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> what I call “decision insurance” (“but our consultants confirmed this made sense!”) so decision accountability is laundered, everything makes much more sense.

> what I call “decision insurance” (“but our consultants confirmed this made sense!”) so decision accountability is laundered, everything makes much more sense. I hear this all the time but it sounds like an urban myth. I highly doubt someone is not getting fired because the consultants they hired fucked up. They're still responsible for the business. I think consultants can help more with the "we need to do X, Y, Z" with consultant's report backing it up.

Terretta 6y ago
> hear this all the time, sounds like an urban myth I didn’t hear it. I’ve spent years as an L3 (CEO is L1) of one of the largest enterprises in the free world, interacting with other enterprises at that level, and collaborating with all the top consultancies’ teams that work at that level. My take is while not always the case, the higher level the committee approving the consulting spend (because even that choice/decision is diffused), the more frequently this is involved. At the end of the day, the CEO works for the Board, who are external and most definitely do not get paid enough to go to jail. Everyone involved needs decision insurance.
- TheOtherHobbes 6y ago
  I suspect too few people understand this. The CEO works for the board. The CEO can be fired at will just like any other employee. They will get an incredibly generous pay-off, unless they have fucked up to a world-beating historic extent. (And sometimes even then.) But as soon as the CEO loses the confidence of the board, they're on their way out. And most boards are only really interested in the financials. They don't care about culture, reputation, product range, or any of those other things. That's detail stuff, and it doesn't interest them. This is a cozy arrangement because no one is personally responsible for anything the company does. The CEO and the board are covered by limited liability, and they won't be going to jail for common crimes - like poisoning water sources, or setting fire to forests. They may go to jail if they fuck with the financials. Extreme fraud can be a showstopper. But having a national monopoly on pushing highly addictive drugs isn't. That's a regrettable offence which deserves a medium-ish fine. And - you know - let's say no more about it. Consultants - like auditors - exist to add another level of deferred responsibility. They're not there to make decisions, they're there to provide legal air cover for decisions that have already been made which need someone else's signature. The meetings, reports, the hasmter-on-a-wheel super-keen grad cadres and the rest are just theatre.
  - orzig 6y ago
    I don't know more than is in this podcast, and n=1, but the leash isn't always very tight: https://www.npr.org/sections/money/2017/07/19/538141248/episode-594-board-games https://www.npr.org/sections/money/2017/07/19/538141248/epis... > They weren't idealists or social activists--just two shareholders who thought the CEO was being grossly overpaid. And they figured that salary was paid with money taken out out of their pockets. So they tried to force a pay cut.
- ntsplnkv2 6y ago
  I won't doubt your experience. I'm sure it has happened, but I've been in some pretty high up areas as well. > My take is while not always the case, the higher level the committee approving the consulting spend (because even that choice/decision is diffused), the more frequently this is involved. It sounds this has more to do with the clout of the individual than it does "oh well mckinsey said this."
andreilys 6y ago
It depends on how much political clout they have. Redirecting blame is a lot easier when you have an external party. More interestingly though is it forces a conversation/decision on a particular problem, since you’ve already spent exorbitant sum of money on the consulting fees.

Terretta 6y ago

> hear this all the time, sounds like an urban myth I didn’t hear it. I’ve spent years as an L3 (CEO is L1) of one of the largest enterprises in the free world, interacting with other enterprises at that level, and collaborating with all the top consultancies’ teams that work at that level. My take is while not always the case, the higher level the committee approving the consulting spend (because even that choice/decision is diffused), the more frequently this is involved. At the end of the day, the CEO works for the Board, who are external and most definitely do not get paid enough to go to jail. Everyone involved needs decision insurance.

TheOtherHobbes 6y ago
I suspect too few people understand this. The CEO works for the board. The CEO can be fired at will just like any other employee. They will get an incredibly generous pay-off, unless they have fucked up to a world-beating historic extent. (And sometimes even then.) But as soon as the CEO loses the confidence of the board, they're on their way out. And most boards are only really interested in the financials. They don't care about culture, reputation, product range, or any of those other things. That's detail stuff, and it doesn't interest them. This is a cozy arrangement because no one is personally responsible for anything the company does. The CEO and the board are covered by limited liability, and they won't be going to jail for common crimes - like poisoning water sources, or setting fire to forests. They may go to jail if they fuck with the financials. Extreme fraud can be a showstopper. But having a national monopoly on pushing highly addictive drugs isn't. That's a regrettable offence which deserves a medium-ish fine. And - you know - let's say no more about it. Consultants - like auditors - exist to add another level of deferred responsibility. They're not there to make decisions, they're there to provide legal air cover for decisions that have already been made which need someone else's signature. The meetings, reports, the hasmter-on-a-wheel super-keen grad cadres and the rest are just theatre.
- orzig 6y ago
  I don't know more than is in this podcast, and n=1, but the leash isn't always very tight: https://www.npr.org/sections/money/2017/07/19/538141248/episode-594-board-games https://www.npr.org/sections/money/2017/07/19/538141248/epis... > They weren't idealists or social activists--just two shareholders who thought the CEO was being grossly overpaid. And they figured that salary was paid with money taken out out of their pockets. So they tried to force a pay cut.
ntsplnkv2 6y ago
I won't doubt your experience. I'm sure it has happened, but I've been in some pretty high up areas as well. > My take is while not always the case, the higher level the committee approving the consulting spend (because even that choice/decision is diffused), the more frequently this is involved. It sounds this has more to do with the clout of the individual than it does "oh well mckinsey said this."

andreilys 6y ago

It depends on how much political clout they have. Redirecting blame is a lot easier when you have an external party. More interestingly though is it forces a conversation/decision on a particular problem, since you’ve already spent exorbitant sum of money on the consulting fees.