fiona czerniawska - the trusted firm -- how consulting firms build successful client relationships

The Trusted Firm

The TrustedFirm

How Consulting FirmsBuild Successful Client

Relationships

Fiona Czerniawska

John Wiley & Sons, Ltd

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Library of Congress Cataloging-in-Publication Data

Czerniawska, Fiona.The trusted firm : how consulting firms build successful client

relationships / Fiona Czerniawska.p. cm.

Includes index.ISBN-13: 978-0-470-02717-2ISBN-10: 0-470-02717-7

1. Consulting firms. 2. Business consultants. I. Title.HD69.C6C92353 2006001–dc22

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Contents

Preface vii

Acknowledgements ix

About the author xi

Part I INTRODUCTION 1

1 The changing client–consultant relationship 3

2 Promises, promises: excellent relationships from a

client perspective 13

3 The invisible firm 25

4 The trouble with the status quo 41

5 The client–consultant–consulting firm relationship 51

Part II PEOPLE 63

6 Personal chemistry and relationship skills 65

7 Recruitment, retention and remuneration 77

Part III PROCESS (1): MARKETING AND SELLING 91

8 Brand versus specialization: the race to the top? 93

9 Handling the sales process 105

10 Thought leadership: as much culture as intellect 117

Part IV PROCESS (2): DELIVERY 135

11 Managing consulting projects 137

12 Three types of teamwork 155

13 When is a methodology not a methodology? 169

14 Innovation – beyond the borrowed watch? 181

15 The two-way mirror: listening and talking to clients 191

16 Partners and parents 201

Part V VALUES 211

17 Values 213

18 Living the values, valuing the lives 221

19 Conclusions 235

Index 241

vi C O N T E N T S

Preface

Trust: it is a word that carries particular resonance in the consulting indus-

try. Even consultants sometimes find their work hard to describe and the

value they add even harder to articulate. While some consulting projects

have clear boundaries and measurable deliverables, many do not – and are

bought on trust. Trust is the foundation of the most successful client–

consultant relationships. Trust is what consulting firms are built on.

But the way in which a consultant and client can rely on each other and

work together in order to achieve a common goal is only the tip of the trust

iceberg. For a consultant to be able to do what a client wants, they need the

support of a “firm” behind them. Indeed, as consulting projects become more

specialized and complicated, it has become harder for a single person to be

able to do all the work. Even independent consultants, accustomed to

working by themselves, are searching out networks of likeminded individ-

uals. For consulting firms, irrespective of their size, the challenge is to

demonstrate that the firm, as well as its individual consultants, can deliver

value to clients.

That is a challenge because the industry faces a generation of clients who

are increasingly cynical, not so much about the value offered by individual

consultants, but about the rationale for buying services from a consulting

firm. There are several reasons for this. The shakeout of the consulting

industry between 2001 and 2004 resulted in many well-qualified and ex-

perienced consultants leaving the larger firms. Some went into line man-

agement roles, where their jaundiced views of their ex-employers have

made them sceptical of the promises consulting firms make. Many more

became independent consultants or joined smaller firms. Without the

overheads carried by larger firms, they could offer clients a better deal: the

same experience for lower fees. When you talk to them, many clients say

that they look for consultants – people – they can work with; once they

have found the right people, the consulting firm itself has little value to add.

This perception is one reason why fee rates have fallen in recent years: price

reflects perceived value, or lack of it.

Consulting firms have responded to these trends by transferring more and

more weight onto the shoulders of their consultants – the human face of

consulting. Leaf through the average consulting brochure, dotted with pro-

files and case studies, and you see how much consulting firms are trying to

personalize their image. But this strategy is not solving the problem: in

some ways, it is making matters worse as it pushes the firm further back

behind the stage. What consulting firms need to do is re-establish the ration-

ale for the firm, not try to hide it.

That is the purpose of this book. It tries to see the consulting firm from

the client perspective: how can a consulting firm’s internal processes –

recruitment, resource allocation, project management, business develop-

ment, and so on – be designed to add value from a client’s point of view?

What are the problems which get in the way? Why do firms find this hard

to do?

Trust between clients and consultants at the individual level is essential,

but so too is trust at a more collective level. We do not just need trusted

consultants, but trusted teams and trusted firms.

viii P R E FAC E

Acknowledgements

There is an embarrassingly large number of people who need to be thanked

for their help in putting this book together. I am grateful to the wide range

of people who were willing to be interviewed, to the public relations staff

who opened doors on my behalf and the support staff who patiently sched-

uled and rescheduled our conversations. However, I am particularly indebted

to Mark Radvanyi and Laura Ryan at Accenture, Julian Goldsmith at Arc

Business, Heather Smith at PA Consulting, Louise Briggs at Booz Allen

Hamilton, Jo Williams at Rossmore Group, Cathrine Brabbin at Boxwood,

Julian Haslam at BT, Nille Skalts at Implement and Aviva Tropp at Marakor.

I would also like to thank Peter Hill and Joy Hewgill at the Management

Consultancies Association for their support and for allowing me to use so

much of their valuable data; Leon Chandler, Angela Garg, Shahid Nazir and

Ronell Vermaak, who helped with much of the research for the book; and

Sarah Taylor, for help in clarifying the structure of the book and for under-

taking many of the original interviews.

I would like to acknowledge the sources of the following material, all of

which has been used here with permission:

Chapter 1 Some of the material in this chapter has been extracted from a

booklet, also written by the author, A Better Place to Be: How the Last Fifty

Years Has Changed the Consulting Industry, published by the Management

Consultancies Association in 2006.

Chapter 2 The data in this chapter were all drawn from a survey, carried

out by the Management Consultancies Association, Perceptions of

Consultancy in 2005. The chapter itself is an expanded version of the author’s

“Issues and Trends” column which appeared in the June 2006 issue of Con-

sulting to Management.

Chapter 3 Some of the material in this chapter has been extracted from a

report, also written by the author, From Bottlenecks to Blackberries: How the

Relationship Between Organisations and Individuals is Changing, published by

the Management Consultancies Association and Management Today in

2005. For further discussion of the concept of “preventing advantage”, see

Corporate-Level Strategy: Creating Value in the Multibusiness Company. by

Michael Goold, Andrew Campbell and Marcus Alexander (John Wiley,

1994).

Chapter 11, 14 and 15 The figures in these chapters come from a report, also

written by the author, Ensuring Sustainable Value from Consultants, published

by the Management Consultancies Association and Management Today in

2006.

x AC K N OW L E D G E M E N T S

About the author

Fiona Czerniawska is one of the world’s leading commentators on the con-

sulting industry.

Fiona is the founder and managing director of Arkimeda, a firm that spe-

cializes in researching and consulting on strategic issues in the consulting

industry (www.arkimeda.com). She is also the Director of the UK Manage-

ment Consultancies Association’s Think Tank.

Fiona has had more than 15 years’ experience as a management consult-

ant, primarily working in the areas of marketing and strategy, and now

speaks, lectures and writes extensively on the consulting industry and related

issues. Her most recent books are The Intelligent Client and Management Con-

sulting in Practice: Award-Winning International Case Studies. She is also the

co-author of Business Consulting: A Guide to How it Works and How to Make

it Work, published by The Economist in spring 2005.

PART I

Introduction

1The changing client–consultant relationship

“The consulting industry,” says Vernon Ellis, International Chairman of

Accenture, “is on a journey of discovery.”

Consultants have always been – and continue to be – in the forefront of

business change. Whether restructuring shipyards in the aftermath of the

Second World War, pioneering the use of new technology in the 1960s and

1970s or transforming the delivery of public services today, consultants have

been there, helping. But it is not just the work they do with clients that has

changed, it is also the very nature of the relationship they have with those

clients. And, as Ellis points out, the journey is by no means over.

A Brief History of Consulting

You don’t get clients like Walter Niehoff today.

When Peter Isaac, a consultant with Proudfoot, walked into Niehoff’s

office in Germany in the early 1960s, it was decorated with photos, medals

and other war memorabilia. Niehoff, a former Panzer tank commander, had

returned from the Second World War to run his family’s factory making knit-

ting machines, but the business was failing and the banks were making

threatening noises. Isaac told the old man he had to cut costs, including

making 100 of his 400 employees redundant, and that he should call in the

trade union leader to explain this. Niehoff refused point blank, saying he

hadn’t spoken to “that idiot” in two years and had no intention of doing so

now. He sent Isaac instead. Seeing the writing on the wall, the trade union

leader agreed, but only if Isaac would also look at how sales could be

improved. “We make a good product which people want to buy, but we’re

hopeless at selling it,” he said. Isaac suggested he should deliver the message

himself to Niehoff but the union leader refused, saying he hadn’t spoken to

“that idiot” in two years and had no intention of doing so now. Once again,

Isaac was the go-between, and he succeeded in getting Niehoff to agree.

When, after six months, the firm was in a position to hire 150 new staff, the

old man literally wept with gratitude.

Post-war businesses were changing, but not fast enough. Philip Burnford

joined the consulting industry in 1964 when he was offered a job with MSL,

the firm that dominated the market in management recruitment. Many of

his clients were medium-sized manufacturing companies. “Often they were

pretty cosy places,” he recalls. “People were promoted simply because they

were next in line. They had no training for management, and no real under-

standing of what it required. They were very set in their ways and suspicious

of anyone from outside the company, particularly of anyone better qualified

than they were.” He remembers visiting a well-known manufacturer of agri-

cultural machinery: “I was talking to the black-suited company secretary,

who was fairly typical of the time and who doubled as a quasi-staff manager.

We had agreed the specification for the development engineers they urgently

needed when we were interrupted by the shuffling entrance of a very old

gentleman, with a resplendent watch chain. It was the chairman and

founder of the company. He listened for a while and then said: ‘Don’t go

sending us any of those graduates. You can’t learn engineering at university.’

