Consultants may well still be able to build effective personal relationships with a client once a piece of work has been won, but the process of winning the work often has to be done with a specialist procurement team, effectively an intermediary between the client and the consultant. Relationships with procurement professionals are harder to build; the procurement manager’s job is to remain impartial. And changes aren’t likely to stop here.

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E-auctions According to the same survey, 10% of large organizations use electronic procurement channels such as e-auctions in which consulting firms post their daily rates for defined pieces of work and have a period of time in which to reduce them if they find themselves undercut by their competitors. Eauctions may save organizations a substantial amount where they are buying a commodity in bulk – their telecommunications costs, for example – but most consulting services are not (yet) commodities. No one, from large firm to niche player, has a good word to say about them. “I really can’t see how clients get anything of value from these,” says Alan Russell, head of consulting at LogicaCMG. “There might be 15 different categories; you have a half-hour window in which to put in your daily rates – effectively, to place your bets. If a firm makes an adjustment in the last five minutes of that half hour, then the window extends for a further five minutes. Everything happens in parallel. We discussed where we wanted to end up, what sot of grades and rates we’d put forward. Then we got the results back, telling us what categories we’d been picked for and why. A few days later we got a letter congratulating us on winning and asking for a further volume discount. The whole exercise was about price, not added value or quality.” That is something Russell believes will come back to haunt the procurement teams: “Good firms won’t respond; they will walk away from situations like this, leaving the procurement team to choose from second-tier players.” Troika was set up by three people (hence the name), all of whom had worked for Big Four firms; their aim was to build a consulting firm that could offer a credible alternative to the very large consulting firms in that most demanding of sectors, financial services. Today, with 50 people, the firm is an acknowledged specialist in its field, providing a combination of strategic and operational advice. “We’ve only come across a couple of examples of eauctions so far, but we’re already clear that it’s a pretty inappropriate mechanism for buying anything other than bulk services,” says Andrew Veal, Trokia’s Marketing Director. “It gets very complicated when every bidder has five or six different grades, because you have to go through a process of putting in rates for each grade. What we see is that the big firms put in their top rates, then whittle them down. There also tends to be a second, seemingly entirely separate process for putting in discounts. This might work if

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the client is looking to hire hundreds of computer programmers at relatively low rates, but if, as we do, you tend to work in small teams on quite short projects, it’s a lot of aggravation.” But consulting firms will suffer, too. Even where a consulting team has been brought in by a procurement department with no regard for the quality of work they are able to perform or their capabilities, the finger of blame will undoubtedly be pointed at the consulting firm, not the procurement process. Being treated as a commodity will result in the consulting industry becoming further commoditized.

The Professionalization of Sales “For an industry that has been almost exclusively relationship-based, these are potentially disruptive trends,” says Victor Koss at Booz Allen Hamilton. “Essentially, procurement departments are the new intermediaries. The smart ones understand how important it is for a consulting firm to develop the requirements for a project in close collaboration with a client. But many adopt a more transactional approach and focus on price at the exclusion of everything else.” To start with, it was possible to take a stand and walk away from situations where price had become the only selection criterion, but it’s getting harder and harder to do this. Instead of personal client–consultant relationships, these changes mean relationships that have to be forged at both the personal and institutional level: corporate “trust” supersedes personal trust. If clients are employing dedicated purchasing professionals, it was only a matter of time until consulting firms employed dedicated sales people. This has meant a huge cultural change for the consulting industry: traditionally, consulting services were sold by the people who would undertake their delivery. Moreover, clients constantly complain that consulting firms bring in senior people to sell pieces of work but leave junior ones to do it. The separation of sales from consulting would appear to be making the problem worse. The root of the issue is that consulting requires a peculiarly consultative approach to selling: however experienced a consultant is, it is vital that he or she has a good understanding of a client’s set of requirements and does not come in with a predetermined solution. “We have to know what we’re talking about,” is how Kurt Salmon’s David Oliver puts it. “We’re industry specialists who understand the subject matter.” But that does not mean Kurt Salmon can rely wholly on its

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consultants to win work. As people become more senior within the firm, they tend to follow one of two career paths – either technical specialists or relationship builders. Moreover, the firm runs “campaigns”, focusing its promotional material and research on a small number of key client issues each year. “We’ve just done something on product availability,” says Oliver. “We sent out letters to around 30 CEOs, summarizing our observations and asking them to contact us if they’d like a copy of a white paper showing our thinking in greater depth. We try and make such things as client-specific as we can: we don’t send out promotional material and demand a meeting. And it works reasonably well: around a quarter of recipients asked for a copy of the paper; with the rest, we’ll have increased our brand awareness. We also have a central marketing team who ensure we don’t approach a client more than once every three months.” On the other hand, targeting clients effectively and closing deals often require the experience, skills and focus of good sales people. Steve Cardell would be the first person to say that Axon does not have a well-recognized brand: he’s firmly in the niche specialist school of marketing. “We wouldn’t invest in a branding exercise,” he says. “We’re already very well known for SAP implementation. We had a debate about whether we should use our existing client relationships to move into other areas of consulting, but decided to stick to our knitting. We couldn’t diversify without diluting the skills clients associate with us.” In any case, Axon has not really needed to diversify: it grew rapidly in 2005, bolstered by a couple of small-scale acquisitions and a clearly defined market of large organizations that want to consolidate their multiple bits of SAP from past implementations. “The ERP market among large corporations may look saturated from a licence point of view,” says Cardell, “but there are still plenty of opportunities to deliver services.” One of the ways in which Axon has adapted has been to separate the people who sell its services from those that deliver them. Because it is growing, Axon can offer sales people an attractive alternative to working for a larger firm: they still get the kudos of selling into big companies, but they are not cogs in a much larger machine; what they sell has a very clear impact on Axon’s business. The crucial thing these people bring with them are networks of relationships Axon can tap into. “We’ve tried everything from boats to black ties to billboards,” says Cardell. “Relationships are the only things that work. We’re linking our-

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selves into networks, piggybacking on other events instead of arranging our own, and organizing seminars on specific client issues. But our most valuable source of leads comes from one of our non-executive directors who has masses of contacts.” Axon also uses a telemarketing company to help open doors: “We send them a list of perhaps 100 companies and they cold call them to make appointments for us. Typically, every four phone calls results in one appointment made,” he says. There are almost as many models for organizing the sales function as there are consulting firms. At one end of the spectrum are those that continue to use consultants to do the selling; at the other are those with professional sales teams whose targets, remuneration and culture are quite different from their consulting colleagues’. In between are firms with an account management structure in which consultants and sales people are seconded to roles which oversee the activity in a small number of important clients or targets. Each approach has its strengths and weaknesses; few firms stick to one method but switch between all three over a period of time. However, the real problem is not that there is no single right answer to the sales/delivery split, but the assumption that one size fits all, that if you bring dedicated sales people in, then you bring them in for the entire process. Such assumptions drive wedges through consulting firms: the sales people can feel unappreciated; the consultants exploited or marginalized. Julian Goldsmith has worked as a public relations and communications consultant to a number of the top strategy, management and human resources consulting firms: “Good, effective business development is not something which comes readily to many top consultants. Even the very term is suggestive of something rather vulgar – the notion of being part of a sales process – and thus rather foreign to their DNA. Whilst there are exceptions to prove the rule, relationship-building outside the formality of the boardroom and almost statutory presentation of a large deck of PowerPoint slides, is unfamiliar ground. Thus there is a reliance on marketing and business development colleagues (often termed ‘support staff’ to the annoyance of such people), to conjure up innovative and compelling events from dinners to corporate hospitality, which they can attend and tick the account management box thereafter. Today’s modern management consultant needs to invest as much time developing their more human and social approach to relationship building and broader account management as they do to developing their intellectual property and broader thought leadership.”

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It’s against this backdrop that you can understand why account management has become so important to consulting firms over the last few years.

Account Management At the end of Shakespeare’s 2 Henry IV, the newly crowned king, Henry V, announces his intention to renew his claims to the French throne. As the Duke of Lancaster remarks: I will lay odds that, ere this year expire, We bear our civil swords and native fire As far as France: I heard a bird so sing, Whose music, to my thinking, pleased the king. It seems a strange decision. The king is a reformed rake, presiding over a squabbling court, so why take on the extra burden of a foreign war? Because Henry recognizes that the best way to dampen down the internecine rivalries which have dogged his country for generations is to give the nobles a new and common goal beyond their shores. First and foremost, account management is a mechanism for overcoming the deep internal divisions that exist in most consulting firms. By drawing together a variety of people from different parts of the business to focus on something – the client – outside their own organizational politics, account management allows people to concentrate their efforts where it matters most. “Most clients now use two or more accounting firms as well other service providers, so the market is very competitive,” says Nick Pasricha of Ernst & Young. The firm has therefore had to work harder at bringing its different skills to a client’s attention, deciding which clients to focus on, appointing a partner in charge of each client account and setting up a multidisciplinary account team. “Their job is to keep track of what’s happening at that client, both the issues the organization faces and opportunities for future work for us, and to introduce the best people from our business to help the client. We don’t necessarily want more accounts, but to be able to deepen and broaden our penetration into existing accounts,” says Pasricha. The process requires focus: “You can’t focus on developing every one of the thousands of accounts we provide services to and that means you have to make some

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hard decisions. Everyone will want their account to be special, so you need people who can take those kinds of tough decisions and stick to them.” Halcrow provides planning, design and management services for infrastructure developments across the world. It was founded almost 150 years ago, at the height of the nineteenth century’s passion for engineering: today, its commissions span more than 70 countries and include work on the second runway at Abu Dhabi’s International Airport, the El Ferdan swing bridge in Egypt, the British Embassy in Moscow and the Chek Lap Kok Airport Expressway in Hong Kong. Despite the variety, complexity and scale of its work, the biggest challenge Halcrow faces is itself. Like many consulting firms, it has groups of specialized people based in different offices and working on different projects. Getting these people to work together can be difficult: each group tends to view a problem from their own angle and it is perhaps a result of the training to be an engineer to unpick things and analyse them, rather than look for common threads in firms. Halcrow relies on client account teams (CATs) – a relatively recent innovation which have emerged as the key means by which the company can deliver the joined-up approach increasingly demanded by clients. An account manager is the single point of contact: “The idea is that a client talks to an account manager who can intelligently discuss every issue about our business relationship whether that’s about future planning or service delivery,” says Andrew Payne, who is responsible for managing the overall process. Account managers are not back-office bureaucrats. Most are based at clients’ sites so they can respond immediately to any queries or requests, but the CATs also bring together the key people involved in a project from different parts of Halcrow’s business in order to come up with better solutions. Success has meant that the role of the CATs has been expanded. When the CATs were set up, it was deliberately intended that they wouldn’t be populated exclusively by senior managers but by people from across the professional grades. With more and more junior staff wanting to be involved, Halcrow has introduced the concept of CAT correspondence, which allows people who are not on the CAT to communicate with it. CATs are now being given their own budget so they can organize things independently, and Halcrow’s internal costing system has been changed so that local offices are no longer profit centres and are encouraged to contribute to the firm as a whole.

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As one account manager put it, “I’m halfway between the client and Halcrow. I’m a translator: I translate between the two businesses. I’m completely sold on the CAT focusing on the big picture: it’s brought our diverse works teams together to talk about things. It is perhaps only through account management that the persistent rivalry between consultants and sales people can be resolved. Consultants have always been much better at resolving their clients’ issues than their own, and an account management structure gives them the leeway to do this more than ever. Accounts can also resolve some of the conflict between what the firm is trying to achieve (sell more work) and what clients want (reliable, high-quality delivery). In other words, client accounts force people to work together far more effectively than any matrix structure ever could. So what sets excellent account management apart, particularly as far as consulting firms are concerned? • Aspiration: It’s tempting to focus the account team’s activities on obtaining an immediate financial return, but while this is commercially important, it is rarely enough. As we’ve noted, one of the reasons why the account management structure works is that it takes people outside their own organization and gives them new priorities, goals and aspirations. In effect, you’re giving them a free hand to do what they do best – help their clients – while ensuring that in doing so they are helping your business. • Investment in the “relationship chain”: An account team is just one link in a longer chain of relationships which runs through both the consulting firm and the client’s organization, and it can’t function effectively if the people in the team do not have tendrils long enough to pull in additional, specialist resources when a client needs them, and tap into key people in the client’s organization when required. • Flexibility and authority: The best account teams are not tied to a rigid set of rules dictated by the consulting firm, but can adapt themselves to what the client needs. They are self-organizing and self-perpetuating. Within certain parameters, they can take decisions for themselves, without having to refer up a chain of command: a client knows that if they ask someone in the account team to do something, it will get done.

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• Information: Account teams are good illustrations of the age-old principle: garbage in, garbage out. Account teams should not just be regarded as a means of getting things done, but as the focal points for all information relating to a particular client. This means setting up processes whereby feedback on the performance of the consulting firm is gathered on a regular and systematic basis – and fed back to the account team. It means investing in external information, so the account team knows as much about their client’s business as possible. It also means sharing that information with the client. Why, for instance, are consulting firms so reluctant to say to a client, “This is what we expect your business to be worth to us in the coming year, and this is what we will be investing in you in order to earn this”? Openness breeds openness, and clients are far more likely to share confidential information about their business when they can see a consulting firm is putting its cards on the table. Account teams should be conduits for information, not bottlenecks. • Rewarding the team: It goes without saying that if you want the account team to perform as a group, you have to encourage them to do so. Having bonus schemes that reduce the role of the account team, either by recognizing the achievements of a handful of individuals or by subsuming the account team’s contribution into firm-wide performance, sends out the message that you do not take teams seriously.

10 Thought leadership: as much culture as intellect

Clients of consulting firms are inundated with information and analysis from every direction, and the vast majority is unquestionably binned instantly. Does this mean it is poor quality work? No, but it does mean that it is being used in the wrong way and targeted at the wrong people. This chapter therefore looks at the content and deployment of thought leadership by consulting firms.

Content – by Design, not by Accident There are six reasons why a consulting firm might undertake thought leadership, even if the firm has not thought them through systematically: 1. Internal knowledge-sharing: It is ironic that consulting firms – quintessential knowledge businesses – have usually found knowledge management problematic. Vast investments have been made in ensuring that proposals and reports are gathered together in a single system so that a consultant working for a particular client can see all the work the firm has done for that client in the past. While this has resulted in more joined-up consulting, the material is primarily used as information (what has happened), not innovation (what could be made to happen). Moreover, knowledge management systems function by people selecting the information they want, not by publicizing new ideas. Internal newsletters, publishing articles about new ideas or leading-edge projects, are a more effective way of letting people know what’s going on.

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2. Recognition among colleagues: For most consultants, job satisfaction and being regarded as an expert in a specialist field are just as important as being paid well. But in busy consulting firms, with most people out of the office working at clients’ sites, giving public credit where it is due can be difficult: indeed, paying consultants well is easy by comparison. Even in the most friendly and collegiate of firms, there is a degree of rivalry, a not-invented-here mindset that makes people cynical about others’ efforts. Giving people the green light to spend a little time researching and writing an article or “white paper”, and disseminating the results, is tantamount to saying, “This person has done well, look at what they’ve achieved.” 3. Increased presence on short-lists: Once a firm starts to focus on the external market as well as the internal one, its initial objective will be to increase awareness of its specialist skills among clients in the hope of being invited to tender for more projects. With clients cynical about consulting firms that claim to be able to offer a full spectrum of skills and continually looking for niche suppliers, the main problem is lack of information. Among thousands of consulting firms which of them have sufficient in-depth expertise to do the work required? Sending out regular thought leadership material on specific issues to potential clients is an important way to overcome this barrier. 4. Lead generation: Improving your ability to get on a short-list is critical, but it is also limited to reacting to initiatives from clients and usually to people you already know. Floating ideas more broadly – in the media or at conferences – may prompt clients to call, express an interest and create more openings. 5. Differentiation: Using thought leadership to help build or reinforce a consulting firm’s brand is a step beyond this, and a hard step at that. Hard, because brands and thought leadership tend to be at opposite ends of the spectrum: brands are usually quite generic (“We work in partnership with our clients”; “We deliver results”), whereas the messages of thought leadership are almost always very targeted (“We know more about setting up call-centres in banks than any other consulting firm”). Reconciling the two is possible. Accenture’s strap-line – “High performance. Delivered” – works well in several respects: not only does it combine important characteristics clients are looking for when they use consultants (quality, results and delivery), but it also acts as a focal point for the firm’s thought

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leadership. You can have articles on high-performing banks or retailers, high-performing systems or teams. The possibilities are endless. But this is the type of exception that proves the rule. 6. Agenda-setting: Given enough data from a wide range of companies and countless practical examples, it is possible for thought leadership to have a profound impact on the way business works. If asked, most of us would probably point to the same small group of people whose work falls into this category. Part of the success comes from having the right idea at the right time; part from hard data; part from being something new, rather than something old and repackaged; and part from there being a market opportunity, an incentive for suppliers to promote the idea. Thomas Edison’s observation – “Genius is 1% inspiration and 99% perspiration” – is applicable to management thought leadership as much as scientific endeavour. Realizing these aims requires different inputs and outputs (Figure 10.1). The foundations of internally focused thought leadership (aims 1 and 2) are case studies of one or a small number of client projects. Case studies are less interesting to clients, however: concentrating on perhaps just one organization, they are too narrowly focused for most managers; based on work already done, they may appear out of date. But above all, clients suspect that

Inputs

Outputs

Quantitative research

Press coverage 6 Agenda setting

Books

5 Differentiation Qualitative research

Articles in external journals 4 Lead generation

Conferences

3 Increased presence on short-lists 2 Recognition among colleagues Case studies

In-house journals 1 Internal knowledge-sharing

Figure 10.1 The six degrees of thought leadership

“White papers”

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the experience of one organization cannot be extrapolated to others; they want to see the same points being made about a wider range of organizations. For thought leadership to change client behaviour – to get them to add a firm to the short-list for a particular piece of work or to pick up the phone and call a firm directly – it needs to be based on hard data – the more, the better. In the first instance, this means carrying out interviews with different organizations and using their input to validate the conclusions the consulting firm has drawn. Beyond this, if a consulting firm wants truly to differentiate itself or to set the agenda in an entire market, it has to carry out quantitative surveys to back up its claims – only this will persuade clients to act. Turning to the outputs, it is clear that while in-house publications, “white papers” and descriptions of individual client projects may have considerable credibility internally, they do little to promote a firm to its clients, let alone a wider audience. Qualitative and quantitative research is more likely to be of interest to external journals, newspaper journalists and conference organizers. Most firms start their thought leadership endeavours at levels 1 and 2, and many stop there. They want to enable their consultants to learn from one another and to gain internal kudos for their work. Far fewer firms manage to generate leads (aims 3 and 4 above) from their thought leadership, and only a minority of those boost their differentiation or drive client attitudes. That doesn’t mean they don’t try: in fact, the majority of complaints clients make about thought leadership stem from consulting firms using the wrong inputs and outputs to achieve their means. They may expect to generate leads, but are only prepared to invest in case studies to do this. Hardly surprising, then, that journalists are not interested. They may think they are saying something earth-shatteringly innovative, but if their conclusions are based on a handful of interviews, few clients will take them seriously. You cannot create demand by publishing a white paper, but this is what many consulting firms send their clients. You don’t build a brand or change a market on the basis of self-publication. Serious thought leadership requires serious investment.

Staying on a Client’s Desk and in their Mind So what are the factors likely to attract a client’s attention? When, if at all, will an article, book or survey produced by a consulting firm prompt a client to make contact and perhaps even buy their services?

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1. Immediate relevance: For a client to hang on to a piece of thought leadership, even for a few seconds, they have to be able to recognize it as relevant to their work. And because most executives have a very narrow definition of what is relevant, it is comparatively rare for a “generic” piece of thought leadership – something designed to apply to any sector – to be seen as relevant. Bankers want to read about people development issues in banks, not across industry as a whole; retailers want to see how other retailers have improved their technology infrastructure. Yet two-thirds of the thought leadership covered is focused on a specific sector. Perhaps consulting firms don’t want to limit the potential market for their ideas to just one or two sectors; perhaps having invested in developing the thought leadership material they can’t afford to. Either way, consulting firms continue to be reluctant to meet this most basic need. 2. Something new: Where consultants excel is in pouring old wine into new bottles and relabelling them. Clients are indeed looking for something different, but experience and cynicism have taught them to regard any thought leadership piece that trumpets its own originality with considerable scepticism. They complain that, despite its pretensions, most material produced by consulting firms is indistinguishable from that produced by their competitors: most thought “leading” is in fact thought “following”. With a little more time invested in seeing things from a client’s perspective – how one firm’s output sits alongside its rivals’ – consulting firms could significantly improve the level of differentiation achieved. 3. Practical application: Occasionally management ideas capture the imagination of executives. Customer relationship management is a good example: although the thinking produced on it in its early days was comparatively abstract, almost all managers could relate to the idea of reconnecting with their customers. But for the vast majority of thought leadership, it is the practical application which will attract people’s attention: not only do they want to know it’s something relevant to them and that it has something new to say on a particular problem, they also want to know what they can do. This is not the same as ending an otherwise interesting thought piece with a series of diagrams illustrating a complex consulting process: detailed frameworks have to be balanced with quick wins. 4. Hard data to back up ideas: Whether a client buys into the idea a consulting firm is trying to put across also depends on the evidence. Clients

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don’t take a consulting firm’s word; increasingly, they’re sceptical of the testimonials of a small number of supportive clients. Surveys are helpful, although too often they are focused on executives’ attitudes rather than actions, but what clients would really like to see is a wealth of named companies whose experience reinforces the message the consulting firm is trying to get across. 5. But not a hard sell: It goes (almost) without saying that the more a client believes a consulting firm is trying to sell it something, the more likely they are to reject the ideas the firm is putting across. Taking these points and working backwards, what does a consulting firm have to put into its thought leadership in terms of content and process in order to get its message across? strategy + business + Booz Allen Hamilton Booz Allen Hamilton went through a rocky patch in the early 1990s. The partnership was still recovering from the shock of having to take back into private ownership a firm they’d floated in the 1970s. In the struggle to survive, any sense of direction had been swept away by the waves of change breaking over its traditional consulting markets. By the mid-1990s, as the e-business machine was starting to pick up speed, it became clear that the firm needed to re-establish its reputation for serious management thinking if it was to recover its position in the marketplace. The personal relationships built up between individual clients and consultants would not be enough. The choice was stark: it could either take the exclusive route, developing thinking to which only a small and privileged number of clients would have access, or it could open its shop for the outside world to browse in. In retrospect, launching a printed magazine, strategy + business, was a bold decision. A whole new generation of dot.com-inspired magazines was hitting the newsstands: creating any kind of distinctive impact would be hard. Ten years on, strategy + business has outpaced and outlasted most of its rivals, and continues to be one of the best-written and original collections of thought leadership associated with a consulting firm anywhere. “Management is the application of organizing intelligence to very complex and large-scale problems,” says Art Kleiner, the current editor. “We wanted some kind of incubator in which we could test out and develop new

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ideas, and we wanted to invite leading people from business and academia to debate the issues. But, as a consulting firm, Booz Allen makes its money from selling and delivering its services on an exclusive basis. strategy + business is a way of solving that conundrum, of reconciling openness with commercial necessity.” Kleiner argues that what is unique about strategy + business is that it takes management seriously. “We don’t treat it as an arcane set of rituals that no one understands and which is therefore potentially bogus, but as a legitimate branch of knowledge. Based on the way people and organizations work, it’s embedded, actionable knowledge, and it’s getting more relevant and coherent all the time.” Another difference lies in the audience strategy + business is pitched at: “We’re clearly aimed at top-level executives, rather than giving hands-on advice to middle managers.” Aspirations are all very well, but for thought leadership to be successful and sustainable, it has to be linked to a consulting firm’s services. Without this, it loses the practical focus that sets it apart from conventional academic research. Without this, the consulting firm loses faith and cuts back its investment. Although editorially independent, strategy + business has to be closely integrated with the mainstream consulting practice. Formal processes therefore exist that ensure that the firm understands where its work comes from – whether it is the result of a longstanding relationship with a particular partner, or whether a particular issue has prompted the client to call. Downloads from the strategy + business website are also tracked so that the firm has some sense of what ideas are resonating well in the market. The account planning includes reviewing what ideas should be taken to clients, how much development the ideas need and what investment may be required. “Our responsibility is to keep up with what’s going on in the firm,” says Kleiner, “to keep our tendrils out there in the firm and in the world at large. As editors, we’re in the privileged position of being able to look even further afield.” “That this is a legitimate magazine is very important to us,” says Kleiner. “Readers come to us because they respect Booz Allen as a firm, but also because it’s a very good magazine.” So what do Kleiner and his colleagues look for when it comes to the quality of ideas they include? Timeliness heads the list: good thought leadership addresses an issue that is important to people right now. Second, it has to have what Kleiner terms “explanatory power”, the ability to articulate the hidden patterns that drive the

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phenomena we see. It also has to be capable of being put into practice to produce replicable results and has to have been rigorously tested in the real world. Finally, it needs a constituency – a group of key people who are ready to hear it. He is not too impressed by the thought leadership produced by other firms. “A firm’s attitude to thought leadership has a lot do with its conception of management consulting. If you treat consultants as sales people, then you need to produce just enough intellectual capital to open a client’s door, and not a smidgen more. But if you think a consultant is an advisor, then you need them to be purveyors of knowledge about the nature of organizations and the world around them. Our understanding of management is the equivalent of where medicine was before we understood the circulation of blood – there’s no unifying theory of organizations. Most management thinking is the medieval barber-surgeon – and there are plenty of Sweeney Todds out there.” As a vice president in Financial Services in London, Victor Koss sees strategy + business from the Booz Allen side. It all works, he says, because thought leadership has become such an ingrained part of the firm’s culture. “Having good ideas and being seen to have them is highly valued here. That means we’re in the fortunate situation that we have far more ideas than we could ever invest in. Anyone can submit an idea, but of course that is only part of the story.” Consultants have to make a pitch for their idea in order to win investment to develop it further. It’s a process that ensures that only the ideas which are applicable, relevant and easily communicable get to the top of the ladder. Ideas come through a variety of channels such as postings on Booz Allen’s intranet, Knowledge On Line, via internal competitions or through excellence in delivering value to clients. “There is huge kudos to winning,” says Koss. “It counts towards our professional excellence awards, our highest internal recognition of adding value to clients.” Thought leadership is, he believes, one of the most important ways in which individuals leverage the resources of the firm. “The sheer variety of work we get involved in means we have plenty of interesting stories to tell clients, but clients don’t want to rely on our personal experience. We can say, ‘this is what I’ve done’, but as a firm we’ve done this kind of project ten times before: that’s very powerful. ‘We’ is much more compelling than ‘I’ over the long term, provided you can leverage it to the client’s situation.”

