Disruption, or Business As Usual?

Media274Warning: This blog post is going to tout my company more than usual. I promise I won’t make a habit of it, but within the context of this post’s subject matter, it is a logical way to go.

The October issue of the Harvard Business Review contains an article by Clayton M. Christensen, Dina Wang, and Derek van Bever entitled, “Consulting on the Cusp of Disruption – The industry that has long helped others sidestep strategic threats is itself being upended.” As you might imagine, this was the first article I turned to.

Among other arguments, Christensen et. al. give the following three reasons for why management consulting is about to be transformed:

  1. Traditional consulting is opaque. Teams of bright-eyed MBAs come in, interview key personnel, go away, and come back with a report detailing the problem and revealing the solution. How they arrive at this plan is usually a mystery, like how that magician knew your card was the seven of clubs.

This isn’t acceptable anymore. In the wake of Enron, Lehman Brothers, AIG, and the entire financial meltdown, corporate executives have been reminded of the fact that even when they follow the sage advice of highly-paid consultants, they are still responsible for the choices they make. Senior decision-makers need to understand the logic behind why one strategic plan is better than another, what the risks and upside potentials are for each strategic alternative, what the signposts are which signal that a contingency plan should be put into action, etc. Transparency and clarity are critical.

  1. Knowledge has been “democratized.” Many large consulting firms have traditionally been storehouses of data, on which these firms perform various analyses. The analysts interpret business trends which the company’s consultants use to help their clients try to forecast the future and develop strategic plans.

These days, anybody can access vast quantities of “big data,” and many companies do. They track their own market data; they download macroeconomic trends from various government databases. The consulting firm may be needed to help interpret the data, but no longer is the consulting firm the source for information.

  1. The areas in which companies need help are becoming more specialized. Rather than turning to consulting firms for broad help with general planning, companies look for specific help within a more clearly defined scope. The authors draw an analogy with the legal profession: more and more businesses are using a combination of internal resources and upstart specialist legal firms to handle many of their legal requirements, thereby reducing the need for traditional big-name law firms. Upstart niche legal firms are turning things upside-down. So are upstart niche consulting firms.

Those who adapt to the new rules will thrive (according to the authors); those who resist will be washed away like so much flotsam.

So how does this allow me to tout Decision Strategies? Because the “new wave” of consulting is the way we’ve done it for twenty years. For us, it’s business as usual.

Our approach is completely open; we document all of the issues, all of the strategic plans considered, the pros and cons of each alternative, the results of every analysis – and then allow the party who bears responsibility for making the decision to do just that: make the decision. What we provide is transparency around the issues and a full understanding of the range of possible outcomes, despite the complexity of the situation. Very few companies have the internal resources to achieve this degree of clarity on their own.

We are not a data storehouse; we don’t claim special knowledge of market trends or social forces. Rather, we work closely with the client’s internal experts – and sometimes additional external experts – to interpret information, regardless of source.

We have always filled a specific niche for our clients. They call us in when they have to make complex decisions with multiple, competing objectives in the face of significant uncertainty. We help them to see clearly through the cloud of chaos which often characterizes such situations.

And I would add a fourth advantage (or perhaps is just another characteristic of the niche we inhabit): our consultants have technical backgrounds, in addition to MBAs and/or decades of industry experience. We not only understand how business works – we also understand how the natural world works. With the increasing importance of environmental, energy, and resource issues, this can be important.

The approach we use has its roots in research which began back in the 1960s with people like Ron Howard at Stanford and Howard Raiffa at Harvard. Numerous others have contributed through the years to improve the methodology and expand the toolkit, but it still boils down to a few simple concepts:

  1. Gain clarity around your objectives, including the tradeoffs you’re willing to make between those objectives
  2. Develop a variety of creative strategies for achieving those objectives (as opposed to trying to find “the best” strategy right away).
  3. Evaluate those strategies against how well they achieve your objectives, fully understanding the range of possible outcomes which could result from each strategy.
  4. Use the insights you gain from these evaluations to create a better strategy than any of the ones you initially came up with.

Sounds simple, right? The concepts are; the actual application can be tricky. Probably one of the most productive things we do for clients is to force a little patience, helping the team to resist the urge to jump in and implement the first apparent solution that comes to mind. By expanding one’s frame before converging on an answer, you catch the pitfalls which can bite you if you focus too narrowly, and you actually save time in the long run by avoiding endless cycles of re-work. I’m halfway through a very good book on this subject, Decisive, by Chip and Dan Heath. They lay out the key points a bit differently from the way I have here, but the underlying message is the same.

So back to the original point of this post: Is consulting undergoing an upheaval? If this is disruption, I say, “Bring it on.”

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