The company survived about another ten years.”

“We were agents of change, trying to get managers to take a more enlight-

ened approach,” says Burnford. But change came at a price. Sir George Cox,

the co-founder of Butler Cox which later pioneered multi-client pro-

grammes on the impact of technology on business, joined Urwick Orr in

the late 1960s, attracted by the glamorous image consultants had already

acquired and the training and variety of work on offer. His first six weeks

were spent at the company’s management school, studying different disci-

plines and listening to presentations by prominent business leaders and trade

unionists. “But my first assignment was with a mid-sized manufacturing

company in the north of England,” he recalls. “I arrived on the Sunday

night: it was cold and my plane was late. The next day I was taken on a tour

of the plant, but it became clear that the local management resented me

being there – and I realized I’d been imposed by their head office. I was put

in a glass-sided office, by myself, in the middle of the factory with just a

4 I N T RO D U C T I O N

experience. Resourcing and efficiency were driven by leverage, an approach

borrowed from law firms in which the expensive and limited time of a firm’s

most experienced and senior partners could be divided between multiple

teams of more junior staff. But consulting firms took leverage to new

extremes: while a law firm or a strategy consulting firm might have been

content with leveraging the time of a partner across half a dozen individu-

als, those working on implementing new technology, where the average size

of projects was typically much larger, were looking at a ratio of one partner

to 30 or even 50 junior staff. Such ratios could only be achieved by codify-

ing, and to some extent standardizing, the approach a firm would take. This

in turn meant codifying their knowledge so more of it was more accessible

to more people, and by increasing the level of training they provided.

Vernon Ellis joined Andersen Consulting in 1969 and became a partner

ten years later. Although it had not yet opened its training facility for con-

sultants at St Charles, Illinois, one of the first things the firm did was send

Ellis on a computer programming course. “The firm had already woken up

to this new way of doing consulting,” says Ellis. “When people thought about

consulting then, they thought of the McKinsey model; they weren’t think-

ing about implementing technology or business change. We were one of the

smaller consulting firms at the time, but we started to focus on technology.”

Needing a definitive way to approach increasingly complex projects, Ander-

sen Consulting developed Method 1, building on individual bits of the

jigsaw already put together by different parts of the firm. “But it wasn’t par-

ticularly visible to clients,” says Ellis. “We didn’t go in with it under our

arms. The idea was always to use it as a tool.”

The proliferation of computer systems, the increasing use of minis as

well as mainframes, and the focus on reducing costs all meant consulting

services were in demand as never before. When Pat Sherry returned to

Coopers & Lybrand’s London office after managing to extend a two-year

posting in Bermuda to five years, he found a tough, commercial and hectic

environment. “It wasn’t so much hot-desking, as hot-rabbit hutching.” The

partner in charge of his business unit would walk round the office on Monday

morning and if he saw someone there two weeks running he’d ask them to

see him the following Monday. “Utilization was never a problem.” Within

a year of returning, Sherry had a team of 30 people working for him on finan-

cial systems and technology projects. Vicky Wright joined Coopers &

Lybrand in the mid-1980s, before moving to Hay Group, where she was the


metal desk and two chairs – to the obvious amusement of all the other staff!

It was nothing like the glamorous strategic-level advisory role I’d envisaged!”

Cox had an advantage, however. Like many consultants, he joined not only

with considerable management experience under his belt, but direct ex-

perience of some of the most advanced deployments of computer technol-

ogy. “I was the equivalent of the one-eyed man in the kingdom of the blind,

not just consulting but running seminars on the lessons we’d learned.”

Technology, together with the human and operational change it brought

with it, was already starting to take consultants far away from their advisory

roots. At Proudfoot, Peter Isaac remembers feeling slightly insulted when

Sir Ian McGregor, grappling with the mammoth task of restructuring British

Steel in the early 1980s, told him that what distinguished him and his col-

leagues from other consultants was that they had dirt under their fingernails.

It was a compliment, McGregor assured him: “You work at the coalface

where things really happen, other consultants work in offices.”

Like their clients, consulting firms had to change too.

Most of Burnford’s and Cox’s fellow consultants had been retired army

officers; the rest had been industrial engineers; most were in their fifties.

Work came through referrals and repeat business: if a client didn’t know a

consulting firm to use, they’d place an anonymous ad in a newspaper. The

majority of sales calls resulted in chargeable work. But, while someone

joining the consulting industry in the 1960s would probably have had an

engineering background, those joining in the 1970s were mostly account-

ants. Pat Sherry joined Coopers & Lybrand’s audit division straight out of

university in 1969, before moving to its consulting practice in 1973, but

didn’t know whether to feel complimented or insulted when the senior

partner told him he’d be better off in the firm’s embryonic consulting prac-

tice. It didn’t matter: the consulting practice wasn’t prepared to have him

anyway, saying he was too young and didn’t have enough experience. When

he reapplied two years later, having worked for a stockbroker in the inter-

val, the firm accepted him. “But my father was a bit bemused,” remembers

Sherry. “ ‘How,’ he asked, ‘could a client pay for someone so wet behind the

ears?’ ”

Sherry’s father wasn’t the only person asking this. As consulting firms

became increasingly involved in implementation, they needed more people,

and there simply weren’t enough with experience. By the end of the decade,

the average age of a consultant was falling, as were his or her years of

T H E C H A N G I N G C L I E N T – C O N S U LTA N T R E L AT I O N S H I P 5

UK Managing Partner. “Even when I joined consulting – and consulting

firms were comparatively small in those days – there was a sense of unease

around how consulting firms should best organize themselves internally. Like

many firms today, Coopers had a matrix structure: individuals would be

assigned to both a skills team and an industry group. Often, there would be

a conflict between the two.”

Growth fuelled the desire for more growth, and bigger firms were already

reaching the point where they couldn’t rely on a handful of senior people

with excellent contacts to drive business. The buoyant market was also

attracting new players. Vernon Ellis recalls a seminal meeting at Accenture

at the end of the 1980s when the consulting partners decided that they

needed to be globally integrated, independent of the Arthur Andersen man-

agement in each country. “We’d done some research on the way we thought

the consulting industry would evolve during the 1990s and come to the con-

clusion that our main competitors would be IBM and EDS. Everyone was

surprised at the time – but it proved to be quite right. At the time, we were

still regarded as one of many consulting firms and we felt it was important

to try and create a separate brand, positioning and image. We knew that, if

we were to win the big projects which made a substantial difference to a

client’s business, then we had to be more disciplined.”

By the 1990s, the market had indeed changed decisively, creating yet

more pressure on consulting firms internally. Demand was polarized between

very large-scale projects, typically involving technology but increasingly

involving outsourcing too, and much smaller-scale, traditional advisory

work. At the same time, clients, more accustomed to using consultants, were

taking a more sophisticated approach to hiring them. “The whole nature of

the client–consultant relationship had changed,” says Philip Burnford, who

by 1991 had become Chairman of Hay Group. “Whereas before we’d been

helping clients do something they couldn’t do for themselves, now it was

more a case of working with the client.” Consulting firms had to choose:

they could either thrive as small, but often highly profitable boutiques, or

they could go for growth. Thus, while Coopers & Lybrand continued to be

something of a cottage industry, focused primarily on advisory work, Deloitte

and Pricewaterhouse moved into industrial-scale systems integration work,

largely around packaged solutions such as SAP.

And what growth: much came on the back of a series of waves – of man-

agement ideas (total quality management, business process re-engineering)


and of technology (enterprise resource planning) – which affected both

large and small firms. And by the end of the 1990s, the industry was

riding the biggest waves of all – the year 2000 and e-business. But the surge

in demand which accompanied the dot.com bubble masked the fact that the

industry had yet to resolve some of its most serious underlying problems.

The priority was recruiting sufficient people, rather than looking for

people with specific capabilities. For many firms, the sheer scale of activity

overwhelmed their core values. An even bigger problem was client expec-

tations: with so many people entering the industry, with their average age

and level of experience far lower than had been the case in the 1970s and

1980s, many clients were poorly served, paying too much for projects that

yielded little or no tangible benefit. The underlying problem was that the

business model of consulting firms had not kept pace with the times. While

advising their clients on how to become global, how to exploit the oppor-

tunities of new technology and how to restructure their organizations, the

consulting industry itself was struggling with all of these things behind the

scenes.

The first years of the new millennium couldn’t have been a period of

starker contrast. By 2000, consulting firms were unable to recruit fast enough:

the “war for talent” was at the top of everyone’s agenda. The surge in demand

for consultants had pushed prices through the roof. But by 2002, demand, no

longer inflated by preparation for the year 2000 and the dot.com bubble, was

falling rapidly; the consulting industry was left with what has been estimated

to be 25% overcapacity. Between 2001 and 2004, consulting fee rates fell by

between 10% and 20%. Pat Newberry was head of PricewaterhouseCooper’s

financial services practice at the time: “Prices fell in a frighteningly short

space of time: it was as though the tide went out and stayed out; the average

daily rate halved. We weren’t equipped to deal with this, and the whole idea

of the one-stop shop, offering a full range of professional services, had proved

to be rubbish. We might have had a wide range of expertise, but it was unbe-

lievably arrogant of us to claim to be expert in everything.”

Falling prices weren’t just the result of overcapacity, but of changes in

the way clients bought consultants. Everyone talked of clients becoming

more sophisticated: many were themselves ex-consultants, laid off in the

post-millennium shakeout, and they knew the tricks of the trade. The deci-

sion to bring in consultants moved from functional heads to central

procurement teams, many of whom focused exclusively on getting the


lowest possible price. They were buying bodies, not consulting teams or

solutions to problems, and their approach rapidly commoditized some

services.