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A Laboratory of Management Thinking PA Consulting Group does not produce a glossy magazine like Booz Allen, yet for its size (it employs around 3000 consultants) it punches substantially above its weight when it comes to thought leadership, covering more topics in more depth than many of its larger rivals. “We take thought leadership seriously,” is the first point David Elton makes. Elton is responsible for the firm’s thought leadership, a process which even he admits can be slightly chaotic. This is not the discipline epitomized by Booz Allen, but a rather more freewheeling approach. “One of the first things people are told when they join the firm is that they’re expected to have ideas,” says Elton. “Thought leadership isn’t confined to senior partners but is part of the life-blood of the firm. That can be frustrating because it creates so much noise we can hardly hear ourselves speak, but it also results in a vibrant, debating culture that goes right across the firm.” It helps, he argues, that PA’s work is very varied, spanning 2–3-day strategy projects all the way to 2–3-year implementation programmes. “Client work is the starting point of all our thought leadership: we’re not going in to sell them a particular idea, but try to start from what the client’s opportunity or challenge is. That means ending up with a different answer each time: no two projects are identical.” An idea might emerge as a result of a particularly important, high-profile client project or because someone in the firm has noticed a common theme emerging in several disparate pieces of work. Both sources generate a lot of material; most ideas stay relatively small-scale; a practice area may decide to use an idea to attract press coverage or as the basis for a paper it can send to clients. Even junior consultants receive very extensive training in producing thought leadership material. “No one needs permission to have an idea,” says Elton. “The formal approval procedures kick in only at the point where a practice area wants to put something down on PA branded paper; that’s how we control the reputational aspects of all this. What we do have to do is ensure that everyone knows how to structure their thoughts and write well. Our thought leadership should be logically argued, well supported and clearly communicated – just as we expect our consultants to be.” It also means that PA tends to focus on ideas which are business critical, rather than innovative for innovation’s sake. “Clients are more prepared to listen when we talk about issues

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which are directly relevant to them,” says Elton. “Outsourcing has been around for at least a decade, but there are still plenty of new lessons being learned.” But why should a busy consultant make time to develop an idea? PA does not give people bonuses for contributing to thought leadership, although it is clear that you get promoted to a senior position only if you have done this. The answer lies partly in peer pressure – that there is a critical mass of people doing this to make it an accepted standard for everyone – but also in the opportunities thought leadership brings for networking. “This is as important as promoting the intellectual credentials of the firm,” says Elton. “We want to create communities of interest around ideas which give people in the firm an incentive to stay in touch with each other and their clients.” Similarly, it makes sense for people to demonstrate their ability to produce thought leadership before they are promoted because thought leadership is integral to their being able to build the kind of high-profile networks they need to forge relationships with clients and win business. But, warns Elton, consulting firms are making a mistake if they try to link thought leadership too closely to sales. This makes PA wary of trying too hard to involve clients in developing ideas jointly. If clients become interested in an idea because an individual consultant they are working with is interested in it, then thought leadership is a valuable way of cementing relationships at a personal level. Output Follows Culture As the experience of Booz Allen Hamilton and PA Consulting demonstrates, the quality and nature of a consulting firm’s thought leadership is determined by its culture. You can’t take a firm that doesn’t believe intellectual endeavour is an integral part of the consulting process and make it produce high-quality thought leadership. You could hire journalists to write up your ideas, but if you haven’t got any good ideas, you would be wasting your money. Equally, you cannot ensure serious, sustainable investment in thought leadership if your colleagues don’t believe that the firm’s long-term commercial success (but not its immediate revenue) depends on it. Nothing comes of nothing, as the Roman philosopher Lucretius once said.

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Deployment – Getting on Your Clients’ Desk in the First Place Consider the following frightening statistics: • On average, 57% of the thought leadership material produced by consulting firms is in the form of self-published articles, either standalones listed on the firm’s website or gathered together periodically in a journal (like Booz Allen’s strategy + business). • 26% start and end their life as a “white paper”, an internally published document which smacks of work-in-progress, rather than a set of coherent, finished thinking. • 8% appear as press articles. • 5% are published by the consulting firm in separate, sometimes quite substantial, reports or surveys on specific issues. • 4% appear as books. On top of this are the innumerable electronic options, such as firms’ own websites, and business, newspaper and television websites. But does this distribution make sense? What are the most appropriate channels for such material? Potential channels can be characterized in two ways: by the form they take (print or electronic) and the “agent” who takes them (a third-party publisher; a consulting firm’s proprietary channel; a hybrid between the two, for example when a consulting firm buys advertorial space in a third-party magazine or website); or personal, when the thought leadership is delivered by individual consultants dealing face-to-face with their clients. In today’s marketplace, consulting firms use a combination of 11 channels, each of which has different strengths and weaknesses (Figure 10.2). • Public/print and electronic: There are two approaches here: – Authored articles: this is where a consultant writes an article in a thirdparty publication or website. Typically, the article will cover an area of specific interest to the audience and its objective will position the consultant as an expert in the field. The neutral context lends authority to the author too. One of the key advantages of this approach is that it is very flexible: markets and media can be finely segmented,

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Public

• Authored articles • Topical sound-bites

• Advertorials

• Sponsored links

Hybrid

Private

Personal

• In-house journal • Ad hoc articles

• Online archive/search of thought leadership • E-alerts • Pod-casts

• External clients • Internal colleagues

Print

Electronic

Figure 10.2 Potential channels for thought leadership

allowing a firm to focus precisely on the areas its target clients are likely to come into contact with. The downside is that it can be difficult to orchestrate: while most consulting firms are not short of individuals willing to raise their profile in the wider market in this way, these are the same people who may find themselves too busy on client work to be able to write something worthwhile. Without some central push, this type of activity rapidly becomes marginalized. Moreover, the standard set by external media is often (though not always) much higher than a firm would set for itself. So it may be possible to write one of those ubiquitous white papers, but harder to convince an outsider that your comments are worth publishing. – Topical sound-bites: Many newspapers and websites are reluctant to carry articles by outside writers – the quality is too variable and delivery often unreliable. They are, however, always eager to have informed input to newsworthy items – someone to comment on a company that decides to offshore some of its work, for instance, or on one that has turned in worse or better than expected results. Being able to get the right person to talk about the right issue at the right time is the challenge here: consultants, busy on clients’ work, are notoriously slow to respond to such requests; being able to ensure they can and are willing

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to do so requires something of a cultural shift as well as sharp coordination. • Hybrid/print: Advertorials are a temptation for consulting firms keen to get their ideas in front of clients, but they are often a waste of time. Effective at name- and brand-building they may be, but they are too obviously sales vehicles to be taken seriously by clients. They are easy to organize and orchestrate, but unlikely to yield much in the way of tangible results. • Hybrid/electronic: A more promising channel is to sponsor links in popular business websites: users can click through to the firm’s website to read an article in greater depth or may be given free or privileged access to a firm’s journal (if it has a subscription-based one). A small point, perhaps, but it is sponsored links which are the prime reason why the number of people who “subscribe” to a consulting firm’s journal online may be ten times that of the print version. Sponsored links are an easy option: you do not have to corral hundreds of colleagues to make them work and a consulting firm’s brand will benefit from association with other, independent brands. However, while this is an effective (often cost-effective) way to reach a wide audience, it too rarely translates into measurable sales. • Private/print: This is the traditional channel chosen by larger consulting firms, and with good reason. For all the aspirations of the electronic age and the paperless office, we still like reading high-quality printed material, on planes or at home in the evening. There are two options here (some firms combine the two): – You can produce standalone articles, surveys and reports on different subjects. This has the advantage of being easy to organize, requires minimal decision-making and can be very focused – it is possible for just a couple of consultants to write an article to send to selected clients. The disadvantages are that the impact is limited to a few people, so this is not an effective way of building a firm’s brand among non-clients; the quality bar is often set quite low as people do not have to vie with their colleagues for limited space. – You can choose to launch a proprietary journal like strategy + business. Here, the quality bar can be set much higher and reinforced by recruiting professional journalists and editors who recognize what most consultants choose to ignore: no self-respecting executive would be truly

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engaged by the dry, preaching tone of much of the thought leadership produced. Good journals or magazines undoubtedly help raise a firm’s overall profile and confer the status of an authoritative voice in business; because they are published regularly, they are also a mechanism for staying in continuous touch and for gathering feedback. However, to do it well takes substantial commitment, time and money, so the temptation is periodically to roll up a batch of articles on different issues into a magazine format and pretend the whole is greater than the sum of the parts. • Private/electronic: Popular though printed material continues to be, there is a new generation of managers who find the relevance, immediacy and convenience of electronic media attractive. There are three potential tools, none of which is mutually exclusive, although very few firms use all three to any great effect: – Every consulting firm’s website has a search facility, but very few allow clients to browse their thought leadership archive specifically. In most websites, typing in subjects you are interested in is likely to yield far more in the way of marketing brochures and press releases than the thought-provoking articles you might have been looking for. – Email alerts are the way round this, enabling people to sign up to receive information on specific areas in which they are interested. In most cases, however, the benefits to the consulting firm are probably greater than those to clients. Both sides undoubtedly benefit from the level of segmentation possible: clients are sent less unwanted mail; consulting firms waste less effort. But because an email alert is designed for instant gratification – the manager interested in something can be alerted to new, relevant thinking – its contents can be perceived to have short-lived value. The contents of email alerts are also less likely to be taken for reading matter on long-haul flights. By contrast, the consulting firm sending out the alerts will gather a lot of information about what kind of person is interested in which thought leadership topics. – Some of the drawbacks with email alerts may be solved by the most recent addition to the thought leadership armoury – the pod-cast. These combine convenience and the ability of managers to personalize content to suit their needs with the opportunity to provide thinking in greater depth.

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• Personal: One of the key roles thought leadership plays is to provide collateral for the people in consulting firms with responsibility for winning new work, whether that is a professional sales force or consultants themselves. Thought leadership provides an excuse to stay in touch, to go back on a regular basis with new ideas relevant to specific circumstances. There are, however, many barriers, as almost every consulting firm will testify: consultants do not necessarily feel comfortable about taking other people’s ideas to their clients, especially if those ideas fall in areas outside the consultants’ field of expertise. Overcoming these – ensuring take-up internally – is the key to securing it externally. Of course, it would be a peculiar firm that elected to use only one of these channels: most – deliberately or accidentally – use a combination. Content, Channel and Connectivity at Accenture Terry Corby thinks he has one of the most interesting jobs in business – and he may well be right. In addition to being responsible for the global marketing of Accenture’s strategy and HR consulting practices, he is in charge of Accenture’s thought leadership marketing. Three years ago, when he took on the thought leadership role, “it was difficult to get people to agree on a definition of thought leadership and it was quite possible to spend hours in meetings discussing the issue,” he recalls. The thinking, he believes, had become over-complicated, so one of the first things he did was cut through that debate, opting for a definition of thought leadership from the Information Technology Services Marketing Association (ITSMA) as “new vision and thinking in business and technology”. He was also clear that thought leadership fell into two distinct categories: innovation and ideas. “Ideas are the kind of thought leadership that often comes out of primary research and think-tanks,” he says. “We have three think-tanks: the Institute for High Performance Businesses based in Boston, which focuses on the way we will manage business and create high performance businesses in the future; the Policy and Corporate Affairs group based in the UK, which is mainly a think-tank on government policy and CEO topics centred around citizenship; and our technology labs in Palo Alto, California. Innovation is different: it’s the kind of thought leadership that comes from things we have invented or done differently with clients as

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part of our work with them, but which is also an ‘asset’ that can be used to help other clients. An example here would be technology we have developed to support a process.” To help organize a global thought leadership strategy for Accenture, Corby used a three-dimensional strategy. He started with the first of his “three Cs” – content – carrying out an audit of what ideas the firm was creating, assessing the top ideas in the media and researching what clients were talking about. “This is still the starting point of everything we do,” he says. “We try to understand what ideas are out there in the marketplace and to what extent we have been successful in getting our thinking on the emerging issues across. We ask, how many of the top ideas did we cover? To what depth did we cover them (a book, for example, would show more depth in a topic than a press release)? Have we got our content strategy right?” Corby’s second “C” is for channels. “We don’t expect thought leadership to sell work,” he says, “but good thought leadership, if compelling and relevant, should yield interesting conversations with clients. In order for it to do that, we have to be sure the right content is getting to the right clients.” It is a process that begins with segmentation: What are the topics we need a point of view about in our market? Who wants to read about them? What do they read? From research Accenture has done in conjunction with ITSMA, Corby argues that printed material remains important – people like it for reading on long flights, for example – but the best channel is personal briefings, when consultants take particular pieces of thought leadership directly to their clients. Part of the attraction is relevance – the consultant only takes material of interest – but a larger part is the level of interaction possible. “We found that the thing clients like best is to be able to go through some sort of diagnostic tool which has been tailored to their circumstances and which ranks them against their competitors,” says Corby. “It’s an approach which also fits well with our culture. In the past, people complained that our thought leadership was very academic, but this approach tallies with our focus on delivery.” On the basis of this research, Accenture has adopted a multi-pronged strategy. It hired a top business editor to oversee its journal, Outlook. It has established related channels: Outlook Points of View, into which shorter articles on good ideas which were still being thought through can go; and My Outlook, which allows people to tailor the content of the firm’s thought leadership into personalized email alerts. “We only email people if we’ve

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something relevant to their interests – content they have asked for,” says Corby. “If we don’t have anything relevant, then we don’t email them. We’re trying to ensure this is the opposite of junk mail.” But the biggest challenge has been linking ideas and innovation with the people who need them. “There have been too many occasions in the past when we had lots of people running around saying do we have any ideas on a given subject,” says Corby. “We needed a way of getting our people connected to our best ideas in a more dynamic way. Technology can help in our culture: we’ve set up ‘Ideas Mart’, which lists all of our current and planned thought leadership to all practice professionals; this can be sorted in different ways including by title, so it’s possible to see what all the material a marketing director might be interested in, for example. We’ve also given our marketing professionals responsibility for advising the capability groups (which provide three-quarters of all our thought leadership) in terms of the best channels to use so we have an integrated approach to marketing.” But perhaps the most important factor in driving internal take-up has been to ensure that the capability groups collaborate effectively with Accenture’s market-facing industry groups. “The capability groups have to test-market their ideas with the industry group at the outset: if there’s no enthusiasm from the latter, then they have to drop it. However, if they do get an enthusiastic reaction, they may find the industry will support the research with time and money in return for configuring the work for their particular sector. They effectively have to pre-sell the idea, so take-up is built in from the outset.”

PART IV Process (2): Delivery

11 Managing consulting projects

Mission Impossible? Regulatory compliance is something that hits large and small companies alike. But, without economies of scale, smaller companies can find themselves weighed down by the administrative burden. It was for this reason that Bradford & Bingley decided to convert its network of 200 independent advisors to “single-tie” advisors who would be employed by, and sell the investment and protection products of, a market leader. That was the aspiration: making it a reality was a huge challenge, especially as Bradford & Bingley wanted to complete the changeover in just four months. A partner had to be found; contracts had to be drawn up; internal processes had to be redesigned – all within a strict regulatory framework. “Sorting this out was the biggest issue we faced,” says Roger Hattam, Managing Director, Group Products and Marketing at Bradford & Bingley. “Once we’d made the decision to go down the single-tie route, we were locked in to the January deadline. If we failed, we stood to lose one of our largest business lines in its entirety. It was an awesome challenge. On top of which, we had to keep the deal absolutely confidential until we were in a position to announce it.” Bradford & Bingley asked a small team from Troika, a specialist financial services consultancy, to help. “From selling financial products from the whole market, Bradford & Bingley was shifting to a more simplified business model,” says Simon Kent, who was in charge of the Troika team. “Roger was concerned that his people didn’t have enough up-to-date product or market

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knowledge, the experience of completing deals like this, or simply sufficient resources to make it happen.” “I always remember one of Simon’s slides,” says Hattam. “It said, ‘This is not impossible’. ‘So, it’s possible?’ I asked. ‘Yes,’ said Simon, ‘but it’s never been done before.’ ” Troika’s help came in two forms: support in concluding a deal; and the project management of the operational change. When Troika started work on the project, in August 2004, “Requests for Information” (RFI) has already been issued to several potential partners. Its first step was to produce a more focused RFI to which a small number of companies were asked to reply within a week. At the same time, Troika took Bradford & Bingley’s board back to basics to establish the key commercial principles they wanted to achieve. Shortlisted suppliers were asked to sign up to these principles, which set out how the model would operate and the products that would be included, as well as the financial arrangements. “Our aim was a signed contract in ten weeks,” says Kent. “Four weeks to go back over what Bradford & Bingley wanted from the deal and pick the preferred partner [Legal & General]; two weeks to write an outline of the agreement; and four weeks to negotiate the final contract.” The key to success was not to let Bradford & Bingley’s tight timescales weaken its negotiating position or skimp its planning of the operational details. “We wanted a good deal, but fast deal,” says Lucinda Hallan, another member of the Troika team. Kent and Hallan ensured that the majority of commercial decisions were incorporated into the Heads of Terms. There were a myriad of practical issues to consider. What would happen if the deal became uneconomic? What kind of management information would be required? What were the regulatory implications of sales which were halfcompleted when the changeover occurred? With an outline agreement in place, planning could start on implementation. “We had two months to do everything,” says Jo Higgins, the Troika project manager who coordinated all this. “The timescales were extraordinarily tight. We were also changing a revenue-generating part of the business: we couldn’t just take the branch advisors out for a month of retraining, nor could there be any delay in moving to the new arrangements in January. Time really was money.” The traditionally quiet period around Christmas was used to take the sales force out of the branches, retrain and reauthorize them. “We had to ensure that someone who left a Bradford & Bingley branch on 16 January as a Brad-

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ford & Bingley employee, selling products from the whole market, could, quite literally, walk back in on 17 January as an L&G employee, knowledgeable about L&G products, and carrying an L&G laptop, without the whole business collapsing,” says Kent. “We were turning off one business on one day, and starting a new one on the next.” It would be tempting in these circumstances to take a heavy-handed approach, but that’s not Troika’s style. Although Higgins was responsible for the overall coordination of the project, almost everyone who worked with her was a Bradford & Bingley employee. Moreover, a significant part of her role was to coach her successor. “As we got closer to the 17 January deadline, my job became more of an advisory one,” says Higgins. “We wanted Bradford & Bingley’s staff to feel completely confident that they could manage the next phases of the project.” The timescales and complexity of the project meant Bradford & Bingley’s reputation was on the line. “We had to make a lot happen in a short period,” says Higgins. “If it went wrong, Bradford & Bingley wouldn’t have a branch-based business. There was a lot of money at stake, and the risk that some of the best independent advisors might leave.” “The key challenge lay in trying to dovetail changes to the company’s rule-book (which governs how it sells its products) and the transfer to new ownership,” agrees Hallan. “Almost all their world was due to change on a single day.” Although large numbers of Bradford & Bingley people were involved in the project, very few worked on it full-time. “Helping everyone from the business juggle what they were trying to do with their day-to-day responsibilities was another challenge,” says Ed Wells of Troika. “A key part of what we had to do was retain the overall vision of what was going on: small changes to one process could have huge implications elsewhere. It was a question of making all the bits of the jigsaw fit together.” Since 17 January 2005, Bradford & Bingley has been able to offer its customers leading financial products, double the gross profit it earns from this business line and increase its sales conversion ratio from 1 : 3 to 1 : 2. “We wouldn’t have done this without Troika,” says Roger Hattam. “Their team brought a strong combination of relevant industry experience, rigour and realism to our negotiation process and enabled us to strike a first-class deal. In large part, their willingness to roll up their sleeves and ability to drive the project to completion ensured an extraordinarily fast and smooth implementation.”

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“We only had four people on the project,” says Kent. “We were the small lever with which Bradford & Bingley effected an enormous change.”

Pushing the Boulder Uphill One of the most important reasons why clients use consultants is momentum. On complex projects where many of the client’s key staff will be involved on a part-time basis only – as at Bradford & Bingley – staying focused, simply keeping going, can be enormously difficult. Consulting firms like Troika can field a team of dedicated and undistracted individuals, who can bring the commitment and energy required to get stuff done. Is this anything more than good project management? The answer is no, but yes. Clearly, many of the tools and techniques of good project management are as relevant in consulting projects as they are in internal ones, but the peculiar challenges of consulting relate to the fact that people from different organizations are involved and that the project team is a bridge between their two organizations. The following issues have to be addressed: 1. How are resources allocated to the project, bearing in mind that a client’s staff invariably have day jobs from which they are pulled and that the consultants may be working on more than one project at a time? 2. What is done to ensure that the project team is up and running from day 1? 3. How easy is it for the consulting firm to adapt what it is doing to suit a client’s changing needs, given the constraints it operates under? 4. Engagement. 5. Stakeholder management. Some of these factors relate to the efficiency with which a project is run, some help ensure its overall effectiveness, others do both (Figure 11.1). All have to be in place for a project to be successful – yet recent trends have meant that none is easy to manage. Resource Allocation The biggest initial challenge the project manager of a consulting team faces is finding a team. Good people don’t hang around consulting firms waiting

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High Engagement

Resource allocation

Stakeholder management

Ability to respond to change

Effectiveness

Mobilization

Low Low

Efficiency

High

Figure 11.1 Factors specific to managing consulting projects

to be put on projects; they are already busy, and fighting for their attention can eat into the project manager’s scarce time at the start of a project. However, not getting the right people could compromise the quality of the work done. Three factors make a difficult situation even worse: • Greater specialization: The more clients want world-class experts in a specific field, the less choice a project manager has. The days when consulting firms could operate a pool of generalists have gone: even graduate entrants need to be trained in something before they can be put on a project, and that reduces the room to manoeuvre. With margins tight, few consulting firms are prepared to solve this problem by recruiting additional staff and bringing utilization down. • Spikes in demand: When interest in a particular field surges, it creates additional challenges. • A culture of instant gratification: We all have greater expectations of customer service than we had ten years ago. Banks have had to cope with people who expect their loan to be approved instantly; retailers, with people who expect a product to be shipped to them in 24 hours. Why

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should consulting firms be any different? Clients who take months to buy a large-scale IT or outsourcing-related project may expect consulting firms to respond instantly when they are looking for input on smallerscale advisory projects. As a result, the process by which specialists are pulled into teams has had to become more flexible: clients want to know that the composition of a consulting team has been based on the unique requirements of the project, and not on a standard formula. Resource allocation is therefore like a complicated game of chess: most of the pieces can move in one way only – the challenge comes from being able to move them better than your competitors. “One of the most substantial challenges a consulting firm faces is its ability to manage scarce resources,” says Jules Beck, who heads up CSC’s Transformational Consulting practice. “Consulting firms have lots of good people in them, but only a small number of those people will be truly excellent. Knowing the select group of people who are critical to solving a client’s issues is a core skill. Managing them and allocating their time where it has the greatest impact is undoubtedly a competitive advantage. At the same time, clients have become much savvier about this issue. They know they don’t get the best people purely by luck, and therefore want to know how we make these decisions and to be involved in the process. Fifteen years ago, it would have been perfectly acceptable for a consulting contract to have provisions in it which allowed the consulting firm to move people on and off a project as it chose. Now clients expect the decision to be a collaborative one. Indeed, it can be one of the reasons why they choose to work with a particular firm: they know they are more likely to get access to those key resources. On top of this, a consulting firm has to take into account another set of potentially competing demands – those of the individual consultant who may have particular constraints or aspirations. A consulting firm has to balance each of these different demands – the firm’s, clients’ and consultants’. That’s not something you can do from a spreadsheet: firms which automate the allocation of resources may enjoy short-term productivity improvements, but they won’t ever pick up all the nuances involved. Managing resources isn’t a process you can dumb down. You need to put time, effort and some of your best people into it.”

