11 ms·

I was a technical project management consultant for a long time. The value that most orgs get from a consultant isn't really in the advice the consultant gives

• Icathian 7y ago
  Absolutely this. It baffles me how many people can understand and repeat ad nauseum "nobody ever got fired for buying IBM" but don't get the role a consultant plays in corporate strategy.
• braythwayt 7y ago
  This. I have done lots and lots and lots of enterprise sales and consulting, and a big part of bringing in outsiders is to provide the illusion of social proof. "Well, we had the experts in, and they found..." That sounds really, really terrible when put so cynically, but the flip side of that is to view it as insurance. If you bring the consultants in, hoping that they will recommend Plan A, and Plan A is truly terrible, a reputable consultant will find a way to sell you on Plan B, by couching it as "A few adjustments to Plan A." So in effect, yes, it is about making changes management wanted all along, but in addition to providing the illusion of social proof, you can also get an extra set of eyes to make sure that you don't completely footgun yourself. Sometimes. Maybe. If the consultants are good at both analysis and selling management on adjusting their plans...
  • bonestamp2 7y ago
    Agreed, and even if the consultants aren't more credible than the intern people, they at least have less bias than internal people, which can sometimes give their opinion a little more weight.
  • taneq 7y ago
    Another big part of it is liability management. If you're a high level exec and you make the wrong call, it's on your own head. If you hire a reputable expert and they make the wrong call, you're in the clear, even if it's what you would have done anyway.
• CharlesColeman 7y ago
  > it's the political cover to make changes they knew they should make all along Or the political cover to make the changes they wanted to make all along.
• globuous 7y ago
  This ! In france, its a classic move by big companies to have mbb formalize what they already know: a need to restructure which unfortunately involves firing people. Its easier to justify restructuring because mbb said so than because the company says so for some reason ^^
  • salamander014 7y ago
    Companies trust capital expenses more than operational expenses for some strange reason. I don't know why.
    • organsnyder 7y ago
      I think it's psychological. With capital expenses, the decision to spend a lot of money tends to be a discrete event/process, while operations usually grow slowly over time. We place inherent value in big purchases—after all, I decided to make the purchase, so it must be valuable.
    • bumby 7y ago
      Cost Bias: A fallacy of ethos (that of a product), the fact that something expensive (either in terms of money, or something that is "hard fought" or "hard won" or for which one "paid dearly") is generally valued more highly than something obtained free or cheaply, regardless of the item's real quality, utility or true value to the purchaser.[1] [1] http://utminers.utep.edu/omwilliamson/ENGL1311/fallacies.htm http://utminers.utep.edu/omwilliamson/ENGL1311/fallacies.htm
    • sjy 7y ago
      Are consultants’ fees generally accounted for as capital expenditure? Seems more operational to me.
  • bsder 7y ago
    > Its easier to justify restructuring because mbb said so than because the company says so for some reason Is it a legal thing? European regulation tends to be quite aggressive when people get laid off, so I imagine that an external assessment helps give some cover for that.
• servercobra 7y ago
  Yup, definitely true. I just got paid a fairly handsome sum for a one week gig at a large organization to write a report about a technical change. It was clear what the outcome was supposed to be and that the manager (who was just taking over some new orgs) already knew what they wanted to do, and just needed an external report to both bolster their decision and CYA. Luckily, what the manager wanted to do is also what I would have recommended, or it could have gotten a bit awkward.
• deleted 7y ago
  [deleted]
• gowld 7y ago
  This is why consultants hire Ivy League graduates. To create a myth of "Ivy League" "quality" justifying the decisions they are hired to recommend. The other thing management consultants do is industrial espionage -- they go into a company to learn how it work, and then advise other companies on how "industry leaders" operate.
