Insights on the Profession: How the Consulting Process is Mastering Increased Complexity

Abstract

Management consulting is at an inflection point. Consulting firms have honed their processes and methods over the past half- century, but the context in which they deliver their services is changing rapidly in terms of client objectives and expectations and the tools and technologies they use to deliver those services. The purposes of this paper are twofold: (1) to assess the impact of these changes on the current consulting paradigm and (2) to recommend a course of action for consulting firms to respond to these changes. For the first purpose, this paper starts with an examination of the evolution of consulting process models and technologies to establish a baseline. By assessing the ability of this baseline consulting paradigm to accommodate changes in the service context, it then makes a case for action. Next, it considers the extent to which changes in methods, people, business partners, and services that consultants are currently making are suffcient responses in this case. For the second purpose, this paper starts by articulating the consulting transformation opportunity occasioned by new process technology, coupled with changes in the nature of work, management organization, and mindsets and behaviors. It then presents research ndings conducted by one of the authors using the science of coordinated action along with real world experience of the process technology company he co-founded. Based on this research, the paper argues that through a combination of scalable process automation and an emergent process model that can better control for the complexity and uncertainty of the current context, consultants can deliver greater realized outcomes for their clients, one core bene t of consulting process improvement.

Introduction

In the age of digital and the empowered consumer, even traditionally staid B2B service sectors are speaking the language of customer experience. Companies are grappling with how to respond to changing customer expectations, new competitors with di erent business models, and new technologies that a ord opportunities to re-envision the customer experience. An oft- cited example is healthcare, where organizations are adapting to a fee-for-value model in which providers are compensated based on the ultimate health outcomes delivered to patients rather than the number of diagnostic tests or procedures performed. While straightforward in principle, the implications touch nearly every aspect of organizations’ business models.

Management consultants, among the most vociferous promoters to their clients of the importance of customer experience, are ironically holding tightest to their traditional service model, which elevates consulting to an art form. But disruption is coming, bringing more science into the consulting process and shifting away from the prevailing overdependence by firms and their clients on the “A-Team,” that group of highly experienced consultants who can bring to bear deep insights and the judgment to be able to deliver the best product every time. These changes portend signi cant implications across the consulting business model.

The change imperative issues from a con uence of changes in the external environment, both challenges and opportunities, that are laying bare the limitations of a traditional consulting model designed to maximize the in-project adaptability of seasoned consultants rather than an organization’s versatility to respond to changing conditions at scale. At the heart of the challenge are the traditional model’s human-centric process control and related lack of scalability. Some consultants are trying to respond to this challenge, but we believe they are missing the opportunity a orded by technology-enabled process control to transform their service delivery model into one that designs in responsiveness to the sources of divergence between intended and realized client outcomes rather than consigning that activity to a separate implementation process.

While we leave it to consultants to customize their process to their clients’ needs, we put forward a process transformation roadmap grounded in an enumeration of leading indicators of process effectiveness that are both measurable and testable. Just as occurred with manufacturing during the industrial revolution, we believe that liberating the consulting process from the specifics of the consulting product is the crucial step to enabling ongoing process improvement and consulting labor specialization that can together yield a quality and productivity revolution in management consulting. We then suggest a paradigmatic shift in the consulting process from a craft to a test-and-learn one enabled by a combination of coordinated action and experimentation sciences that furnish methods and tools for measuring and testing process effectiveness. While experimentation has been well articulated by others, we devote particular attention to the application of coordinated action science and the nature of new technology tools designed to facilitate it.

Scope of the Topic

Consultants provide three very different services for their clients:

  1. Advise on changing their businesses through outcomes-based management consulting
  2. Help them make the changes with implementation services
  3. Help run the new operations through interim management, staff augmentation and managed services.

By outcomes-based management consulting we have in mind the rst and second sorts of service that together seek to transform the client’s performance. These services may target speci c functions such as human resources or procurement, distinct stages in the value chain such as R&D, operations or marketing and sales, or specific activities of the corporate center such as strategy, corporate development, or support services. The management consulting process is an interventionist one designed to diagnose the client’s condition, design an alternative, higher performing one, and direct a change program to transform the client from the current to the alternative state. The consulting product—the output of this consulting process—is a strategy comprising goals, objectives, priorities, roadmaps and workstreams. After a period of implementation, the business outcomes realized denote the results achieved from using the management consultant’s product.

How has Consulting Evolved?