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Mobilization “Mobilization” smacks of consulting jargon, bureaucracy and unnecessary form-filling – the kind of thing large firms inflict on unsuspecting clients; an excuse to inflate their fees still further. But if clients are using consultants to inject energy and momentum into an issue or organization – as they increasingly seem to be – then the first few days of a project will be critical to instilling urgency into the situation. Getting a consulting team together is only the beginning: coming from different parts of the consulting firm and the client’s organization, they may know little about what is expected from them. That creates an overhead: being able to manage it efficiently is crucial, especially in a world where clients want to achieve more and more in less and less time. You don’t have to be big to do this. LCP Consulting is a niche firm that specializes in redesigning organizations’ supply chains. “The aim is to ensure the supply chain is driven by what the customer wants, not by the internal metrics of efficiency,” says John Lockton, LCP’s Managing Director. The sectors LCP works in are not renowned for their patience: carmakers, manufacturers and retailers all expect just-in-time delivery from their suppliers, and they apply the same standards to consultants. So LCP cannot afford to hang around: “Hitting the ground running isn’t something we can leave to chance,” says Lockton. In early 2002, the company had found itself at an impasse: clients liked the results they were delivering, but they were finding the process somewhat hair-raising. “We’re really a bunch of experts and entrepreneurs with what we like to think are some good ideas,” says Lockton, “but we’re weren’t paying enough attention to what the process felt like from a client’s point of view. Even our employees were getting frustrated. So we’ve brought all our experience together into a structured process we call BPS – behaviours, processes and skills. It’s a guide rather than a prescription: clients are suspicious of anything that smacks of rigid standardization. But over the years we’ve been able to prove it can make a big difference to the success of a project.” The process and systems aspects of BPS are the bits you would expect to see in any good project management tool – indeed, LCP took what it thought were the best aspects of several different tools as the starting point. A process map prompts the consultant to ensure certain documents have

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been completed at the start of the project, stakeholders consulted and objectives communicated. But it is the behavioural component that sets BPS apart. Richard Budd, LCP’s operations partner, takes up the story: “Integrated into the standard project management material are the behaviours we expect: delivering real value as a team; taking our clients on a journey in which they will develop as people; using time in a disciplined way; communicating openly, clearly and frequently; recognizing good work and people’s commitment. What we found was that we could have the systems and processes in place, but if we didn’t back those up with the behavioural aspects, then it was all pretty meaningless.” BPS is therefore designed to be a reference point. “It gives us a common language to talk about complex projects,” says Budd. “We don’t talk about process flows, but ‘swim lanes’.” BPS also gives everyone, including people on the client’s side, the opportunity to see where they fit in, how what they do will have an impact. Part of this lies in articulating the interdependencies between different parts of a project – again, a standard project management technique – but part lies in strengthening people’s commitment to seeing things through. While many consultants can be criticized for riding roughshod over middle and junior managers in client organizations, BPS is intended to be inclusive. Finally, BPS provides a common standard to which everyone in LCP, no matter how senior, is expected to adhere. “It’s a common reference point which allows more junior people to challenge the leaders of the projects if they think they’re getting out of line,” says Budd. “We don’t insist on using this approach, but we do encourage it,” says Lockton. “If a client is interested, all well and good, but we don’t like to impose it on people. The only problem is that we usually live to regret it: if ever there’s a problem on a project, we can track it back to one of the elements in BPS being missed out. It’s like a guiding light we follow: we deviate far from it at our peril.” The point about having a common language is picked up by Jonathan Cooper-Bagnall, a member of the management group at PA Consulting Group. PA uses its own proprietary approach to a project, a five-point model covering “entry”, “visioning”, “diagnosing”, “planning” and “implementation”, which all its consultants are trained in. “It’s not particularly revolutionary,” says Cooper-Bagnall, “but it recognizes just how important it is for us to have the same fundamental approach to the work we do, despite its

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variety. The entry stage looks at how you’re going to build a relationship with the client, and what you have to do to ensure the project is a success. We also know that people’s personal goals have to be in line with those of a project – there’s no point asking them to work immensely hard on something they’re not interested in – and the entry stage is the opportunity to air such issues. Unless we get the entry stage right, everything about the subsequent project will be difficult.” Another advantage to formalizing this stage of a project is that it takes a lot of smaller decisions out of the equation, allowing the consultants to focus on what is important. “They can stop reinventing the wheel and engage with the client!” says Cooper-Bagnall. But does all this make for something which the client will find is too rigid? “The process isn’t necessarily explicit from the client’s point of view,” argues Cooper-Bagnall, “and details have to be adjusted to fit the profile of different types of project, but it’s a useful framework for the project as a whole. We need to have a common language – an underpinning structure – otherwise things start to go awry.” Ability to Respond to Change “I don’t particularly care for consultants,” says Robert Sternick, “but I get round this by not treating the ones I use as consultants.” It sounds like one of those rather specious arguments, like the alcoholic who justifies an extra drink for medicinal purposes. But in Sternick’s case, he’s making a serious point. In 2001, Sternick was appointed chief executive of Infast, a specialist parts manufacturer and supplier to the automotive, rail and industrial sectors, based in the UK. Over the next three years, caught between rising prices for raw materials and customers who were looking for annual cost reductions, it became clear that continuing to manufacture in the UK was virtually impossible. But the board faced a difficult decision: moving the work to low-cost suppliers in Asia and the Far East would mean laying off Infast’s 200 highly skilled workers. It was going to be a difficult, heartbreaking process, and Sternick knew from the word go that he could not do it by himself, so he did what many chief executives have done: he hired a team of consultants – in this case from the Rossmore Group and its parent company, Arup. “We badly needed neutral feedback,” he says. “Emotions were running high and we badly

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needed someone who had no vested interest in the outcome and who could give us another view on the real issues, and what the opportunities were in moving overseas versus the drawbacks.” The consultants’ original brief was to plan and implement the strategy for exiting manufacturing in the UK and for sourcing products overseas. This would involve working out the priority of the parts to be sourced from elsewhere, ensuring that they were all approved and accepted by the customers, planning stock levels to protect supply and keeping production going in the UK in the interim. “We quickly realized this wasn’t going to be straightforward,” says Matt Cooper at Rossmore. “Getting the same quality at competitive prices was proving difficult.” Customers were understandably nervous: the announcement of the closure programme had had a devastating effect on Infast’s manufacturing operations: productivity and morale both plummeted. “Being able to keep our customers while we shifted production became a serious worry,” says Sternick. The situation was compounded by the lead-times involved. Infast’s customers demanded products with as little as three weeks’ notice, even though the lead-time for the steel Infast used was more than 16 weeks. Transferring supply to the Far East would create a product lead-time of up to 26 weeks, and the higher stock levels Infast would need to cover this would eat into any potential savings. It started to become clear that the UK manufacturing operation was far more valuable than originally supposed, able to provide short-lead manufacturing of high-value, low-volume specialist parts. That realization triggered a rapid and, from Sternick’s point of view, welcome about-turn. Virtually overnight, Cooper’s role switched from overseeing the transition of all production overseas to sourcing only a limited number of standard parts from the Far East while transforming the UK manufacturing business into an agile supplier of high-quality, specialist parts. This meant reviewing the product mix to see how best to source each part, analysing the supply chain, assessing productivity and what skills and resources would be required to make long-term survival a possibility, working with customers and suppliers on the way forward and implementing a programme that balanced outsourcing with restructuring. However, relations between Infast’s board and the manufacturing division were beyond recovery: dealing with its managers was more than uncomfortable. Cooper’s tyres

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were slashed one evening, and he could only recall the words of Winston Churchill: “If you’re going through hell, keep going.” But the result? Within half a year, the monthly losses were converted into equivalent profits, and the jobs of more than 200 people were saved. “The Rossmore consultants were never a separate team,” says Sternick. “Some of them reported to people in our organization; some of our people reported to them. That wasn’t easy to do – we had plenty of people who complained about the arrangement – but it meant we could get things done within a very short space of time, and time was of the essence if we were to save the plants.” It was the equivalent of taking independent input intravenously. “I think Rossmore learned from the process too,” says Sternick, “that there’s more to working with clients than just being a consultant, that being in the thick of things can be a lot more rewarding than just giving advice, that it’s easy to make recommendations but a lot more challenging to deliver. Together, we also learned there are no walls: if you work on a project where the rules surround you like walls, then you’re bound to fail.” For Sternick, the key to the project’s success was the ability on all sides to hold two conflicting forces together: the need for a clear vision, defined goals and a tight schedule which gives you the discipline to deliver, with the ability to think the unthinkable and do the undoable. “Be comfortable being uncomfortable,” says Sternick. That’s advice he would offer to the consultants he works with, as well as his colleagues. Engagement The more you talk to clients, the more it becomes apparent that it is how a consulting firm engages with middle and junior managers that determines their long-term, sustainable success. Indeed, the extent to which individuals at all levels gain from a consulting project is one of the most important factors in determining its success. A recent survey by the Management Consultancies Association showed that 70% of clients who were happy with the work done by consulting firms gained as people from working with the consultants, compared with just 4% of people who were not satisfied (Figure 11.2). That is ironic, given how much consultants like to boast of their relationships with “c-level” people: the chief executives, information,

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I personally gained experting an opinion 80% % of respondents expressing an opinion

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Figure 11.2 Who gains from consulting projects? (Comparing clients satisfied with work done by consulting firms with clients who are dissatisfied)

marketing and finance officers. Undoubtedly, these are the people who sign the cheques, but it is the people who report to them, the people who so often feel pushed out by consultants, who make or break a project. Historically, consultants have tended to view this relationship as one-sided: in so far as they interacted with these people, the role of consultants was to transfer their knowledge and skills to them. While important, this assumption has spawned an unbalanced, more than slightly patronizing view – something that clients have been quick to detect. “Engagement is always an issue: if it’s not immediately apparent, then you have to look for it,” says Rob Davies at Water for Fish, a niche consulting firm specializing in organizational effectiveness and change management. Resistance to change is something change management experts commonly talk about, but as Davies points out it is a barrier that grows the further down an organization’s hierarchy you go. “Typically, you could expect one in ten board directors to object to a major change, one in four senior executives, and one in two middle managers,” he says. “It’s tempting for consulting firms to underplay the issue, to propose to do exactly what a client has asked for without flagging up the likely obstacles, because it’s going to increase the cost substantially.” Some would argue that you can’t justify the cost, but Davies is adamant that a consultant has a moral obligation to take this into

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account: “There’s a tendency to sit back in blissful ignorance until the consultants arrive and then say, ‘Oh shit, what happens now?’ ” Engagement, Davies believes, has to take place at two levels if a consulting project is to stand any chance of success: the individual and the team level. Again, we are comparatively used to evaluating individuals’ attitude to change: some will actively embrace it, others will actively resist it, but the majority will take a passive role, sitting on the sidelines, waiting to see which way the wind blows. Consultants, like managers, make the mistake of focusing on the people who respond enthusiastically – it’s the more comfortable route – but they would do better to pay more attention to creating subtle shifts in the passive majority. “Minute adjustments here and there, getting people to allow change, even if they don’t want to drive it, will determine whether long-term change will take place,” says Davies. Davies is very much against the culture of coaching which is now endemic in change management consulting: “People also don’t tend to mobilize as individuals, but as groups. The analogy of the sheep dip is instructive, even though it’s often used in terms of contempt – ‘you can’t dip people like you dip sheep’. The whole point about sheep dipping is that you do all the sheep at once, so they can’t cross-infect one another.” You could get some idea of how this works in practice by looking at how HM Revenue and Customs (HMRC) has been using “lean” techniques to cut the time taken to process tax returns. Not the most prepossessing of starting points, you might think, but behind the stolid façade of government, there is a dramatic change going on. HMRC is a relatively new government department, created in early April 2005 by combining the Inland Revenue and HM Customs & Excise (most of the UK government’s tax-collecting machinery) under one roof. This is integration on a tremendous scale: the department employs 100 000 people, 30 000 of whom are involved in processing tax returns. Scale is not the only challenge: the department is also tasked with improving customer service while simultaneously achieving the equivalent of a 30% reduction in processing costs by March 2008. “On top of this, we had a backlog of work from the old Inland Revenue and widespread cultural inertia,” says Eilish Henry, who had the unenviable task of sorting out the problem. “As an organization, we were good at hitting numerical targets: the real problem was improving quality. We didn’t seem to be able do both, but it was crucial for our customers that we did.”

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Lean techniques appeared to offer a solution, and HMRC commissioned a pilot project in Scotland to see what benefits it might yield. Consultants from McKinsey were involved and, as the department started to explore whether the initially highly promising results could be replicated in other areas of its business, it also hired a team from PA Consulting to roll out the ideas in two other large offices. “The feedback from the pilot was very positive,” says Henry. “For the first time, both turnaround times and quality improved.” New, “lean” processes played an important part here, but they would probably have been irrelevant if the people who performed the processes hadn’t wanted to make them work. “Engagement was immensely important for us,” says Henry, “because the scale of cultural change here is enormous and we couldn’t afford to underestimate the challenge it posed to the front-line of the business. We had to promote a very high level of personal accountability and activity, and that meant managers had to have difficult conversations about individuals’ attendance and quality of work. This is not easy for the managers or team members involved and emotions are still running very high.” In this environment, Henry could not afford to use consultants to force the changes through: what good would a team of first-rate consultants be if 30 000 people did not want to cooperate with them? This meant that PA’s role, as well as testing the lean approach and redesigning HMRC’s core processes, was to help the department become self-sufficient. “If we could build up a critical mass of good people, a core of people who could mentor others, then we’d be able to roll out the new processes across the department as a whole without external support,” says Henry, “but everything hinged on engagement.” First, there was an inevitable degree of cynicism to be countered: some people viewed “lean” as yet another fad; many believed that the consultants would not understand their business. “We put a lot of effort into explaining what we were doing,” recalls Henry, “setting the scene, saying why we’d hired consultants, making it clear that they weren’t coming in to replace people but to supply specialist skills we needed in the short term.” For the immediate team, initial concerns were dispelled by the speed with which the consulting team became conversant with the minutiae of their work. “The great lengths they went to, in order to understand how we worked, genuinely impressed our managers.” Front-line managers also had to be trained in effective and active management – something that has had its own payoff in terms of improved performance and better management

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skills. On top of this, as Henry’s team began to roll out standard processes across the business as a whole, they encouraged processing teams to talk about how they had been working: rather than a control tool, standardization has prompted people to defend their own ideas. “If it’s a good idea, we adopt it,” says Henry. All three ways of engaging people – consultants who took their clients’ work seriously enough to understand it properly, better training and listening to ideas rather than dismissing them – have something in common. Engagement happens when ordinary people in organizations believe that they and/or their team will personally gain. Consultants need to stop brandishing a stick at middle managers and start offering them a few carrots instead. Stakeholder Management There are usually more stakeholders to deal with in a consulting project than in an internal one, partly because the intervention of consultants can trigger all kinds of positive and negative reactions, even when it has barely begun, but also partly because one of the most important roles a consultant plays is as an arbiter, an honest broker, between people with different vested interests on the client side. Indeed, research has shown that consultants – not clients – put stakeholder management at the top of the list of challenges they face in doing their job. “We like to think of ourselves as the Special Forces of the consulting industry,” jokes John O’Rourke at Catalise. “Our solutions aren’t always the most elegant, but they’re professional, dependable and fast.” Being a niche firm, Catalise has almost a family feel to it: “People take things personally here. For a bunch of burly men, we can get quite emotional.” Not surprisingly, the firm runs on trust rather than seniority or status. “It’s very open: we all have to look at the CV of someone before we offer them a job,” says O’Rourke. “Newcomers have to earn our trust and demonstrate their capability: we’re not going to accept someone just because they look good on paper. The core of what we do relies on sound relationships – internally as well as externally – and we try to embed that culture in the social fabric of the firm.” All of which should mean O’Rourke and his colleagues are in a strong position when it comes to handling the sensitivities that arise when you’re

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trying to integrate five organizations, in five countries with five different cultures and five different technology platforms. The client was one of the largest and most profitable logistics companies in the world with global mail, express and logistics services. The size of the business is daunting: revenues in excess of €40 billion, 380 000 employees and a customer base extending to every corner of the globe. Acquisition had given the company scale, but it had also brought it the problems and opportunities of integration. It was just such an opportunity that was confronted by their Financial Accounting Shared Service Centre Integration team in January 2004. Their challenge was to integrate the finance processes of five business units and then transfer them to a shared services centre. This represented not only a considerable business integration and technical challenge (each of the five businesses had different IT systems) but also a cultural minefield. Catalise walked into the middle of this, called in when it became clear that the in-house team had run into problems. “We quickly realized that cultural and organizational issues were just as important as the systems ones,” recalls O’Rourke. “Creating cohesion was crucial.” But it wasn’t easy: there were 200 people on the team, many of whom came from different, often competing, consulting firms. “People had different understandings of the project objectives and were trying to keep issues close to their chest rather than discussing them openly. If anything the barriers were going up, not coming down.” Time was short, so Catalise flew all those involved in drafting the project’s business requirements to a single location. “We virtually put them in a room together and didn’t let them out until the requirements were agreed,” says O’Rourke, “but it had a double benefit. Not only were the requirements completed on time, but we’d managed to kick-start the process of building an effective team.” Building on this success, Catalise found themselves being asked to manage all the communication between the project’s multiple stakeholders, ensure those stakeholders had realistic expectations and build a confident, collaborative team spirit. The project duly went live on 1 July 2005: against a backdrop of many parallel integration projects, it has been hailed as a landmark success – demonstrating what can be achieved through effective use of change management techniques. “I’d say our approach was bold, rather than innovative,” says O’Rourke. “The change management techniques we put in place weren’t rocket science, but it was the speed and timeliness of

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our intervention that mattered most, against a background of growing intransigence and cultural entrenchment.” The outcome of the project speaks for itself, but it is not all that O’Rourke is proud of: “We got people to leave their company badge at the door, and wear our client’s badge instead.” The success of a consulting project lies in not being a consulting project.

12 Three types of teamwork

Welcome to the Murky World of Consulting If you thought consultants sit in an office analysing data and putting presentations together, think again. Metronet is a consortium of Atkins, Balfour Beatty, Bombardier, RWE Thames Water and EDF Energy. In 2003, it won two 30-year Public Private Partnership (PPP) contracts for upgrading two-thirds of London Underground’s infrastructure. Maintaining rail track is labour-intensive and often can only be done at night in physically demanding conditions: productivity has changed little in recent years. However, under the terms of the PPP, Metronet had agreed to improve productivity substantially, so it hired a specialist consulting firm, Boxwood, to help them achieve this. Working with Metronet for just four months, Boxwood helped the company increase the speed with which sleepers were replaced by 250% and track renewal by more than 300%. The consulting firm’s initial priority was “discovery”: identifying what needs to change and determining what is and is not possible. Replacing sleepers involved gangs of around 20 operators who could replace two sleepers per shift. Four Boxwood consultants worked alongside these gangs for two weeks in order to observe and analyse their performance, map the key operational processes and identify potential solutions. Some ideas were simple ones, such as introducing lights on helmets and increasing the amount of preparation work that could be done above ground. Others were more demanding – introducing a continuous improvement culture, for example.

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The next stage of the work was “consensus”: piloting potential solutions and building consensus for change among the operators, managers and unions. All the testing was done on live projects, underground and at night, with project team members from Boxwood and Metronet working alongside the operators. Traditionally there had been a divide between the underground night workers and the daytime planning workers, so this shoulderto-shoulder approach earned the team enormous respect from the operators. And respect became enthusiasm as the operators realized that performance improvement often meant that their work was easier, not harder. It meant cutting out duplication, delay and rework – all of which had been hugely frustrating. The results amazed everyone: instead of two sleepers, the gangs could now replace six per shift. In the last stage of the project – “mobilization” – the same joint team rolled out the new processes for sleeper replacement to all the gangs of operators, revised the processes for renewing track and trained a Metronet team in how to make further improvements. The project was characterized by an extremely strong partnership between Boxwood and Metronet. For people outside of the immediate team, it was hard to tell who worked for which company, such was the level of integration. Indeed, the project would have been a disaster if those involved had believed in the common misconceptions about each other – that management consultants are faceless analysts who operate at arm’s length, producing reports that are incomprehensible and ineffective; that former public sector workers are lazy and unable to adopt new working practices. Nothing could have been further from reality. “Our ability to work as a team depended on three factors,” says Dan Tonkin, one of the consultants from Boxwood involved in the project. First, as consultants, they had to be absolutely open and honest with everyone. “If we gave any information about potential efficiencies to the directors, we’d also show it to the charge hands and their teams so we could involve them in decisions. Often all they needed was the chance to step back from their work, but they worked so hard that they didn’t often get the opportunity to do that. Where we could, we’d also take the time to meet those teams beforehand so we could explain what we were doing and where we needed their help. These were all important factors in ensuring that the recommendations made were really theirs, not ours.” Second, the consultants had to make it clear that they were not there to take people’s jobs away. “We

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had to ensure this wasn’t perceived to be a threatening process,” says Tonkin. “Once we’d got over that hurdle, they were completely up for improving the system.” Finally, the consultants had to respect the people they worked with. “If we’re brutally honest, I think some of us, before we started, suspected that the Metronet teams were simply lazy. It was quite the opposite. They worked immensely hard: some people were working 12-hour shifts, six days a week – and you don’t see many consultants doing that!”

The Team as a Source of Competitive Advantage There are four reasons why teamwork has become an essential attribute of a successful consulting firm. Give Us Specialists! First, client demand for ever more specialist knowledge is fragmenting consulting projects. Whereas ten years ago a project might be staffed by a small number of experts – often the senior partner, supported by bright, but less specialized staff – today’s clients want everyone in the team to be a specialist. In practice, that means that team members may be drawn from different parts of a consulting firm; so not only may they never have worked together before, but they may have very different opinions and perspectives. More and more, team members will come from different firms, as clients move away from the notion that a single firm can provide every service and as they begin looking to obtain services from a variety of large and small firms. That creates new challenges: how can you work effectively with someone with whom you may, in other circumstances, be in competition? The Bundling of Services Nor is this just a question of peaceful coexistence, the consulting equivalent of toddlers’ parallel play in the sandbox. For many clients, the opportunities to do something innovative lie in bringing together different skills. In a recent survey, almost every project discussed by the clients of consulting firms involved more than one area of consulting. In other words, there appears to be no such thing as a “pure” HR project or a “pure” marketing project. Even strategy consulting, which has conventionally been classed as

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a very distinct area of consulting, was combined with other services in 85% of cases. Almost 40% of the consulting projects discussed had a change management component. Keeping the Freelance Consultant at Bay Moreover, teamwork at all levels creates an important point of difference between consulting firms and independent consultants. Sole traders have become an increasingly important part of the consulting marketplace over the last five years. They are accepted among even the largest corporate clients, who recognize they may have specialist skills and excellent credentials – many, after all, have worked for large, prestigious consulting firms in the past. Their fees are attractive: they carry neither the overheads of a large firm nor the risks of an offshore supplier. Faced with this challenge, consulting firms have had to be clearer about the value they add as a collective entity, what they can do that a sole trader cannot. Most firms have therefore focused on building their brand, increasing their research and knowledge management capabilities or on ensuring they have the financial muscle to carry innovative pricing deals. But they are starting to appreciate that they have another advantage – the ability to work as a team. Of course, any independent consultant worth their salt will say they can work as part of a team, but the question is not so much whether they can work with others, but how long it takes them to do so effectively. Imagine you boarded a plane and discovered the crew were all used to working independently. They would probably have very different ideas about cabin service and they would have to invest some time at the beginning of the flight in negotiating how they were going to work. You might strike lucky, they might be able to sort things out quickly and you would get your peanuts – or you might not. In fact, the likelihood is that some bits of the service would work, but it would be patchy and inconsistent, and you probably wouldn’t choose to fly with that airline again. Compare that experience with a regular airline: although the cabin crew may never have worked together before, they have been trained in the same procedures and they share enough of a common culture that they can form an instant team. So it is with consulting projects: as a client you could hire a group of independent consultants and ask them to work together. With a bit of luck and considerable good management you might arrive at your destination in one piece, but it will probably have been a bumpy flight. One of the things you

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are buying from a consulting firm is the confidence that while their people may never have worked together, they are, like the cabin crew, capable of forming an instant team. Bringing the Client in from the Cold Finally, the “team” has to expand to include clients themselves. If there is one word which could be used to sum up the reason why some consulting projects are more successful than others, it’s partnership. Neither clients nor consultants benefit from a confrontational environment in which each side is seeking to promote its own interest at the expense of the other. Of course, partnership is a dangerous word to use in this context, abused as it has been by a generation of marketing literature from consulting firms which paid lipservice to an idea that was rarely realized in practice. A genuine partnership works at two levels. At the individual level, all the people involved in a consulting project have to work together as an effective team. The whole has to be greater than the sum of the parts. But the willingness of individuals to work together has to be reinforced at a corporate level. Here, the aims of the client’s organization and the consultants’ firm need to be closely matched. Each party needs an incentive to behave and contribute in a way that supports the collective effort, not self-interest. Create teamwork that extends from the individual to the corporate and you can achieve extraordinary things. “What’s the key lesson?” asked one client. “The power of working together.” Working together happens at three levels: • Tactical – making groups of people, often from different backgrounds and with different agendas, work together as an effective team on the ground. • Firm-wide – overcoming internal demarcation within consulting firms. • Strategic – ensuring that, at a corporate level, two organizations can work together successfully, clearing obstacles which might inhibit the ability of their teams to collaborate.

Tactical Teamwork Kurt Salmon is unusual among consulting firms, a niche specialist (in retailing and supply chain management) whose revenues put it among the middle-sized consulting companies. “Our consulting style is quite

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collaborative,” says David Oliver, Vice President in the firm’s London office. “We’re less arrogant than the stereotypical consultant. We may even be too self-effacing: we sometimes criticize ourselves for not pushing our clients hard enough, but the flip-side to this is that we engage well. We’re good to work with.” The firm takes all the steps you’d expect to ensure that its teams can function quickly and instantly: ensuring those involved in delivery are properly briefed by those involved in winning the work, if the two are different; providing background material to ensure that even the most junior team members are fully prepared; agreeing the internal rules of engagement that make high-pressured working environments bearable – who gets to go home when, how many nights away from home for how long. But Kurt Salmon is lucky: it works in a well-defined market in which most of its recruits have experience, so there is common ground from the start. It needs relatively little in the way of standardized methodologies because its consultants already have direct experience of the issues manufacturers and retailers face. What Goes Around Comes Around Unless you are very lucky, teamwork doesn’t just happen. Indeed, in talking to consulting firms it becomes clear that the most important factor is establishing a quid pro quo culture in which everyone is treated – and is seen to be treated – fairly. Richard Owen, Chairman of Deloitte & Touche in the late 1980s, recalls a seminal moment when someone who had been seconded from the client to his consulting team rang him at home late on a Friday night. “He was in a panic because he’d left some vital papers in our office for a course he was running on the following Monday. I rang the office and managed to find a security guard who went to see if he could find the papers, but they weren’t there. They’d been spotted by another member of the team who arranged for them to be delivered to the secondee.” The secondee was stunned by the supportiveness of the consultants’ working environment: he’d never called his boss at home. “In a consultancy,” says Owen, “no one enjoys another’s discomfort.” But, like every professional organization, consulting firms are dogged by their internal divisions. The combined pressures of specialization (which clients require) and diversification (which consulting firms need to spread

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the risks of specialization) have created organizations that function around intense pockets of activity. Joined-up consulting becomes difficult: different business units may have different recruitment criteria; they may pay people more or less; they may develop their own, distinct subculture, especially if they are successful. Moreover, what is hard enough when the market is growing becomes almost impossible when times are hard. Internecine competition can break out between business units as each one scrambles to secure the limited work available. Cross-divisional teams are one of the key ways in which a consulting firm can overcome these issues, but this depends on making it clear that each business unit is being treated equally; that fees and profits are divided equally (if there are separate P&Ls); that one business unit does not bear more of the burden than another. The foundations of teamwork in consulting firms are fairness and transparency. A brilliant colleague will attract so much work that it will improve everyone’s prospects; the fact that one person is better suited to the needs of a particular project than someone else does not make the former a better consultant. Marakon recruits from a broad range of backgrounds. “We’ve got historians and lawyers, as well as economists, engineers and psychologists,” says Herman Spruit, Marakon Associates’ Regional Managing Partner in Europe. “When we’re putting a client team together, our first task is to match what we have with what the client is looking for. One of the most important ways in which we can add value over and above what the client expects is to create a diverse team that looks at issues in different ways and constructively challenges the client’s thinking.” When people are not assigned to a particular project or are taken off one they are already on, it is important they recognize this is not because of failure on their part. The firm works hard at matching what their clients want and need with what their consultants seek to get out of their career. “We move people around to give them variety,” says Spruit. “We find that clients benefit from the diversity of our consultants and welcome the breadth of experience we bring from other sectors.”

