December 15, 2017

Why you should stop buying consultancy (at least by itself)

By Paul Laughlin

consultancyWhen should you use external consultancy? Are you wisely bringing in wider expertise, or wasting your money on people who won’t be around to see the consequences?

Such a question plagues many analytics or insight leaders. Indeed I have spoken to many, over the years, who are frustrated by the speed with which directors turn to consultants.

I’ve mentioned before the need to build the reputation of your team, to mitigate the risk, of external voices being listened to instead.

But, in this post, I want to turn to the topic of consultancy itself. I’m sharing these thoughts with a foot in both camps. I have decades of experience as a senior leader within a FTSE100 business. In that role, I have seen external consultants both add value & be a waste of money.

Now, as a founder of my own business, I am choosing to take a different approach to consultancy. I advise people not to buy my consultancy by itself. What am I thinking?!

Why consultancy often fails

Just like the evidence of most change projects failing to deliver the benefits expected, so too, consultancy often fails. Why is this and what does it fail to achieve?

Having experienced both sides of this equation (client & consultant), a few reasons spring to mind:

  • Poorly defined expectations (lack of consistent understanding of goals)
  • Scope-creep, insufficient time/resources (shared responsibility)
  • Internal stakeholders not managed (‘politics’ are often blamed for lack of stakeholder management)
  • Lack of knowledge or skill required by consultant (less common)
  • Consultant has ‘textbook knowledge’ but lacks ‘real world’ experience/pragmatism (too often the case from large management consultancy firms)
  • Results poorly communicated to key decision makers
  • Lack of knowledge transfer or capability embedding

All of those can be pitfalls to avoid, when using a consultant, whether for technical or management/people work. It is worth using the above list of risks, to filter your selection of consultants to work with. Can they demonstrate experience of those risks & how to mitigate them?

But, the most pernicious problem that I have seen with consultancy, is the last one on that list. As with projects, the problem with consultants can be they finish/leave. When that happens, businesses can fail to realise any value from the engagement, if others are not skilled as needed. It can end up as just another report on the shelf.

So, is there a better way? Well my experience of working with some wise clients suggests that there can be.

What can help consultancy succeed?

The solution, at least in my experience, goes back to the initial ‘contracting’.

It requires more than defining the outputs of a consultancy engagement in terms of advice needed or format of outputs. Spend time to think, not only about the decision needed, but actions following.

If the consultancy is to identify capability gaps or investment needed, who will need to put this in place? If you cannot yet identify people (yet to be hired), is there a business manager/leader who will need to oversee the change?

The key is to identify who will need to act on & manage the knowledge required. If you like, the person who will need to become an internal ‘expert’, once the consultant has left. Then, in my experience, the missing piece of the puzzle is training, coaching or mentoring.

I’ve written previously, on the benefits of training & coaching. Sadly, it sometimes feels like businesses are quicker to invest in technology, than in developing their people. Even when that IT spend is larger. This is a false economy. In Data Science, or wider Customer Insight, it is so often the people skills & leadership skills that make the biggest difference.

From a watch to a compass

I’m sure you’ve heard the phrase, “borrowing your watch to tell you the time“. It is often, damningly, used to describe consultants. Those who appear to be paid well, only to inform the leaders of a business what some of its own managers already knew. Although, to be fair, this is more a criticism of weak knowledge management or engagement by executive teams.

Anyway, I was recently sharing with my business mentor, these convictions about consultancy. He, usefully, suggested that I think of transforming the above story to a new narrative regarding consultants. Instead, think of “borrow your watch to teach you how to use it as a compass“.

[As an aside, you can do this, by pointing the hour hand at the sun. Then, navigational South is halfway between that location and where 12 noon points. This only works for your natural timezone, like GMT is in the UK. But, if you are at a time of year that uses daylight saving (eg BST), then adjust accordingly.]

Back from that aside, I valued the analogy. Consultancy needs to move on. From taking advantage of borrowing the watch (or that perception), to achieving knowledge transfer. Leaving businesses generally, insight leaders in particular, able to continue using new skills themselves.

Improving is a joint responsiblity: clients & consultants

To move forward, towards this more positive value-add from consultancy, will need work by both sides. As suggested above, clients need to avoid short-termism. Think beyond pressing decisions or projects to be completed. Any change or advice sought, should be converted into an ongoing capability. One nurtured within the organisation (including its wider value chain of partners/suppliers).

Just as I have learnt with regards to recruitment, “hire in haste, repent at leisure“. Take time to be sure that your use of external expertise or services is not missing the knowledge transfer to continue to add value in future.

With regards to consultants, I know many who care passionately about their work & care about adding value. But, the profession as a whole has a problem. I recommend take a leaf out of the book of executive coaching professional bodies. When I qualified as a leadership coach, and signed up to a professional body, I was committing to not creating dependency. Engagements were to help the client achieve their goals & avoid ongoing dependency on the coach or mentor.

Just like teachers, our goal as consultants, should not be for clients to stay at school. Our joy should come from them graduating. From the client no longer needing your services, because they now have a thriving internal capability or leader.

What is your experience?

I hope this post comes across in the right spirit. I am not seeking to moralize or condemn any individuals. Everything I am suggesting comes from learning the hard way. In other words, the times I have got it wrong, on both sides of this relationship.

That said, I am grateful to my current clients, who have been wise enough to make effective use of my services. I hope we continue to both learn how best to help today’s organisations thrive.

Taking this approach can be brave for a consultancy. It can mean declining work when a prospect is not interested in also investing in the knowledge transfer needed for success. That is something I seek to practice.

So, I’m interested to hear your opinion. If you are a consultant, does this ring true to you? What is your take on how to fix the reputational risks of our profession?

If you are a client, do you still buy consultancy alone? If so, how do you ensure the organisation is able to realise the benefits on an ongoing basis? What is your best solution for knowledge transfer? How do you avoid being dependent on consultants to move forwards?