Outcomes-based management consulting originated much like the master craftsmen-apprentice model that characterized manufacturing before the Industrial Revolution. Master consultants, through their project experience and partnerships with academics and industry practitioners, developed and re ned models of best practice for everything from strategy to operational functions. These are the paradigm-like “big ideas” that are often closely associated with rm brands: things like the Boston Consulting Group’s “growth share matrix,” Bain’s “pro t from the core” point of view, or Strategy&’s (formerly Booz & Company) “capabilities-driven strategy.” Inspired by these paradigms, consultants proliferated encyclopedic compendia of best practices to direct performance improvements for everything from functions to assets and business activities.

The management consulting industry grew up over the last ve decades around two pillars – industry and business function—consistent with how rms organized their knowledge and those best-in-class models and clients’ primary buying criteria (essentially, “Do you know my sector and do you know my function?”). Cutting across these sector and functional knowledge domains was the notion of general management consulting capabilities. The idea was that those master consultants implicitly possessed the skill and judgment to collect and interpret quantitative and qualitative data and, through an essentially deterministic process, adapt the client to a best practice model.

The art of assessing highly diverse clients operating amid highly varied conditions and adapting them to a new model was the exclusive domain of the management consultant. More so than the speci c knowledge they possessed, what de ned a management consultant was the ability to assemble the right client-side team, sequence activities, orchestrate and steer meetings and communications, and act as honest brokers and back channels to cross clients’ internal silos and get things done. In short, they were more like diplomats than technicians.

Beyond high level methodology slides, the detailed design of the consulting process was largely subordinated to the particular operating mode of an individual consultant in order to permit maximum maneuverability and customization. While the standard process consisted of discrete and sequential activities, with diagnosis, design, and implementation performed separately, the same consultants typically performed all activities with minimal specialization. Firms also vested these master consultants with responsibility for managing all aspects of the client relationship, both in the context of a particular project and on an ongoing basis.

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Taken together, the management consulting industry evolved as an art rather than a science. Consulting rms prized highly adaptable consultants skilled in this art who could perform three roles:

1. Subject matter experts with “big ideas” 2. Diplomats 3. Client relationship managers

Firms correspondingly geared their internal development towards cultivating these skills and the judgment to deploy them through an extended program of on-the-job training and mentorship. Firms also oriented their performance management around these human assets: essentially, their billing rate and percent utilization. Clients, for their part, paid for services performed rather than outcomes achieved and assumed that rms possessed an e ective consulting process based on references and brand.

The Current State and the Case for Action

We are now observing a number of challenges to the traditional consulting model. In terms of outcomes, there is a disconnect between, consulting rms and clients reporting over 95 percent of the outputs of a consulting engagement meet their expectations on the one hand, while on the other hand, most independent research indicates that only 30 percent of initiatives actually deliver the intended results, a statistic that remains at. This seeming contradiction suggests that consultants and their clients are mixing up means and ends by basing their judgments on indicators that are not good predictors of outcomes. Clients continue, for example, to prize face time with senior consultants, which they equate with successful project outcomes. But client expectations are changing in ways that portend a change in this constellation.

The performance of a process is ultimately a function of its ability to meet speci cations by managing the internal and external sources of variation that can disrupt it. Changes in speci cations or the sources of variation can a ect process performance by changing the conditions under which the process operates. The challenges besetting consulting re ect the inability of process control and scalability of the traditional model to adjust to signi cant changes in the specifications and sources of variation emanating from changes in the external environment.

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Inadequate Process Control

While it yields impressive gains for clients in many instances, two related problems compromise the outcomes produced by the traditional consulting model:

  1. Client adoption of the recommendations that result from the diagnostic and design activities is incomplete and does not achieve the intended outcome. This results from either the wrong recommendation, an inability of the client to implement the recommendation, or a lack of consensus to do so.
  2. Clients who adopt the consulting recommendations struggle to sustain the outcome. This results from either an overreliance on consulting resources during implementation and inattention to instilling adequate client capabilities or a failure to adapt the recommendation for changes in circumstances.

In both cases, the problems re ect inadequate process control in the traditional consulting service delivery model. That is, rather than employing a process designed to consistently deliver a consulting product, which will produce the desired outcomes when in use, the model relies on consultants to idiosyncratically adapt their process throughout an engagement.

Lack of Scalability

Management consulting is stubbornly resistant to productivity improvement. The US Bureau of Labor Statistics reports, for example, that labor productivity in the manufacturing sector rose 4.3 percent annually between 2009 and 2013 compared to 0.2 percent growth for the industry group that includes management consulting. Comparable annual growth rates for the multifactor component of productivity that captures changes not accounted for by labor and capital inputs—such as technological innovation and changes in the organization of production—were just 0.1 percent for consulting, continuing the nearly at trend that prevailed for the past quarter century, against 1.0 percent for the private non-farm business sector as a whole, which is less by more than a factor of 10.