This meltdown has triggered, although not resolved, a serious and long-

overdue reappraisal of how consulting firms work. Peaks and troughs of

demand are the inevitable consequence of today’s business world in which

capital and information flow more freely than ever before. The key question

for consulting firms is therefore not simply which products and services to

provide, but how they can deliver them flexibly and profitably. Globaliza-

tion means that there’s always someone out there who is inventing some-

thing cheaper, smaller and faster than the existing players can offer, and no

company – consulting firms included – can afford to rest on its laurels. Off-

shore companies have undercut the prices of established firms; new tech-

nology means entire swathes of work can be done from places as far afield

as India, Taiwan and South Africa, rather than in London or New York.

Demographic change and clients’ desire for specialist knowledge have com-

bined to squeeze firms’ ability to get the people they need. Consulting firms

used to be up or out, and they could afford to be because they received so

many more applicants than they had places. But the flow of people isn’t what

it was, so the industry has had to become more concerned about the

work–life balance and being able to offer flexible working. “The industry is

transforming itself,” says Pat Sherry. “We don’t want to go through the

recent boom-and-bust cycle ever again.”

Why Read This Book?

The evolution of the consulting industry has taken it far from its roots.

Today’s consulting firms are bigger than ever; the projects consultants take

on are far more complex and challenging. Yet, when you talk to clients about

how they view the relationship they have with their consultants, one thing

becomes very clear: they continue to view it in personal terms. Did they get

on with the consultant? Could the two of them work together effectively?

Success is attributed to the personal qualities of the consultants: they knew

their stuff; they rolled up their sleeves and got on with things. By contrast,

failures tend to be associated with consulting firms: the firm wants to sell

more work; the firm did not staff the project with the people they had

promised; they put their interests above those of their clients.


Consulting firms have responded to this divergence between perception

and reality by transferring more and more responsibility to individual con-

sultants. They have pushed their consultants into the limelight – then tried

to hide behind them. Of course, they are not alone: organizations in all

sectors are pursuing a similar philosophy; it is the dark side to the empow-

erment we strive to achieve.

But the peculiar problem for consulting firms is that neither clients’ atti-

tudes nor their responses work well in an environment in which trust

between individuals, while still vital, is not enough. Multidisciplinary pro-

jects and the focus on delivery not just advice, mean that clients need teams

– firms. In these circumstances, consulting firms cannot afford to rely on

one-to-one relationships: they need corporate relationships as well as

personal ones.

As an industry, consultancies spend a great deal of time thinking about

individuals: Who is the best person to put on this project? Who should go

where in the matrix structure? Who are the partners or directors of the

future? How can we build better, more effective relationships with our

clients? I wouldn’t dispute that these questions are important, but I would

argue that we don’t spend anything like enough time thinking about the

role the firm has to play in answering them. What kind of environment,

infrastructure, support and culture do individual consultants need if

they’re to do their job properly? What can the consulting firm do that its

employees cannot do for themselves? Is the role of the firm to invest in inno-

vative ideas and new approaches? Is it to assure the quality of the people

who call themselves consultants? Is it to provide comfort to clients in the

form of a global brand? If consultants cannot answer these questions, then

it is hardly surprising that their clients cannot either; nor is it surprising that

clients see consulting firms as part of the problem.

In 2000 David Maister published a seminal book. The Trusted Advisor has

rightly become the gold standard by which consultants judge their own

behaviour. No one wants to be a mere contractor: everyone wants to be a

trusted advisor. Yet this is now – after six years of turmoil in the consulting

industry – only part of the solution. What good is it if your client trusts the

handful of people in your firm who truly excel at building and sustaining

long-term client relationships if they are not prepared to extend that trust

to other people in your business? What good is it if they think “their” con-

sultants are brilliant if they also think they are undermined by the com-


mercial self-interest of the firm? The trusted advisor should be the tip of the

iceberg: what good does it do you to have trusted advisors if you don’t have

a trusted firm?

“The concept of the trusted advisor still has enormous merit,” says Steve

Gunby, Head of the Boston Consulting Group’s Americas region. “If your

child were ill, there would be lots of people who would profess to be helpful,

but if you found someone who was prepared to take the time to talk to you

and your child, to understand what was going on and invest effort in finding

precisely the right treatment, then you’ll return to that person again and

again in the future. The same is true in business. Most companies are not

in the business of replicating historical success but in identifying the changes

they need to make in anticipation of future changes: they’re sailing into

uncharted waters. These organizations want someone they can trust, to help

them do what they need to do, not simply tell them what they need to hear;

they need someone who can look beyond their own self-interest. Personal

trust remains, and will continue to remain, an essential element of the rela-

tionship between a client and consultant. But today’s consulting projects are

complex and multifaceted, taking them from pure analysis all the way to

change management, the human principles of making the technology

required work effectively, and the corporate implications of a specific deci-

sion. Most people cannot be an expert in all of these things – and that’s the

challenge for consulting firms. A client cannot have a trusted relationship

with everyone, but equally one person cannot have all the expertise in the

world. Behind the trusted advisor there have to be people – an organization

– who can deliver the skills and services the client needs.”

The purpose of this book is to examine how consulting firms are respond-

ing to this challenge.

The rest of Part I explores these points in more depth:

• Chapter 2 looks at why clients use consultants and the extent to which

their attitude to them has become polarized: consultants good, consult-

ing firms bad.

• In Chapter 3, we look at the way in which consulting firms are part of a

broader trend across business as a whole, which weakens the role and

responsibility of organizations.

• Chapter 4 analyses the trouble with the status quo. Clients’ preference

for individual consultants over consulting firms is not enough in today’s


complex environment. Indeed, clients themselves implicitly recognize

this, as the changes to the way they buy consultants demonstrate. Simi-

larly, consulting firms’ desire to empower their consultants may sound

laudable, but it does not necessarily equip them to succeed.

• Chapter 5 introduces the conceptual framework for this book and argues

that instead of thinking of the client–consultant relationship as binary,

we should recognize there is a third party involved – the consulting firm.


2Promises, promises: excellent relationships

from a client perspective

Consulting firms that think about how they build and sustain relationships

with their clients tend to see it from their own perspective, from the inside

looking out.

If we begin by asking clients how satisfied they are with their use of con-

sultants, we find there’s a mix of good and bad news. The good news is that

the overwhelming majority of managers who use consultants are pleased

with the results. A recent survey undertaken by the Management Consul-

tancies Association found that 98% of managers were completely or partly

satisfied; and more than half were completely satisfied. Satisfaction levels

were sufficiently high that 80% of those interviewed said they would use the

same consulting firm again. The bad news, of course, is that this still leaves

plenty of room for improvement: 47% were only partly satisfied; and 2%

were totally dissatisfied.

What Do Clients Want from Consultants?

The single, most important reason why clients use consultants is that they

need access to specific skills not available internally. In a recent survey of

managers, more than two-thirds rated this factor as crucial in their decision

to bring consultants in (Figure 2.1). This was particularly marked in organ-

izations commissioning larger-scale projects.

There are two sides to this. Consulting firms are unquestionably seen as

the repository of important skills and experience. Consultants are the people

clients turn to when they want to find out something new, benchmark

themselves against rivals or understand lessons learned by others. But many

organizations clearly lack the knowledge and expertise they need to develop

new strategies and change their capabilities, systems and processes to help

them achieve these.

There is a significant gap between this first reason – the access to specialist

skills – and the next most important reasons for hiring consultants. Forty five

per cent of respondents use consultants as a source of fresh thinking, either

because the consultants do not necessarily accept the assumptions made by

people working in an organization, or because the consultants’ experiences of

a wide range of situations allows them to provide new insight. Objectivity was

rated as crucial by 24% of those interviewed, although what they mean by this

varies. For some clients, objectivity is synonymous with independence: they

want to work with consulting firms that have no ties to other organizations,

particularly software vendors or outsourcing suppliers. But for others, objec-

tivity simply means having the ability to stand back from the pressures and

politics of a client’s organization – to see the wood for the trees.

Big spenders are slightly less likely to use consultants because they

lack the skills to do a piece of work internally. Increasingly, multinational

corporations, staffed with executives who’ve been through business school,

are able to find the know-how they need among their own people. The thing

they find harder to source is innovative thinking: consequently, access to

original thinking is significantly more important to these clients.


66%

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Figure 2.1 What is the single most important reason why you hire consultants?

Consultants are often accused of being used to rubberstamp decisions

already made: in fact, only a very small proportion of clients use consulting

firms in this way.

The dominant factor which determines whether a consulting firm will

end up on a client’s short-list is its reputation for successful work (Figure

2.2). The bigger the project and the more an organization spends on con-

sulting annually, the more likely this is to be important. Other factors –

whether the client has used the consulting firm before, a recommendation

from a colleague or other business, or if the consulting firm has a well-known

name – are all much less important. Indeed, 60% of interviewees said the

name was comparatively unimportant, something that was true among even

the highest-spending organizations.

But this raises the curious question of how a consulting firm acquires a

reputation for successful work if it is not through previous projects, referral

or brand. In reality, all these factors do make a difference, but not in a way

that clients either perceive or consciously admit to. Reputation is in a sense

the tip of the iceberg – the part of the consulting firm that clients

evaluate – but previous work, referral and brand are the nine-tenths below

the water.

P RO M I S E S , P RO M I S E S 15

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Figure 2.2 The crucial factors in choosing between consulting firms

An Anatomy of the Best

Client–Consultant Relationships

Clients view consulting relationships in two distinct ways: the personal

interaction they have with the consultants (the people); and the results

delivered (the promises they make).

