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Business management consultancy rip-off

I’ve been reading with mounting horror a book called 'Rip Off' by David Craig. The cover justly describes it as, ‘the scandalous inside story of the management consulting money machine’. Craig was himself a blue chip consultant.

My horror arises from the fact that even the bluest of these consultancies may earn their gigantic incomes - and I mean gigantic - by methods which are little short of confidence tricks. Moreover, these methods do not include doing wonderful work for the clients pouring money into the consultants’ pockets. A large proportion of the work done appears to be a waste of money, and very big money at that.

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But there’s a third horrific element - the incompetence of the senior managements who fall for the consultancy tricks and then exercise grossly inadequate control over the progress and achievements of the projects. The failings of the latter are rooted in the economic bias of consultancy. The most important task is not the completion of a superb project, but the selling of a new and preferably much bigger piece of work. The consultants earn their fortunes (as Craig says, leading partners are ‘very, very rich’) by selling their services, not by delivering them.

To give you an idea of the true flavour of the consultancy operations, here are some ‘tricks of the trade’ identified by Craig.

First, you get your foot in the door by offering a first phase or study or analysis that costs relatively little and addresses some problem area identified by the client. During the few weeks of this sprat-to-catch-a-mackerel routine, you insist on weekly updates. You involve the management team, briefing the members one-to-one, so that the updates change from presentations to working sessions - bringing the managers on to your team and side.

The beauty of the client partnership is that it makes such obvious sense for the client. Of course, the work will be better planned and implemented if seconded managers participate with the consultants. But what makes sense for the client makes millions for the consultants as their management allies become committed to the project and thus powerful sales aids for the consultant.

The latter still needs fancy footwork. Suppose the project involves hundreds or thousands of engineers, of whom the consultancy possesses not one. Easy: you stress the enormous value of an independent outside view, uncontaminated by the acquired mindset of an engineering culture. If, on the other hand, you’re stuffed with engineers, you take a different line: for this assignment, nothing but profound knowledge of engineering can provide the understanding and insight which the client requires so urgently.

Heads you win, tails you don’t lose can also work if your findings come under challenge - say, the numbers your people have crunched are dubious or plain wrong. Craig recommends this spiel. ‘These numbers may be right or they may be wrong. We don’t know and nobody we talked to… knew either. Of course, they had opinions. But nobody really knew. And you can’t run an organisation effectively if people don’t trust your basic numbers… so the real underlying issue is to work together to put in a management process that people believe in and can use’. Works like a charm.

If you think that managers are too honourable to fall for such trickery, just read Craig’s case histories. I especially like the large Irish dairy where the consultants couldn’t do their usual efficiency studies because there were no people to study. Masses of people were on the books, and drew good pay and better overtime. But they seldom or never came to work; the raison d’etre of the business was to extract money from the EU for unwanted products. The dairy got paid three times - for not selling the surplus, for storing it and finally for destroying the stuff...

READ THIS BOOK!

Robert Heller