Firm-wide Teamwork One of the most significant barriers to effective teamwork originates in consulting firms themselves, in the rigid internal boundaries that persist, despite

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all the attempts to instil matrix management. Specialists want to belong with other people working in the same field; they form teams which can be dismissive of others’ expertise and reluctant to share ideas. “Consulting firms have struggled with the way they’re structured,” acknowledges Jules Beck at CSC. “They’ve tended to rely on pools of expert resources, each led by a guru in that field. This works well if there’s strong leadership but it’s ultimately inflexible. It creates too much hierarchy, and too much ‘one-think’ occurs in which people in groups tend to agree with each other rather than challenging their collective assumptions and coming up with new ideas. Finally, this model is very vulnerable to people becoming territorial: it’s a recipe for political battles.” At the same time, Beck believes, clients have become much more demanding. “We need to be able to move people in and out of projects much more quickly than used to be the case,” he says. “Clients don’t want to pay to have an expert there for a week if they’re only really needed for a day, or for a day when they’re only needed for one hour-long meeting. This creates enormous challenges, because we’re not dealing with just one project or trying to place just one expert. We have to be flexible, yet also run a lean business with high levels of productivity. We have to be able to pull in people from other parts of our organization, not just our immediate consulting colleagues, because this is what stimulates innovation. And we have to ensure that the person we put on a job is the one best placed to solve the problem whatever it is, irrespective of whether that person is very senior or junior. We’re not – and we can’t afford to be – rigid about who works where and in what capacity.” How CSC achieves this relies on a combination of practical initiatives. Training courses and other events have become a means of bringing different parts of the organization together and encouraging people to exchange ideas. Key performance measures are not owned by individual lines of business – a recipe for protectionism – but by two or more business areas in order to ensure people collaborate internally. There is a very strong mentoring process. “But perhaps the most important way in which we remain flexible is by valuing difference,” says Beck. “It’s comparatively easy for a consulting firm to become very homogeneous and that stifles debate. CSC is a broad church: we recruit people who may not always have the background of orthodox consultants but who are highly experienced in a wide range of business environments, and we encourage them to challenge assumptions and the status quo.”

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“Global deployment fundamentally requires a combination of the trusted advisor and the trusted firm,” argues Steve Gunby at the Boston Consulting Group. “The trusted firm has to deliver the resources you as a client need, and the trusted advisor is someone you know who is personally sweating to make sure the firm is delivering. If you’re in New York and you’re getting the input of a world-class expert based in Singapore, you still want someone you can look in the eye and know they’re on your side.” That dual function has become increasingly important as clients’ needs have become more specialized, putting more pressure on a firm’s internal networks. “Our senior people go from country to country more than they would have done ten years ago – an expert in banking might fly from New York to London to Frankfurt to Tokyo,” says Gunby, “and the key to making this work is connectivity.” All the firm’s 450 partners get together twice a year, largely with the aim of making sure they all know each other; on top of this are global practice area meetings and a host of other sessions. But the most important thing is to ensure people actually work together. “Networking for its own sake only gets you so far,” says Gunby. “We have 120 people working in our consumer practice, and I’ve worked with at least half and know 90% of them. That’s invaluable when it comes to global assignments. Good working relationships with our colleagues are based on trust, just as much as the good relationships with our clients.” Even firms that focus on specialized and therefore more homogeneous markets recognize the challenge here. “We tend to recruit very analytical people,” says Geoff Nicholson, Managing Director at Mercer Oliver Wyman. “Typically they’re mathematicians, engineers and economists – very numbers-oriented people – and we give them an opportunity to work with other bright people on real-world problems. What we can’t afford is to have too much in the way of process when it comes to putting the right person on a project – or, indeed, in any aspect of our business. People here have a very low tolerance threshold for bureaucracy.” Mercer Oliver Wyman gets round the problem by using technology to deploy its 900 consultants all over the world. “Every office has access to a real-time system showing who is available and what their specialist skills are,” says Nicholson. “We also monitor how much travel people are doing and whether they’re working in different areas or focusing exclusively on one – it’s quite possible to have a very good career as an expert in mortgages here, precisely because we’re so specialized.”

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Of course, the challenge is even greater when the firm-wide “team” is 126 000 strong. Kris Wadia is a partner in Accenture’s Global Delivery Network (GDN). He likens the evolution of the way in which the firm deploys its GDN resources to levels of Carnegie Mellon’s Capability Maturity Model Integration model. “In Level 1, processes are unpredictable, poorly controlled and reactive,” says Wadia. “At Level 2, processes involved in a project become repeatable, standard and consistent; by Level 3, organizational processes are being defined and are predictable; Level 4 introduces managed processes and you are looking for continuous improvement. At Level 5 – and this is where Accenture is today – our focus is on continuous improvement and optimizing our use of resources.” Accenture’s tradition of offshoring goes back to the mid-1980s when the firm set up a facility in Manila; the roots of this practice can be traced to a “spin-off” of a regional accounting firm. In the early 1990s, the firm took over the upstream accounting for BP’s oil and gas business in the North Sea, a pioneering business process outsourcing deal that paved the way for Accenture to provide similar services for other oil companies in the area. As it became increasingly clear that service delivery did not have to take place at a client’s site or even in the same country, Accenture began to establish a variety of “centres” around the world: centres of excellence, delivery, solutions. By 2001 it had become clear that this sprawling structure required a different type of management and the firm therefore took two important decisions. The first was to create two new workforces, in addition to its established consulting practice and support personnel. The first was “solutions”, the core of which would be its deeply skilled IT people; the second was “services”, which would support its business process outsourcing deals. “We recognized that we couldn’t run every part of our business like a consulting practice,” says Wadia. “There were projects which needed deep technical skills but at a relatively low cost, but we still needed an onshore presence where clients didn’t want to offshore a particular function.” The second key decision was to take the myriad of different centres and groups that had sprung up and turn them into a true network. “The defining moment was to place one person in charge of this,” says Wadia, “so that we had consistency of everything – infrastructure, the quality standards to be achieved, client satisfaction metrics. It brought the level of central coor-

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dination and control necessary for multi-centre delivery.” This new style of working suited the type of large-scale projects Accenture was increasingly involved in, but it also had other benefits. “You can’t have good business continuity planning and recovery if you don’t have a network,” Wadia points out. “You can’t shift an entire local workforce in times of trouble, so you have to be able to store data in other locations and have other people who know what exactly to do because you’ve established common training standards and processes throughout your business.” But how does it all work? By no means all the work Accenture does needs resources from the GDN: small-scale consulting projects are still staffed by people from the relevant industry groups within the consulting workforce. “But the moment a relationship partner has won a piece of work which he or she can’t staff or which needs a combination of different skill sets and different price points, then they have to tap into the network,” says Wadia, “and, because we have 40 facilities which employ a total of 24 000 people around the world [in June 2006], we can match any combination of onshore, near-shore or offshore requirements a client has.” To make this happen, representatives of the GDN are embedded in the industry groups, but there has also had to be something of an education process, internally and externally. “Some clients can have rigid ideas about how they want a project to be resourced. We’re all learning how to work in this new, genuinely global environment. Teams don’t have to be based in the same physical location for them to be effective. In the eight years I’ve been at Accenture, I’ve never led a team that is entirely based in the same country. That people can communicate effectively across geographies is a testament to the standards we have in place, and the methods, tools, architectures we train people in.” In addition to having one person in charge of the entire network, Wadia cites other critical success factors. “The GDN needed its own culture, because the people who work in this part of our business need as much a sense of belonging as those in other areas. If you’re just one of 134 000 employees, then it’s easy to feel lost. We do a lot to encourage people to exploit the opportunities of belonging to this community. There was a team in India that created a project management tool that proved very valuable, so we asked them to develop their idea further and then roll it out across all our delivery centres.” Indeed, an important part of making the network work has been to build mutual respect. “Accenture has always had the philosophy of using the right person on the right job, and almost everyone who

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works here has spent time in different places,” says Wadia, “but there was still a fair amount of caution about the GDN when we first floated the idea, none of which was helped by the negative press coverage of jobs moving wholesale overseas. However, we also have a culture of respecting colleagues: once people started working together, they began to realize they could benefit from each other’s expertise. It comes down to trust,” Wadia says. “We’re all tied up in GDN’s success – and our clients’.”

Strategic Teamwork But talking about fairness and transparency is not enough where clients are concerned. Teamwork at this level depends on having a common set of goals. One of Accenture’s key aims is to bring its consulting and outsourcing practices together. “Transformational outsourcing”, the peg on which the firm is hanging its growth, combines a drive to improve performance (the consulting element) with a lower-cost means to deliver the improvements (outsourcing). It accounts for around half of Accenture’s revenues. More than consulting or outsourcing in isolation, transformational outsourcing requires effective teamwork, between Accenture’s consulting and outsourcing workforces and between the client and Accenture. “There has to be mutual respect and the recognition of each others’ interests,” says Lis Astall at Accenture. “If there’s an imbalance here – for example, if one firm puts its self-interest ahead of the collective endeavour – it will always start to show in the process.” The vast majority of Accenture’s projects are long-term, multi-strand, spread across different countries, so the team is all-important. “We don’t look at individual people, but the overall team,” says Astall. “Our clients often say what they like is the strength of our bench.” Making these teams work starts with Accenture’s structure: the firm is organized along industry lines, but this is criss-crossed by its workforce groupings: solutions (carrying out systems integration work onshore and off); services (outsourcing); enterprise (largely consulting); and contractors. “The relationship often starts at the personal level, but rapidly becomes more corporate,” says Astall. “Winning and delivering work on this scale takes far more than two individuals sitting down and hammering out the details.”

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That is exactly the kind of philosophy Accenture has been putting into practice at Thomas Cook UK & Ireland, Europe’s second largest leisure travel group which employs some 12 000 staff, operates almost 600 travel stores and takes more than 3 million customers on holiday every year to more than 1000 destinations. It is a substantial oak to have grown from a very small acorn: Thomas Cook began his travel company in 1841, with a successful one-day rail excursion at a shilling per head between two stations in central England. Cook’s first foreign holiday was a grand circular tour of Brussels, Cologne, the Rhine, Heidelberg, Baden-Baden, Strasbourg and Paris. Such a long and distinguished history may have bequeathed the company one of the world’s best-known travel brands, but it also left it with a legacy of operational challenges. In fact, it is three separate business units alone in the UK – sales, tour operations and the airline – none of which operated as an integrated business. On top of this, the company had 23 offices in the UK, and the rest of its infrastructure, from its IT systems to its HR administration and finance function, was a patchwork of disparate and disconnected processes. In the face of new entrants with much lower cost structures, new airlines and online travel companies, these inefficiencies were threatening its survival. “Everyone had their own way of doing things,” remembers Ian Ailles, Managing Director of Thomas Cook’s Specialist Businesses. “There had been a lot of acquisitions, so we had multiple head office sites, several ledgers. And there were plenty of challenges around the business – strengthening the brand, customer delivery, operational issues. There was a limit to how much we, as a management team, could do: we decided to concentrate on running the travel business and to find a partner who could take on the back-office functions, streamline them and run them more efficiently.” The last thing the company was looking for was a typical them-and-us supplier relationship: this would be a long-term project and they needed an organization that would be willing to share their objectives, risks and – hopefully – rewards. Accenture signed a 10-year “co-sourcing” arrangement in which it committed to delivering a series of major change and continuous improvement programmes. What is most innovative about the deal is that it focuses on business outcomes, such as capability improvements, new ideas to move the business forward and cultural fit, not just on systems delivered or deadlines met, and that it is flexible enough to translate into an

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operational plan that really works. Thomas Cook controls strategy, policy, investment and critical decisions, while Accenture is responsible for the operational management of the work to transform the former’s back-office processes and subsequent service delivery, and the overall performance and profitability of the shared services centre. The arrangement not only eases Thomas Cook’s cash flow concerns; it frees the company to concentrate on what it does best: selling holidays. Accenture’s priority was to create a high-performance, cost-effective shared services centre, based in Peterborough, and within a year a significant number of back-office functions had been relocated there. Four years into the agreement, 70% of the work originally transferred to Peterborough has moved again, this time to India. “The transformation has been just phenomenal,” says Carl Dawson, Thomas Cook’s Chief Information Officer. “To change a business of this size at the speed it happened and to help us to deliver the dramatic financial performance is an incredible success story. We are now well positioned to grow our business.” Clearly, in a project as large and complex as this, there is a multiplicity of critical success factors: the extent to which Thomas Cook could tap into Accenture’s Global Delivery Network; the speed and momentum with which changes were rolled out; the fact that Accenture was able to halve the number of redundancies when Thomas Cook’s processes were offshored by redeploying people on different contracts. However, the fact that the two companies shared in the success was not insignificant. “One of the reasons we chose Accenture was that the firm was willing to be innovative around the financing of the deal,” says Ailles. “We needed to invest, but were under pressure in terms of profitability. This deal allowed us to change our cost and capital structures. The fact that success was also defined in terms of what we wanted to achieve as a business was also hugely important. If the project failed, then neither we nor Accenture could gain, and that promoted a very strong ethos of working together at all levels of both our organizations. Now, we’ve the flexibility to change as our business changes direction. Accenture has also encouraged innovation, something we didn’t have the capability for before and do now. That combination of discipline, efficiency and innovation has paved the way for continual improvements in the performance of our business.”

13 When is a methodology not a methodology?

Clients want to have their cake and eat it: a recent survey by the UK Management Consultancies Association showed that exactly the same proportion of clients chose a consulting firm because the latter had a tried-and-tested approach to doing something as those that chose a firm because they had an original approach to the work in hand. In some cases, the same client wanted both a structured methodology and innovation. Wanting something new is a basic human desire for difference and excitement. Managers are not really different from toddlers: they try out new toys, bore of them and demand new ones. But managers are also risk-averse, they want guaranteed success. Consulting firms find themselves walking a precarious tightrope between these two sets of expectations: tip too far towards the methodology side and they are criticized for hawking pre-packed solutions; tip too far towards innovative processes and they are accused of being disorganized or seeking to enlarge the scope of a project to increase their fees. There are issues from the supply side too (Figure 13.1). Methodologies started to become important at the point where the consulting industry began to recruit more junior people who did not have in-depth skills or years of experience to draw on. They would, as one client put it, use methodologies like a drunk uses a lamppost – for support rather than illumination. But a methodology does much more than this: it acts as structural glue and a set of accepted standards in an environment where employees may be distributed across a multitude of different projects, perhaps in different countries. As consulting projects have grown in size and complexity, methodologies have become the primary means by which a consulting firm controls quality

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1990s

2000s

To supplement the skills of junior consultants To provide structural glue and standards in large-scale, complex projects

To ensure control of quality and delivery To increase speed of delivery

Figure 13.1 The evolving role of methodologies

and delivery. At the height of the ERP boom, when armies of consultants went from client to client, a methodology became a necessity, a way of exerting control over consulting done at scale. In more recent years, as clients have become more reluctant to commission these massive IT projects, methodologies have morphed into a way of doing things quickly, a means to devolve authority to their front-line, setting out the rules of what consultants can and cannot do. These aspects all remain pertinent today, as massive IT projects have been superseded by large outsourcing and offshoring deals, and as a host of new entrants espousing highly structured approaches, such as Carnegie Mellon’s Capability Maturity Model Integration (CMMI), have emerged. The core of Axon’s business is SAP implementation: not surprisingly, the firm has an approach which it can apply again and again. “We have an overall framework for the consulting process,” says Steve Cardell, Axon’s Chief Operating Officer, “together with tools, templates and examples of ways of doing things. Different teams are responsible for each set of tools, so that those working on HR systems are charged with developing the HR tools. We recruit senior people, often from much larger consulting firms, who are very experienced: we don’t need something that tells them what to do.” “Some tools don’t change much from year to year,” says Cardell. “The fundamental issues they’re addressing remain the same. To be honest, I don’t think they represent a competitive advantage: all the consulting firms we

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compete with have learned the same lessons about what works and what doesn’t during the course of implementing an ERP system, and we all have pretty much the same tools. Ten years ago, having a methodology used to be a differentiator, but clients no longer believe in a single, holistic methodology. We can’t stand up and say, ‘We have the best method’; indeed, it would be hard to think of an instance where we’ve won a project on the basis of methodology. But we would be shot if we stood up and said we didn’t have one.” However, the problem with this evolutionary path is that it has taken parts of the consulting industry dangerously close to what many people regard as commoditization. Methodologies demystify the consulting process; they allow clients to have a clearer idea of the costs associated with different tasks and to negotiate the price of these separately. “As an industry, we have to be careful about our reputation,” says Duncan Craig at AT Kearney. “Client attitudes are deteriorating: there’s too much emphasis on price, not value; the quantitative analysis of our capabilities common to so many procurement processes will lock us in to the commodity space. One reason why prices are depressed at the moment is that as an industry we’re on the defensive, scared we can’t actually justify the rates we need. We have to go back to clients and defend the value we’re adding and restore confidence in the quality of work we’re delivering, otherwise the industry will continue to be commoditized.” A methodology is a double-edged sword that has to be wielded with care. To get round this dilemma, consulting firms need methodologies that protect them against commoditization, not pave the way for it. Traditionally, the way firms have solved this problem is by making it clear that their methodology is not something to be slavishly adhered to, less a set of prescriptive rules and more the equivalent of a recipe book from which the good chef picks and chooses. “We don’t sell pre-packaged solutions,” says David Oliver, Vice President of Kurt Salmon Associates’ UK practice, “but we use them. A good example would be inventory management in the retail sector: this is always an issue, and we have lots of methodologies around improving inventory management, but we don’t sell these. A client will see the problem in terms of poor availability, too much stock or too many end-of-season markdowns. Everyone will be concerned about this, even the most efficient companies. So what we sell them is better availability or less stock in the system. In so far as our tools feature anywhere in

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the process, it is around giving a client confidence that we can solve these issues: most of our credibility comes from being able to discuss the issues intelligently in the first place. Obviously, it helps if we can refer to similar work we’ve done for another retailer, but it’s very rare that we’ve done exactly the same thing, so even our case studies need to be pretty robust and get stale quickly.” Two things will be critical to exploiting the advantages of a methodology in the future while minimizing its disadvantages: 1. content – providing genuine insights which are directly and explicitly related to the creation of lasting value; 2. process – ensuring that the methodology involves people rather than alienates them.

Content – Avoiding the Emperor’s New Clothes Syndrome There is barely a consulting firm on the planet that does not lay claim to a methodology of sorts. Sadly, in many cases, this adds up to little more than a patchwork of ideas from client work, stitched together in a rudimentary fashion and falling to pieces when pulled, leaving the average consultant more or less naked. Kurt Salmon Associates is unusual among consulting firms. In the first place, it has been around a long time: the eponymous founder trained as a textile engineer in Germany before emigrating to the United States in 1930. Becoming a consultant because it paid more than working in a hosiery mill, Salmon applied a combination of sharp analytical sense and old-world charm to persuade clothing manufacturers they could benefit from outside help. Nor did he just want to offer advice: “We don’t just lay eggs, we hatch them”, was one of the aphorisms he used to sum up his firm’s approach to consulting. Today, Kurt Salmon Associates employs 800 people across the world, but it is still providing a combination of analysis and implementation, largely to consumer products companies and retailers. Working in such demanding sectors for so long, the firm has accumulated a vast array of specialist knowledge: the question is how to employ it. “Given our client base, it’s ironic that we probably lean too much towards being a

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bespoke tailor,” says David Oliver. “We’re not as highly leveraged as many of the other big firms, so we typically have more relevant experience within the project team and we don’t need to underpin our work with a single methodology. On the other hand, our apprentice-artisan model means we’re less scalable and it takes time to develop the next generation of experts.” It is also a model that is under increasing pressure from clients who, like consumers, are looking for instant gratification. “Many of the benefits of the way we work only become visible to clients when they work with us,” says Oliver. “They love the experience of working side-by-side with people who know as much, if not more, about the industry as they do. But that’s not something that’s easy to communicate when we’re trying to win work from new clients. These days, clients want to know we have a methodology, a way of demonstrating that we can deliver results more quickly than if they were to do the work for themselves. You can’t start with a blank sheet of paper any more.” So how is Kurt Salmon reconciling the push to develop, not just individual tools and techniques, but some more overarching process? In the first place, it is not changing how it develops its ideas: setting up a separate thinktank would be anathema here. “Our ‘methodology’ is really a set of tools which have grown out of client work, rather than a regimented method,” says Oliver. “Our challenge is how to codify the best of what we have done for clients and to keep that up-to-date. We don’t develop methodologies offline, but through interaction with our clients: this is the only way of being able to understand the important issues from their perspective and separate the interesting but academic ideas from those with real, practical implications. We read management journals, but that’s mostly to help us understand what other consulting firms and academics are talking about!” It follows from this that the firm adopts a rather self-organizing principle to developing ideas, allowing them to emerge through a process of natural selection rather than picking one single idea to invest in at too early a stage. “The best approach is to allow people to follow their passion for a bit,” says Oliver, “to give them the freedom to go off and develop their thinking to a certain point.” At that point, investment from the firm comes into play. “You need the oversight of a fairly senior person,” he continues, “who takes responsibility, taking the idea further, editing it, and ultimately for deciding whether it’s better than something we had before so that we don’t have six versions of the same thing. It’s easy for things to get too big, too fast.”

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The challenge lies in taking this a step further and in linking the different tools so that the whole is greater than the sum of the parts. “It used to be enough to have tools for designing and modelling distribution networks, but you can now get off-the-shelf software that does that. The next variable is the goods a client is transporting – that might be items in boxes versus items on hangers – in order to look at how detailed merchandising can affect the costs and efficiency of a distribution network. Thinking around single issues has become commoditized: what clients struggle with is driving crossfunctional change, and that’s where we’re developing new approaches,” says Oliver. Joining up the dots is clearly part of the solution, but so too is capturing the value to be derived from applying the approaches it develops. “Codifying client work is only part of the picture. We also need to track the benefits that accrue from using it. Consulting firms often take it for granted that clients recognize that value; in practice, they tend to focus on operational metrics. Clients will happily say we have improved productivity by 20% or improved efficiency so that they can take on 15% more business, but they’re less likely to link that result to the way we’ve worked. Being able to articulate that value is now at the heart of our ‘methodology’.” Value is also something that crops up when you talk to people at Marakon Associates. So far as the strategy consulting market is concerned, Marakon is a relatively new kid on the block: it was founded in 1978 with the idea of combining innovations in investment and strategic management in order to help executives in large corporations run their businesses more effectively. Initially, the firm focused on performance measures such as economic profit and equity value, labelling its approach “value-based portfolio management”. “But we rapidly realized that we had to link these metrics with the strategic planning process,” says Herman Spruit, Marakon’s Regional Managing Partner in Europe, “hence the idea of ‘value-based management’.” This focus on value continues to underpin everything we do, even as our approach has broadened to include execution, growth, productivity, leadership and organization, as well as strategy.” It is a disciplined approach that differentiates Marakon’s position in the market, and it plays a key role in the relationships Marakon has with clients. “We call it fresh advice and lasting impact,” says Spruit. “First, it’s not about choosing a specific model to work from, but holding up a mirror to the organizations we work with and asking fundamental questions about strengths and weaknesses. We marry that with an analysis of what’s hap-

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pening in their market in order to understand what choices they have, what will maximize the value of their business. “The second aspect is to use objective decision criteria. Having a lasting impact is not about one-off decisions. To maximize its value, an organization has to take all its business decisions in a better way. This involves understanding how a client got to the situation in the first place, and what kind of information, standards and dialogue are the norm. How should they change the processes and boundaries of an organization to spot decisions that need to be taken? How can they make decisions in a way that adds value and ensure that they will be implemented? These are the things that create lasting impact.” How Marakon works with its clients depends on the kind of decision the company is facing. “What is common among all our engagements is a focus on providing the highest quality data with careful consideration of how to engage with people. It’s this combination of content and engagement that makes our approach so successful in gaining client ownership,” says Spruit. “So we will rarely make a presentation and say, ‘This is what you should do’. It’s more important to have the right dialogues in the business with the right people. What kind of conversations should these people be having with each other? They each have valuable information to share. Framing the choice is important, as there is usually at least one alternative to the decision that needs to be tested, so we have a rigorous process where all the alternatives are evaluated. That ends up changing the conversation people have with each other, so our approach has a strong behavioural aspect to it. “Although it’s sometimes tempting to follow a rigid structure and be prescriptive, we never tell our clients what to do. Every decision an organization makes is different and we have to take account of that. We also find that our clients like to work with us in different ways. There’s one level where you work with content and another level where you are almost a coach. Sometimes you can add tremendous value just by asking the right questions, and that builds a lot of trust and confidence. Inevitably, we find that every successful organization has an agenda of four or five highest value things to focus on. Less successful companies are much less focused and consequently their energy is dissipated across a wide range of lower-value issues. Sometimes we have to deal with the issue that’s uppermost on everyone’s mind first, but we do it in such a way that it has lasting impact. This gives us a mandate to then work on the highest-value issues. It’s important to look

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at where the organization is currently focusing its effort and work with the sources of energy and frustration to get people excited about the opportunities waiting to be tapped. Most of our client relationships last for years, so we aim not just to improve the quality of one decision, but to improve their decision-making process and the way they gain sustainable competitive advantage.” Flexibility – seeing every client issue as unique – has to be underpinned with discipline, and discipline does not come from a manual so much as from culture. “People who join Marakon have to go through a process of learning our common values and language,” says Spruit. “In a sense, we try to mould them to the culture of the firm, but then use that common set of values to give them the confidence to be different. Business solutions are about strategy, finance and organization: no one at Marakon is ever allowed to specialize in just one of these areas. They have to understand issues through all three lenses in order to develop sustainable solutions. Over the last couple of years, Marakon has also switched from an evaluative culture to a developmental one. It encourages you to ask the right questions,” says Spruit, “because coaching people to interpret what’s going on is one of the most important skills in arriving at the best solution. Just as with our clients, we don’t want to tell people what to do on a specific occasion, but to ensure they can make the right decisions on a sustainable basis. As with our clients, we want to have a lasting impact on our people too.”