At the heart of this challenge is the human rather than technology-centric nature of process control in service sectors. Absent more robust and scalable process control, in order to grow, consulting rms have only two options. They need to either acquire competitors’ more specialized (and usually costly) senior talent and accomplish the intricate and invariably vexatious task of adapting it to a new culture or employ a laborious system for enlisting and training new generalist consultants in the idiosyncratic methods and good judgment possessed by seasoned partners.

A consulting firm’s need to add consultants to expand their knowledge, skills, and services makes it a challenge to incorporate the additional data sources, client stakeholders, and client business partners that might improve the effectiveness of their service delivery process. Larger consultants struggle to serve non-traditional clients, notably small to mid-size ones that cannot a ord the traditional fee-for-service model or contribute the necessary internal resources to complement the consulting pyramid-sta ng model, which not only inhibits their business development, but also deprives their best-in-class models of the experience of 90 percent of the economy. Taken together, the scalability problem introduces measurement errors and missing data in the diagnostic stage that compromise the output from the traditional consulting process.

A Changing Environment

Management consultants are struggling to adapt to the changes that are impacting the service economy more broadly. Sectors from banking to telecom, from transportation to hospitality are scrambling to respond to changing customer expectations for a consistent experience that meets their needs across the touchpoints of their relationship with a company, falling barriers to entry that are attracting new entrants, and the advent of new technologies that permit a reinvention of service activities.

Underlying these trends is increasing awareness of four related truths:

  1. The customer’s experience of a service is a function of the customer’s expectations and the operations that go into creating and delivering the service: a combination of processes, organization design, technology systems, and crucially the behaviors of the individuals who interface with the customer. Client expectations are changing rapidly as they demand faster project outcomes, more seamless coordination of engagements across disparate geographies and even outside their four walls to outsourcing providers and other business partners, and more measurable impact. Responding to changing client expectations for better outcomes consequently demands multifaceted change of the consulting business model.
  2. High employee turnover makes it extremely di cult to deliver a consistent and e ective customer experience. Relative to the time it takes to train a consultant and establish their reputation and client relationships, consultant turnover is high. Some of this turnover is by design, a function of the “up or out” culture intended to rapidly promote high performers. Another important contributor is the strategy of poaching talent and client relationships from rival rms. While it can yield high performing individuals, this turnover works against delivery model consistency, given the highly people-dependent nature of the prevailing consulting process.
  3. Access to information makes protecting the intellectual property behind service operations much more challenging. The sorts of proprietary frameworks and methodologies consultants once guarded closely are increasingly available to anyone. Not only is it easy for consultants to copy each other’s methods, but clients are also able to see them for what they really are, which more often than not is rather thin.
  4. Increasing complexity and uncertainty are stressing the utility of the deterministic best practice models at the heart of the traditional consulting model by multiplying the factors and the interactions among them that drive outcomes, both within client organizations and in the external environment. Consultants are struggling to account for this complexity and uncertainty in their models, resulting in mis-speci ed solutions or solutions that fail to keep pace with the pace of change.

While tailor-made for in-project adaptability, the human-centric process control and scalability constraints characteristic of the traditional consulting model are ill-suited to the sort of adaptation at scale necessitated by these more systemic changes in the external environment.

A Changing Model

Management consultants are not standing still. They are augmenting the methods, people, business partners, and services from those that prevailed in the traditional model.

  • To improve accuracy, larger rms are adding new types of consultants and business partners with unique knowledge and experience. Technical experts such as reliability engineers, functional specialists such as industrial designers and other creative disciplines, and industry practitioners can respectively contribute new insights to the diagnostic, design, and implementation components of the consulting process. Witness recent creative design shop acquisitions by Capgemini, Deloitte, and McKinsey, Deloitte’s acquisition of an asset reliability specialist, or PwC’s acquisitions of digital specialists.
  • The larger consultants are also trying to introduce implementation experience into the design speci cations and improve the delity of the implementation process to those speci cations. One way is by joining forces with best-in-class companies that have experienced a transformation initiative such as EY’s partnership with P&G, targeted at propagating the latter’s manufacturing excellence program. Another way is by allying with technology and other service providers that need to be involved to implement a transformation. Lastly, consultants are assembling specialized labor forces such as McKinsey’s internal “Implementation” offering and Roland Berger’s “External Network” composed of independent, a liated consultants.
  • To improve precision and speed, consultants are mechanizing their process with more extensive use of pre-con gured templates, interactive platforms for collecting and analyzing data against best practices, and sophisticated data analytics that automate predictive modeling. Firms are also developing comprehensive digital libraries of technology and trend insights, and o shoring select analytic and report generation activities they can use to decrease the time to recommendation dramatically.
  • To improve versatility, consultants are launching new o erings, including ongoing managed services such as Deloitte’s Supply Chain Managed Services, a form of outsourcing for high value-add activities such as pricing and demand forecasting, “as a service” assets such as the McKinsey Solutions portfolio that allow clients to license the tools consultants have perfected in the course of their engagements, and capability and skills development programs such as the Boston Consulting Group’s Client Enablement programs.
  • To better link their business model to client outcomes and whittle away at the separation between recommendations and implementation, consultants are shifting their fee structures away from service-based to performance-based ones.While these changes are taking consultants in the right direction, they are not fundamentally altering the consulting process and its inherent weaknesses. In many ways, they are perpetuating aspects of the traditional paradigm, for example, by adding new types of master craftsmen such as industrial designers to work alongside the traditional MBA types.The more extensive use of templates and tools, consulting’s version of Taylorism, is improving precision, but in many cases at the cost of accuracy and versatility. One mining client, for example, lamented that their consultant could not properly calibrate those templates and tools because they could not determine if the client more closely resembled an auto manufacturer or a pharmaceutical company. While consultants can use these tools to capture client data more e ciently, they tend, moreover, to focus on the same sort of data they always did: nancials and operating metrics. While sophisticated data analytics methods are faster and able to evaluate many factors, clients still struggle to take decisions based on their outputs, because they worry that some untested factor will change the result in the real world.