The People

It was Mary Poppins who, having measured the two children in her charge

(“stubborn” and “inclined to giggle”), was asked to turn her measuring tape

on herself: “Practically perfect in every way” it showed. Ask any manager

how they view their relationship with consultants and they will almost

always begin at the most personal level. If the project went well, it was

because those involved were “good” consultants; if it went badly, it was

because they were “bad”. The better the people, the better the project; the

better the project, the better the people.

Clients believe that good consultants are knowledgeable, dedicated,

honest and able to engage with people on the client side. But, like Mary

Poppins, they are not absolutely perfect: indeed, it is often the fact that they

do not have the answer to everything that creates the strongest, most

binding client relationships. If anything, you could sum up the attributes of

a good consultant as different, but the same – different in that they have to

bring something specific to a client, typically in-depth expertise in a field

with which a client is unfamiliar (without this essential difference a client

would have little reason to hire the consultant, after all); but the same in

so far as consultants also need to be able to work closely with their clients,

to be part of the same, seamless team if they are to add value.

Knowledge

As we have noted, clients hire consultants to plug gaps in their skill sets, to

bring experience acquired across a range of organizations and situations. “We

wanted to work with one consulting firm, to join us as a part of our team,”

said one client. “Of course, we needed a suitable approach, but essentially

we needed the right people. The firm we chose provided us with people who

not only gave us the necessary expertise, but also the confidence and knowl-


edge to implement this massive project.” It follows that the most serious

criticism clients level against “bad” consultants is that they did not know

enough: “They were inflexible generalists, lacking any specific or detailed

expertise,” complained one.

Dedication

It is hard work being a good consultant: clients expect nothing less than

absolute commitment to the work in hand. “The consulting team put in an

incredible amount of effort and emotion into the project,” was the critical

factor for one manager. “You can’t work at this pace, making commercial

decisions of this scale and complexity without excelling in knowledge, com-

petence, professional judgement and, most importantly, courage.” “We never

worried about them dropping the ball,” was another manager’s perspective

on the same point.

Honesty

Most clients – the best clients – do not like yes-men. They are not hiring

consultants to agree with them all the time or flatter them, but to tell them

what they need to know. “They have to think independently and be willing

to say unpopular things,” is how one manager put it. “They need to work

with us while also challenging us as an organization in a constructive way.”

“Over the years I’ve worked with a number of consultancies,” said another,

“but this team has been the most challenging – which is what I asked them

to be. They are thoughtful yet practical and are not afraid to be honest and

say what they think rather than what you want to hear.”

Mutual respect

Clients also value consultants who can be honest about themselves. There

is little a client hates more than arrogant upstarts who think they know the

answer before they have listened to what the client has to say, or who

pretend to be above the kind of humdrum detail on which projects succeed

or fail. Modesty is better than setting false expectations; “You become a bit

sceptical about things,” said one client about a project he’d been involved

in, “but this firm has had a very honest and clear approach. It’s applied


common sense, not a magical mystery tour. The consultants pointed us in

the right direction and gave us the tools to do more. We are impressed with

the speed with which your people picked up our business. Simply put, they

are nice guys: there is no holier-than-thou attitude here.”

Flexibility and a willingness to admit when things are not working out

are better than trying to apply a rigid methodology. “They’ve bent over back-

wards to help us during this challenging period,” was how one client put it.

“The many streams of communication were fundamental to this project and

these built a strong relationship between the consultants and clients

involved. Feedback between the two was open, often frank, always con-

structive. Where ideas or processes did not work, they were changed.”

The recognition that neither side is perfect but has something distinctive

to add creates mutual respect. “This programme brought many different

skills and experiences together,” said another client. “We have been frus-

trated together, laughed – and sometimes nearly cried – together, but we

have always had drive and determination in the face of adversity. Most

importantly, we have always had respect for each other’s ways of working

and different cultures.”

Engagement

If you add knowledge, dedication, honesty and mutual respect together

you get a single, overarching attribute: the capacity a consultant has to

empathize with the client and the ability to motivate and enthuse a client’s

staff as a result. Typically, clients talk in terms of partnership, integration

and collaboration. “These consultants were able to achieve terrific rapport

with our people; their attitude fitted in perfectly with our vision and working

style.” “They worked collaboratively with us to drive out a hugely success-

ful outcome and integrated very well into our team. They were able to build

a rapport at all levels in our organization.” “It was their ability to adapt to

our cultural environment and be part of a team which made this consulting

team stand out.”

Consultants who feel empathy for their clients are more likely to spend

time helping them develop at a personal level. This might involve coach-

ing them for an important presentation, advising them on their next career

move or giving them constructive feedback about their strengths and weak-

nesses as a manager. When clients talk about good consultants, they often


say how much they have learned from them: “I enjoyed working with the

consultants hugely. I’ve learned a lot and I truly believe that the joint team,

which spanned a range of functions in our business, gives us a benchmark

of how we should work together in the future.” It is often reciprocal: con-

sultants who give something to their clients get something back – insider

information on company politics, the opportunity to talk about additional

work in the offing.

But the crucial thing that empathy drives is engagement. Arrogant con-

sultants, who have little time to listen to their clients let alone empathize

with them, are unlikely to inspire those around them. Good consultants do

just that: “The consultants’ insight and analysis, together with their prag-

matic approach, have engaged our staff and proved to be a more effective

catalyst for change than any of our previous approaches,” said one client.

Another made it even more personal: “The feeling from my team has been

very positive: indeed, they’ve literally been jumping up and down with

enthusiasm.”

Engagement in Action

The Department for Work and Pensions (DWP) pays the pensions of around

12 million pensioners in the UK. Introducing the Pension Credit in 2002

was part of the government’s goal to reduce pensioner poverty, but it was

also the most radical change in income-related benefits for pensioners for

50 years, requiring more than 3000 staff to be trained, over 300 forms and

leaflets to be produced, all existing business processes to be updated and new

software to be developed.

Managers at the Pension Service hired a team from Capita Advisory

Services (formerly Capita Consulting) to help plan and implement these

changes. It was work that required a balanced approach by the consultants

involved, combining energy and focus to ensure that the benefits would be

available on time with partnership-style working which engaged people at

the Pension Service rather than steamrolling them. “Capita’s practical and

focused input to the capacity improvement programme was crucial to

achieving the first stage of our targets for Pension Credit,” recalls Charlie

McKinnon, the Pension Service’s Transformation Director. “Their inde-

pendent challenge and hands-on approach was just what was required to

help our managers increase their operational capacity when it was most


needed.” “Capita worked alongside us, developing and implementing prac-

tical solutions and changing the way we work by coaching people individ-

ually and in teams,” adds Tony Cooper, the Pension Credit project manager.

“Their approach has challenged our thinking and helped us make lasting

improvements in our operational management capabilities. The people from

Capita blended in well and got on with the task in hand.”

But good consultants are not enough: they have to deliver on their prom-

ises. “We helped create a sense of urgency and corporate responsibility which

meant that the new credit was delivered to 2.4 million people on time,” says

Gordon Wilkinson, Managing Director, Capita Advisory Services. Perfor-

mance improvement work with the pension centres resulted: an increase in

caseload capacity of more than 40%; a 30% reduction in the number of

Pension Credit cases outstanding; more than 20 000 cases moved to alter-

native pension centres across the county as a means of making best use of

capacity in order to manage and clear backlogs. “Our work with the pension

centres has strengthened the operational management of the organization

and has supported staff during a time of rapid change,” says Graham Waller,

Account Director of Capita Advisory Services. “Facing initiative overload,

the pension centres have been coached towards success, focusing on co-

operation and sharing good practice. These principles have been bedded in

and have made a real difference to ways of working.” “Capita has been part

of the engine room of this project,” agrees Cooper, “adding fuel and oil to

help bring the project in on time.”

The Promises

“The team were complete all-rounders, working with us and our customers

and delivering brilliantly in both arenas. Their attitude is hungry, they are

ambitious and they deliver beyond our expectations every time.”

Although consulting firms habitually talk about “exceeding expect-

ations”, it is what a firm promises that is really at stake here. Every con-

sulting project has promises embedded in it: they may be small or large,

explicit or implicit, but they are there none the less. Indeed, the single most

important thing consultants do is keep their promises.

The promise that all consulting firms make – and most keep – concerns

time and money. Even where a consulting firm is charging by the day, there

will be a budget for the work and a completion date. But most consulting


work is now done on a fixed-time basis, so the most explicit promise a con-

sulting firm makes is to complete the work within the stipulated timeframe

and for the agreed sum. “This highly ambitious project was managed on time

and within budget,” said one satisfied client. “The implementation was a

100% success.”

Going further up the “promise pyramid” (Figure 2.3), clients expect con-

sultants to do what they said they were going to do – implement a new IT

system; coach a group of staff; analyse a market. Such promises may relate

to inputs (“We’ll run half a dozen brainstorming sessions for your executive

team”), outputs (“We’ll analyse your options for entering the Asia-Pacific

market and report back in a month”) or business outcomes (“We’ll

improve your time to market”). They may be more or less ambitious: but

they will be what the consulting firm has stated them to be. “Put simply, the

consultants came in, stated what they would do, and then did it,” said one

client.

On-time, on-budget delivery and doing what they say they will do are

promises clients expect consulting firms to deliver; they are also almost

always explicit, embedded in the terms of reference and contract. In addi-

tion, there is a promise clients hope will be achieved – that the positive

results of a project will be sustained, that the benefits, once delivered, will

remain with the organization long after the consultants have left. This is

something that consulting firms can rarely make explicit: there are too many


On time, on budget

Doing what you say you will do

Setting a higher standard

Sustainable results Implicit promise

Explicit promise

Helping an organization do

what it didn’t think it could

Proportion of consulting firms delivering on their promise

>95%

<5%

Figure 2.3 The promise pyramid

variables to be able to say with certainty that the recommendations the

consultants make will stand the test of time or that an application they

have installed will be deployed effectively by its users. Both client and con-

sultant may strive to achieve this, but neither side can guarantee the result.