Process – Methodologies for Engagement Hot-housing is something you do to seedlings and bright children, but can you do it to a group of airport security officers? That was the challenge facing Capgemini. Mark Murphy is the Customer Service Director at the UK’s third busiest airport, Stansted. Half of his staff work in security: “The content of work is dictated by machinery, regulation and the volume of customers travelling through the airport – it’s as simple and complicated as that.” It is not hard for people to feel disenfranchised in such an environment, where they have so very little say in their work; however many good ideas they have about what could be improved, the opportunity to put those ideas into practice can be limited. “Because people’s lives depend on us getting this right, people are reluctant to change things,” he says. The pattern of activity at

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the airport makes Murphy’s job an unenviable one. As the hub for many of the low-cost airlines serving London, Stansted’s rush hour is between 5 am and 7 am, with smaller peaks during the day. With 14 x-ray machines in its central search comb, the airport has a finite capacity, but is keen to find ways of increasing customer throughput so that this capacity can be safely increased. “We clearly need more capacity during the busiest periods, and more flexibility during the quieter ones,” says Murphy. Having worked with a team from Capgemini in his former role at Tesco, Murphy asked the firm to help engage these essential employees and channel their ideas and energy into solving the problem. But he also wanted to avoid the parent–child relationship that often sets in when you hire consultants and which would only exacerbate the situation: “The culture has been quite paternalistic, but we needed to devolve more decision-making to the people close to the customer without compromising security.” He was particularly interested in “hot-housing”, a way to develop new ideas from front-line people as quickly as possible, which he had seen Capgemini put into good effect at Tesco and which had also been applied at Gatwick airport. “I thought there’d be a good fit.” “It didn’t feel like it at the time,” laughs Michael Harrington, who had led the hot-housing project at Gatwick and had the task of persuading a group of cynical security officers that hot-housing could be applied to anything other than delicate seedlings. “Essentially, hot-housing is a test-bed environment for thinking up, testing and trialling new ideas as fast as possible,” explains Harrington. Ten security officers were taken out of their day jobs and asked to canvass their colleagues for good ideas for resolving fundamental issues; they were given ten weeks to formulate and test their ideas, with help from Harrington and his team. “We tried to pre-empt the inevitable scepticism of such situations by preceding the actual hot-housing with work on developing the core skills of the security management,” says Murphy. “We’d spent time training and coaching them, making the point that we wanted to invest in them and their operation.” The aim was to change the outlook of enough people to reach a tipping point, triggering widespread change in the organization. The attitude of Harrington and his colleagues also helped: “They weren’t coming in with a holier-than-thou approach, but one which was open and honest, and treated people as individuals. The hot-housing provided a neutral, almost detached environment where it was possible to have some

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challenging discussions on how to improve. If there’s anything I think I’d change if I did something like this again, it would be to find a way of involving more people in order to spread the word.” Just across the North Sea in Rotterdam, Herman van Herterijck makes similar points about consulting methodologies. Unilever Foodsolutions, where van Herterijck is the Chief Operating Officer, is a significant player in the European food service market, covering 23 countries from Ireland to Russia with a team of around 2000 employees. Discriminating customers and a shrinking market cut little ice with Unilever’s head office: growth was still expected. Moreover, van Herterijck and his board would need to balance the efficiency of standardizing their pan-European supply chain with the need to stay in touch with the company’s local markets. Their challenge was to ensure that those 23 different teams could pull together. “I’m a strong believer in running a business through emotional ties, rather than hierarchy,” says van Herterijck. “The time when the manager sat at the top of a pyramid exerting indirect influence through a complex reporting structure has passed. People should be able to reach me: if a field salesperson in one country has a good idea, they should be able to talk to me about it. Equally, if I have something I want to happen, I should be able to talk directly to the people who can make it happen. We both should be able to go through a well-organized network – that’s my dream for this company.” The first signs were not promising: “When I arrived here, it was a bit chaotic. We had all the overheads of being a multinational corporation with none of the benefits: people didn’t work together.” Van Herterijck had worked with Steve Smith at Quest International on change management issues before, and he asked Smith if his Strategy into Action approach could help. “I said, ‘Let me explain my dream . . .’.” Strategy into Action is an approach developed by Smith and his colleagues over many years; essentially, it aims to help people work out what is important in complex environments and make them happen. “The engagement and commitment of leadership teams at all levels is a core ingredient,” says Smith. “The process involves holding workshops aimed at creating one-page plans; enabling structured debate on the ends and means encapsulated in these plans, up, down and across the organization; encouraging people at all levels of buy-in; and launching practical initiatives via a series of highimpact events. But the value to Foodsolutions lay not so much in the

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conceptual model as in the extent to which it provided a structured process for agreeing a plan and making it work.” “As a newcomer to the business, I didn’t know enough about it to challenge people when they told me something wasn’t possible,” says van Herterijck. “Moreover, it’s not my role to know everything inside out. With my executive team, our job is to create the right vision, put the right people in place, to ensure they have the right priorities and to coach them to help achieve that vision. What we could bring was process, not content, and that’s where Strategy into Action would help, it would provide strict discipline in terms of how we went about things, but didn’t tie us down in terms of content.” Four months of work ensued. Van Herterijck’s team knew that any shorter timescales would push the business units into second-guessing what was wanted from them, rather than analysing what they actually thought they could achieve. The individual country operations prepared their business plans and submitted them to van Herterijck; he and his team went back with comments, perhaps areas where they thought a country might be being too pessimistic or hadn’t thought through its approach. They then compared the aggregate of all the local proposals with the top-level targets for the year set by Unilever’s head office. “We could see where the gaps were,” says van Herterijck, “and we could go back to the countries and say, ‘Here are some ideas, see what you can do with them’.” When the second set of plans produced by the countries took the company to within a whisker of the top-level targets, van Herterijck’s board accepted the plans as they stood. “One of the important lessons we learned,” he says, “is how important it was to accept these second attempts even though we thought there were minor imperfections. If we’d gone back a third time, people would have thought we weren’t listening to them but were simply trying to force them to accept the head office numbers. That wasn’t what we wanted at all: the countries have to own their own plans.” “Today,” he says, “we’re close to realizing my dream. We recently held a leadership forum which brought together 125 people from across the entire business and you could tell they felt completely connected to each other. I listened and coached, but didn’t have to say much: the teams were running the show.” The drawback to most consulting methodologies is that they are entirely focused on process (doing things faster) and content (doing things differently), but rarely consider people (those that do the doing). Because it is

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the consulting firm that has developed them, methodologies are necessarily things that are done to clients, not with them. Clients may like the idea – hence the importance of having a methodology if you are a consulting firm trying to win work – but they rarely enjoy the practice. This is, surely, the next step on the evolutionary ladder.

14 Innovation – beyond the borrowed watch?

What does innovation really mean to consulting firms? The industry continues to be haunted by the ghost of the consultant as someone who takes your watch, tells you the time and asks to be paid for the information. Research shows that 90% of clients know the joke, a figure that rises the more money an organization spends on consulting. Of those who have heard it, slightly more than half do not think it is outdated (three-quarters in high-spending organizations). At the same time, fresh thinking is the second most important reason why clients use consultants after access to specialist skills. There are significant barriers to innovation in consulting. The first is the clients themselves: while they may talk about the need for creative thinking, it is a comparatively rare client that means it. All too often, innovation is something that sounds good in theory, but is difficult to handle in practice. Innovative projects are often leaps of faith and many managers do not feel comfortable with the level of risk involved. There are risks, too, for the consulting firms. Innovative projects are hard to plan for and the flexibility they require makes it difficult for a firm to use its limited resources efficiently. Innovative projects are also more likely to disappoint: clients may set out with high but unrealistic expectations, then blame the consultants when they achieve less in practice. On top of this, innovation is rarely a consulting firm’s core competence: while there are a minority of firms which specialize in, and have an established record of, doing groundbreaking work, the overwhelming majority are better equipped to interpret and deliver ideas which have been developed and tested elsewhere – by clients themselves, in business schools or research projects. Spotting and nurturing embryonic

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ideas takes time and a degree of entrepreneurial talent few consulting firms have. The Boston Consulting Group is one consulting firm which can legitimately claim to have generated ideas that have since passed into common business practice. The experience curve evolved out of analysing semiconductor production in the 1960s and the recognition that costs tended to decline with cumulative production volume as producers convert their experience into increasing efficiency. The BCG Growth-Share Matrix remains a mainstay of MBA case analysis. Within a couple of years of being founded, the firm was producing essays aimed at stimulating executive thinking across a broad range of issues: “The subject matter is chosen to be deliberately provocative, significant in implication, and relevant to the policy decisions of corporate competition,” the firm announced in 1964. “There is always a market for innovative approaches, especially where an organization is undergoing wholesale change,” says Steve Gunby, Head of the Americas region at the Boston Consulting Group. “At the most abstract level, companies are entities optimized around their historic business model: everything in them – people, processes, systems and culture – contributes to the status quo, so changing this is enormously difficult. The whole reinforcing system of values and structures needs to change too. While the fundamental questions we address as consultants remain the same, the specifics of how we respond to these challenges – how we change an organization – have to be ever more sophisticated, and that creates enormous pressure on us to ensure our thinking continues to move on. To be innovative with clients, we have to innovate ourselves.” There are two aspects which distinguish the Boston Consulting Group’s approach. The first is the extent to which innovation is woven into the fibre of the organization. “Our firm is built on the notion that there is an enormous amount of learning embedded in our clients, ourselves and in past ways of doing things. We’ve developed complex knowledge management systems to ensure we can exploit this learning: although the results of a particular piece of work may obviously be confidential, if we think we’ve developed a new or better tool, for doing market research for example, then that’s something we’ll leverage by disseminating it across the whole firm.” Each practice area has its own budget for developing new ideas, whether that is putting a team of people together to work on something for a period of time or giving

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someone time off to study or write a book. “At any one time, there is a myriad of different initiatives underway,” says Gunby. “But systems and processes are not enough. To sustain this level of activity, we have to recruit people whom we think will be genuinely innovative individuals and then use our training programme to strengthen that predisposition.” Because new ideas often cross conventional boundaries between disciplines, Boston Consulting Group’s training is much more broadly based than it used to be; being able to engage an organization’s willingness to change is now a fundamental part of the training: “There has to be process, as well as insight,” says Gunby. But much more comes down to the gentle application of peer pressure: “We spend a lot of time sharing ideas in meetings via informal networks: all our staff have to feel that developing new ideas and taking them to our clients is part of their work.” There are very few consulting firms which could claim to put as much emphasis on innovation as Boston Consulting Group does. True, some of the other large firms have innovation “centres” into which fee-earning consultants may be seconded to sit side-by-side with full-time researchers, in order to develop new ideas. But what this means is that innovation tends to be regarded as an “extra”, something that happens outside your normal day job. True, many firms would claim to develop thought leadership, but that is not the same as innovation. So does this mean that the consulting industry is stuck with the takeyour-watch-to-tell-you-the-time image? Is the level of innovation it offers always going to fall short of clients’ expectations?

The Stardust of Consulting The underlying problem seems to be our understanding of the word: innovation smacks of big ideas which have groundbreaking impact. It sounds like the kind of thing only the biggest firms, which can afford to spend millions on standalone think-tanks, can do. It conjures up images of science labs, of serious conversations in hushed voices, of ivory towers. Such an image does not help clients (they expect the impossible); and it does not help consultants (they feel it is beyond their reach). Perhaps when we use the term innovation we should be thinking of something smaller-scale and more down-to-earth.

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Bending the Rules To many clients innovation is synonymous with flexibility. Innovative consultants are those who are prepared to break out of the strictures of their firms’ methodologies, to bend and even flout the rules when the situation demands it – a variation of the consultant good, firm bad perception. Thus, while consulting firms develop methodologies, it is individual consultants who circumvent them, as the following comments (all made by clients) illustrate: • “Very disappointing – it was too much of an off-the-peg solution.” • “The firm ended up telling us what we already knew.” • “What we valued most was the consultants’ good knowledge of the market and their flexibility.” • “They were innovative, taking the time to understand our real requirements and tailoring their approach to meet our needs.” • “A bad firm is one who either does not listen or appears initially to listen but who comes up with a pre-packaged solution.” Indeed, comparing the responses of clients who have been pleased with the work done by their consultants with those who have been disappointed shows just how important flexibility is seen to be. Happy clients are roughly eight times more likely to believe their consultants took a flexible approach (Figure 14.1). Moreover, it is almost certainly lack of flexibility that gives rise to jokes about consultants taking your watch to tell you the time, rather than lack of creative thinking as such. The people who hire consultants, and who are more removed from the actual process of consulting, tend to have a far more positive view of a consultant’s flexibility than those who work closely with them – project managers, people seconded to a project to work alongside the consulting team and even end-users. Indeed, end-users, the people most directly affected by the work consultants do, are half as likely as the decision-makers at the top of their organization to believe consultants can be flexible (Figure 14.2). Innovation can therefore be seen in terms of what it is not – not following a rigid procedure. British Airways’ London Eye is one of the most beautiful additions to the London skyline in recent years: an elegant structure combined with breathtaking views have made it the city’s most popular tourist destination. It’s an

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Figure 14.1 Perceptions of flexibility comparing clients satisfied with work done by consulting firms with clients who are dissatisfied

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architect’s dream, but an operational nightmare. As a business, it is very space-constrained: it has only a tiny shop and no restaurant so, unlike most attractions, the opportunities to drive up revenue per customer are very limited. “We’ve been very successful at attracting a high volume of customers,” says Eleanor Harris, London Eye’s Operations Director, “but by 2004 we’d reached a crossroads: our costs, insurance and rents were all going up, but where were the new opportunities for growth going to come from?” Such opportunities as there are involve trading up from a conventional ticket: having champagne and roses for romantic evening “flights”, combining a ticket with a hotel package, designing a weekend in London round a visit to the Eye. “We have more in common with lastminute.com, than we do with a traditional tourist attraction,” says Harris. “They needed to take the flexibility we didn’t have in physical terms and apply it to the kinds of tickets and deals we could offer.” But the obstacle here was the Eye’s ticketing system, which had originally been designed with theme parks in mind and was not capable of handling all the different elements the Eye now wanted to bring together. Harris therefore approached BT, which had been providing on-site support for the existing ticketing system, to help them develop a system which suited their specific needs. “The unique aspect of the new e-ticketing service was that it was to be integrated with third-party systems so people can book a hotel, get discounts from restaurants, get tickets for other shows, all at the same time they booked their tickets for the Eye,” says Alex Barrie, BT’s project manager. “Everything had to be automated: the system had to be capable of processing direct and indirect sales while stripping out costs for the Eye and its business partners.” It is far more complicated than it looks on paper. If someone bought a ticket from a third party, they would get a voucher which they would then have to queue to convert into a ticket when they got to the Eye, which negated one of the reasons for paying in advance. Moreover, it was only when the voucher went into the till that the Eye and the third party which supplied the voucher would know that it had been consumed. This meant that calculating how much commission various third parties were entitled to would create a mammoth paper chase to reconcile the invoice sent with the vouchers redeemed. “One of the things we were bringing was expertise in business-to-business trading,” says Barrie, “a combination of industry

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knowledge and innovative technical thinking. We had to be able to design a solution in which everyone won: visitors wouldn’t have to queue up; third parties would know how much commission had been earned; the Eye could reduce its back-office costs while also offering more flexibility and choice.” No one had done anything quite like this before and both sides were at pains to ensure that none of the creative thinking was lost in the process of designing and constructing the system. Ideas, as well as time, were money. “It helped that BT knew our business very well,” says Harris, “because it meant we could all sit down together and go through what we wanted and how we might be able to make it happen. We had a vision of the kind of system we wanted – fast, front-of-house ticket collection machines, stateof-the-art scanners. Alex and his team had to take a creative approach, interpreting the challenges we faced as a business and translate them into technical ideas.” “It helped that the Eye is such an innovative and intelligent client,” says Barrie. “They knew exactly what they wanted and why it was important. It’s a tightly run business in which everyone understands what their role is and how they contribute. We were each pushing the other to come up with better and better ideas: it was an exciting process for everyone involved.” Harris agrees: “I’ve been involved in consulting projects where both sides have claimed to be partners but still applied the old them-and-us mentality in practice. Our relationship here was excellent: BT has been open-minded and listened to what we have to say; where we’ve suggested changes, they’ve taken them on board in a positive, not grudging, way. And that’s generated a huge amount of trust between us. This project was a real leap of faith,” says Harris, “and we’ve all invested a lot in it. But we think we’ve got one of the best systems in the marketplace, and we’re already seeing the benefits in financial terms: special flight tickets have doubled this year.” Generating Insights Innovation in consulting projects is not just about flexibility any more than it has to be about blockbuster ideas. For most clients, innovation means insight. Bob Dench used to run Barclays’ investment management businesses and is now on the board of AXA UK; he also has a variety of non-executive roles for other financial services companies. As you’d expect, he has seen a

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lot of consultants come and go. “After years of cost-cutting, Barclays had absolutely no fat left in key areas of its organization,” he says. “Any significant new initiative, whether it was aimed at taking out more costs or increasing revenue, meant bringing in short-term additional resources – ‘body shopping’ consultants – from outside.” The organizational upheaval caused by waves of change in the financial services sector meant that many specialist skills were in short supply: “Like other companies, they found it hard to recruit the specialist skills it needed,” says Dench. “Moreover, we were also conscious that we wouldn’t require these skills in perpetuity: it was more a question of filling specific short-term gaps.” Although faced with little choice, Dench was, and remains, cynical about the way some consulting firms operate. “You have to be sure you use the right firm,” he says, “so you don’t get too great a divide between the people in charge and the people who actually do the work. There are too many firms whose business model depends on having a partner who swans in once a fortnight while the junior people crack on with the work, who use you as a rung on their personal ladder through your organization and forget you’re the one signing today’s cheque.” Against this backdrop, one group of consultants stood out, Troika, which specializes in the financial services sector. “One of the main reasons why we set Troika up was that we wanted to be able to work closely with clients and to avoid the arrogant air or boffin-in-the-corner approach that characterized many other consultancies,” says Andrew Stewart, one of Troika’s cofounders. “It sounds heretical to say it in this industry, but we don’t want to employ gurus who put clients’ backs up. We have bright people who know what they’re talking about but whom clients enjoy working with. These are people who won’t stab them in the back and whom we can trust to get on with things and make the work they do a positive experience for all concerned.” Freedom is one of Troika’s most cherished values. “Like other consulting firms, we have frameworks and processes, but we want them to liberate people’s thinking, not limit it,” says Stewart. “Once we’ve established that we can trust someone, we give them a lot of freedom.” There is freedom of information, too. “Knowledge isn’t power here,” says Stewart. “We can’t even understand why people should think like that.” It helps that every time someone goes to see a client, they write up a summary of the meeting and distribute it to everyone in the company, including the support staff. “Very

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occasionally something comes up that’s confidential, but it’s the exception that proves the rule,” says Stewart. “Our default view is that everyone should know everything. This is the best – indeed, only – way to ensure that we keep up with all the gossip about what’s going on in this industry and to perpetuate a culture in which everyone thinks, ‘Oh, that’s a good point, I should be talking to my client about that’.” Andrew Veal is Troika’s Sales and Marketing Director: “Capturing all this information doesn’t mean we have an expensive customer relationship management system and lots of formal procedures. Instead, we have simple mechanisms for monitoring who’s doing what and indexing the information so that everyone can find what they need. We also don’t limit contact with important clients to senior people on our side, but encourage everyone to get involved; the connections they make don’t necessarily pay dividends straight away but they do in the long term. At the same time, we don’t want people to feel under pressure to sell work: it’s much more important that they build up their credibility within their own network. Creating a culture in which freedom, knowledge-sharing and networking are just the way we do business is the most important thing.” Bob Dench first came across Troika in 1999, when they had been asked to advise on a project in another part of the bank. “They were very bight people, but the reason why they really stood out was not just how much they knew about our industry but also how open and honest they were. We could use them to sound out ideas about our business on subjects ranging from potential acquisitions to how to improve our brand in markets where Barclays was relatively weak. When we moved on to thinking how we would move out of the life insurance business, it was Troika who helped us do a deal with Legal & General and manage the transition. Theirs is a low-key approach: they don’t ask for business but we use them because we know they can deliver. When we were evaluating the Legal & General deal, their analysis indicated that we’d get a 30% increase in sales, and that’s what we got. They don’t claim they can do something when they can’t: they’re honest about their strengths and weaknesses, and they don’t try to lock us into a long-term process – we don’t get multiple phases of work.” The other factor that set Troika apart in Dench’s eyes was the extent to which they could surprise him. “Many consulting firms follow a set script,” he says, “and they won’t deviate from that no matter how much you need them to. The people at Troika are more like disciplined jazz players; they

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think on their feet and that improvization produced insights we hadn’t anticipated. Those moments are like stardust: they’re few and far between in business, let alone consulting, so you treasure them.” The mistake we make with innovation in the consulting process is that we liken it to a wave – massive in scale, sweeping everything before it. In practice, it is the stardust which clients value most.

15 The two-way mirror: listening and talking to clients

One of the main criticisms levelled at consultants over the years is that they surround themselves with mystique. Clients, uninitiated in the ways and rituals of the consulting process, were expected to hover on the threshold of the shrine, waiting for the oracle to speak. Yet some firms are learning that it is better to throw open the doors and invite the client in.

From Small Acorns . . . Billund, in western Denmark, does not immediately look like a place for a grand business experiment. Its rolling hills and small farmsteads speak of a gentle life, not the cut and thrust of the metropolis. But it was to a university campus there that Implement, a Danish consulting company, invited some of its clients and all of its employees in August 2005. Implement employs more than 130 people helping clients plan and implement changes. It is a broad remit, covering everything from strategy, leadership development and supply chain management to IT, but what distinguishes Implement from other consulting firms offering a similar range of services is its stress on using the consulting process – the experience people have from working with Implement consultants – as a means of ensuring the improvements delivered outlast the consultants who helped deliver them. People learn best from their own experiences is part of the firm’s credo; so too is the idea that real change is never easy but requires extraordinary effort. “Every project is a change project,” says Niels Ahrengot, one of Implement’s founders, “because they all involve changes in

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attitudes, behaviour, structures and technology. Implementation isn’t something that happens at the end of a project, the last of a series of phases: it should be the focus throughout.” The trip to Billund was the latest meeting of Implement’s “university”, a couple of days set aside every year and timed to coincide with the point at which most Danes are returning to work after their summer break. It is an opportunity to review the previous year and make plans for the coming one – all the things you would expect from a conventional company gettogether. The difference is that Implement invited its clients as well. Thus, it was not just employees, but clients too, who contributed to the daylong debate on how Implement is perceived, what it can do to improve its services, even what its future strategy should be. For a couple of days, the tables were turned: the clients became the consultants, advising Implement. “We thought it would be a good idea to invite clients because we want an honest relationship with them,” says Ahrengot. “We don’t want to walk into their offices pretending we’re something we’re not; we want them to know everything about us, even if that means washing our dirty linen in public!” It was a high-risk strategy from Implement’s point of view. What would happen if one client bad-mouthed the firm to another? How comfortable would the consultants feel about receiving advice rather than giving it? In fact, the proposal split the company almost equally: “Some of our older consultants did find the idea quite threatening,” says Ahrengot. “They were used to being in charge and they didn’t think they’d feel comfortable having an open discussion in front of their clients. But the younger consultants thought it was a very natural thing to suggest: they think this kind of openness and honesty is the way business will be run in the future. The younger generation is also perhaps a more confident one: they are more prepared to say when they don’t know something or to walk away from a piece of work they know they can’t do – and our proposal showed them that we want to be authentic as a business, not just at the individual level. Moreover, when we’re working with clients, one of the things we try and show them is how important it is that they don’t pretend to be something they’re not, otherwise they can’t learn and change. If they can do this, then they’ll gain the courage to do or be something different. And that same thinking applies to Implement: we have to be brave if we’re going to be different.”

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Clients reacted very positively to the idea: “No one said no,” says Ahrengot. “Everyone thought it would be an interesting experiment.” There was a quid pro quo: Implement invited the clients to take part in the professional development workshops which brought together leading speakers on a variety of change-related topics. “Part of the aim was simply to bring together a lot of bright people and give them a chance to talk about the issues – and that was an attractive proposition for all sides,” he says. So, for two and a half days, Implement’s clients sat down with their consultants, talking about change management issues, discussing Implement’s style – what was good and what might need to change in the future. “The most important thing we learned was how critical the simple things in a project are: that it’s often not the complicated issues which derail a piece of work but the basic things, because these are the things that matter to the people with whom we work side-by-side. They’re much less interested in the grand strategy than in practical questions about what they as individuals can do differently and better. We were lucky enough for the overall feedback to be very positive and constructive, but it also brought home to us how easy it was for people on the ground to get confused or frustrated. That’s something we’re taking into account in terms of the development of our consultants.” The process does not stop there: Ahrengot plans to invite clients to Implement’s next “university” and to organize smaller, interim meetings on specific issues. “We want clients to feel they have a stake in how we develop,” he says, “that they should be able to shape our future to fit their needs. Everyone will gain from this.” Consulting by the client for the client.

. . . to Spreading Oak Trees It would be hard to find a firm more different from Implement than Halcrow, the giant engineering consultancy, yet there are clear parallels between what both firms are trying to achieve. To build on its account management structure (see Chapter 9), Halcrow has what it terms a Strategic Relationship Development programme aimed at its most valuable accounts: “SRD ensures we’re far more joined up internally,” says Andrew Payne, who is responsible for the programme, “but it’s also an assessment and review system, fuelled by feedback from clients.”

