When – and how – to use consultants?

As a former management consultant Suvi Nenonen says the trick to getting the most from your consultants is to become a savvier client.

Management consultants. They will tell you what you already knew – and charge eye-watering sums for it. The second oldest profession in the world. Fancy suits and lots of arm-waving. Never to be found when something needs implementing.
These are just some of the jokes about consultants along with just as many about lawyers. And after 10-plus years as a management consultant before transferring to academia full-time, I have probably heard them all. But how much truth are there in these jokes? Should you avoid this dreaded tribe altogether – or is the trick to become a savvier client?

Client, diagnose thyself
Unlike the jokes suggest, management consultants are generally great problem-solvers. But the problem with management problems is that they come in various shapes and sizes, and most management tools – such as theories, frameworks or consultants – tend to work only for a limited range of problems.  
Therefore, the first and foremost step to becoming a savvy client is to become more aware of the differing nature of your strategic challenges, and doing the immediate diagnosis yourself: Complicated or complex problem, analysis or synthesis, description or prescription?

Traditionally management consulting has been applied to complicated problems, requiring lots of data gathering and crunching. How to move from static to dynamic pricing? Is this company worth acquiring? How to segment the ever-changing market? When faced with such a challenging analytical problem, reaching out for a traditional consulting company is a relatively safe bet – especially if you are short on time and suitable manpower.

But what if you need more fundamental advice: should you approach consulting wizards when you really don’t know what your overall strategic direction should be? A client of mine once said: “You mustn’t outsource strategic thinking” – and I agree.
As a CEO or chairman you are responsible for your company’s vision, and thinking that consultants can generate a truly innovative strategic direction by performing advanced analytical procedures outlined above, tends to be a costly mistake.
The most innovative visions don’t come from analysis, but from creative synthesis – and outside experts, no matter how experienced, typically lack the detailed contextual understanding to “connect the dots” in a truly innovative way.
However, there are plenty of other, more fruitful ways to involve external advisors in such situations: providing information about the latest trends, facilitating senior management team discussions – or designing prototypes to test the preliminary hypotheses.

Build a portfolio of consulting partners
Because the nature of the strategic problem to be solved determines what kind of external advice is needed, larger organisations especially shouldn’t rely just on one consulting partner.
One-man bands are usually not experts in everything, no matter how eclectic or long the CV of your favourite consultant is. Larger consulting companies, on the other hand, always have their own way of approaching clients’ problems – and sometimes this approach suits your dilemma, while other times it just doesn’t.
So, the second step in becoming a savvy client to consultants involves building a portfolio of possible partners, consisting of as diverse a set of advisers as possible.

Building on the above, a consultant who turns a job offer down – or better still, refers you to another one – is most likely a keeper: such advisers know what they do well, and the limits of their expertise. However, it is probably not the best policy to build your consultant selection process around the integrity of these external advisors – which leads us to the third and last step in becoming a savvy client: being knowledgeable about management theories and fads.
 Ignorance is the surest way of separating you from your money, whether in flea markets or the marketplace for management advice. Understanding the differences and linkages between ‘disruptive innovations’ and ‘dynamic capabilities’ doesn’t only help you to have more meaningful dialogues with your consulting partners; it also saves you from buying seriously old wine in a new, shiny bottle.

Associate Professor Suvi Nenonen works at the University of Auckland Business School’s Graduate School of Management and teaches in the MBA programmes. Her research focuses on business model innovation and market innovation.

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