Not surprisingly, few make such promises explicit: they represent the aspir-

ation rather than the immediate goal. That said, where the hope is realized,

clients are unstinting in their praise. “The transformation has been

just phenomenal,” said one. “To change a business of this size at the speed

it happened and to help us to deliver a dramatic improvement in financial

performance is an incredible success story. We are now well positioned

to continue to grow the business.” “The consultants’ analysis has pro-

vided us with a competitive advantage because it has allowed us to compete

in the market at prices of up to 30% less than before while still maintain-

ing our margins,” said another. “In monetary terms, we will have earned

more than 100 times in increased income than we paid out to the consult-

ants in fees.”

Beyond the hoped-for promises consultants make, there are other poten-

tial promises. These are almost entirely unwritten and are results a consult-

ing firm may be able to deliver above and beyond a client’s expectations.

Indeed, it is these potential promises that clients talk about when they say

that a consulting firm has exceeded their expectations.

Potential promises fall into two groups.

First, by bringing in consultants it may be possible to raise the standard

of thinking and working in an organization. This may seem an outrageously

arrogant suggestion: after all, most managers in client organizations are thor-

oughly experienced and have as many business qualifications as the con-

sultants who work with them. But remember, we are talking about good

consulting here, not just the workaday standard. Good consulting firms,

which set great store on the quality of work they do, can change how client

managers see themselves and what they expect from their own staff. “The

consultants said, ‘Let’s not settle for less, let’s go for something better’,”

recalled one client. “Looking back, that was the right thing to do.” “The

success of this programme was increased by the way in which we could work

closely with the consultants,” said another. “It’s felt ‘joined up’, not only in

terms of delivery but also in relation to a shared passion for excellence. It’s

been refreshing to work with professionals who are clearly in touch with the

demands of the business and able to add real value.”


The second potential promise is much greater in scale and scope. Some-

times – and if we are honest it really is on a very small number of occasions

– consultants can do something an organization thought was impossible.

“We wouldn’t be where we are today,” is typically how clients see this. “The

consulting team recognized our strengths and challenged us to achieve more

than many of our managers would have thought possible. They have helped

our business release valuable capacity and delivered an approach to per-

formance management that will support our future business growth,” said

one client. “I can hardly believe it: we’ve been involved in this programme

for less than two months and our average sales value has already increased

by almost a third,” said another.

And the Bad Relationships?

If people and promises are the two cornerstones of the way in which clients

view their relationship with consultants, what is it that goes wrong?

Unsurprisingly, clients cite poor quality consultants first. “Bad consult-

ants are those who trot out platitudes and charge a lot,” was how one

manager put it. “They offer little insight and add nothing new.” “They only

do what they’re told to do,” complained another. “There’s no leadership.”

Yet others talked of the arrogance consultants so easily slip into: “They think

they are the sole owners of intellect in their area; they can’t relate to other

people.” “A bad consultant is someone who either doesn’t listen or pretends

to listen while coming up with a pre-packaged solution.” And from the

people, clients quickly move on to talk about the broken promises. “A bad

consulting firm is one that sells you a project with one set of people but tries

to deliver with another. You expect the organ-grinder but get the monkey.”

“They promise the earth and can’t deliver; they make powerful presenta-

tions but have no substance.”

The striking thing about these comments is how quickly an unhappy

client moves from blaming the individual consultant to blaming the con-

sulting firm which supplied them. That is not unreasonable: it is the con-

sulting firm which is, after all, providing the service. But it is noticeable how

the same connection is rarely made when it comes to good work: then, it is

the good consultant who gets the credit, not the firm. Also worth noting

is the way in which dissatisfied clients often criticize the consultants who

work for them for putting their consulting firm’s interests above those of


their clients. According to one manager, a good consultant “will always act

in our best interests, rather than imposing an overused solution or looking

for future business and sales”. By contrast, bad consultants “aim to get as

much money as possible out of us in the short term at the expense of any

long-term relationship”. From a client’s point of view, individual consult-

ants add value because they bring specific expertise, and this allows them to

make good their promises. “The key thing is the people in the firm assigned

to the project. The people are more important than who they work for.”

Consulting firms only get in the way of this, putting pressure on consultants

to divide their work between other clients or look for additional sales oppor-

tunities.

Consultant good, consulting firm bad.


3The invisible firm

Never mind the client–consultant relationship for the moment: let’s look at

the pressures on employers and employees.

The Strained Relationship between

Organizations and Employees

Increased outsourcing, more remote working, greater autonomy and better

technology have resulted in a workforce which believes it’s more productive

than ever.

In June 2005, the Management Consultancies Association and Manage-

ment Today (MCA/MT) carried out a survey of around 1200 managers, from

all types of organization, in order to understand their attitudes to their

employers and how these are likely to change in the future. In all, 70% of

respondents judged themselves to be more productive; and 38% a lot more

productive. But increased productivity has come at a cost: respondents were

more than twice as likely to agree rather than disagree with the statement:

“I work long hours and find it hard to switch off”. A substantial minority

saw themselves as having to work harder than their parents.

The real costs here are frustration and resentment: while many people

are working longer hours and achieving more, most think it’s in spite of, not

because of, their managers. Thirty per cent of respondents said they thought

the management skills of their organizations were poor; 15% said they had

little or no respect for their managers. People in large organizations are more

than twice as likely as those in small ones to be cynical about their bosses.

In perhaps the most damning part of the survey, respondents made it

crystal clear that their managers aren’t delivering – and are unlikely to do

so in the future. Asked what they thought managers should focus on, two-

thirds said they should concentrate on developing their teams (Figure 3.1).

Asked what they thought managers would actually focus on, only 16%

believed this is what they would do in practice; 45% thought that managers

would continue to be occupied by project management and internal admin-

istration, although only 3% thought this should be an important activity;

and 16% believed that managers would continue to spend most of their time

on office politics. (The remaining 20% did not express an opinion.)

There’s a tension here between what individuals are prepared to do and

the way that organizations treat them. The more people give in terms of

effort, the more they expect to get back – not just in terms of money, but

also job satisfaction, flexible working and a whole range of other benefits –

but the less organizations appear to be delivering. If this is not confronted

and resolved, it will prompt people to start questioning why they work in

an organization at all.

Paul Sanchez is a consultant at Mercer Human Resources Consulting:

“Every 50 years or so organizations face a paradox which threatens their


66%

3%

8%

19%

0%

16%

45%

10%

4% 5%8%

16%

0%

10%

20%

30%

40%

50%

60%

70%

Developing the

people and/or

teams who

work for them

Project

management

and internal

administration

Dealing with

customers on

the front line

Planning and

developing

new ideas

Negotiating Other

office politics

stn

ed

no

ps

er %

What do you think managers of the future should spend most of their time on?

What do you think managers of the future will actually spend most of their time on?

Figure 3.1 Managers are unlikely to meet employees’ expectations

survival, and we’re seeing it again today. Outsourcing and offshoring are just

two of the factors which are changing the relationships organizations have

with the individuals who work for them: employees are more vocal about

their loyalty to a profession and their own self-interest, but not necessarily

to their employers. At the same time, while there’s an almost palpable desire

for organizations to have employees who are committed and put in extra,

discretionary effort, those same organizations are distancing themselves from

their obligations to their employees. The economic and political environ-

ment is pushing organizations and individuals apart.”

The Forces Shaping Organizations

Four interrelated forces are driving change, each of which brings organiza-

tions and individuals into conflict:

1. outsourcing and the continual redefinition of what constitutes an

organization’s core business;

2. the distribution of work across different people, organizations and

locations, and the extent to which this makes work fragmented;

3. changing demographics and expectations which create an employees’,

rather than employers’, market;

4. the doubled-edged sword of technology which enables people to do more

but tempts organizations to do too much.

What’s in? What’s out?

According to the MCA/MT survey, 61% of organizations have outsourced

all or part of their information technology (IT) function, a figure that rises

to more than 70% among the largest corporations; and 43% have outsourced

at least some of their facilities management, rising to 63% in big organiza-

tions. But outsourcing is not confined to these two well-established areas:

41% of those surveyed outsourced some of their marketing activities; 29%

part of their finance function; and 14% some aspects of customer service.

Large organizations are more likely to outsource their IT operations, mar-

keting and human resources (HR) departments than small ones, and are

twice as likely to outsource parts of their customer service. Small businesses

are more likely to outsource their finance function. Forty-six per cent

T H E I N V I S I B L E F I R M 27

of people expect the level of outsourcing in their organization to increase

in the future; only 5% believe it will fall; the rest expect it to remain the

same.

The Extended Organization

One of the consequences of increased outsourcing is that the boundaries of

organizations are becoming blurred. More than two-thirds of respondents

said that a significant amount of time is spent working with people outside

their company. Over a third said that remote working – from home or at a

customer’s site – was now common in their organizations. Most think remote

working has had a substantial impact on how they and their colleagues work.

The involvement of third parties and increased remote working means that

more and more people accept that they no longer have to be sitting next to

someone in order to work with them effectively.

Moreover, geographical dispersion is contributing to the fragmentation of

work: more than two-thirds of respondents said that more of their time was

spent on project work, as opposed to line management, than was the case

in the past. This was true across all sizes of organization and all sectors.