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Clients like the opportunity to provide feedback because they benefit too: Halcrow is able to point to areas where the firm has been criticized in the past and show how it has improved. In some ways, SRD replaces traditional means of building client relationships with something more comprehensive and systematic. “Clients perceive it to be important: we’re not always playing golf with them and we’re not always taking them out for lunch, because we’re all busy working,” says Payne. Three things set Halcrow’s approach apart from that of other consulting firms. First, Halcrow doesn’t gather feedback from senior executives only, but from people at all levels in a client’s organization. Different areas are scored separately, but it’s possible to get an aggregate score for the project as a whole, so that those involved can see whether they’re doing better or worse than the previous year. The results are mulled over by the account teams and Halcrow’s executive in order to identify areas for improvement. The feedback also indicates the relative importance of different aspects of a project to a particular client, so that Halcrow can see if it is investing too much time in low-priority areas. “It’s a very powerful mechanism which allows us to see what our clients are thinking about us in real-time,” says Payne. “We find it incredibly useful: we know where the strong performance is and where the not so strong performance is. There’s a real drive to understand the client’s needs, to work with them, never mind how difficult some of their requests, and to build our relationship such that it aligns with the client’s ultimate business objectives.” That information helps Halcrow be more proactive, enabling them to suggest solutions to problems that are just surfacing. It can diffuse difficult situations by allowing Halcrow’s consultants to understand the context in which a client’s apparently unreasonable demand is being made. It builds a picture of a client’s needs from multiple perspectives – from the point of view of different national subsidiaries, for example – which means Halcrow can appreciate the pressures it is under. And herein lies the second important facet of Halcrow’s approach. The information isn’t ignored, but is used to drive change at all levels in Halcrow’s organization. Client feedback carries a currency and weight that no amount of internal memoranda could ever match. As Payne puts it: “When we say, ‘Look, the client is telling us we’ve got to improve this’, we find people listen.” So it is not just telling the truth that matters, but doing so quickly and consistently. Communica-

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tion has become one of the most important mechanisms Halcrow has for uniting the firm, and every channel is exploited: regional coordinators liaise with project managers to discuss feedback; client account teams will debate it; there’s an intranet and an internal magazine. Third is the use to which Halcrow puts this information. Follow-up is crucial: one of the main reasons why clients are willing to invest so much time in providing feedback is that they believe it will be acted on. And it’s not just clients who benefit: using what the client says can act as a catalyst to bring Halcrow’s organization together, overcoming its residual division, far more effectively than internal programmes or edicts could ever do. But perhaps the most stunning aspect of the SRD process is that feedback isn’t just disseminated internally. A letter goes out from Halcrow’s chief executive to every client who participated, thanking them and summarizing the results. But it may not stop there. “We had one office where we’d had really tough feedback,” says Payne, “so we organized a face-to-face feedback session with everyone in the office – all our staff went to it – and we held the session in the client’s office, so the client’s staff were there too – and there were some fairly agonizing comments. It was very difficult, but it really created an environment of trust. With another client the very first feedback session was shared jointly with our client. An indipendent survey team relayed to the client what we thought their strengths and weaknesses were and what they thought ours were. It helped us retain a £2 million annual contract and we’re planning to carry out this type of 360 degree feedback exercise every year.”

Breaking through the Sound Barrier Consulting firms talk a lot about the importance of listening to clients, yet they often find it hard to do it. Technical expertise – the status of being an “expert” – encourages consultants to preach. Yet communication – from client to consultant as well as consultant to client – is one of the most important factors in determining the success of a project. Clients who are happy with what the consultants have done are far more likely to believe the consultants have been open and honest with them and have listened to what they have to say (Figure 15.1). The real problems, as Implement and Halcrow have found out, lie in the simple stuff: being able to explain what is going on to people involved in a

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Figure 15.1 Comparing the perceptions of satisfied and dissatisfied clients

project. Consultants tend to focus their talking and listening on the most senior people in a client’s organization – the people who take or influence the decision to hire consultants or who manage the project. Those caught up on a day-to-day basis, either because they have been seconded to a joint project team or because the consulting project will have an impact on their work, are much less positive about the experience. These are the people whose work will most directly have an impact on the success or failure of a project, and these are therefore also the people with whom consulting firms most need to creat a dialogue (Figures 15.2 and 15.3). If we look at the experience of Implement and Halcrow, six common points emerge: 1. Equality: Feedback has to be solicited from every level in a client organization. Typically, consulting firms gather information at levels which are both too high and too low. Formal market research is used to collate feedback from clients on a systematic basis, but the data are often aggregated to a point where they become hard to act on. Thus, you might get feedback that you are not being proactive enough in taking new ideas to your clients, but you will need more detailed information if you are going to be able to respond correctly. Is this all clients, or just some? Are some of

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your people better than others at this? Are there circumstances where it wouldn’t be appropriate, and if so, what are they? At there other end of the spectrum, many firms rely on individuals walking the corridors of their clients’ organizations, picking up nuggets of information as they go. The problem here is that such information is hard to disseminate: it

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may be that the person involved can fix the problems, but escalating issues beyond his or her immediate circle often proves difficult. Moreover, a firm that relies on nuggets of information being filtered up its organizational hierarchy will inevitably be slow to pick up trends. A better approach is to gather the views of everyone involved in a consulting project, from the project sponsor to those whose work may be only indirectly touched by the work the consultants do. This is the only way an accurate picture can be formed of a project’s progress, and the chances of its success and failure. Seeing things from the client’s perspective: Consulting firms are as guilty as any other type of business of choosing feedback metrics which tell them what they want to hear, not necessarily what clients want to say. The best feedback captures the client’s experience – how a particular consulting project felt from their point of view. As Implement has found out, that experience is the foundation on which sustainable improvement can be made. Bravery: Most consulting firms keep their client feedback to themselves; they may not even share it with people in their organization. Indeed, the worse the feedback, the greater the temptation to bury it. Halcrow and Implement stand out because they are willing to share the findings of their client research (bad as well as good) with their staff and their clients. No firm is perfect, so this will never be an easy process, but the worse the feedback, the more important it is. The promise of change: Halcrow and Implement’s clients are willing to invest the time to provide feedback because they have an unspoken guarantee that the firms will act on what they say. Clients want responsiveness: they want to know that the consulting firm revolves around them. This could be something as simple as moving someone out of a particular team or changing the way a project manager reports progress, or it could be something as substantial as going back to the drawing board and starting a project from scratch. The catalyst for internal change: Consulting firms, whether they are partnerships or not, often have rather diffuse power structures built around consensus and consultation, rather than action. In many cases, this quasicollegiate environment evolves into a formidable bureaucracy aimed at gently but firmly preserving the status quo. In such an environment, it can be difficult for individuals to act decisively – there are too many

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checks and balances – but someone borrowed from a client, and speaking with authority, will carry vastly more weight among their clientfocused peers. 6. Continuous listening: Soliciting feedback should never be a stop-start process. It may be that, like Implement, you initiate a rolling series of meetings, or, like Halcrow, that you put in place a systematic process for surveying clients. Either way, it is the continuity and commitment that are implied which count. Never pause; never take your eye off the ball; never give up.

16 Partners and parents

Tim Lloyd has firsthand experience of the impact of mergers and acquisitions (M&As) between large-scale consulting firms. “The first one came out of the blue,” he recalls. “You work somewhere for 15 years, then someone just tells you in three months’ time you’re going to be merged with one of your arch-competitors. If you’re a consultant working at the coalface, it all comes as a bit of a shock.” In fact, it turned out to be a less painful experience than he’d anticipated: “There was a lot of moaning, but it went reasonably well, but then I was fortunate not to be senior enough to have to jockey for position with people in the other firm. Moreover, the cultures of the two firms were pretty similar: we had common clients, skill sets and values. It was a merger of relative equals.” The next one was a completely different story. “It wasn’t a merger, but a sale, and just about everything was different between the two firms – services, culture, approach to the market. There was angst from day 1, a culture of them-and-us from both sides, and it went from bad to worse.” Leaving the firm along with many colleagues, Lloyd set up a business advising clients on business process outsourcing and shared services strategy, providing independent advice to help them navigate their way through an increasingly complicated picture on the supply-side. Riding on this wave of activity, Lloyd and his colleagues found themselves working for global clients who expected them to be able operate throughout the world. “We could have flown people around, but it didn’t make sense, so we looked around for a US partner, and found that some of our ex-colleagues had set up a similar business there. We’d all been part of the same business in the past and had known each other for ten years, so it made perfect sense to work together

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again.” Nor was this just a case of working together on the occasional project: the two companies shared clients, marketing expenditure and intellectual capital. “It gave us a chance to open up a new market for both firms – multinational clients. We could say to a client in Europe that we could carry out similar work in the US, and vice versa. Now, five years on, the two companies have finally merged to form Alsbridge – a process that has been far less painful than the ones Lloyd went through previously. So M&As in the consulting sector can work. But, as Alsbridge’s experience illustrates, there are critical factors which determine whether a deal will work: 1. Lloyd knew and trusted the people in the other company; each side knew how the other operated and thought. 2. The two companies were trying to achieve the same thing. 3. They shared a similar culture and a consistent set of values. 4. They had never been in competition with each other: there was no legacy of acrimony. 5. The market in which they operated was particularly fast-growing, so there were opportunities to be exploited, not scraps to be fought over. 6. Economies of scale (sharing certain internal resources) and being able to leverage each other’s skills and knowledge base proved possible in practice. These prime motivators of many deals are often the hardest things to achieve. Another factor was undoubtedly size: neither company had accrued the scale or complexity to make the integration process a nightmare. So, does that preclude M&As between larger consulting firms? In fact, an important shift has been taking place in the consulting industry over the last couple of years. While most people would rightly be wary about the chances of being able to bang two very large firms together successfully, a new wave of firms is emerging which combine the specialist focus of a niche firm with the resources, capital and clients of a much larger one. The Software Company Software companies have classically concentrated their efforts on their core business: developing and selling software. But as time passed, many

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expanded their portfolio to include consulting services and software training. This trend began with repositioning their software developers to service customers who needed support in implementing the new software or in migration projects. These employees had highly developed skills in their company’s core business: the product side of the house. But, by the late 1980s and 1990s, many software companies had also started their own consulting firms. Initially, their objective was to ensure they could service the burgeoning market in implementation services. Protecting their brand became a priority too, as news of horribly expensive failed projects filtered through to the press. A company that has seen all these waves of activity wash over the market and remain one of the world’s largest software companies is SAP. SAP has created professional consulting services for its customers from within the company, as well as brought in specific expert services that complement its consulting portfolio. Bernd-Michael Rumpf is Global Head of Field Services and Senior Vice President of SAP’s Consulting and Education arm. He has been with SAP since 1999. One of the tasks he was charged with was bringing together eight different entities owned by SAP which were offering consulting services in Germany. “We chose to integrate these smaller, compatible companies rather than make one single big acquisition because we wanted to address issues related to integrating people, programmes and processes as they came up. We were able to ensure our new employees have the opportunity to embrace our values and are committed to SAP; thus maximizing the potential of bringing them on board,” says Rumpf. There’s a link here – almost a mirror image – of the way in which Rumpf views SAP’s relationships with its clients. “Good client relationships are founded on a mutual perception of the value of that relationship,” he says. “If you can’t demonstrate and get value from the relationship then it’s not going to be sustainable.” That means having to put a lot of effort into establishing value, early in the client relationship as well as at the end. “It’s easy to make promises, but you need proof, credible and meaningful references from other clients that demonstrate what you can deliver in practice.” To this end, Rumpf and his team have worked out offerings that provide services for SAP customers’ entire IT lifecycle. This offering ranges from strategic consulting services, solution delivery services, all the way to operations services and lifecycle management services. SAP Consulting opens a gateway to unparalleled SAP expertise. “Our mission is to maximize

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customer success,” he says. “That’s our overarching goal: we don’t only talk about project success.” Rumpf applies the same philosophy to the relationship SAP Consulting has with the product side of the SAP business. All involved parties have to be able to get value from it. This works in several ways. SAP provides a pool of highly skilled resources that projects can draw on: “Our credibility comes from having people with specific industry skills and leading-edge technical knowledge,” he says. “Those are the types of qualities that develop over time: you don’t get them from a two-week training course. Bringing in experts from SAP means we have people who have deep technical knowledge of the software and exposure to new products – they may, for example, have been involved in testing them – and can bring this to clients. SAP Consulting also offers deep insights into business and business processes. It’s the mix of business and technical skills which is crucial for maximizing our customers’ success.” Rumpf believes in this next generation of experts and is continuing to invest in employees who are making fast headway in this direction. Technical architects and business process experts can be very different types of people, so SAP is very active in ensuring these two sides can work together effectively. “Whatever their background, we have to make sure they share SAP’s core values – it’s one of the most important things we check when we recruit someone,” he says. “Those values – customer focus, integrity, quality, commitment, product excellence – are the same for everyone; they’re embedded in the way we work. We’re also clear that each group has a specific and high-value skill and that both sides benefit from working together. There’s a lot of day-to-day reinforcement of this message and we make sure our people also have the time to gain experience from working on international projects which involve both sets of expertise. But, at the end of the day, the fact that every project requires them to work together binds us all together.” Another factor making the relationship between the software and consulting sides of SAP is that the company sees itself as part of a wider value chain. “SAP can only be successful if there is a strong network of partner organizations, consulting firms that can project manage and implement the installation of our software,” says Rumpf. What that means in practice is three things. SAP also invests in training its partners and keeping them upto-date on new releases. SAP offers its customers and partner ecosystem

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several engagement modes, from expert services, to quality assurance and safeguarding. “We end up working in many different modes,” says Rumpf. “In many cases, SAP simply gets a licence fee for the software, but there are also clients who prefer to see us getting more involved. They want the reassurance of knowing that they have recourse to our technical knowledge. There are even occasions when, because we make the software, we are asked to be the prime contractor on a deal. To dispel any confusion about what we’re trying to achieve, we’ve made it clear that we don’t want to grow faster than the market: in other words, we don’t want to take market share from our partners. That gives us a degree of stability and our partners, reassurance.” The Telecoms Company T-Systems is a wholly-owned subsidiary of Deutsche Telekom, providing a wide range of technology and systems services, from network architecture through to business process outsourcing. Its 52 000 employees support around 160 000 medium-sized and large-scale customers across 20 countries. Dr Arnulf Heuermann is the Managing Partner in charge of the international telecoms practice at Detecon International (founded in 1977), TSystems’ consulting subsidiary. Although it is wholly-owned, Detecon has retained its own, well-established brand. “We’re a different type of organization from other consulting firms” says Heuermann, “because we’re entirely focused on the telecoms and ICT sectors.” Detecon employs a substantial number of senior consultants with vast experience. (In fact, the company also provides interim managers to clients.) “We can afford to have the specialists which generalist firms don’t have,” he says. “Over the years we’ve also managed to build up strong relationships with universities, as well as offering internships.” Detecon can also call on the technical skills of T-Systems when it comes to full-scale implementation, which means its staff can concentrate on what they do best – providing expert input and advice. Then there is also the relationship with Deutsche Telekom itself: “Deutsche Telekom gives us access to innovation and research which would otherwise be difficult to obtain as an independent niche firm.” These relationships are paying dividends as Heuermann’s colleagues take the knowledge they have of setting up networks and operations to less

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developed telecoms environments in Asia, Africa, the Middle East and Eastern Europe. “Clients can depend on us to have up-to-date knowledge of everything from economic business issues to technology developments.” Heuermann says that working with other consulting companies is definitely the exception rather than the rule: “We do work with partners who have complementary skills, for example law firms on regulatory work or research institutes on postal regulation. We are used to making relationships work externally, as well as internally.” The Outsourcing Company Serco has been in the business of delivering essential public services for 40 years, and is at the forefront of the changing relationships between the public and private sector, delivering services that range from running airport control towers in North America to operating the kilometre-long Ghan train, one of three transcontinental services the company owns in Australia. Since 1964, it has been maintaining the ballistic missile early warning system at RAF Fylingdales in the UK. In 2003, Serco established a consulting practice. Organic growth and an acquisition followed, culminating in the launch of Serco Consulting in early 2006. “We’re a very small part of Serco’s 42 000 staff,” says Peter Illsley, who heads up Serco Consulting, “but we’re growing fast. We have to win market share in a fiercely competitive environment, and the only way to do this is by being better than anyone else.” Most of Illsley’s team were recruited individually into Serco rather than through the acquisition. “Acquiring another consulting company would have been very difficult,” he argues. “We’ve had plenty of approaches, but it’s like buying the wind: you think you’re getting lots of good people, then half of them leave or turn out to be associates on short-term contracts, in which case all you get is the associate phone list.” He’s equally cynical of alliances: “We get calls all the time about this too, but we’d rather not do it because it just complicates our lives. We’ll work with a few, small, highly specialized firms who genuinely add something different or keep us on our toes, but generally success lies in having a simple business model.” Making the relationship work with that much larger parent is vital: Serco mainly delivers services, whereas Serco Consulting works mainly “clientside”, helping its customers procure and manage services providers. “We use

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knowledge from Serco’s experience as a highly successful service delivery organization to help our clients manage deals which are often very complex, help them get over the transition process as quickly and painlessly as possible, and deal with the multiple stakeholders,” says Illsley. “In addition, we carry out work for our core divisions, or work alongside them to provide a seamless service for external clients, shaping client organizations prior to them taking on services run by the operational side of Serco.” Success depends on the fact that each side of the business can benefit from the other. The main Serco divisions need the consulting expertise of Illsley and his team, and the consulting business needs the operational and deal-making expertise and contacts of the Serco divisions to generate work for it: “We’re not intended to be a sales machine or tasked with forging relationships with more senior people and using them as a channel for Serco’s wider services,” says Illsley. “We just do consulting.” The Engineering Consultancies “2005 was another good year for us,” says Peter Madden at EC Harris. “Although as a consulting business we’re relatively small, we’re a critical part of the services offered by the wider firm.” EC Harris focuses on helping clients get better value from their physical assets. Not surprisingly, its client base includes commercial property developers, airports, rail companies, hotel chains – indeed, anyone with a substantial amount of capital tied up in buildings or infrastructure. Its services include quantity surveying, project management, building surveying, management consultancy, software development, facilities management and 15 other disciplines, including engineering and design-related professions. An embarrassment of riches on paper, it has all the makings of complexity in practice. So how does Madden’s team make it work? “We don’t go to market by ourselves,” he says, “which means that all potential entanglement about who owns which client is immediately irrelevant.” Instead, his practice, like all the others, forms horizontal groups in the company’s matrix, but it is the vertical groups, focused on specific industries, which are responsible for winning business. The sales force sells the whole business, not just individual practice areas. “Moreover, rather than trying to interest clients in a service, this cross-practice focus means we can develop ideas that bring together skills to solve very specific problems

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– how a water authority can best meet its regulatory commitments, for instance.” The various parts of the business also depend on each other. “One of our biggest projects at the moment is for a major airport,” says Madden. “It’s such an enormous, complicated endeavour that the business case for using our consulting skills is compelling. If we can look at costs across their whole supply chain and identify even small percentage savings, the absolute amount of money saved is huge. At the same time, our consulting business couldn’t survive independently: being tied in to implementation means we’re less likely to be commoditized.” Nor is that sense of mutual dependence limited to EC Harris’s own organization: “We’re building what we describe as managed communities,” says Madden, “networks and alliances of consultants, clients and supply chains, all of whom can work together on particular issues.” “You get new and better ideas when you cross-fertilize people from different backgrounds and experience,” agrees Alan Marsden, chief executive of Rossmore. “Eighty per cent of our business is behaviourally-based, so you’d expect us to be able to engage with people in our parent company, because if we couldn’t, we shouldn’t really be in this business.” Although a separate organization, Rossmore is 64% owned by Arup (and will be wholly-owned by the end of 2006), another global engineering consultancy, whose 7000 consultants dwarf Rossmore’s 30. The structure and history here are different from EC Harris’s: Rossmore was a separate company, although some of its shares were owned by Arup even then, but in 2004 it became a wholly-owned subsidiary, moving into an Arup office. It has been a significant change – business psychologists and engineers do not have much in common – but it is one that has started to pay dividends as the two companies work together on more and more projects. Marsden’s philosophy is not far from Rumpf’s at SAP: treat your parent organization in the same way you treat your clients. But whereas for Rumpf the key lay in value, for Marsden, not surprisingly, it lies in engagement. “When we work with clients we put considerable effort into understanding their culture and history, talking to them about what they’ve done well in the past and what has gone wrong. That’s the best way to engage people: most managers, the more so the more senior they are, are very proud of their achievements. We have to apply the same level of dedication and sensitiv-

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ity internally: our relationship with Arap won’t work if we’re continually trying to impress them with how clever we are. And that’s paying off: in 2005 we jointly worked on 13 large proposals, compared to just two the previous year. It’s just like having another set of clients to deal with.” Ian Hackett, a fellow director at Rossmore, agrees: “If we look at what distinguishes the way we work with clients, these are exactly the same things we’d apply internally. External clients are looking for us to transfer knowledge to them and providing a spark of innovation is what keeps a client coming back: new original ideas can actually move the business forward. But they don’t want us to be didactic – no one likes being preached to – and they want us to do things with them, not to them. The same is true in our relationship with Arup. Every side, internally and externally, has to benefit from the relationship. If something isn’t good for the client, then it’s not good for either Arup or us; equally, if something isn’t good for Arup, then it’s not good for us and vice versa.” The idea of small consulting companies operating as standalone parts of larger ones offers an alternative solution to some of the operational problems dogging consulting firms: acquiring financial security without having to compromise their focus; getting access to a variety of skills without having to recruit them on a full-time basis; and being able to handle large-scale projects with a small resource pool. As the examples above illustrate, making this work depends on: • clearly different skills involved, so the opportunity for internal conflict is negligible; • a common culture, irrespective of the different services offered and backgrounds of the people involved, ideally built up over a period of time; • both sides understanding, respecting and investing in the value the other gets from the relationship; backing this up with a structure that supports interdependency; • being accustomed to working with other organizations and creating effective internal and external networks; not being put under pressure to achieve the kind of financial targets that create internecine competition; • applying the same way of working internally as externally.

PART V Values

17 Values

What better way to talk about the values a consulting firm should have than by witnessing them in action in some of the most gruelling conditions imaginable?

Turning the Lights back on in T’bilisi Georgia, the former Soviet Union republic, is probably not the top destination for a consultant in search of an easy or glamorous existence. With economic growth depressed by strained relations with Moscow, regional disputes and corruption, keeping even the most basic of services going has been difficult. “During the energy crisis in the early 1990s, people got used to living in darkness,” says Tariel Mazmishvili, a regional manager of the state-owned electricity company, United Energy Distribution Company. It was a vicious circle: unable to supply electricity all the time, UEDC’s revenues fell, making investment impossible. “Working in the sector was very difficult,” says Mazmishvili. “We sometimes had to use our own money to solve problems.” By 2002, UEDC was a financial, technical and operational disaster. A consolidation of 59 smaller companies, it had mounting debts and was virtually incapable of collecting charges for electricity it supplied; it could not pay its taxes, borrow funds or even use a bank account, let alone attract new investment. Earlier government attempts to privatize the company’s assets had failed, leaving it at the mercy of endemic corruption. Employees were paid erratically and often had to give kickbacks to their supervisors to keep their jobs. No one knew exactly how many employees there were: although

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it claimed to have around 3200 employees, in practice there were twice as many. Service was terrible. Some customers had no electricity for most of the winter: those who did usually had up to six hours’ supply each day but sometimes had none. Even in the summer, daily disruptions were common. More often than not, faults were repaired by customers themselves. The only way to get a 24-hour supply was to steal it. A desperate Georgian government approached the US for help. The US Agency for International Development (USAID) stepped in and asked PA Consulting to take over executive control of UEDC for an initial period of 18 months (subsequently extended by another 24). PA’s job was to rebuild UEDC’s commercial and technical operations; strengthen its financial management; help the company meet wholesale electricity consumption targets; and help the government rationalize the energy sector, attract investment and eventually privatize UEDC. PA found the UEDC without money, credit or management systems and controls, and without reliable information about its burgeoning staff or its dwindling assets. In tackling the problems, its consultants faced abuse, threats and physical assaults. Information was destroyed, facilities were shot at and attempts to collect bills provoked demonstrations, often backed by prominent politicians. The situation was initially so bad that USAID considered cancelling the project. However, the PA team took over full management control and executive authority, initially staffing all key positions, including general director, chief financial officer, technical director, director of legal and regulatory affairs, director of human resources and administration. The first priority was to roll back the tide of corruption which had engulfed the company for so long. New processes and functions were put in place which, for the first time, established who had authority to execute contracts and undertake legal proceedings. The new team also restored UEDC’s ability to use the banking system (and thereby avoid handling cash), and established a commercial security service to undertake unscheduled audits of books and records, launch “midnight raids” on facilities and investigate possible embezzlement or mismanagement. PA also rotated individuals – especially if they had been in post for a long time and taken no leave – knowing that corrupt employees like to stay in position to avoid detection.