    O ering clients managed services, while ful lling a client need not adequately served by traditional outsourcing providers, does not fully resolve the fundamental challenge of improving client outcomes. The reason is that conventional asset-based consulting concentrates on improving the analysis phase of the consulting process in isolation without addressing the linkage between analysis and implementation that determines outcomes.

    While consolidation is the norm among the largest consulting rms, a countervailing trend is a ramifying bottom of the pyramid. Freelancers have long been a feature of the industry, but their reach was historically constrained by scalability. The advent of coordinated networks of freelancers such as Eden McCallum and Business Talent Group helps to alleviate some of these constraints by consolidating business development activities and standardizing elements of project structuring and management. Former consultants of top rms like the flexibility of these models and the freedom from business development, and clients appreciate a more on-demand service often at a lower price point. However, a side e ect of the proliferation of independent contractors, individually or as teams, is increased variability of the consulting process.

    Although performance-based fee structures help to better align the consulting process to the intended results, these typically concentrate on immediate measures of performance such as changes in client costs. Consultants are not aggressively promoting these arrangements in strategy and other areas that do not align well with discrete nancial outcomes. While keen, in principle, on skin-in-the-game fee structures, clients complain, too, that the arrangements ultimately cost them more than traditional ones.

    Some specialist rms have devised innovative methods for engaging the client organization. Notable examples include Schaffer Consulting’s team-based WorkOut method, designed in collaboration with GE for managing large transformations, or Enterprise Management Group’s process for eliciting management sponsorship of employee suggestions for rapidly cutting costs. But since these are really a form of labor specialization, they are still dependent on a skilled consultant to manage them, which constrains their extensibility. It also continues to subject them to the variability intrinsic to essentially human- delivered services, both across di erent consultants in a rm and as individual consultants confront different conditions in client organizations or the external environment.

    What is missing, in short, is a reinvention of the management consulting process that can radically change at an industrial scale both performance in terms of client outcomes and the economics of the service delivery model.

The Path Forward

Over the past quarter century, most industries have advanced their performance through process improvements that shifted production from people-dependent processes to an ever-improving balance of the right people, working in e cient, de ned processes, and leveraging innovative technology. (For this progress, management consultants can claim a fair share of the credit.)

Manufacturing has been at the forefront of this trend, but service sectors such as telecommunications and certain areas of transportation have also achieved impressive gains in client satisfaction while reducing costs and introducing scalability. Part of these gains resulted from value chain and location specialization through outsourcing and o shoring, but a signi cant contributor was process improvement engendered through the introduction of process technology coupled with a careful calibration of the nature of work, management organization, and the mindsets and behaviors that animate the process. This is the transformation opportunity now in front of management consulting.