Traditionally, the structure of firms was totally rigid, but that’s had to

change to allow companies to respond to constantly shifting customer

demands and competitive pressures. The result is that, while some work has

to remain repetitive and prescribed, more and more people don’t have jobs

so much as a series of assignments that continually change. It’s a shift that

can go too far: many organizations suffer from too many projects. Indeed,

we seem to have reached a point where working on a project is seen to be

a badge of success: you don’t get promoted for “just” being a line manager.

Another ramification is that production has become increasingly inde-

pendent of delivery: you can design and start an activity in one location,

but deliver it elsewhere. People are specializing more, and the more they

specialize, the more work is compartmentalized.

People Power

It follows, too, that as people are expected to operate more autonomously,

so their responsibilities grow. Across the board, three-quarters of respondents

to the MCA/MT survey said that their organizations were making them


more accountable for their work; more than half said they were allowed to

get on with things more than they used to.

Greater personal autonomy suggests greater fluidity in the workforce as a

whole, and this is borne out by the survey. Two-thirds of respondents expect

to be employed by many different organizations during their working lives;

almost half expect to make a significant career change at some point.

People increasingly believe they have a right to do what they want to do.

Indeed, their demand for autonomy may well be outstripping the pace at

which organizations are evolving. They do not trust corporations or gov-

ernments: choice isn’t a luxury – the gift of a generous institution – it is an

expectation.

Technology: Friend or Foe?

Technology has changed employees’ expectations of what organizations are

capable of. Fiona Driscoll is a leading consulting to the public sector. “We

think the organization of the future should be able to recognize us, as cus-

tomers, by our DNA and find us in the great database in the sky. It should

be able to make connections and use knowledge to be more responsive and

deliver better services – the equivalent, say, of applying the Amazon model

to a public institution. Equally, employers expect people to work 24/7 and

have hugely increased the amount of information they generate, but they

haven’t used the technology to improve people’s working lives.”

Organizations also persist in over-reliance on technology to change the

behaviour of their people and to increase their productivity. But technology

only tells organizations what they can do, not what they should do. Anne

Bennett, who works for ER Consultants, a firm specializing in people and

organizations, argues that misguided investment at corporate level ignores

the way in which individuals interact with technology. “We need to be

aware of the psychological levers here,” she says. “Individuals have to be in

control and, at the moment, there’s a gap between how people experience

and understand technology, and how they’re being driven in their organi-

zation. Factories evolved because people realized there were things they

couldn’t do in cottages. Technology may have brought people together, but

it’s social capital – networking among people, usually characterized by trust,

cooperation and community involvement – that leads to the accomplish-

ment of common goals and that keeps them together.”


Doug Neal, at the Leading Edge Forum at CSC Computer Sciences Cor-

poration, makes a similar point, but from a different perspective. “People

take technology personally,” he says. “You’ve only got to see how people put

their mobile phone on the table at meetings to see that they’re making a

statement about who they are. What we’re seeing in the workplace is the

consumerization of technology: people often have better equipment at home

than they do at work. Someone with a digital camera downloads pictures to

their computer, they may fiddle around removing the red-eye from a flash

and then email the picture to a friend. In the process, they learned about

data transfer and e-commerce without the IT department being involved.

Yet, despite the fact that people are becoming smarter at using technology,

organizations remain unwilling to trust them: most IT departments still treat

their users as stupid. Moreover, standardization – the key strategy of most

IT departments – shifts costs on to individuals: it just pushes the costs

around. People buy phones that make them look good but which are com-

pletely at odds with their corporate IT standards. The challenge therefore

is how organizations balance the need to drive down corporate costs with

individuals getting the kit they want. There are organizations that, if you

pass a competency test, will allow you to buy the equipment you want pro-

viding you promise never to darken their door asking for support; they’ll just

treat you as an adult and give you the money. But organizations still need

to change some of their technical interfaces so that they can connect to any

hardware, not just their own highly customized version. Web-based appli-

cations will enable employees to access corporate data irrespective of the

hardware they’re using. But what we’re really talking about here is a change

in philosophy that allows individuals to build their IT department from the

bottom up.”

Consulting Firms as Models for the Future

The consulting industry has not just been telling its clients about these

trends, it has been living them.

Outsourcing and the Redefinition of What Constitutes an

Organization’s Core Business

For all the talk about back-office processing and call-centre jobs moving

to low-cost locations, it is probably the consulting, outsourcing and IT


services sectors which have suffered most at the hands of offshore com-

panies. Most major suppliers now offer their clients a combination of

on- and offshore services, ensuring they can continue to deliver high-quality

work while keeping costs low. Many middle-tier and smaller firms are fol-

lowing suit. As clients become familiar with the idea of offshoring, it is likely

that more and more services will move, changing irrevocably the balance of

personnel. Gone will be the days when an offshore facility might house just

a few hundred people out of tens of thousands in Europe and North America:

soon, a quarter, perhaps half, of firms’ employees will be based in India,

China, South Africa or Eastern Europe, creating new challenges for man-

agement, quality, career progression amongst others.

Distributing Work across Different Teams and Locations

Working on clients’ sites has always been a part of what consultants

do. Indeed, as clients complain about lack of transparency among consulting

firms who turn up at the client’s site only for meetings and pre-

sentations, but do most of the work in their own offices, working where a

client can see you has become ever more important. Moreover, if you can

work offsite, then you are sending a message to your client that you do not

need to interact with them face-to-face: if you do not need to do this, then

– a client may decide – you do not need to be based round the corner. In

other words, out of sight becomes offsite – and that rapidly becomes

offshore.

An Employee, Rather than Employer, Market

Recruitment is at the top of most consultancies’ agenda. Consulting has long

been one of the prime destinations of top business school graduates,

attracted by a combination of varied, challenging work, excellent salaries

and a high degree of personal autonomy. But the industry has lost some of

its sheen of late: variable economic performance, long hours, relentless

travel and salaries which are scarcely better than those of line managers all

mean that empowerment takes on a wholly new meaning. Few people want

jobs for life from consulting firms any more than they expect them. Firms

have proved fickle employers – on average laying off around a fifth of their

employees between 2002 and 2004 – so why should their employees be dif-

ferent? What goes around comes around.


The Doubled-edged Sword of Technology

Consultants love gadgets. Indeed, with comparatively flat organizational

hierarchies, hot-desking and half their lives spent in airports, there are very

few other visible perks they can boast about. It is therefore ironic that con-

sulting firms have been some of the most tardy when it comes to getting

their own IT house in order. A typical consultant will show off the high-

end phone he has been able to wangle, but complain bitterly about the speed

of his office email server.

The key to all of this is what economists call externalities.

In the search for ever greater efficiency, consulting firms, like other organ-

izations, have streamlined and simplified themselves – and often left employ-

ees to deal with business and organizational complexity on an individual

basis. Outsourcing and offshoring have allowed organizations to shift from

a fixed to a more variable cost base, but potentially at the expense of indi-

viduals in particular locations, who have to seek alternative employment.

Remote working enables organizations to be more productive, but largely

leaves individuals to bear the costs. Empowerment has been a means of

shifting responsibility to individuals – and may ultimately backfire as

demographics change the balance of power between employer and

employee. Technology has become one of the ways in which people con-

struct their public persona and signal status – the twenty-first-century equiv-

alent of the brass plate on an office door – but it’s usually the employee who

pays for it.

Nowhere is this contradiction more apparent than in people’s views on

career development.

People are proverbially a consulting firm’s greatest assets. In the light of

this, you would think that training and people development would be one

of the areas where organizations would be most eager to retain control. In

fact, that same shift of responsibility and, indeed, funding from employer to

employee is evident here, too. Most people replying to the MCA/MT survey

were positive about their own skills and the willingness of their organiza-

tion to invest in them as individuals. They overwhelmingly rejected the idea

that they didn’t have the right skills for their current job and that the train-

ing they received might be a waste of time; most had had management train-

ing of some sort. Respondents were, however, more ambivalent about their

organization’s wider commitment to developing people (Figure 3.2). While


just over half disagreed with the statement “My organization doesn’t under-

stand what skills will be important in the future”, a significant minority

(20%) agreed with it, and the rest didn’t express an opinion. Similarly, a

third said their organization did not invest a lot in its staff and 23% said it

would not be prepared to finance a business qualification. A massive 67%

of people said they were prepared to invest their own time in building up

their business skills. These figures did not change significantly by sector or

size of organization.

That same ambiguity emerges when people were asked about who is

responsible for their training and career development: 32% said their

employer was in charge of this; 39% disagreed (the rest didn’t express an

opnion).

From some perspectives, this is good: “People in South Korea hustle,” says

Doug Neal at CSC. “They don’t feel they’re owed anything; they take the

initiative and responsibility for their own careers rather than waiting to be

told what to do. That kind of behaviour ought to be a wake-up call for

western economies, where the attention has been focused on institutional


52%

20%

67%

45%

23%

53%

15%

30%

0%

10%

20%

30%

40%

50%

60%

70%

80%

My organization

would be willing

to fund me if I

wanted to obtain

a business

qualification

My organization

doesn't

understand what

skills will be

important in the

future

I invest in

developing my

business skills in

my spare time

My organization

invests a lot of

time and effort in

training and

developing its

staff

stn

ed

no

ps

er %

Agree Disagree

Figure 3.2 People are ambivalent about their organization’s wider commitment to developing

people

human resource issues such as setting standards, securing employee protec-

tion, getting long holidays. The era of entitlement is over: people have to

be working today on the skills they’ll need tomorrow. Personal and corpor-

ate life are being more interwoven, just as they were in the pre-industrial

period.”

Employers, too, will benefit where people take greater pride in their skills.

The people who spend a lot of time working away from the office or with

people from different organizations have to be self-disciplined, flexible and

good at communicating. One of the key things organizations need is better

engagement. Getting the various parts of a dispersed team, some of whom

may work for different employers, to work together will necessitate a new

set of core skills. People will take more responsibility for keeping their skills

up-to-date.