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The next step was to restructure the company’s labour force: almost threequarters of the original 6200 employees left; new people were recruited, taking the total to around 4000. A more attractive salary structure, combined with objective criteria for dismissal, helped to secure union support for this programme and, as the company’s reputation has improved, so has its ability to attract better people. “Working conditions improved, salaries increased and social welfare issues were addressed,” says Lasha Chokheli, chairman of the labour union. “The current management of the UEDC is now the only one in Georgia to have taken responsibility for paying off salary debts incurred by previous management. The labour union expresses sincere gratitude for the professionalism and personal dedication of every member of PA’s management team.” Finally, the PA team strengthened UEDC’s legal operations. Previously, the company seemed unable or unwilling to defend any court cases: former managers were alleged to have colluded with successful plaintiffs to share settlements. UEDC has also initiated over 30 prosecutions for corruption and theft, and pursued over 600 cases of electricity theft (versus none prior to PA’s involvement); a handful of former management and staff have been jailed. Adapting established management approaches to Georgia’s unique culture and condition was essential. Although stealing from state enterprises is common in Georgia, stealing from neighbours is taboo, so the PA team pioneered communal metering, whereby groups of UEDC customers took on joint responsibility for paying for electricity recorded via a single meter. Recognizing the exceptional diversity of UEDC’s customers, especially the Azeri and Armenian communities, PA encouraged each of the UEDC’s regions to pursue its own PR and outreach efforts. New computer systems took into account Georgia’s multiple languages, telecommunications problems and lack of IT skills. The effect has been extraordinary. “Since PA’s arrival, we have been able to supply electricity almost 24 hours a day,” says Mazmishvili. “By July 2004, the collection rate had reached 96%. That means we can pay people more, invest in transportation and the latest computer technologies. I’d like to express my gratitude to each and every member of PA: they restored my hopes.” Mazmishvili is not alone. “At the peak of the energy crisis, Kutaisi, our regional capital, was dead, businesses could not function,” recalls Temur Suladze, now Head of Sales for the West Central Branch of UEDC. “I led

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demonstrations throughout the city against the electricity company. Then the consultants came: metering started, illegal connections were cut, power started to flow. That’s why I took a job at the company: I wanted to be able to contribute to the positive changes. For a year we battled corruption, energy theft and threats from criminal gangs. Today, I’m proud: my town is alive again, it has power, business is developing, and its people are grateful to my PA colleagues.” Eter Tsitsikashvili is a grandmother who lives in Old Rustavi: “Before PA came, we might have electricity once in a new moon at most. The worst part was having power for only one or two hours a day. That was the only time you could cook food and it was like a contest: you had to do it during a certain time, otherwise your family would go to bed hungry. Once, in midwinter, when the city was completely dark, I was taking our ‘ration’ home – a hot dinner I prepared at my neighbour’s for my grandchildren. In the unlit street I slipped and fell; the dinner spilled. I felt such helplessness I did not want to get up. I will never forget that awful feeling: we had no hope. It’s not only me who should be grateful to them, but the whole district. If it wasn’t for them, our children would be cold; many families could have died during those difficult years. Everything changed on PA’s arrival: those people have kept their promise.” PA is now in the process of transferring management responsibilities back to local employees – both PA’s Georgian team members and managers within UEDC. Already three of the five top management posts originally staffed by PA expatriates have been occupied by Georgians. By helping to make Georgia self-sufficient in management expertise for the energy industry, PA is supporting the government’s aim of industry reform and increasing the likelihood that UEDC’s success will be sustained after the management contract ends. It is exceptional for a consulting firm to manage an entire organization, especially in such appalling circumstances. Donor support for transitional economies is usually limited to technical assistance or advice, but with UEDC, almost for the first time, USAID financed a management team to achieve aggressive reforms. The results were achieved with very limited external investment. In fact, UEDC achieved a collection rate superior to a more favourably located Georgian competitor, Telasi, which had received more than 50 times as much investment. What made the difference?

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Dean White, who oversaw the engagement and later took over as UEDC’s general director, is in no doubt. “We pulled together five expatriates and around 30 locally recruited staff into a highly motivated team with a strong sense of mission. They worked seven days a week, for most of their waking hours. That dedication, allied to the sensitivity it displayed towards local issues, created a new spirit in the company and with its customers and stakeholders. We showed that a committed, creative and courageous team can turn round even the most deeply troubled organization, rooting out corruption so that honest employees can get on with their jobs. We showed that proper management is a prerequisite for improving utilities in developing nations – and should precede large-scale investment and/or privatization. More than anything else, the UEDC assignment is a lesson in what can be accomplished through excellent teamwork. I’m so proud of the handful of us expats and our 30 Georgian loyalists. I’d take them into battle anywhere.”

Lessons from the Freezer The Polar Challenge is a competitive, 320-mile team race in the unforgiving conditions of the Arctic, known to be one of the toughest in the world. Seven teams of three set out to travel on skis for 19 days, travelling for a minimum of 12 hours a day, pulling sleds weighing 70 kg, in temperatures reaching –70 degrees. But the Polar Challenge is not just about the exhilaration and excitement of these challenges; there is also a longer-term perspective to its work, which aims to give something back to the communities of the remote and often underdeveloped territories where the challenges are held, through education and environmental programmes. The physically demanding nature of the challenge, combined with the extreme weather conditions, mean that safety and survival are paramount. Base camp is in Resolute, Canada, and every team has to transmit their location daily. Any team failing to communicate with base camp triggers the first stage of a rescue plan. The Polar Challenge team itself consists of experienced adventurers, supported by logistics experts and leadership and team specialists, but, for the first race in 2004, they also needed someone who could design and build the kind of robust, reliable communications systems they needed to stay in touch.

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Extreme temperatures, and the limited number of people on the ground able to man a telephone system, meant that a voice-only approach to communications would have been impossible to support. The challenge, therefore, was to come up with an alternative means of communicating with base camp and with home, using technology appropriate to the environment. Moreover, the technology had to integrate with the daily routine of the teams and be 100% reliable, achieving the balance between safety, usability and portability. To complicate things further, the Polar Challenge was also going to be filmed by the BBC as part of a series on human endurance, and the BBC had stipulated that its crew had to be able to communicate with staff in London via email. Fujitsu had only five weeks before the start of the race to design, develop, test and implement the system, so there was no room for mistakes. It had to enable the race teams to transmit their location information, identify devices the teams could carry and use easily in freezing temperatures and blizzards, identify a secure, robust wireless system to allow the BBC crew to send emails, and balance the technology requirements with the needs of real people in extreme circumstances. In testing conditions, keeping things simple could be a matter of life and death. “There is no room for dead weight,” says Polar Challenge’s Chris McLeod. “If something doesn’t work first time, every time, it gets ditched. We can’t afford to carry equipment that doesn’t work.” This was the first time anything like this had been attempted. The solution was based on the Motorola satellite phone running on the Iridium satellite network. A unique graphical interface was developed to improve usability and navigability when the teams were physically frozen and less agile. By contrast to a voice-only solution, the Fujitsu data-led solution means that Polar Challenge will be able to accommodate more teams in the future. In a voice-only solution voice slots would be limited, and would have to be scheduled and managed very tightly. The Fujitsu data-led solution meant that support staff were able to receive team reports concurrently, enabling them to focus on potential emergencies rather than managing calls. The basic data communications available at the magnetic North Pole are provided by the Iridium satellite network, but only 2.4 kbps are available and connections are charged at $3 a minute, including connection set-up time, which can take 45 seconds. With such expensive communications, it was important to make efficient use of the limited bandwidth and connec-

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tion time. The Fujitsu team decided to use store-and-forward messaging based on standard Internet email, with text-based content and a high level of compression. Using this approach it was possible to maximize limited connection times and move messages in both directions as quickly and effectively as possible. Another important factor in keeping the connection times as short as possible is management of battery life; within the constraints of the race environment there are limited opportunities to recharge batteries. The store-and-forward messaging service was used for two primary communications services – personal email and team status reporting. Making it work in sub-zero temperatures was a challenge in itself and demanded creative thinking. Electronic equipment had to be kept in sealed bags when transferred from the external temperature of –40 degrees to the relative humidity of the tent. To keep the batteries warm, the Fujitsu team improvised a “hot box” using a microwave-sized camera case, insulated internally with sponge and heated by candles, an idea inspired by the way Indian restaurants keep their curries warm at the table. The technology also had to be easy to use, something that is critical when you are suffering from snow blindness and cannot move frozen fingers. Fujitsu’s design of the PDA used colours to contrast with the snow and ice, and drop-down selections for ease of use. The challenges of the Arctic conditions can only be understood by people who have experienced them, so the only way for the Fujitsu team to be sure the technology they had put together would work – and keep working in this environment – was to go to the North Pole with it, to join the teams and the BBC, living in tents out on the ice. As Tony Martin, co-founder of Polar Challenge, put it, “The Polar Challenge is now an annual event and growing every year as more and more volunteers attempt to achieve their challenge of a lifetime. Fujitsu’s team literally went to the ends of the earth on our behalf; we had – and continue to have – an ‘on ice’ engineer to provide support when we need it. They have met our objectives head-on.” It is stories like these that make you realize that the consulting industry has one of the best commercial propositions on the planet. What better job can you have in the corporate world than to help other organizations achieve their potential? What better way is there of making corporate social responsibility a reality? However, these stories bring us full circle, back to the point at which this book started – but not quite. The values demonstrated by the teams from

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PA and Fujitsu – total dedication and commitment to the goals of their clients, exemplary teamwork and the willingness to think laterally even in the most taxing conditions – are the ones clients associate with the best consultants, but not necessarily ones they link to consulting firms. Whether they recognize it or not, when a client buys a consultant, they are buying the values of a firm: the irony is that such values, like living organizations, need a sympathetic environment in which to flourish. The consultant who has these values, but who does not find them in the firm where they work, will leave. These values have, of course, to be mediated through and reinforced by all the aspects of the client–consultant–consulting firm relationship we have already examined. They determine what kind of person is recruited into a firm, how they are remunerated, recognized and developed. They must be underpinned by the way in which the firm stays close to its clients, wins business and designs its processes. But what more does a firm have to do to protect and sustain its values?

18 Living the values, valuing the lives

How do consulting firms sustain their culture? How do they ensure the values they want to recruit are the same values they protect and nurture?

Creating a Consulting Culture Each of the following companies faced a different challenge to its identity. BDO Stoy Hayward is a middle-sized accounting firm in London which had to claw back its confidence after being caught up in a corporate scandal. DiamondCluster’s brand lies in its people and way of working. Celerant celebrates its 20th birthday in 2007: as a relative newcomer, it has had to establish a distinctive culture from scratch. Taken together, these companies illustrate what is difficult – and different – when it comes to sustaining the culture of a consulting firm. Faith in the Team at BDO Stoy Hayward Polly Peck was one of those Icarus-like stars of the stock exchange. During the 1980s, its share price soared on the back of extraordinary growth under the chairmanship of Asil Nadir, only to come crashing down in 1990 when the profits supposedly generated by Turkish and Northern Cypriot subsidiaries disappeared. Stoy Hayward, as Polly Peck’s London auditors, were inevitably burned by association. “From being a high-growth, entrepreneurial and quite glamorous accounting firm, we became outsiders; in the words of the media at

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the time, we were ‘unclubbable’,” says Simon Bevan, a former managing partner of the firm. But the debacle forced Bevan and his fellow partners to think through what kind of firm they wanted: “We wanted to be marketnot marketing-led, to focus on delivering a good service rather than selling ourselves. We set out to make sure that everything we did centred on the proposition: ‘expert advisors to growing businesses’, a strategy which guided us through the 1990s.” It was the start of a decade-long process of transformation at what is now BDO Stoy Hayward. It put together a team who’d been to different business schools, to develop a business education programme focusing on: organizational effectiveness; innovation; corporate strategy; and growth and entrepreneurship. Everyone in the firm, from the most junior to the most senior, went through a version of this course. As the learning from the initial business education programme took root, a group of senior people developed a methodology for helping the owners and management of growing businesses achieve their aspirations. As a result, the firm now had people who understood the growing business market – and a unique tool that had been developed specifically to help clients in that market. But the real turning point came in 2001–2 when the firm moved from being a national association of local independent partnerships, led by the largest of them in the south-east, to a single national firm. “We realized that we needed to ensure that the strong culture that had made the south-east firm successful reached the rest of the country. From the early 1990s, we’d been carrying out regular staff surveys,” recalls Bevan. “We’d focused on all the conventional stuff – satisfaction, management style, morale and so on – but it was only when we started benchmarking ourselves against other organizations did we realize how positively we all felt about the behaviour and values of the people we worked with. And because we hadn’t understood how important these were, we’d never attempted to codify them: we’d just taken them for granted. We’d also always had strong client relationships, but we’d never really invested any money researching how these were forged.” Extensive workshops, involving partners and staff from all parts of the country, identified four core values: honesty and integrity; taking personal responsibility; strong and personal relationships; and mutual support. In 2002 the firm started to promote these values explicitly, codifying the acceptable behaviours that underpinned them and identifying the unacceptable ones, which would not be tolerated. Recognizing that its people

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had always shared these attributes renewed the firm’s self-confidence and made the integration of a number of independent firms into a national firm much easier than it might otherwise have been. The firm developed an annual client listening programme for its top 500 clients, consisting of either face-to-face meetings between client management and partners who had not been involved in working for them; or telephone interviews by an external agency. The client interviews rate BDO Stoy Hayward’s strengths and weaknesses, and flag up any issues. According to Bevan, “Their remit is to drill down through any problems, so, for example, if someone mentions they’re not happy about fees, the interviewer will ask if that’s to do with the absolute amount of money involved, transparency – they don’t understand how their fee has been calculated – or value for money.” Feedback is given to the relevant client service team, the business unit leader and all the way up to the firm’s senior management. “If a problem crops up in just one client service team, then it’s up to that team to sort it out. If it comes up more often, then we flag it as an issue the firm as a whole has to resolve. We also go back to clients and ask them if things have improved.” The process of change has now extended to the firm’s key account management process. “We sometimes got feedback from clients that some of our older, often very senior partners were trying to do all the work themselves,” Bevan says. “They should have been acting as a conduit, but were ending up as bottlenecks: these have to be business relationships, not individual ones.” Client service teams were re-engineered, with account planning support, to facilitate communication across the firm and to ensure client managers didn’t focus only on the here-and-now, but would try to anticipate client needs. However, it quickly became apparent that some teams were more effective than others. “When we piloted the idea of key account teams, we picked out a range of clients in different sectors – public versus private companies, new clients versus long-standing ones – in order to gauge the critical success factors. Of all the potential variables, one stood out: teamwork. When time had been spent picking the right people, doing psychometric tests and team-building exercises, it made a significant difference to the key account team’s effectiveness.” As a result, each team had an awayday to help them function effectively together, to brainstorm ideas and to put together concrete plans. Teams have reasonable targets and budgets – and there is a single profit pool for the firm as a whole, which means there

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is little incentive for cut-throat competition internally. Mutual support is paramount: “People are expected to work together with the goal of improvement, to give feedback to each other, for others to tell them if they are not behaving in the right way. If someone doesn’t respect his or her colleagues, they simply won’t work with them.” A Shared Sense of Identity at DiamondCluster Formed in 1994 at the beginning of the dot.com boom, recent years could hardly have been more difficult for DiamondCluster. In Europe, mobile phone operators, weighed down by their investments in Third Generation licences and technology, were in a tailspin; fixed-line operators, faced with a different set of challenges, were adopting a rabbit-in-the-headlights approach to solving them. Against the odds – and in contrast to most of the firms that sprang up around the e-business bubble – the firm survived, then thrived, growing by 25% in 2005. Today, the firm’s revenue is spread across seven vertical industries, including financial services, healthcare and the public sector, as well as telecoms. “We do three things,” says Stephen Warrington. “We help people translate the strategies they’ve started to define into something they can do something with, something that’s detailed and actionable. We help them through the technology choices associated with the implementation of their strategy, and we’re totally objective – we’re not in the market to sell systems implementation or hard-/software, and clients find value in that. Finally, we’ll help bring everything together by assisting with overall programme management: we drive things through and get things done. Clients have been increasingly looking for this over the last two or three years: what differentiates successful organizations is not the uniqueness of their strategy, but their ability to get on with what they want to do. Most consulting firms tend to focus on just one of these things – strategy, technology or project management – we combine them in a multidisciplinary way.” Personal empathy: that’s what Stephen Warrington, UK Managing Director for DiamondCluster would say is the firm’s core value. “Our proposition means we have to have the kind of people who roll up their sleeves and get on with things; we need to be flexible and down-toearth,” says Warrington. “But the single, most important thing we need is personal empathy. Listening to people, understanding their constraints as

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well as their aspirations, recognizing what is possible – these all lie at the heart of getting things done.” That value articulates itself in many ways, not just in the people DiamondCluster recruits. “We avoid tried-and tested frameworks,” says Warrington, “we’re more bespoke tailoring than off-the-rack. Every project is managed in a separate way, reflecting its unique nuances. Not having a standardized approach forces people to be creative in every project. We’ll also take a pragmatic view: rather than aim for perfection, we’ll focus on the 20% of work that produces 80% of the benefits.” Similarly, rather than ride roughshod over middle managers in a client organization, DiamondCluster will try to work with them. “We don’t attempt to stratify projects,” says Warrington, “but to operate across the spectrum. We don’t do what many other consulting firms do and ‘man-mark’, designate particular individuals on our side to work with specified people on theirs.” Nor is empathy confined to the firm’s external relationships with clients. “This is a very collegiate environment,” says Warrington. “Everyone owns our culture; everyone has a stake in the firm.” There is little in the way of hierarchy or even structure: “It’s a very fluid organization, so that we can cover a lot of ground with a relatively small number of people.” What comes around internally, goes around externally. Having a supportive culture is the key to building the firm’s reputation, Warrington believes: “The importance of brand is diminishing as consultancy firms mature: clients are looking beyond that. They know what they want and are getting better at distinguishing one firm from another, even among the small consulting firms.” A reputation is harder to build than a brand, because it depends on clients seeing the firm in action. “One of our challenges is to do more to reinforce our cultural distinctiveness and thus our competitive edge in the market place,” he says. Getting Results at Celerant Consulting Celerant Consulting was founded in 1987, merged with Cambridge Technology Partners ten years later to become Cambridge Management Consulting, and re-emerged as Celerant Consulting in 2001. “We know what we do, and what we don’t do,” is how Peter Clements, a long-serving Vice President with Celerant, sums up the culture of his firm. “We’re an operational consulting firm which helps clients implement their

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plans and quantifies the benefits achieved. Clarity is all-important: it dictates not only what Celerant does, but who its clients are and how it approaches its work. It’s how we’ve built our reputation, by doing what we say we will. The only reason we exist is to help our clients improve the performance of their business, so we are very outcome-focused and driven by the results of what we do.” This focus on results shapes and sustains the firm’s culture. It makes it pragmatic: “We don’t believe there is a perfect solution for anything,” says Clements. “We’ll apply any suitable tool or new idea that helps in the delivery of results quickly and effectively. We’re very down to earth, and the people we employ have gone out and done real work – they’ve got their hands dirty.” It sets the standard for recruitment: “Every time we have the opportunity to bring new people on board, we’re reinforcing our culture. If you were to lay all our CVs out on a table, you would see a very diverse mix. We have people from a broad group of industries, as well as many from a consulting background. “But everybody talks about results, and our view is the only thing that can ultimately differentiate us, and that’s how our people work closely with our clients at all levels – from the boardroom to the shop floor – to drive a change in behaviours which leads to lasting financial results and performance improvement. They have a strong sense of reality and that tends to lead to some very practical and hands-on people, people who can develop close working relationships with clients. It’s all about fit”. It imbues the firm’s business processes: “When we talk about results, we talk about financial performance, operational improvement and about cultural and behavioural changes. We set targets for these at the start of an engagement and measure them throughout its course and at multiple levels. A portion of our fees is typically tied to the delivery of measurable results.” The focus on results is also the currency of authority externally and internally: “Every client should have an agenda of the four or five highest value issues that they are focused on. If we and the client are not working on the highest value agenda items, then neither of us is working on the right things. Tackle the issue that’s top of the mind first, but do it in such a way that it has lasting impact.” Moreover, the best results can only be achieved, Celerant believes, through the relentless pursuit of quality and joined-up consulting. “We can

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recruit great individuals from a wide range of backgrounds, but it’s the meeting of those minds that’s crucial,” says Clements. Over the last five years, the firm has transformed its executive education process, organizing courses with Stanford, INSEAD and attendance of select senior management at Harvard. Like every sizeable consulting firm, Celerant has to give its people a “home” to which they belong – in Celerant’s case, there is a functional structure so that people are grouped by functional skill rather than industry or geography. But, having divided people up, it needs to bring them together, by rotating them through roles rather than allowing them to stay too long with a single client, by awarding bonuses that are based in part on overall performance as well as individual contribution, and by having an equity structure that has enabled around a third of employees to be shareholders. “The reputation we build and the relationships we have depend on doing what we say we will,” says Celerant’s Peter Clements. “Relationships have to be multi-level – there’s a real clarity about what we do and what we don’t do. From a Celerant perspective it is very important, as there is no point in taking on a piece of work that does not fall in our area of consulting. That is what gains you a reputation. Being focused is important, because 1) you build a reputation, and 2) you build a high degree of trust in terms of doing what you say you will. Every client engagement is tailored and there is no one answer, that’s our view of the world. Every organization is different because it’s full of different people, and different organizations are at different stages of their evolution.” With such a single-minded culture, it should be no surprise that Celerant is utterly uncompromising in its commitment to its values: as Clements puts it, “We don’t adapt our culture: when you buy us, you get our culture. Ours is a culture where results are key, and the way we get to the results – working with real people who do real work, to improve the way they go about their daily business and in doing so enhance their firm’s overall performance – is what we believe truly sets us apart.” The Flexibility of a Single Value No two consulting firms are alike. Many firms share similar values – indeed, so many share so much that these values have become devalued through overuse. Anyone can say they

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want to work “in partnership with clients” or that they have a “collaborative, hands-on” approach; everyone is “open and honest”. What strikes you, though, when talking to successful consulting firms, is how important it is to have, not a set of values, but a single, overarching dominant value, a sun around which everything else in the firm orbits. Perhaps it is simply hard to remember a single, all-encompassing value: how many managers do you know who, when asked to list the values of their organization, count them on their fingers and then say, “Now, there is a fifth/sixth/umpteenth, but I can never remember it”? Perhaps, if you have just one value, then it can become the one, unequivocal standard against which every decision or activity can be judged. Finally, it may also be that a single value allows a consulting firm to adapt much of what it does to suit the needs of individual clients, without compromising the “soul” of the firm. Without this flexibility, a firm’s processes and culture can become ossified, unable to absorb new ideas. But too much flexibility results in an organization that bends with the wind, one that is too willing to sacrifice its standards when the need arises. “We’ll lose a job if we don’t have empathy with a client, but we’ll also lose it if we have exactly the same culture,” is how Duncan Craig at AT Kearney sums up the delicate balance. “A client wants us to be able to work with them, but they don’t want us to be them. Consulting should always involve a degree of challenge, of asking why something is always done in a certain way.” Lis Astall at Accenture makes a similar point: “I’d say our core value is about client delivery. That’s something we’ve held on to, despite the fact that a third of our partners have joined the firm from other organizations in the last five years. Success depends on being able to bring in fresh thinking without compromising that value.” The same is true, Astall argues, if you look at Accenture’s relationships with its clients and the extent to which it is willing or able to adapt its culture to match that of a client. “Most often, an organization will select us because they can see cultural empathy because there’s a cultural match between us, but there are occasions when someone hires us precisely because their own organization isn’t sufficiently focused on delivery and they want us to come in and change that. We recently had a session with a government department where we each separately, and with the help of an external facilitator, set down what we liked and disliked about the other side, and what we thought the other would say – this is the closest

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we come to adapting the culture. There were some surprises and we’ve used the technique several times since.” With 30 people compared to Accenture’s 120 000+, you would think the Rossmore Group would have a different perspective. In fact, Alan Marsden, Rossmore chief executive, also agrees: “Our culture is an incredibly open one – everyone gets to see our results every month. It’s supportive and constructive. When we recruit people we want them to be free spirits and they can take from our culture what they want: we don’t want to mould them to our culture. But there’s a cultural line that we’re not prepared to cross, with both employees and clients. It takes a lot of guts to say to a client that we’re not prepared to do something the way they want to do it if we believe it’s not right for the business: it’s too easy to tarnish your reputation.” A single value, closely held, allows a consulting firm to balance the need to work collaboratively with its clients while retaining its organizational integrity.