Process Paradigms

As consultants contemplate changes to the consulting process to e ect this consulting product quality transformation, they need a process roadmap to improve. Management consulting process models can be deterministic or emergent, with the former working backwards from a vision of the ideal state and the latter allowing an ideal state to emerge based on real- world experience. In general, deterministic models also favor a disaggregation of diagnostic, design, and implementation activities; emergent ones tend to more tightly integrate them. Processes can be either manual and customized or automated and standardized. The combinations of process models and technologies yield four process paradigms:

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  • Craft: a mix of manual technology and a deterministic model designed to deliver a highly customized service for helping clients adopt pre-de ned best practices. This paradigm seeks to maximize the adaptability of the implementation portion of the process to individual client circumstances.
  • Piloting: a combination of manual technology and an emergent model designed to deliver a highly customized service for testing and proving improvements at a reduced scale amid real-world conditions before extending them. It is more akin to an observational study than experimentation and lacks the randomization and scale necessary of the latter. This paradigm seeks to maximize the calibration of the process to improve the accuracy of, and build confidence in, recommendations.
  • Automation: a blend of automated technology and a deterministic model designed to help clients more consistently and rapidly adopt best practices. This paradigm seeks to maximize the reproducibility of the process to improve the precision of diagnostic and design activities.
  • Test & Learn: a mix of automated technology and an emergent model designed to deliver a highly systematic and consistent service for testing and proving improvements at scale and in a fashion that yields solutions optimized for a wide variety of real world conditions. This paradigm seeks to maximize the versatility of the process to deliver precise and accurate solutions across a range of changing contexts.The traditional management consulting process paradigm is a Craft one that prizes adaptability. Changes in the model to date have focused on shifting vertically or horizontally by trading that adaptability for either greater reproducibility or calibration to real-world experience. We believe that achieving better process performance depends on replacing the adaptability of the Craft paradigm with the versatility of the Test & Learn.Leading Indicators of Process PerformanceBefore consulting rms can set about designing a better process, they need to be clear on what a good process looks like. An e ective process would make the outcome a function of the process itself. For that, the consulting product design and use process needs to integrate three elements:
  1. Design: a consulting service designed around the intended outcome and the process, organization, technology, and behavioral norms that deliver it
  2. Measurement: metrics to continuously assess progress towards, and risks that might undermine, a good consulting product and its use
  3. Control: tools to adapt the use process (implementations, execution, change management) in response to insights gleaned from the performance metrics

Clients should be able to con rm the consulting product they receive from the consulting service exhibits the leading indicators that it will deliver the intended business outcome:

  • An Endorsed Case for Action: genuine support by the client stakeholders that “We need to take action on this topic, for these reasons…”
  • Tangible Goals and Objectives: genuine support by the client stakeholders that “We need to attain these fiscal and non-fiscal outcomes within these timeframes.”
  • Measurability: outcomes and milestones de ned at a level that can be measured, without ambiguity and room for debate.
  • Accuracy: valid con dence that the recommendation is the best prescription for the particular client situation, not just that it is rational and compelling.
  • Verified Endorsement: tangible evidence that client stakeholders are aligned around the opinions that will drive their actions.
  • Viability: complete acknowledgement that “My concerns have been su ciently accommodated and mitigated where found to be valid.”
  • Prioritization: agreement on what matters most, not just a list, and scoping that describes what is out as much as what is in.
  • Actionability: an understanding of how the objectives will be attained, including a clear implementation plan.
  • Accountability: an understanding of who is responsible at an individual task and name level of detail.
  • Feasibility: validation that the resources required for success (money and skills) are available through outcome delivery.
  • Traceability: ability for newcomers to the project to quickly come to an understanding of the decision process that led to the project and its content.
  • Adaptability: a plan for identifying and adjusting to inaccurate assumptions, changes within the client organization or in the external environment during implementation.For over ve decades, the responsibility to deliver a consulting product comprising all these features has rested squarely on the shoulders of management consultants. The trouble is they possess few tools for measuring and testing their product to ensure these features are in place. Without that assurance, clients over focus on the competency of the individual consultant rather than the rm and whether or not they are getting the A-team.

Tools to Improve the Consulting Product

Better management consulting process design and control is ultimately about better managing the internal and external sources of variance that can drive a wedge between the intended and realized outcomes of a consulting engagement. Shifting consulting process performance thus depends on methods for systematically measuring these sources of variance and testing the efficacy of solutions to manage them.

Coordinated action: the objective of management consulting projects is to produce coordinated action around the stakeholders’ shared topic, for which most of the leading indicators of a good consulting product listed nearby are pre- requisites. The negative variance here relates to the challenges of group agency; namely, getting the groups creating their new futures to make choices and take actions that yield intended outcomes amid complex motivations, incentives, and information asymmetries.

Experimentation: a tool for managing the variance that arises from the complex causal relationships among factors both within an organization and the external environment that dictate the efficacy of a solution. In contrast to observational studies like pilots, experimentation is a tool for testing the predictions and systematically controlling for all factors that make up the causal relationships.

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Science of Coordinated Action

While the case for business experimentation has been well articulated by others,1 we believe the science of coordinated action and its application to business environments has not been adequately addressed. With the advent of new technology such as SchellingPoint’s (see sidebar) designed to facilitate the application of this science, we believe this is a critical juncture for adapting the consulting process.