  • crazygringo 7y ago
    Well, it's not just that. Basically they need a bunch of people who are really good at ingesting a ton of data, analyzing it, and summarizing it. Turns out those are exactly the same skills involved in writing academic papers, which gets you good grades. So these people really are statistically disproportionately the people in Ivy League schools and similar who also got high GPA's in those schools. So there's some reality behind what you call a myth. (Obviously you can still be awesome at that and not have gone to an Ivy League school, that goes without saying.) Edit: in response to a comment below... also you can of course be at an Ivy and not be a good writer too. Which is why consulting firms tend to have extremely selective hiring on campus through interviews with many rounds where most applicants get rejected, and pay huge attention to your GPA at college.
    • kortilla 7y ago
      Not really. To get into an Ivy League school you only need to perform well in high school and have the right connections and/or guidance to build the perfect resume. With college grade inflation and the fear of blowback from failing well-connected ivy students, the only guarantee you get from hiring an average Ivy League student is that you have someone who can write high school essays well. The typical undergrad graduate still barely has any critical thinking ability. If you want people fresh out of school who can ingest data, analyze it, and summarize it, you want good grad students. Good grad students come from non-Ivy schools more often than not. The only industries that care about Ivy League at this point are the ones where connections matter more than intellectual ability. Everywhere else has recognized that the pedigree is not a useful signal (see Google’s hiring data on this).
      • deleted 7y ago
• crazygringo 7y ago
  It's exactly this. Within any organization, you can have 3 or 6 important people pushing in completely different strategic directions. And it can be clear to any unbiased observer that there's only one good, responsible choice, but within your org that gets met with essentially "but that's just your opinion, man". So you call in a consulting firm and they deliver what most of the people already know. The consultants don't need to be rocket scientists. But afterwards, nobody can say it's just your opinion any more. It's now expert analysis that you paid good $$$ for, and everybody who disagreed before now basically has to get on board. So it's not even necessarily political "cover", but almost like a referee that brings enough credibility to settle otherwise intractable internal disputes. Also, this lets the CEO appear unbiased to all the people who "lost". So they can get on board with the new policy but not feel like the CEO shot them down personally, which is bad for morale, can lead them to quit, etc. (Just because they believed in the wrong strategy doesn't mean they still can't be super-valuable in the future in executing the right strategy.)
  • beambot 7y ago
    "Referee" is too unbiased a word. Shocking how frequently the consultants' conclusions mirror the arguments posed by the side that pays their fees.
    • kube-system 7y ago
      Money is one thing, but there's also just plain old information bias. Politics don't go away when the consultants come in. The consultants are going to be working closer with the group that brought them in. It's not uncommon in my experience for the 'other group(s)' to ghost the consultants.
  • slg 7y ago
    >Also, this lets the CEO appear unbiased to all the people who "lost". So they can get on board with the new policy but not feel like the CEO shot them down personally, which is bad for morale, can lead them to quit, etc. The flip side is that it is also bad for morale for someone to be recommending a solution for some time, the recommendation is ignored, a consultant is hired, the consultant recommends the same solution, and then the recommendation is implemented. This is exacerbated when the consultant's fee is some large percent or maybe even a multiple of the salary of the person who originally recommended the solution. It makes the original employee feel worthless and doubt the leadership's ability to properly evaluate solutions.
• mathattack 7y ago
  Same as “nobody got fired for hiring IBM”
• crusso 7y ago
  it's the political cover to make changes they knew they should make all along No argument here. Every single time that I've been in an organization that has brought in management consultants, the results of their work were almost exactly in line with advice that we had been feeding upper management for some time. It's infuriating to have the right answers to solve problems while people at the top ignore good advice and then spend huge amounts of money to get that good advice repeated to them by other people. Even worse is when upper management acts like the consultant advice is the first time they've heard those recommendations.
• organsnyder 7y ago
  That's also Epic's (the healthcare software vendor) big value proposition. Their software is okay—among an industry filled with shit, their turd is at least polished. But their delivery model is incredible: they make customers woo them (shouldn't vendors be doing the wooing?), and they have a prescribed way of doing things if they decide you're worthy to purchase their product. What you get in return is a constant cudgel of "this is the Epic way" to yield when talking with practitioners who are used to doing things their own way (especially doctors—nurses are more flexible and pragmatic, in my experience). This can be especially useful when you have a system of multiple facilities that's grown through acquisitions, with each facility having decades of accumulated practices that aren't quite aligned with your other locations.
