Is the consulting industry a sham? : Farnam Street

This MIT grad gives you an inside look at the Boston Consulting Group.

Analytical skills were overrated, for the simple reason that clients usually didn’t know why they had hired us. They sent us vague requests for proposal, we returned vague case proposals, and by the time we were hired, no one was the wiser as to why exactly we were there.

I got the feeling that our clients were simply trying to mimic successful businesses, and that as consultants, our earnings came from having the luck of being included in an elaborate cargo-cult ritual. In any case it fell to us to decide for ourselves what question we had been hired to answer, and as a matter of convenience, we elected to answer questions that we had already answered in the course of previous cases — no sense in doing new work when old work will do. The toolkit I brought with me from MIT was absolute overkill in this environment. Most of my day was spent thinking up and writing PowerPoint slides. Sometimes, I didn’t even need to write them — we had a service in India that could put together pretty good copy if you provided them with a sketch and some instructions.

So the question is why do businesses hire consultants? I’ll bite. I think one of the main reasons largely has to do with a cover-my-ass type arrangement. Management can argue they hired “the best, most knowledgeable, most experienced consultants” and be worry free. If it works out great, however, if it doesn’t they can rationalize they did everything in their power to improve the situation.

One method of improving alignment of interest between the company and consultant would be to better align the consultants monetary reward to their actual business impact. So, rather than a flat fee, they get a percentage of the ‘improvement’. If there was no improvement, there would be no money going to the consultant.

via Is the consulting industry a sham? : Farnam Street.

This problem is real and not all are due to ethic issues: sometimes you work extra hard only to get minimum or even negative return, while copying and paste may lead to real fat benefit. The way to look at it: accumulated choices! Consultancies accumulate experiences from similar cases and apply those to the current one. There is nothing wrong or bogus about doing that. It may seem ripping clients off but from a historical perspective it just means you get a higher margin on accumulated experiences. 

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