Research by one of the authors and his colleagues at SchellingPoint seeks to understand how to improve a group’s ability to rapidly assemble their most valuable plans, which are both viable and genuinely endorsed by those required to implement them. The research integrated three management science disciplines:

  1. The ndings of SchellingPoint’s founders from applying social exchange theory to businesses, which contributes a process methodology for understanding the “relational networks” that drive how people act.
  2. Professor Chris Argyris’s work in “Action Science,” which contributes concepts to design a better collaboration process by explaining what causes people to act, and, importantly, not act.
  3. The research on “interdependent decision-making” of Professor Thomas Schelling, a game theorist and 2005 Nobel Prize Recipient for Economics, which contributes models explaining how people choose to act in “mixed motive, non-zero sum games” – which describes the nature of most management consulting projects.

By combining these three theoretical models with their experience in business process improvement and as management consultants themselves, they surfaced a set of insights on groups collaborating around a shared purpose. These insights were gathered by studying over 150 multi-person, collaborative activities, including Fortune 50 corporate and business unit strategies, process improvements, chartering new functions, large IT projects, strategic alliances, outsourcing contracts, mergers and acquisitions, new product and service designs, and government policies. These are some of over 90 common “collaborations” that comprised between 4 and 15,100 stakeholders within one, between two, and across as many as 330 organizations. Roughly half were client teams only and half were projects led by a management consulting firm.

Several interesting findings emerged related to the leading indicators of a quality consulting product. As might be expected, there was sufficient domain expertise available between the client and when present, the consultants. The greatest source of poor outcomes related instead to the collaboration process and how information and insight are generated and used to turn “We each think” into “We all agree to do.”

When using an alternative technique to traditional consulting interviews, the research found that on average a client team possesses 167 unique, relevant opinions that will drive their short and long term action or inaction around the topic. (Somewhat counterintuitively, the number of opinions is mainly a function of the topic and the number of di erent types of stakeholders, not the total number of people involved, so even a small group of ten people may well possess the same number of opinions as a group of 100 people on a particular topic.) Even when working with a small group, this is too many points of view to capture on ipcharts or in a spreadsheet. Further, the correlation with the number of di erent stakeholder types means the traditional focus of consultants on identifying and facilitating amongst a core group of individuals – typically a leadership team – will not yield a complete set of opinions.

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Because traditional interview, meeting, and workshop methods surface an incomplete dataset of opinions, while they can yield seemingly rational and compelling goals and plans, they are insu cient for creating coordinated action in the design stage. They thus fail to deliver the leading indicators of success that can counter the ve types of action that undermine coordinated action.

The research identi ed four categories of opinion that drive coordinated action:

  1. The case for action and assumptions about the current state and future environment
  2. Aspirations, goals, and means to achieve those goals
  3. Concerns for unintended consequences of taking action
  4. Perceived barriers to success.

The traditional consulting process pays some attention to the rst category and focuses substantially on the second while largely ignoring the third and fourth. These rst two categories are coincidentally associated with a positive bias; clients like to discuss actions. While these optimistic points of view and aspirational goals account for about one-half of the total opinions, the other half are negative ones associated with concerns and reasons for resistance. The traditional consulting process is not designed to accommodate this much negativity.

Scientific tools and methods for coordinated action reduce the burden on the consultant and instill the ability to systematically steer groups towards actions that deliver intended outcomes by measuring and testing the three attributes of opinions: alignment, completeness, and change tolerance.

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Alignment

The best predictor of successful consulting outcomes is stakeholder endorsement, more so than the theoretical accuracy of the recommendation. Clients explicitly state that they hire consultants to help them develop the best objectives and plan to attain them, but implicitly they expect the consulting team to produce one that is endorsed. An e ective consulting process is intrinsically about fostering the collaboration that leads to and sustains the sort of alignment that yields endorsement.

While clients and consultants understand alignment to be an essential contributor to success, they consider it a soft, sensed dynamic rather than a measurable asset or liability and treat alignment as an outcome: a binary yes or no of “we are” or “we are not.” Consultants reinforce this point of view with a “follow these steps and you will be aligned” approach. During the diagnostic and design phases, consultants often sense the client team is not genuinely aligned or that alignment is weakening, but possess few tools for proactively and accurately assessing and reconciling misalignment.

Treating alignment as a dynamic characteristic of any group makes it measurable, which is key to most of the leading indicators of a valid consulting product listed earlier, including an endorsed case for action, accurate objectives, measurable objectives, viable plans, accountability, and prioritization. Of the more than 250 groups measured to date, including Fortune 50 leadership teams, federal government agencies, small enterprises, and global alliances on topics ranging from corporate strategy to SAP implementations and global disease eradication strategies, every group was between 44 and 83 on a 100-point alignment scale. That is, no group was ever fully aligned, including leadership teams that one week earlier had just completed strategy projects with well-known consulting firms.

