UK: STRATEGISTS WRONG-FOOTED.

UK: STRATEGISTS WRONG-FOOTED. - Is the market moving away from the major consulting firms?

by
Last Updated: 31 Aug 2010

Is the market moving away from the major consulting firms?

There's a hoary old joke about strategy consultants which contains more than a grain of truth. All the strategy consultant does, so it's said, is circle the client three times and drop a report on him - following that up with a fat bill, of course. This avian technique has served the best-known consulting firms well over many years. But times are changing. Despite the current enthusiasm for 'business process re-engineering', 'overhead value analysis' and the like, there are signs that the strategy consultants' market is itself changing in ways which make it difficult for the big firms - the McKinseys, Boston Consulting Groups, Bains and others - to keep pace.

'Because today's markets are so fast-moving, competitive strategy often needs to be adapted on a rolling basis. Many companies are therefore taking strategic analysis and interpretation in-house,' says Michael Stiles, a former senior man with PA Consulting Group who set up his own practice four years ago. 'Clients want to solve problems for themselves,' agrees independent consultant Magnus Spence, who recently published a study of the UK consulting industry.

Many would argue that formulating strategy has always been the prime responsibility of management, not of consultants. 'Too often consultants are allowed to state the problem for which they will supply their solution, rather than offer a solution to a problem defined by the client,' maintains Sir Owen Green. In more than a quarter of a century at the head of BTR, Green employed consultants only for straightforward technical problems, like plant lay-outs, to which they could bring specialist knowledge.

Not all senior managers are disdainful of the help that consultants offer at a strategic level. At the building materials group Redland, says its corporate planning director Kevin Connolly, 'we try to do more things in-house'. Nevertheless Redland has used strategy consultants several times, notably on post-acquisition studies following the Steetley takeover of 1992. 'They are expensive and must be used carefully on projects of sufficient value,' Connolly accepts. But Redland has been happy with their work.

Any suggestion that the use of consultants implies an abdication on the part of management is far wide of the mark according to many who have worked on both sides of the fence. 'Sometimes you want an outsider's view, and sometimes it takes an outsider to liberate the insider's view,' says Nicholas Prettejohn, head of strategy at Lloyd's of London and a former partner in Bain & Co. 'Consultants bring objectivity and smart brains, and can throw a lot of resources at a problem very quickly,' adds Jim Grover, strategic planning director for GrandMet's global food business and an ex-partner in OC & C, the strategy consulting arm of accountants Coopers & Lybrand.

'A consultant will look at a company's strengths and weaknesses. This is a judgmental role, not an executive one,' argues David Faulkner, once with McKinsey & Co and now a lecturer on business strategy at Cranfield School of Management. 'The responsibility of management is to get the best possible help, if it is required,' says Barry Jones, Boston Consulting Group's UK managing partner.

Paradoxically, the best possible help - from management's point of view - often means that the consultant must take a more involved role in the company. This is not something which strategy consultants are always qualified - or anxious - to do. The need for close involvement could be all the greater if the assignment is intended (as with 're-engineering', for example) to bring about some fundamental change: for in such cases the company will want to see knowledge transferred to its internal teams. For this reason, many clients like their advisers to be 'action-oriented and facilitative', as Spence says, and equipped with all the 'soft' skills desirable for working with teams. Strategy consultants, however, are not invariably adept as trainers and facilitators.

'From problem-solving to coaching is not an easy transition,' says Marcus Alexander, a former BCG consultant and currently a director of Ashridge Strategic Management Centre. Moreover aptitude may not be all that's lacking. Knowledge-transfer often means that the consultant has to work with the client less intensively than before, but over a longer period. This is not popular with the big league consultants. 'It impacts upon their own profitability,' Alexander points out. Besides, it could cause them 'to give away the golden goose'.

In future, strategy consultants may have to take that risk. 'Consultants have to be less rigid,' comments Prettejohn. Those who add value as implementors and facilitators - as well as via rigorous analysis - should find an enduring market for their skills. For others, the lean years of the 1990s may not be over.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today