I’ve been seeing stories in the media recently about big, prestigious consulting agencies doing very bad things, like working with dictators and profiting from an opioid epidemic they appear to have exacerbated. But what about the companies who hired these consultancies — did they know they were getting bad advice?
And what about times when morality isn’t hanging in the balance — are these consulting agencies delivering high-quality advice?
As a consultant with 10+ years under her belt and a co-owner of a strategy consultancy, you might think I would be the last person to suggest a critical analysis of such firms. But bad actors hurt the economy and the consulting industry. They make us all look bad.
Here are the top three symptoms of a toxic relationship with a strategy consultancy — one that isn’t providing real value to your business.
1. They’re finding more problems than solutions
Every consultancy trades on its ability to become a “trusted advisor.” In the biz, “trusted advisor” is understood to mean “my clients would buy anything from me.” This is a lucrative position to be in for the consultant who invoices you for their time and materials, but it’s a serious cash drain for the trusting client. To become your trusted advisor, consultants will both address a current challenge and find new challenges to solve next.
In a past life, I was one of a few dozen consultants on a transformation project team for a financial services company. While devising the strategic transformation, the team was encouraged to identify which client challenges could be opportunities to cross-sell. A year and a half later, after 50 people had been deployed across four different service lines, the project was behind and over budget, and had effectively left the client with no choice but to continue paying for consulting. I asked myself: whose business was our advice truly supporting?
A client’s challenge is real, but the consultant’s desire to eliminate the challenge is not always genuine. Consultant companies will offer to bring in experts, tools or capabilities that you don’t have in-house, but these experts are usually motivated by their sales targets. Not only are they finding more problems, but they are also developing new ones — they are making you organizationally codependent.
2. They’re using a one-size-fits-all approach to solve your challenge
Many consultants are trained to have an expert-led approach. It’s what allows them to charge a high hourly fee. Unfortunately, that training also means that they have a bias toward providing answers — often before, or even instead of, asking questions. This approach leads to solutioning inside of a black box; your consultants will devise solutions or strategies based on their expertise, without the collaboration and input of the people who have an inherent, lived understanding of the challenges, capabilities or culture of a business.
For instance, Purdue Pharma engaged McKinsey, who were known for their ability to implement proven strategies that increase profits and streamline operations. While these strategies may have worked for other businesses, McKinsey didn’t account for Purdue’s context, neglecting the ethical consequences their solutions would have on the wellbeing of patients, as reported in the New York Times. Needless to say, Purdue ended up with far more and far bigger challenges than they likely would’ve faced without these so-called “solutions.”
A cookie-cutter approach to client engagements is the modus operandi for many strategy consultancies. In the biz, such an approach is referred to as “leveraging past work.” If a solution worked previously for a similar client, then the consultancy will perceive this solution to be a time-efficient and profitable way to solve your business’s parallel challenge. For consultants overloaded with work, leveraging is a survival tactic that enables them to perform their duties and remain highly billable.
Such formulaic approaches to solving complex challenges ignore individual business’s unique needs, as well as those of the business’s customers. Stacking ignorance on ignorance can lead to missed opportunities — or, in the case of Purdue Pharma, substantial social, financial and reputational ramifications. The consultant’s profit-generating tactic becomes their client’s profit drain.
3. They’re only providing incremental value — not transformative value
“Transformation” is a pretty common buzz word in the biz. A lot of consultancies will suggest that they can take your business from where it is today to a new, more successful place. They promise increased sales, more market share or better profitability.
On the same transformation project I mentioned above, one of the biggest results promised to the client was a shift in the way their employees worked: they would have better access to quality data, which would enable better insights and faster knowledge sharing. The engagement involved large-scale tech implementation, tools implementation and change management. While these were intended to shift the productivity and knowledge base of the employees, the truth was that the changes impacted only the data scientists. Everyone else was too intimidated to use the new tools and used their same lengthy workarounds to produce data insights. Similarly, knowledge-sharing changed incrementally because teams were so used to working in their silos that the new tech, tools and teams were not set up to shift the inherent cultural challenges of the organization. In the end, a several-year, multimillion-dollar transformation produced only incremental changes.
If you are a mature market leader looking for transformation, you’ve likely exhausted all the traditional levers of achieving these goals — you may have opened more stores, entered new markets, streamlined jobs or automated processes. If all this is true, then your next move is not so obvious.
Your consultants aren’t offering transformation if they’re devising strategies that are profitable and tactical, but aren’t setting your business in a new direction or defining a new reason for being. If your consultants are suggesting solutions that don’t have you thinking, “I understand how I can do business differently now,” then they haven’t delivered on their promise.
So, if you are working with a strategy consultancy that has found a way to bore itself into your business and make you more dependent on them than you’d like, if your consultants have provided you with solutions that lack an inherent understanding of the unique challenges of your business, or if they’ve called their work “transformational” when it really only produces incremental results — these are clues that you need to reevaluate your relationship and consider firing your strategy consultancy.
On another note, if you’re looking to solve your current strategic challenges, in a way that makes the most sense for your unique business, and create transformational value, get in touch.