This evidence shatters the consulting operating assumption that a core team can assemble goals and plans and then hand them over to another group to be executed. In fact, the implementation team is being handed a faulty product; embedded misalignment in the goals and plans that the consulting process could not avoid are a root cause of implementation problems. But when implementation and change management activities produce sub-optimal results, no one looks back to the source of the problem, especially when that is the sponsoring leaders and executives. Changing the consulting process from treating alignment as a promise (“You will be aligned around your great goals and plans”) to a dynamic characteristic changes the consultant/client conversation from “Are you aligned?” to “How aligned are you?” and sets up the ability to design into the outputs the leading indicators.

Completeness

To obtain a complete set of stakeholder opinions – the essential raw material in the consulting process – consultants must engage with internal and external stakeholders beyond leadership and subject matter experts, notably by obtaining the frontline perspective. This requires erasing the line that typically separates the group that comes up with the strategy from the one that implements it. But simply inviting more participants does not make the process e ective. To provide safety and avoid peer pressure and group-think, which commonly a icts workshops in which people are directly exposed to their colleagues and managers, participants need guaranteed anonymity to feel safe to share their opinions, especially negative ones. New techniques, such as Virtual Dialogues, are helping alleviate these dynamics that naturally occur in groups participating in mixed-motive, non-zero sum consulting projects, while still enabling decision-makers to exercise nal control over the outputs.

Change Tolerance

Opinions are not static. The consulting process, therefore, needs to keep abreast of and be responsive to the many unplanned and unavoidable factors that can arise during use of the consulting product, including:

  • Exit and entry of client stakeholders
  • Planning assumptions that become invalid
  • New external influences related to customers, competition, regulators, and other factors
  • Learning generated in the course of the project as ideas are tested and applied
  • Second-order barriers and negative side-effects

Accommodating these factors in a periodic “Monitor Drift” step provides client stakeholders and consultants who designed the goals and plans with the means to recognize and adjust to real life during project implementation. As one CEO said, “We get to proactively determine where to move the goalposts, rather than being accused of moving them to hide failure.”This is important for traditional deterministic process models and a necessity for emergent process models, whereby journeys consist of shorter-term experiments that determine the next step forward. In this model, diagnostic, design, and implementation activities occur on a repeatable cycle. This enables client and consultant to manage uncertainty and change rather than doggedly tread down a defined path.

SchellingPoint Software

The SchellingPoint software is designed to enable any size of group, in any location, in one or more companies, to rapidly create coordinated action around a shared topic, whether they are creating new goals and plans, implementing existing ones, or restoring failing collaborations. SchellingPoint’s consulting tools are topic-agnostic and integrate into existing methodologies, from project launch to outcome attainment. In addition to a library of over 100 templates for common business topics, consulting rms can embed their domain expertise in proprietary topic templates.

SchellingPoint identi ed that management consulting projects comprise many common tasks having a direct impact on the project’s e ciency and outcomes, but that most would be conducted three different ways by three different (senior or junior) consultants, even from the same consulting rm. The primary reason is that these tasks are not de ned or documented;

Task

Issue and Solution

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Stakeholder Selection

Consultants understand stakeholder management, but lack explicit instructions on how to determine the target set required for projects to be most valuable, viable, credible, and complete.

Participant Classes and Selection Criteria

Interview Output

Consultants are not taught how to record notes and extract the declarative statements in stakeholder interviews – the raw material in every consulting project.

Seed Interview and Point Identi cation Method & Tools

Draw Conclusions

Driven by di erent experiences, biases and worldviews, three consultants in the same practice may draw di erent conclusions from client interviews, taking the client down di erent paths to different futures.

JOE – AI-based expert system, generates core conclusions

Measure Alignment

Consultants understand leadership alignment is essential, but have had no means to objectively measure it.

Alignment IndexTM

Pinpoint Conversations

Faced with a rich set of quantitative and qualitative data, how does the consultant select which discussions are necessary to create the most valuable, viable and endorsed plans?

Triage functionality using Coordinated Action theming

Reconcile Disagreement

Unless trained as a facilitator, few management consultants are comfortable publicly surfacing and reconciling stakeholder disagreement.

Collaborative Design Method and Tools

These are just six of over 30 individual consulting process tasks where a standardized, technology-assisted procedure is now enabling management consultants to perform vital tasks with greater consistency, speed and e ciency. SchellingPoint’s Guiding Hand strategy has reduced the total hours required to one-third of those when not using SchellingPoint, enabling the consultants to focus on applying their expertise where and when it is most valuable.