The responsibility and cost of people development is being externalized

along with so much else. It all raises some important questions.

Are Managers Really Necessary?

The shift of responsibility from the organization to the individual is pro-

voking something of a crisis where managers are concerned. With more

people working in different locations, taking more responsibility for their

work, what is the role of management? Ironically, a time when people appear

to require less management is also a time when they want it more than ever.

Half of all respondents to the MCA/MT survey felt their bosses spent insuf-

ficient time actually managing their staff, a figure that was highest among

employees of large organizations and in manufacturing, financial services

and the public sector. Respondents were twice as likely to agree as disagree

with the statement: “The managers in my organization spend too little time

actually managing people” (Figure 3.3). A similar number expect their man-

agers to be kept busy with project management and general administration;

a significant minority think that, whatever shape organizations adopt, their

management will continue to be obsessed with office politics. It’s a depress-

ing picture, but does it mean that management has reached the end of an

evolutionary cul-de-sac? Will management be the next thing organizations

externalize? Indeed, with notions such as empowerment, perhaps they are

already doing so.

Geographical dispersion and outsourcing will make traditional manage-

ment more difficult. The increasing specialization of work is another issue.


“The era of the generalist is dead,” says Fiona Driscoll. “If you look at the

public sector, it’s quite clear that formulating and implementing policy

requires two very different sets of skills. The people who draft policy need

to understand how the whole system works, but they need to work with

delivery people who’ll be much more specialized. Pulling those two groups

of people together can be very difficult. Who’s driving the car? Can we

assume that the delivery specialists will know what to do, or do we need a

new breed of super-managers?”

At the Rossmore Group, the chief executive, Alan Marsden, agrees that

a new style is needed. “There’ll be fewer middle managers, but they’ll have

more general skills,” he says. “Management will be more about coaching. It’s

easy to play the dictator when everything’s going wrong, but you need a

totally different approach in a buoyant market. Organizations aren’t partic-

ularly good at recognizing that leaders have a sell-by date: the UK is littered

with leaders who stayed beyond their time.”

If managers are to survive, they need to reinvent themselves.

Do We Still Need Organizations?

“The days when a company like Ford did everything have gone,” says CSC’s

Doug Neal. “But, as we add more and more layers, we’re increasingly faced

with the question of what constitutes a viable layer. The layers get thinner


The managers in my organization

spend too little time actually

managing people

50%

25%

0%

20%

40%

Perc

enta

ge o

f re

spondents

who e

xpre

ssed a

n o

pin

ion

60%

80%

100%

Agree Disagree

Figure 3.3 Managers spend too little time actually managing

as they become more specialized, but at what point do they disappear

altogether?”

There’s a parallel here between the relationship employees have with

their employers and that of business units with their corporate centre. Ten

years ago, when the viability of holding companies was very much under

scrutiny, Michael Goold and Andrew Campbell floated the concept of “par-

enting advantage”. Essentially, they argued that the ability of a holding

company to create value depends on an “activity fit” (the extent to which

the parent company can add value to a subsidiary – for example, by helping

the latter sell its products in new markets) and a “people fit” (the extent to

which the critical success factors of the subsidiary match the skills and norms

of the holding company – for example, a shared recognition of the import-

ance of innovation). Subsidiaries where the activity and people fit are both

high constitute a corporation’s “heartland”; where they are both low, the

subsidiaries are “alien territory”.

Sylvia de Voge, at the HR consulting firm Hay Group, argues that

the same way of thinking needs to be applied to individuals. “It’s too easy,”

she says, “to assume that the organizations of the future will simply be more

virtual, have more remote working and outsource more of their jobs.

Every sociological study on this subject has shown that, for people to estab-

lish trust with their colleagues, there has to be physical contact. Without

this, the idea of the virtual company may well backfire, with people ques-

tioning why they should give their valuable time to an entity which offers

no equivalent of the parenting advantage to their individual ‘franchise’. If

you deconstruct an organization, the unit value will at some point be an

individual: people will ask if they’re worth more because they’re part of

a team – and leaders and managers need to pose themselves the same

question.”

So where will the parenting advantage of the organization lie? Not, we

can be sure, in the particular services they provide or the products they

make. The parenting advantage of the twenty-first-century organization is

far less tangible.

Teamwork

The basic unit of production used to be the factory (the command and

control structure of an industrial economy); then it became the individual


(the empowerment of people in the information age). It’s now rapidly being

recognized to be the team.

“Teams will drive the structure of organizations in the future,” argues

Alan Marsden at the Rossmore Group. “The realization is dawning that

more gets done through collective action. Much as Charles Handy [the

management guru] predicted, organizations will be smaller and many

more people will be self-employed and acting as consultants or working on

short-term projects, but the activities of those involved will be much

more interrelated – overlapping circles rather than tiers of boxes we’re

accustomed to seeing in organizational charts. The ability to network will

be key.”

One of the most important ways in which organizations will add value is

therefore in enabling effective networking, irrespective of the extent to

which their structure is “networked”. In other words, the ability to facilitate

networking will be as important in an organization where no functions are

outsourced and where everyone works in a single location as it is in a virtual

organization whose activities are distributed across different companies and

locations. Organizations suffer if they are not sufficiently networked – you’ve

only got to look at consulting firms to see this. Consultants may be spread

across the world; they may work on their clients’ sites as much as in their

own offices. For consultants involved in long-term projects away from

“home”, there’s a danger that the firm becomes nothing more than some-

thing that supplies a telephone and a pay cheque.

Teams also provide people with the motive to work. The main reason

why most people work is to be with people they like: technology may help

people work effectively when they’re away from the office, but it can’t

replace social interaction, which is a fundamental part of doing our jobs well.

You can’t brainstorm new ideas and implement them if everyone’s working

in isolation.

Training and Development

Our greater ease with technology and our access to the Internet create new

possibilities to change the way organizations train and develop people. But

technology, however effective, can cover only a part of people’s develop-

ment, and one of the core rationales for organizations is that human inter-

action provides the opportunity to develop in other ways. Mentoring and


coaching programmes need people to be physically present. You need to be

able to see your manager and observe what he or she does: that’s not the

kind of thing you get from a software package.

Yet the role organizations play in nurturing their employees’ skills has

been increasingly “outsourced” to business schools, a trend which has some

important drawbacks. “An MBA has become a more and more generic qual-

ification,” argues Roy Barden, a director of Catalise, a consulting firm spe-

cializing in portfolio management. “People see the process of developing

their management skills as building a kitbag of concepts and models rather

than gaining insights from practical experience. Moreover, in a world where

people turn to business schools for management skills, you have to start ques-

tioning where that practical expertise will come from – if there’s no one to

build it or learn from it, it’ll wither on the vine.”

“Are organizations doing enough to train and develop their people?” asks

Doug Neal at CSC. “The answer is no. You can’t separate growth of the

individual from the growth of the organization; you have to build people as

well as businesses.”

Knowledge

Organizations can be repositories of information in a way that indivi-

duals, however well connected, can never hope to be. But today’s organiza-

tions need to think more carefully and more creatively about how to fulfil

this role. How does a geographically dispersed organization that outsources

many functions tap into employees with good ideas? If people don’t know

what’s going on in an organization, they’ve no opportunity to build on it.

This has to change: innovation isn’t something people are going to do by

themselves at home; it comes from pooling knowledge and bringing people

together.

Leadership

Another important facet of an organization is that it provides leadership.

However, in a team-based environment, the nature of that leadership may

be very different from the charismatic leadership of recent times: “it’s going

to be leading by example and leadership through team effort,” says Alan


Marsden at the Rossmore Group. “The day of the solo leader is fast disap-

pearing; more and more organizations are talking in terms of the strength

of their management teams, rather than their reliance on a single individ-

ual.” “Leadership has to change because people will no longer do just what

we tell them to do,” agrees Doug Neal. “People will do things because they

want to and that means having leaders they respect, who value their opin-

ions, who understand and work with the social networks of their organiza-

tions and who provide role models for the kind of behaviour they want to

see.”

But outsourcing, decentralized structures and dispersed teams all raise the

question of where the leaders of the future will come from. “Take outsour-

cing as an example,” says Roy Barden at Catalise. “One of the key issues

organizations should consider before they outsource a function is whether

their future leaders are likely to come from it. If your finance director tends

to become your chief executive, then outsourcing most of your finance func-

tion may be a bad idea.”

“Moreover, organizations will need teams which are resilient and flexible

and which have strong communication skills. Leadership becomes all the

more important in this context, but it’s quite different from ‘managership’,”

says Paul Sanchez at Mercer. “Leadership will be more about the ability to

create and engage communities of people to fulfil a common vision. While

many organizations recognize that leadership is a crucial issue, they’re far

from cracking the code of what makes a leader. The one thing we are sure

about is that you have to have ‘bench strength’ – the critical layer in an

organization where potential leaders can acquire the skills and experience

they need.”

Values

Finally, the role of the organization is social as well as economic. Consult-

ing firms very much fit the model of the knowledge-intensive, networked

organization of the future, but the glue that holds them together is cultural.

People are inherently promiscuous, but what makes them stick with an

organization is that they share a common set of values. The more people

want greater autonomy in their lives, the more important it is that organi-

zations have strong values. Without these values, people will be quite mer-

cenary; with them they get a buzz out of staying.


How will these points play out where consulting firms are concerned?

Chapter 4 looks at the pressures on clients which challenge their preference

for thinking about the relationships they have with consultants in personal

terms and which challenge consulting firms’ ability to offload responsibility

to the consultants who work for them. Chapter 4 suggests a different model,

which takes into account the role the consulting firm plays in the

client–consultant relationship.


