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For better or for worse, consulting companies exist to: 1) Enrich their partners 2) Lend credibility to their clients Consulting firms are hired based on an

For better or for worse, consulting companies exist to: 1) Enrich their partners 2) Lend credibility to their clients Consulting firms are hired based on an "appeal to authority" fallacy. Companies don't want to make hard/unpopular decisions, so they outsource them to consultants. Data point: management consulting is one of the industries that is hit hardest by a recession. [0] If consultants truly provided value, this is exactly when they would be most needed. The people actually doing the work on these deals are 22-25 year olds. They are highly incentivized to make their firm look good (thus enriching the firm's partners). Anything else is gravy. Anecdotally, I have many friends who worked in the industry, and when asked if they would hire consultants for their own hypothetical businesses, the answer was always "No". I highly recommend this article on McKinsey's work restructuring Puerto Rico's debt - it pulls back the curtain on the industry: http://nymag.com/intelligencer/2019/04/mckinsey-in-puerto-rico.html http://nymag.com/intelligencer/2019/04/mckinsey-in-puerto-ri... [0] https://www.ft.com/content/1a229d54-4548-11de-b6c8-00144feabdc0 https://www.ft.com/content/1a229d54-4548-11de-b6c8-00144feab...

harperlee 7y ago
Overly cynical. All companies exist to provide profits to their owners. Your argument about the datapoint can also be argued for lending: credit disappears when it’s most needed. It must be completely and utterly useless, then. Or perhaps when a crisis strikes, if you want to minimize spending, you first eliminate consultant bills, instead of, idk, firing internal employees? Part of the value of a consultant is that they are more mobile than an employee, so they get to see the same problem in different companies, and get expertise on that issue more quickly that if you stay on the first company in which you solved that issue. I’ve dealt with the same very-specific software on about 20 different banks, for example (disclaimer: I’m a consultant :) ); I have people under 25 on the team that are real experts on very specific things, and run cicles around people with 2x - 5x their experience if you count it in days and not problems solved. And then of course consultants are sometimes hired for the wrong reasons and asked to do obvious recommendations. Politics were there before the consultants arrived.
- reaperducer 7y ago
  Overly cynical. All companies exist to provide profits to their owners. Overly simplistic. Not all companies exist to provide profits to their owners. There are thousands of companies in the U.S. and elsewhere which exist for other reasons.
  - harperlee 7y ago
    Sure, “all” is a powerful word. It was simplistic enough to support my point, which still stands though. Perhaps it is more useful to discuss the central point on debate, instead of being picky on points that are not central to the debate?
- sgt101 7y ago
  >All companies exist to provide profits to their owners. No. This is very mistaken. There are many more stakeholders that companies have than their owners. For example, their customers. For example. Private Hospitals do not exist to make money. They can make money. But they exist to provide healthcare to sick people. As a side effect they pay their employees and make money for their owners; but if they fail to provide healthcare then they cease to exist. On the other hand, if they fail to make money they are often taken over and continue with new owners. Companies exist to serve a function in our society, they depend on our society and they are part of it. They are not cash machines.
  - dv_dt 7y ago
    I feel that you're describing companies as they should be, while the quoted comment line is describing them as they have become treated.
  - harperlee 7y ago
    I get what you mean, really, but it is not what I’m talking about. Depending on the country, the “companies” that you mention have a different legal status than an enterprise / business kind of company. I think my point was clear: not only management consultants are the ones who seek to make money out of their business. And of course to belabor your point, if private hospitals and bakeries and carmakers are all in to make a better world, up to that standard of idealism, consultants are there too.

harperlee 7y ago

Overly cynical. All companies exist to provide profits to their owners. Your argument about the datapoint can also be argued for lending: credit disappears when it’s most needed. It must be completely and utterly useless, then. Or perhaps when a crisis strikes, if you want to minimize spending, you first eliminate consultant bills, instead of, idk, firing internal employees? Part of the value of a consultant is that they are more mobile than an employee, so they get to see the same problem in different companies, and get expertise on that issue more quickly that if you stay on the first company in which you solved that issue. I’ve dealt with the same very-specific software on about 20 different banks, for example (disclaimer: I’m a consultant :) ); I have people under 25 on the team that are real experts on very specific things, and run cicles around people with 2x - 5x their experience if you count it in days and not problems solved. And then of course consultants are sometimes hired for the wrong reasons and asked to do obvious recommendations. Politics were there before the consultants arrived.

reaperducer 7y ago
Overly cynical. All companies exist to provide profits to their owners. Overly simplistic. Not all companies exist to provide profits to their owners. There are thousands of companies in the U.S. and elsewhere which exist for other reasons.
- harperlee 7y ago
  Sure, “all” is a powerful word. It was simplistic enough to support my point, which still stands though. Perhaps it is more useful to discuss the central point on debate, instead of being picky on points that are not central to the debate?
sgt101 7y ago
>All companies exist to provide profits to their owners. No. This is very mistaken. There are many more stakeholders that companies have than their owners. For example, their customers. For example. Private Hospitals do not exist to make money. They can make money. But they exist to provide healthcare to sick people. As a side effect they pay their employees and make money for their owners; but if they fail to provide healthcare then they cease to exist. On the other hand, if they fail to make money they are often taken over and continue with new owners. Companies exist to serve a function in our society, they depend on our society and they are part of it. They are not cash machines.
- dv_dt 7y ago
  I feel that you're describing companies as they should be, while the quoted comment line is describing them as they have become treated.
- harperlee 7y ago
  I get what you mean, really, but it is not what I’m talking about. Depending on the country, the “companies” that you mention have a different legal status than an enterprise / business kind of company. I think my point was clear: not only management consultants are the ones who seek to make money out of their business. And of course to belabor your point, if private hospitals and bakeries and carmakers are all in to make a better world, up to that standard of idealism, consultants are there too.