Counting the Value, not the Cost It is one thing to talk about – indeed, live – a specific value, but quite another to be able to explain to the outside world how that value translates into value to a client. This is the heart of the problems consulting firms face in defending their existence to an increasingly sophisticated and cynical client base. Going back to that simple conclusion so many clients have reached – consultant good, consulting firm bad – it is clear that the reason why individual consultants are valued is because a client can immediately see they are doing something. I will never forget being asked to call a client many years ago who wanted to commission a study on whether to launch an in-store loyalty card. As I had been warned he was a bad-tempered, shoot-from-the-hip type, I did so with some trepidation. Indeed, the first ten minutes of the conversation were a one-sided harangue on how he had been passed from person to person in the consulting firm where I worked. “They’re all talking to me about approach, ways of working, adding value, other businesses they’ve worked with,” he ranted. The penny eventually dropped: I almost had to shout over him, “It’s OK. I’m going to do the work. It’ll be me turning up on Monday morning.” That stopped him in his tracks: in all his dealings

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with the firm, he had not spoken to a single person who was actually going to do something. The irony of consulting firms’ insistence on values is that they are rarely articulated as something that is valuable to a client. But wait, you might say, surely values such as integrity, openness and honesty are valuable? Of course they are, but, by their very nature, they are not things clients would find easy to see as an immediate and tangible benefit. The challenge, therefore, remains to connect the “values” with the “value” they generate. Watson Wyatt is a global consulting firm which focuses on human capital and financial management. Adrian Mathias has been with the firm almost 20 years, most recently in charge of an office and a team of 80 consultants. “The culture here is a very informal and open one,” says Mathias. “When I came to work here in 1988, the senior partner came down to shake my hand and said: ‘We are as we are, so take us or leave us. If you like us you like us, if you don’t you don’t’. That’s the kind of straight-talking place it is. You can go up to the senior partner and ask for his or her help.” But the heart of the firm’s culture, he says, is always putting the client first: “If you look after the client, then everything flows from that: happy clients create great career development opportunities which attract the best people and generate the most profitable business.” If anything, the firm takes excellence for granted and has not done enough to recognize the efforts people make to maintain the high standards expected of them. In recent years, that problem has replicated itself externally: like other consulting firms Watson Wyatt now finds itself increasingly having to deal with procurement departments rather than directly with the end-users of its services. Here, too, it is easy to make assumptions about an excellent standard of service – after all, every firm claims that – and difficult to show what these values mean in practice. With this in mind, Mathias and his colleagues have been changing the way they work. “We start off by sitting down with each client in order to establish the criteria the client will use to judge whether we’ve done a good job,” he says. “Everyone in the team, from the most senior to the most junior, will be aware of these criteria.” So far, so conventional. Where Watson Wyatt takes it a step further is in the way it tries to track and report on the value it has delivered, project by project. “The teams working at our major clients are encouraged to record everything, no matter how small, we did to help our clients. It might range from something as significant as changing their reward structure to helping a manager prepare for a particularly import-

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ant board presentation. The aim is to circulate this internally and externally in the form of a formal report. It helps our client relationships – they can see what our commitment to clients yields in terms of tangible results. It helps internally: we’re constantly drumming into people right through the firm that everyone contributes in a big or small way to keeping the client happy, even the tea-girl who sets up the biscuits and tea for an important meeting.” But clients, too, have to be able to appreciate the values of a consulting firm if the latter are to be at all meaningful. This takes us straight into fraught territory: both clients and consultants have traditionally shied away from trying to value the input of consultants for a combination of good and bad reasons. Clients have been reluctant to expose their decision to use consultants to outside scrutiny; consultants have resisted demands to quantify the value of their input on the grounds that no two consulting project are alike, and that much of what they do is intangible and therefore unquantifiable. Paul Sedgwick admits he has struggled with the value of consultants from time to time in his role as Commercial Manager for the UK’s Environment Agency: “It’s something that is neither straightforward nor easy to do,” he says. But it is important: Sedgwick and his team are responsible for letting around £150 million in contracts to a combination of engineering and management consulting firms and contractors. Since October 2000, they have been putting framework agreements in place, sharply reducing the number of suppliers involved (the Environment Agency now deals with just six consulting firms instead of 46). “Before we put the frameworks in place, each contract would have been individually priced and would have required a separate procurement process, often for a low-value piece of work,” says Sedgwick. “The savings in efficiency alone have been considerable, and that’s before we take the better prices we have been able to negotiate into account.” The process has had other benefits, too: because the money is spent with a small number of suppliers, both sides have a greater incentive to invest in the relationship. Regular meetings are held with all the suppliers in a particular framework together, backed up with individual supplier development meetings. “These meetings give both sides the opportunity to explain their objectives,” says Sedgwick. “Each supplier has an action plan which we monitor, and one member of our team is responsible for supplier development. We take them through a presentation of what has been

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achieved and the challenges the Agency faces in the coming year. It looks at the targets we have to meet and how we expect suppliers to help us meet them. The suppliers give us a presentation of what they’re delivering and can raise areas of concern. For example, someone might say that we don’t have the right balance between incentives and risk – between carrots and sticks, in effect. On top of this, we try to identify and develop best practice with suppliers. The Agency should be a conduit: taking good ideas from one supplier and applying them elsewhere.” But the most recent innovation has been one of the Agency’s own making, to introduce “value registers” which aim to capture the savings made during the course of a project – the costs avoided or the time saved, for instance – as distinct from the benefits of the overall project. This is quite different from the way most organizations think about the costs and benefits of using consultants: typically, the latter are rolled up into the business case for a project as a whole, making it hard to see what value has been added by the consultants involved. By contrast, the Environment Agency’s approach aggregates all the small-scale benefits often missed in big projects. “One of the advantages of the value registers is that it increases peer pressure among suppliers,” Sedgwick says. “They can look over each others’ shoulders and see how they’re doing by comparison. It raises the stakes for the suppliers and, because we now deal with a smaller number of suppliers, there’s a genuine incentive to come up with good ideas. We can also allocate work on the basis of performance.” Sedgwick believes there are several reasons why the scheme is working so well. “It’s based on goodwill,” he says. “Although we don’t force suppliers to take part, they clearly stand to gain by doing so. They all want their contribution to be recognized. Second, we include softer issues, such as effective communication, as well as the more obviously measurable ones, so we try to take account of the overall relationship we have with a supplier.” The potential downside, though, is complexity: the process is rigorous and quite a lot of work is involved in managing it and in validating the claims made. “We don’t want to spend our lives capturing this information,” says Sedgwick. “Similarly, the No. 1 priority of our suppliers is to deliver projects on the ground, not fill in forms. To get round this, we focus on project savings and don’t attribute them to individual parties, which would probably have resulted in endless arguments. Suppliers’ reputations thus stand on the overall success of a project.”

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The solution to the valuing-the-values problem is not hard, but it may be frightening. Consulting firms’ attempts to capture and even quantify the value they add to clients is a major step in the right direction. But encouraging clients to do this, systematically and regularly, using one standard process for all their consulting suppliers which is based on metrics clients (not consultants) find useful would be a massive leap forwards. Value, like beauty, is ultimately in the eye of the beholder.

19 Conclusions

This book set out to examine the three-way relationship between client, consultant and consulting firm. Its essential premise has been that trusted advisors need the support of trusted firms, firms that deliver on the promises they make to clients and employees alike. It has also argued that unless clients’ trust in the consulting firm can be strengthened, then those firms face an uncertain future, trying to defend their fee rates in the face of increasing competition from low-cost suppliers and independent consultants. That firms are not doing this successfully at the moment is borne out by the assumption clients habitually make – consultant good, consulting firm bad. Each party in this three-way relationship is dependent on the other two (Figure 19.1): • Consulting firms need people in order to build relationships with clients and deliver services. A firm’s relationship with its consultants is mediated through its culture. As far as clients are concerned, the relationship is primarily channelled through processes – the way the firm wins and then delivers work. • Those processes are what consultants need consulting firms to provide if the latter is to add value; they are what distinguishes a consultant who works for a firm from an independent consultant working alone. By contrast, the relationships consultants have with their clients are clearly personal ones – this is the heartland of the trusted advisor. • Similarly, clients interact at a process (or corporate) level with consulting firms, but at a personal level with consultants. What they need are

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Client

Process

People

Consulting firm

Individual consultant Values

Figure 19.1 The delivery triangle – values, people and process

for both clients and consultants to exhibit the right set of client-centred values. This book has focused on the interactions between the three groups involved: • Part 2 looked at the people issues: how do consulting firms attract and retain people of the calibre they need? – The best personal chemistry takes place between a client and consultant where the consultant exhibits, in addition to technical expertise, the ability to be part of a team; take the initiative; be believed; and demonstrate empathy. The greatest of these is empathy. – In today’s market, attracting people with these characteristics requires efficient as well as effective recruitment processes. That is hard to achieve because recruitment is necessarily a labour-intensive process. Put too much emphasis on face-to-face interaction, and you will not be able to keep up with the market; too little, and you may end up compromising the quality of the people you bring on board. • Part 3 looked at how consulting firms win business:

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– In these days of encroaching commoditization, two factors stand between a consulting firm and falling prices – its brand and the degree to which it specializes in a particular area. Although in different ways, brand and specialization confer three advantages on a firm: the quality and nature of the people it has at its disposal, and its ability to deploy them as and when required; the quality of relationships it enjoys across its client base; and its ability to bear risk. However, these factors give the firm the opportunity to charge high prices only if they translate into benefits from a client’s point of view. – Commoditization is fuelling and being fuelled by the growing power of centralized procurement teams, particularly in large, multinational corporations and government institutions. This has created a new barrier between the end-users and consultants themselves, and consulting firms have responded by professionalizing their approach to sales. However, dedicated sales forces have their drawbacks. The key to solving the potential conflict between the sales and delivery arms of a consulting firm is to look externally, to focus on client accounts rather than internal processes. Good account management combines the aspiration to serve a client as well as possible; investment in the relationship “chain”; giving the account teams the authority and flexibility to take decisions for themselves and act on them; a ready exchange of information between the account team, their client and the consulting firm as a whole; and a focus on rewarding the team as a whole, not the individuals within it. – In the battle to outpace commoditization, thought leadership has become one of the most important ways in which consulting firms are trying to put space between themselves and their competitors. Yet, despite the rhetoric, thought leadership for many firms remains primarily – and ironically – an internal issue, a means of sharing information across practice boundaries. Where firms have a more ambitious approach to thought leadership, how they operate may vary, but one common theme emerges: thought leadership has to be part of a firm’s culture. • Part 4 turned to the delivery of consulting services: – Consulting projects vary from internal projects in five important respects: the way in which resources are allocated to a project; mobilization – what is done to ensure that the project team is up and running

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–

–

–

–

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from day 1; how easy it is for the consulting firm to adapt what it is doing to suit a client’s changing needs; how the consultants engage with people in a client’s organization; and stakeholder management. In delivering services, one of the most important ways in which a consulting firm can add value is through teamwork. This comes in three forms: the tactical teamwork that takes place when clients and consultants work together; the consulting firm-wide teamwork required to resource complex jobs, increasingly in different locations across the world; and the strategic teamwork that occurs when consulting firm and client share the same goals, risks and rewards. Clients expect consulting firms to have methodologies, but they complain when these are applied too rigidly. Two factors determine whether a methodology will add value to a client: content and, less obviously, the way in which it engages the people on the client’s side. The pressure on a consulting firm to have, and be seen to have, a methodology is huge, yet most consulting firms would like to be innovative. As a result, clients tend to be dissatisfied with what they see: the innovative thinking they receive is rarely as exciting or as radical as they expected. Where innovation does occur, it is often on a smaller, but no less important, scale: it comes from being able to change a process and from generating insights which genuinely surprise clients. This is the stardust of consulting. The mystique that has traditionally veiled consulting firms can only do them a disservice: much better to open themselves up to their clients’ feedback, bad as well as good. Gathering this kind of information needs to be: done at all levels in a client’s organization; articulated from the client’s point of view, not the consulting firm’s; shared with all those involved, even – perhaps especially – if it is negative; acted upon; a catalyst for internal change; and never-ending. While mergers and acquisitions involving consulting firms have often led to problems, an increasing number of consultancies have parent companies. These parents are providers of additional, diverse resources, a potential channel to the market and a large internal market in their own right. Making these relationships work involves: being clear about the different skills involved; having a common culture; an understanding on both sides of the value each brings to and obtains from the relationship; having a culture that is used to working with other organ-

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izations; and, above all, applying the same way of working internally as externally. • Part 5 looked at the culture and values of the consulting firms. It argued that there is no single, “right” culture, but that it is important for a firm to have one overriding value that drives its aspirations and behaviour, rather than a multitude of values which become confused in practice. It also argued that a “value” of a consulting firm had to translate into something a client “valued”. If there is one word which comes up more than any other in this book, it would have to be engagement. When you talk to clients who have been involved in particularly successful consulting projects, it is the word they invariably mention. When you listen to people complaining that consultants are not worth the money spent on them, it is often because no one has taken the trouble to explain why consultants have been brought in or what their role is. Engagement is the key to being a trusted firm.

Index

Accenture advertising strap-line 93, 118–19 Astall, Lis 51, 78, 228 brand 93–4, 118–19 DSS project 66 Ellis, Vernon 3, 7 firm-wide teamwork 164–6 Global Delivery Network (GDN) 164–6, 168 global integration 7 recruitment 78–80 remuneration 86 strategic teamwork 166–8 thought leadership 118–19, 131–3 values 228–9 accountability 28–9 account management 97–8, 111–15 ad hoc articles, thought leadership 129 advertorials 129 agenda-setting, and thought leadership 119, 120 Ahrengot, Neils 191–3 Ailles, Ian 167, 168 Alsbridge 202 Andersen Consulting 6, 93 arrogance 23, 96 Arthur Andersen 7, 93 articles, thought leadership 127–8, 129 Arup 145, 208–9 Astall, Lis 51, 78–9, 86, 166, 228–9 AT Kearney 69, 171, 228 Atkinson, Adrian 87–9 attrition rates 77, 78, 82–3, 86 authored articles, thought leadership 127–8

autonomy 71 and accountability 28–9 initiative, seizing the 69 and organizational values 39 AXA UK 187 Axon 110–11, 170–1 backgrounds of consultants 5, 77, 79, 81 bad relationships 23–4 Barclays Bank 187–90 Barden, Roy 38, 39 Barrie, Alex 186–7 BBC 218, 219 BDO Stoy Hayward 221–4 Beck, Jules 67, 142, 162 Bennett, Anne 29 Bevan, Simon 222, 223–4 Black, Tom 51, 67, 68, 69, 87 Blair, Tony 66 bonuses 84–6 Booz Allen Hamilton Koss, Victor 109 people management 57–9 strategy + business 122–4, 127 thought leadership 122–4, 126, 127 Boston Consulting Group (BCG) brand 94 Gunby, Steve 11, 94, 162, 182 firm-wide teamwork 163 innovation 182–3 Boxwood 155–7 Bradford & Bingley 137–40 brand 43, 93–9, 102, 103, 237 importance to clients 15, 225 thought leadership 118–19 British Airways’ London Eye 184–7

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British Steel 5 BT London Eye 186–7 Offline project 72–3 Online project 72–5 Buckle, Alan 51 Budd, Richard 144 bundling of services 157–8 Burnford, Philip 4, 5, 7 business process re-engineering 44 business schools 38 Butler Cox 4, 81–2 Cambridge Management Consulting 225 Cambridge Technology Partners 225 Campagnino, John 79–80 Campbell, Andrew 36 Capability Maturity Model Integration (CMMI) 164, 170 Capgemini 54, 176–8 Capita Advisory Services/Capita Consulting 19–20 Cardell, Steve 110–11, 170–1 career development see training and career development Carnegie Mellon 164, 170 case studies methodologies 172 thought leadership 119–20 Catalise 38, 39, 69–70, 152–3 Celerant Consulting 221, 225–7 centralized procurement departments see procurement departments change, ability to respond to 140, 141, 145–7 change implication, addressing the 52 change management 44 changing nature of client–consultant relationship 3–12 Chartered Institute of Personnel and Development 83 Chestnutt, Andy 70, 85–6 Chokheli, Lasha 215 Clements, Peter 225–7 client–consultant–consulting firm relationship 51–2 delivery triangle 53–9, 236 client–consultant relationships bad 23–4 people 16–20, 43–4, 49, 235–6 pressures 46 promises 20–3 clients’ perspective of client–consultant relationships 13–24 coaching programmes 38, 149

commoditization and brand 97 depersonalization of consulting 46, 47 e-auctions 109 methodologies 171, 174 procurement teams 9 communication 18, 191–9, 238 leadership 39 compartmentalization 28 Compass Consulting 70, 85–6 complexity of consulting project 45 Cook, Thomas 167 Cooper, Matt 146, 147 Cooper, Tony 20 Cooper-Bagnall, Jonathan 86–7, 144 Coopers & Lybrand 5, 6–7 Corby, Terry 131–2, 133 core business 27–8, 30–1 corporate governance 58 Cox, Sir George 4–5, 81–2 Craig, Duncan 69, 171, 228 credibility 69–70 cross-divisional teams 58, 161 CSC Computer Sciences Corporation Beck, Jules 67, 142, 162 Butler Cox 81 firm-wide teamwork 162 Neal, Doug 30, 33, 35, 38 Pawlowicz, Andrew 51 resource allocation 142–3 culture see values Davies, Rob 148 Dawson, Carl 168 dedication 17 delivery risk 98, 103 delivery triangle 53–4, 235–6 Booz Allen Hamilton 57–9 Ernst & Young 54–5 PKF Consulting 56–7 Deloitte 7 Deloitte & Touche 105–6, 160 demand spikes, and resource allocation 141 demographic change 9 Dench, Bob 187–8, 189–90 Department for Work and Pensions (DWP) 19 Department of Social Security (DSS) 65–6 dependability 69 depersonalization of consulting 46–7 Design Council 81 Detecon 205–6 Detica 51, 67–8, 69, 87

INDEX

Deutsche Telekom 205–6 de Voge, Sylvia 36 DiamondCluster 71–2, 86, 221, 224–5 dot.com bubble 8, 78, 83–4 Driscoll, Fiona 29, 35 e-auctions 46, 108–9 EC Harris 207–8 economy projects 47 Edison, Thomas 119 EDS 7 effectiveness projects 47 efficiency projects 47 Ellis, Vernon 3, 6, 7 Elton, David 125–6 email alerts, thought leadership 130, 133 empathy 18–19, 67, 71–5, 224–5 employee market 28–9, 31 engagement 18–20, 89, 239 managing consulting projects 140, 141, 147–51 methodologies 175, 176–80 parent companies 208–9 remote working 34 teamwork 160 Enron 44 Environment Agency 231–2 equity payments 86, 87 ER Consultants 29 Ernst & Whinney 51 Ernst & Young 54–5, 56, 84, 87, 112–13 extended organization 28, 31 externalities 32, 34 facilities management, outsourcing of 27 feedback 191–9, 238 financial risk 99, 103 firm-wide teamwork 161–6 flexibility 18 account management 114 firm-wide teamwork 162 innovation 181, 184–7, 189–90 methodologies 176 resource allocation 142 of values 227–9 fragmentation of work 28 framework agreements, procurement function 107 freelance consultants 158 Fujitsu 218–20 globalization challenges 9 firm-wide teamwork 163 recruitment 80 Goldsmith, Julian 111

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Goold, Michael 36 governance, corporate 58 Gunby, Steve 11, 94, 163, 182–3 Hackett, Ian 209 Halcrow 113–14, 193–5, 196, 198, 199 Hallan, Lucinda 138, 139 Handy, Charles 37 Hardaker, Cath 56, 57, 72 Harrington, Michael 177 Harris, Eleanor 186, 187 Hattam, Roger 137–8, 139 Hay Group 6, 7, 36, 83 Haynes, Martin 74 Henry, Eilish 150–1 Heuermann, Arnulf 205–6 Higgins, Jo 138, 139 history of consulting 3–9 HM Customs & Excise 150 HM Revenue and Customs (HMRC) 149–51 homeworking 80 honesty 17, 69, 74, 192, 195 hot-desking 52 Human Factors International 87 IBM 7 Icon Media Lab 83 Illsley, Peter 107, 206–7 Implement 191–3, 195, 196, 198, 199 Infast 145–7 information technology see technology Information Technology Services Marketing Association (ITSMA) 131, 132 in-house journals, thought leadership 129–30 Outlook 132 strategy + business 122–4, 127 initiative, seizing the 69 Inland Revenue 150 innovation 181–3, 238 branded firms 96 clients’ desire for 14, 45 firm-wide teamwork 162 flexibility 184–7 generating insights 187–90 methodology versus 169 parenting advantage 38 strategic teamwork 168 thought leadership 125, 131–2, 133 insights, generating 187–90 instant gratification culture methodologies 173 resource allocation 141–2

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Institute of Directors 81 interviews recruitment 78, 79–80 thought leadership 120 invisible firm 25–40 Isaac, Peter 3–4, 5 IXL 83 Johnston, Garry 74–5 journals, thought leadership 129–30 Outlook 132 strategy + business 122–4, 127 Kent, Simon 137–8, 139, 140 Kleiner, Art 122–4 knowledge 16–17 parenting advantage 38 people management 58 thought leadership 117 see also innovation; specialist skills Koss, Victor 57–9, 109, 124 KPMG 51 Kurt Salmon Associates 69, 109–10, 159–60, 171–4 Lamb, Sue Lennox 72 LCP Consulting 143–5 leadership 38–9 thought see thought leadership Legal & General (L&G) 138, 139, 189 leverage branded firms 94–6 history of consulting 6 niche firms 100–1 listening skills 70, 191–9, 238 Lloyd, Tim 201–2 Lockton, John 143–4 LogicaCMG 108 London Eye 184–7 London Underground 155–7 Madden, Peter 207–8 Maister, David 10 managers employees’ views of 25–6, 34, 35 need for 34–5 managing consulting projects 137–40, 237–8 change, ability to respond to 145–8 engagement 147–51 mobilization 143–5 resource allocation 140–3 stakeholder management 151–3 Marakon Associates 161, 174–6 Marsden, Alan 35, 37, 38–9, 208–9, 229

Martin, Tony 219 Mathias, Adrian 230–1 Mazmishvili, Tariel 213, 215 MBAs 38 McGregor, Sir Ian 5 McKinnon, Charlie 19–20 McKinsey 150 McKinsey model 6 McLeod, Chris 218 mentoring 37–8, 162 Mercer Human Resources Consulting 26, 39 Mercer Oliver Wyman 99–100, 163 mergers and acquisitions (M&As) 201–2 methodologies 169–72, 238 content 172–6 process 176–80 Metronet 155–7 mobilization, managing consulting projects 140, 141, 143–5 moments of truth 66–72 momentum 140, 143 MSL 4 multidisciplinary consulting teams 44–5, 46 multinational corporations, desire for innovative thinking 14 Murphy, Mark 176–8 Nadir, Asil 221 Neal, Doug 30, 33–4, 35–6, 38, 39 networking, parenting advantage 37 Newberry, Pat 8 niche firms see specialization Nicholson, Geoff 99–100, 163 Niehoff, Walter 3–4 objectivity, clients’ desire for 14 offshoring Accenture 164 challenges 9, 30–1 organization–employee relationships 27 Oliver, David 69, 109–10, 160, 171–4 openness 115, 191–9, 238 account management 115 organizations consulting firms as models for the future 30–4 invisible 25–40 management 34–5 need for 35–40 shaping forces 27–30 strained relationship with employees 25–7 organization-wide teamwork 161–6

INDEX

original thinking see innovation O’Rourke, John 69–70, 152–3 outsourcing 27–8, 30–1 to business schools 38 leadership 39 and managers 34 organization–employee relationships 27 of training and development 38 transformational 41–2, 166 overcapacity in consulting industry 8 Owen, Richard 105–6, 160, 161

procurement departments 8–9, 106–9 depersonalization of consulting 46 and values 230 productivity of employees 25, 29 professionalization of sales 109–12 promises 20–3 failure to keep 48 promotion 81 thought leadership 126 Proudfoot 3, 5

PA Consulting Group engagement 150–1 HM Revenue and Customs project 150–1 mobilization 145 ownership structure 86–7 Pawlowicz, Andrew 51 T’bilisi project 214–17, 220 thought leadership 125–6 parent companies 201–9, 238–9 parenting advantage 36 knowledge 38 leadership 38–9 teamwork 36–7 training and development 37–8 values 39 partnership between clients and consultants 159 partnership model of consulting firms 48 Pasricha, Nick 54–5, 84, 87, 112–13 Pawlowicz, Andrew 51–2 Payne, Andrew 113, 193–5 PE International 81 Penna 89–90 Pension Service 19–20 people, delivery triangle 53, 54 Booz Allen Hamilton 57–9 performance-related pay 81–2, 84–6, 87 personal chemistry 43–4, 65–6, 236 empathy 71–5 moments of truth 66–72 PKF Consulting 56–7, 72 pod-casts, thought leadership 130 Polar Challenge 217–20 Polly Peck 221 previous work 43 importance to clients 15 Pricewaterhouse 7 PricewaterhouseCooper 8 process, delivery triangle 53, 54 PKF Consulting 56–7

rapport 18 Razorfish 84 recruitment 77, 236 branded firms 94 employee market 31 innovation 183 niche firms 100 process management 56 “war for talent” 8, 77–80 referrals 15 relationship skills 65–6 empathy 71–5 moments of truth 66–72 remote working 28, 31, 32 engagement 34 remuneration 81–2, 83–7, 89 reputation 43, 171 branded firms 98–9 generic level 49 governance, corporate 58 importance to clients 15 niche firms 103 people management 58–9 risk 98–9, 103 thought leadership 125 and values 225, 227, 229 resource allocation 140–2 innovative projects 181 respect, mutual 17–18 teamwork 157, 165–6 retention of consultants 77, 81–90 risk branded firms 98–9 innovation 181 niche firms 102–3 reputation 98–9, 103 Rolls Royce 105 Rossmore Group Infast project 145–7 Marsden, Alan 35, 37, 39, 208, 229 parent company 208–9 values 229

Quest International 178–9

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INDEX

Rumpf, Bernd-Michael 203–5, 208 Russell, Alan 108 Russell, Grahame 89–90 salaries 83–4, 89 see also remuneration sales process 105–6, 237 account management 112–15 procurement departments 106–9 professionalization 109–12 Salmon, Kurt 172 Sanchez, Paul 26–7, 39 SAP 203–5, 208 scale of projects 45–6 Scient 84 Sedgwick, Paul 231–2 Serco 107, 206–7 shares 86 Sherry, Pat 5, 6, 9 size of consulting firms financial risk 99 process management 56–7 Smith, Steve 178–9 sole traders 158 sound-bites, thought leadership 128–9 specialist skills clients’ desire for 9, 14–15, 16–17, 44–5, 71 extended organization 28 freelance consultants 158 and managers 34–5 teamwork 157 specialization 93, 99–103, 237 firm-wide teamwork 163 methodologies 172–3 resource allocation 141 sponsored weblinks 129 Spruit, Herman 161, 174–6 stakeholder management 140, 141, 151–3 standalone articles, thought leadership 129 standard setting 22 Stansted airport 176–8 Sternick, Robert 145–7 Stewart, Andrew 188–9 Stoy Hayward/BDO Stoy Hayward 221–4 strategic teamwork 166–8 strategy 44 strategy + business 122–4, 127 Suladze, Temur 215–16 sustainable results 21–2 tactical teamwork 159–61 teamwork 66, 155–7, 238 and competitive advantage 157–9

and empathy 73 firm-wide 161–6 moments of truth 67–8 parenting advantage 36–7 people management 57–8 scale of projects 45–6 strategic 166–8 tactical 159–61 technology firm-wide teamwork 163 history of consulting 5, 6, 8 impact on organizations 29–30, 32 offshore companies 9 outsourcing 27 sales process 106 thought leadership 133 Telasi 216 tendering 106, 118 think-tanks 131 Thomas Cook UK & Ireland 167–8 thought leadership 117–26, 237 deployment 127–33 Tonkin, Dan 156–7 topical sound-bites, thought leadership 128–9 Touche Ross Bailey and Smart 105 training and career development 32–4 branded firms 94, 95 firm-wide teamwork 162 history of consulting 6 innovation 183 parenting advantage 37–8 Trinity Horne 72–5 Troika 108–9, 137–40, 188–90 T-Systems 205–6 Turner, David 73–4 turnover rates 77, 78, 82–3, 86 Unilever Foodsolutions 178–9 Unisys 81 United Energy Distribution Company (UEDC) 213–17 Urwick Orr 4–5, 81 US Agency for International Development (USAID) 214, 216 values 213–20, 239 creating a consulting culture 221–9 delivery triangle 53, 54–5 methodologies 176 parenting advantage 39 thought leadership 126, 132 as value for clients 229–33 van Herterijck, Herman 178–9

INDEX

Veal, Andrew 189 virtual company 36 Wadia, Kris 164–6 Waller, Graham 20 Warrington, Stephen 71–2, 86, 224–5 Water for Fish 149 Watmore, Ian 65–6 Watson Wyatt 83, 230–1

websites, and thought leadership 129, 130 Wells 139 White, Dean 217 white papers 110, 118, 120, 127, 128 Wilkinson, Gordon 20 Wright, Vicky 6–7, 83 year 2000 8

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