For example, a boutique consulting rm won the business to help a hospital system redesign their neuroscience service line. The project comprised two consultants and 56 client stakeholders, from the chief strategy officer to physicians, surgeons, nurses and administrators in a process that allowed these key stakeholders to fully participate in designing endorsed adjustments in a few weeks and a few hours. Another consultant enabled 542 healthcare specialists across the world to assemble a healthcare innovation roadmap for the EU using virtual collaboration, which led to a policy change in Brussels within six months of completion. Another designed and governed the post-merger integration of two software companies with 162 stakeholders over two years in what was considered “one of the smallest elements of the total integration budget, but the greatest impact on outcomes.” In all three cases, endorsed and viable goals and plans were assembled in a fraction of the time and led quickly to positive outcomes. One F250 rm reported they met the three-year goals for their cross-enterprise process transformation, which impacted 6500 sta within one year, due to the clarity, commitment and completeness of the SchellingPoint-based plans.

Summary

The consulting process is a collaborative information management activity. How it generates and processes information is the most significant contributor to consulting product quality and client outcomes. As consultants frequently counsel their clients: rather than a constraint on their creativity, good process improves the consistency, accuracy, completeness, and e ciency of human-centric activities. It ultimately enables a more predictable and e ective application of an individual’s wisdom and skills.

The master craftsmen who continue to comprise the bulk of consulting rms’ leadership might reject a more process-centric consulting model that appears to diminish the creativity and good judgment that have been the bedrock of the traditional consulting model and the industry’s most storied brands. We believe, however, that such reticence is misplaced. Management consulting will not become the automotive industry, with robotic factories assembling client plans and recommendations. This is not about replacing consultants with consulting process and technology. But a well-designed service backed by e ective process technology can remove much of the mundane work consultants do and enable them to deliver more consistent and better outcomes. At the same time, well-conceived process improvements can help consultants foster a more participative, informed process that brings greater wisdom to the table without leaders losing control of the decision-making.

Transforming consulting process performance requires a more emergent model that can accommodate the increased complexity and uncertainty of the current environment coupled with process technology that can scale and thereby enable a pendulum swing from a focus on outputs – big ideas and products – to the inputs that drive real outcomes. Making this transformation happen will hinge on the application of a lot more science: both to manage the group agency challenges that can disrupt coordinated action and understand the complex causal relationships that determine outcomes. It also depends on client side changes in terms of how clients engage with consultants, externally and internally within their organizations, and what they value in those engagements.

Early signals from those bringing the talents of their consultants to bear in redesigned, technology-enabled consulting processes are positive for client and consultant alike. Traditional consulting rms will increasingly face a reckoning. As clients become more educated and experience the value of rms using consulting process automation and technology they will create a “pull” as they shift their buying criteria towards consulting process capabilities that deliver outcomes, while small and mid-size consulting rms that avail themselves of this new source of competitive di erentiation will furnish the “push.”

A consulting process technology platform, while necessary for management consultants to advance their consulting process and enhance their di erentiation and scalability, is, however, only part of the solution to providing clients with better outcomes. Consultants ultimately need to change the mindsets and behaviors that animate their services. For that, they also need to revisit who they hire, how they train, and against which metrics they evaluate performance and organize their incentive programs. They need to shift, for example, from judging performance by rate and utilization to metrics related to client outcomes. Inasmuch as process technology changes the time and cost-to-serve, it also portends changes in how and how much consultants are compensated for their services, potentially making rst-rate consulting accessible to underserved small and mid-sized clients.

The next few years will be an exciting time in management consulting as market forces drive transformation and management consulting moves from a 50-year old people-based s-curve to one driven by people, process, and technology.

 

Authors

NS

Nathan Simon ALM Intelligence, Director, Lead for Strategy & Operations Consulting Research

 

FFF

Michael Taylor SchellingPoint, Co-founder and Managing Principal

 

About ALM Intelligence

ALM Intelligence provides accurate and reliable market sizing and forecasts on consulting services worldwide, needs-analysis and vendor pro ling for buyers of consulting services, timely and insightful intelligence on the top consulting rms in their respective markets, and operational benchmarks that measure consulting performance. ALM Intelligence’s research spans multiple service areas, client vertical industries, and geographies. Our analysts provide expert commentary at consulting industry events worldwide, and o er custom research for Management Consulting and IT Services rms. More information about ALM Intelligence is available at www.consulting.almintel.com.

ALM, an information and intelligence company, provides customers with critical news, data, analysis, marketing solutions and events to successfully manage the business of business. For more information, visit www.alm.com.

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