  • sjg007 7y ago
    I mean, honestly, for a medical record system, if you allow a million doctors specific customization then as a company you are going to be in for a bad time. Epic is basically the Borg at this point as well. Any customization should come from a consultancy via some well defined interface.
  • TurkishPoptart 7y ago
    Very interesting. I'm part of a project to unify EHR systems for a number of giant hospitals in my area...all under Epic! The way they're selling it is "One patient, one bill, one record." There's all these Epic people running around, and they're all quite young and presentable, and they probably make some _killer_ slide decks. The funny thing is, our institution (a state body) actually hired some Deloitte people for their expertise. They told us to stick with Cerner, from which we're migrating. Nope, not gonna happen, we're too invested in Epic!
• maxkwallace 7y ago
  On the positive side, I do think that if we repeat this truth enough times we can decrease the "cover my ass" value of consulting and help more orgs make change autonomously.
• dpeck 7y ago
  Exactly. Early in my career I learned that a consultant is almost never hired by an organization, a consultant is hired by a faction within an organization who already knows what they want the deliverable to be.
• sbuttgereit 7y ago
  I have been on the "client" side of consulting engagements and a consultant myself. I think you identify the central truth of consulting: that usually we're not bringing any magic knowledge to the table. However, I think there are other circumstantial values that appear alongside the one you identify. I find that consultants not only provide cover, but also provide a level of focus on non-immediate, but important, problems that doesn't otherwise materialize on its own. Nobody wants to be seen wasting the highly paid consultant's time so you often get people paying attention when they might not otherwise. There's also setting the stage for what ends up as a sort of professional group therapy sessions and with the consultant as a mediator. I think you touch on that, but maybe I see some greater emphasis on that bit.
  • Ill_ban_myself 7y ago
    Consultants have usually seen 10-20 successful versions of what you are trying to do and 3-4 failed versions materialize over the last three years. The difference is usually whether the companies involved had the money and focus to mostly follow the consultant’s plan or whether it gets bogged down in customizations and committees of internal stakeholders at the company. I’ve also seen a couple stall because 3rd party vendors over promised and totally dropped the ball but it’s usually the vendors that the company was locked into before the consultant came on board or some niche product with no good vendors in the space.
• ndarwincorn 7y ago
  This entirely misses the forest for the trees. And granted the author's bias gets in the way of his attempt to point out that forest. Their bias aligns with mine, but with less editorialization IMO the following would be more clear: It's not that the work is or isn't valuable, or where that value is. It's that McKinsey charges 72% more than a competitor for the same consulting, and that there's a massive perverse incentive for public servants in charge of awarding contracts to pick the most expensive one. From the article, bias left in: Back in August, I noted that McKinsey’s competitor, the Boston Consulting Group, charges the government $33,063.75/week for the time of a recent college grad to work as a contractor. Not to be outdone, McKinsey’s pricing is much much higher, with one McKinsey “business analyst” - someone with an undergraduate degree and no experience - lent to the government priced out at $56,707/week, or $2,948,764/year. ... And this gets to the second reason why McKinsey can charge so much, which has to do less with McKinsey and more with an incentive to overpay more generally. It’s more likely something called the ‘Industrial Funding Fee,’ or IFF. The GSA’s Federal Acquisition Service gets a cut of whatever certain contractors spend using the GSA’s schedule, and this cut is the IFF. The IFF is priced at .75% of the total amount of a government contract. In the case of McKinsey, since 2006, “FAS has realized $7.2 million in Industrial Funding Fee revenue.” ... Does McKinsey do a good job? The answer is that it’s probably no better or worse than anyone else. I’m sure there are times when McKinsey is quite helpful, but it’s in all probability vastly overpriced for what it is, which is basically a group of smart people who know how to use powerpoint presentations and speak in soothing tones. You can just go through news clippings and find areas McKinsey did cookie cutter nonsense. For instance, McKinsey helped ruin an IT implementation for intelligence services. In the immigration story, MacDougall shows that the consulting firm encouraged ICE to give less food and medical care to detainees. That’s cruelty, not efficiency.
  • JoshTko 7y ago
    I've seen this trend get worse on HN were top voted comment is just a response to the title and not the actual heart of the article.
    • kinkrtyavimoodh 7y ago
• sjg007 7y ago
  I don't subscribe to this viewpoint. You have to have the clout to bring in the consultant in the first place. Now it may be a buy vs build decision and you are looking for advice on the buy side but I don't see it being about political cover when your "reputation" would be tied up with the consultant.
  • kube-system 7y ago
    There are many projects where the build vs buy decision itself is politicized. Political rifts between business and IT is a story that is just as old as business software itself. Super common scenario: * The business thinks IT is too slow to implement, and doesn't understand business needs * IT thinks the business changes priority too much and doesn't even understand their own business processes, and it's leading to technical debt because the demands of the business are half-baked * So, the business brings in a consultant who says they will do everything they want, without any push-back, in half the time
    • potta_coffee 7y ago
      Two years later, the outsourced work is half-finished and what has been delivered is near-total garbage. All the best engineers have left the team and the business is scrambling to hire someone competent to cleanup the mess.
      • kube-system 7y ago
        Sometimes a company with a competent IT department hires a bad consultant. Sometimes a company with an awful IT department hires a good consultant. Roll a dice.
    • sjg007 7y ago
      Yeah... I don't really subscribe to this viewpoint. I think it's a meme at this point. "Politicized" is a trope in my opinion.
      • kube-system 7y ago
• reallydontask 7y ago
  it's the political cover to make changes they wanted to make all along There is a difference, sometimes subtle sometimes not so
• thinkloop 7y ago
  There's another piece to it too: they are able to legally sell trade secrets between organizations. They update their "knowledge base" every engagement and become "specialists" in the field.
• greggyb 7y ago
  An additional aspect is focus. By being expensive and not part of the normal reporting hierarchy, a consulting firm working on a project can have the luxury of focusing on just that project. This is a huge benefit.
• ownagefool 7y ago
  I don't know if this is always the case. High end consultancies have sold oursourcing that decimated the UKs IT orgs, and are now selling in-sourcing, whilst in reality many are just selling outsourcing to them with new buzzwords like DevOps and microservices. It might be what the businesses wanted to do all along, but I'm not sure it's what they "knew they should be doing".
• chaostheory 7y ago
  If we’re including the other consulting firms, it’s not just that. These companies effectively also function as a contracting platform ie a “AWS” for on demand employees instead of servers
• skydoctor 7y ago
  This calls for a P2P model of consultancy then: Company A acts provides neutral consultancy to Company B (in a unrelated field) and Company B or C provides neutral consultancy to Company A.
• bduerst 7y ago
  One of my profs in business school said that 1/3 of the time you hire consultants is because you know what you want to do but you need a fall guy in case it goes south. You're paying a premium to offload the liability. Wash, rinse, repeat with the big 4.
• taude 7y ago
  Yeup, this. I worked at a former company who paid 7 figures for a re-org (lay-offs), and it was run mostly by 25 year olds, with the occasionally pre-recorded video by a big-co partner. Was really interesting dynamic that felt more like "Up in the Air". But it was obvious they did it for liability reasons and so they wouldn't have to take the blame for the lay-offs since it was the consultants who told them findings.
• timwaagh 7y ago
  That's just one type of consulting. Perhaps a very important type but governments tend to hire them for far more mundane reasons as well: government workers at some places rarely (never) get fired so it's more efficient to hire a consultant for a while instead of being stuck with a lifer even if the consultant is four times the cost.
• deleted 7y ago
  [deleted]
• lazyasciiart 7y ago
  That's not always the case. Sometimes they bring a consultant in with no intention of doing anything that gets suggested, so they can point to how much serious effort and money they spend on the topic.