4The trouble with the status quo

Christina’s (not her real name) office was everything you’d expect the office

of a senior executive in an international bank to be: magnificent view of

Manhattan; expansive desk; tasteful artworks. The only problem was that

none of it was hers any more.

Five years earlier, walking round the IT department as its newly appointed

Chief Information Officer, Christina had been struck by how backward it

all felt. There were too many people tapping away at desks working on

schedules that ran for years. The project plans and specifications were liter-

ally endless. The department’s internal customers, out there in the business,

were frustrated by lack of progress and were installing their own systems

without consultation. Under pressure to cut costs and improve performance,

Christina had done what so many other CIOs did: she had chosen to out-

source the bank’s IT department. What was the point of trying to change

embedded working practices – a process that could take years – when the

bank needed immediate changes?

But, as a veteran of outsourcing deals in her previous company, Christina

had also been wary of repeating some of the mistakes she’d seen. Outsour-

cing, she knew, could become a straitjacket, binding a client to the same

supplier, service and costs for far too long. She had wanted a different

relationship, one in which both sides would work together rather than be

at loggerheads; one which could change as the needs of her company

changed.

That didn’t mean that she had been immediately won over when one of

the potential suppliers started talking about “transformational outsourcing”

– another buzzword, was her first reaction. But she had liked the idea of

using a combination of consulting and outsourcing to redesign the creaking

business processes and move to new, more up-to-date technology. She

had also liked the governance structure the supplier wanted to put in place:

part of the fees would be held back until specific milestones had been

achieved. Some were project deadlines – a new system going live – others

were intended to reflect the impact of the new systems on the business as a

whole – rising staff morale and customer satisfaction. But what she had really

liked was Bruce, the programme manager who would be in charge of the

contract. He was direct and honest; having worked on similar projects with

other banks, he also knew his stuff. Christina knew she could work with

him.

“You can have all the terms and conditions in the world,” she had told a

banking magazine two years into the contract, “but it’s who you work with

that matters. I can go to Bruce with a problem; we can get all the relevant

people – their side and ours – to sit down round a table together to thrash

out a solution. We have, but we don’t need, an escalation process to resolve

particularly difficult problems: we roll up our sleeves and work together.”

Christina hadn’t anticipated that the new chief executive, who’d joined

the company just a year earlier, would see things differently. Faced with

wide-ranging, deep-rooted operational problems, he badly needed some

quick fixes with sceptical investors. From his point of view, he was on the

outside of the highly effective personal relationship Christina had built up

with the bank’s outsourcing company. He was always looking in, often

through rather a dark window. When a relatively minor target was missed

he used it as an excuse to blame the supplier for failing to deliver – and

made it the scapegoat for a whole range of bad results.

A less honest person would have bent with the wind, but Christina had

invested too much of herself in the relationship to do that. The press release

had been the point of no return: she hadn’t been allowed to defend the

project’s record or her own position. She felt she’d been portrayed as naïve,

hoodwinked by a bunch of unscrupulous consultants. The supplier was still

spitting tacks, Christina remembered. Who wouldn’t be, having met every

other target to date? She recognized now, too late, that she should have put

more time into explaining the deal to her fellow executives and bringing

the CEO into the relationship. The supplier, too, could have communicated

with the business better, managing expectations rather than magnifying

them.


“The trust has gone,” she said in her resignation letter. “There’s no way

we can rebuild it.”

Personal Relationships Are Only

Part of the Story

In Chapters 2 and 3 we looked at how both clients and consulting firms

focus on the relationships between them. Clients like and respect the indi-

vidual consultants they work with, but are suspicious of the motives of the

firm. Consulting firms want to devolve authority and responsibility to their

front-line consultants; they rely on “trusted advisors” to build trust and win

business. In fact, neither attitude is wholly sustainable in the light of the

radical changes the consulting industry is undergoing.

Let’s be clear: people are important.

Clients don’t start out trusting their consultants. They can’t because they

don’t know them. What they do know is the firm: they may recognize its

brand or have heard on the grapevine that they have a reputation for doing

good work; they may have worked with the firm before on a different project

or know someone who has. These are all the qualities that get a consulting

firm on a long-list for a particular piece of work. They get them a seat at the

table. Going from the long-list to the short-list is all about approach (both

the attitude of the firm to the project in question and their methodology),

price and the return on investment the client can expect, and relevant

experience.

But winning the business undoubtedly does come down to people. If you

are a manager who is considering hiring a consulting firm, you want to know

that you can work with the people you are paying for. You will watch their

presentations with polite interest. You will listen to how thoughtfully they

respond to your questions. You may interview them just as if they were apply-

ing for a job on your team. But all the time the questions you are really

trying to answer are: Can I work with them? Do I trust this individual? The

more the client and consultant have to work together, the more important

this is. A service that will largely be done away from a client’s site – market

research or applications development – is much more likely to be bought

on approach, price and track record, but personal chemistry is going to be

critical in one that requires constant interaction between the client and

consultant.

T H E T RO U B L E W I T H T H E S TAT U S Q U O 43

If anything, personal chemistry seems to have become more important in

recent years. One of the lessons of Enron was that even the biggest brands

are vulnerable: you cannot trust a corporation in the same way you trust an

individual. Consulting firms have reinforced this shift by making their ser-

vices as tangible as possible by putting a human face on them. As a client,

you are encouraged to think you are no longer buying Company X, but John

Smith, your regular, down-to-earth consultant; not Company Y, but Jane

Brown, energetic, incisive and accessible.

A personal relationship can also be valuable if things go wrong. No

amount of running back to check who is responsible for what in the con-

tract will help when a client encounters a problem, but knowing someone

well and being able to trust that they have the client’s best interest at heart

may well defuse an increasingly tense situation.

The trouble is that delivery – the bulk of those things that happen

after the contract is signed – depends on a lot more than one personal

relationship.

In the first place, very few consulting projects these days involve only one

“discipline”: there are virtually no straightforward operational improvement

projects, any more than there are simple HR projects. Even strategy, tradi-

tionally the most self-contained of all consulting services, is rarely “pure”.

In clients’ eyes, just about every project, irrespective of size, requires a com-

bination of skills. A recent survey of clients by the UK Management Con-

sultancies Association showed that less than 10% of all projects involved

just one consulting service. By contrast, 40% were seen to have a change

management component, and just under a third involved some strategy. This

profile is quite different from the one that emerges when you talk to con-

sultants. According to UK consulting firms, change management accounts

for only 3% of fee income to consultants and 7% from strategy. Business

process re-engineering, regularly declared defunct by the consulting indus-

try (and accounting for just 2% of fee income in the UK), featured in 30%

of projects as defined by clients.

Combining consulting services like this is the result of three factors:

• Specialization: Specialist expertise is always at the top of clients’ agenda.

Focusing on their core business, clients inevitably want their consultants

to follow suit, to be, in the jargon of the moment, world class in their

areas of expertise. They are no longer buying a team of bright consult-


ants who can put their hand to everything without being skilled in any

one thing. This means that clients are taking an increasingly fine-tuned

approach to deciding which consulting firm (and which consultant)

belongs where in a particular project.

• Complexity: Having broken their business down into components, clients

need to be able to put it back together, to link processes in a seamless

fashion, even when those processes are being carried out by different com-

panies. The shape of consulting projects is evolving to match this: no one

person or firm can be expected to have the full range of specialist skills

required for a particular piece of work. Clients may instead choose to

multi-source – to pick individuals for a range of different suppliers to work

together in a virtual team for the duration of the project.

• Innovation: Many of the most creative business ideas come from

crossovers from one sector to another, and the same is true in consulting.

Access to original thinking is one of the most important things clients

are looking for when they hire consultants, especially if they spend a lot

of money on consulting, and clients are looking to obtain this by putting

people with different skills together. “It’s in the gaps between conven-

tional consulting disciplines that we’re finding new ideas,” is how one

client put it.

The second problem with relying on a key individual is scale. In the trad-

itional consulting model, it was possible for the partner of a firm to work

closely with the board of directors, for example, to develop options around

investing in a new market. Choosing between those options and putting the

decision into practice was the responsibility of the company’s management,

not the consultant. The role of the consultant was confined to shaping the

company indirectly, by influencing the board to act. Scale was not an issue:

it was the client’s problem. By the early 1990s, clients had begun to react

against this, demanding that consultants become more involved in the

implementation of their ideas rather than relying on clients to do it for

themselves. This has required scale: you cannot expect one person, however

brilliant, to be able to implement a project single-handed. Even if they did

have all the right skills, they simply cannot be everywhere at once: they

need a team. That team may vary from the very small (perhaps just two or

three people) to the very large (the kind of combined outsourcing and

consulting project which requires hundreds of people), but it involves a


fundamental shift in how both sides think about the relationship. A client

may have an excellent relationship with a project manager, but if that

project manager doesn’t have similarly excellent relationships with his or

her team members, then the personal trust invested by the client is a waste

of effort. There have to be other people who share the project manager’s

approach and values; there has to be an organization behind the project

manager which supports them.

These two factors – multidisciplinary consulting teams and the need

to effect widespread change – are putting the central client–consultant

relationship under immense pressure, pressure that is being felt by clients,

individual consultants and consulting firms themselves.

The Depersonalization of Consulting

The irony is that, despite the extent to which clients talk about the import-

ance of the personal relationships they have with the consultants who work

for them, the process through which they buy consultants has been evolv-

ing in the opposite direction.

Formalized procurement processes increasingly keep clients and

consultants at arm’s length: three-quarters of large-scale organizations

monitor how much they spend on consultants centrally; two-thirds

have preferred supplier lists; more than half have framework agreements

with a small number of key consulting firms; a fifth use specialist consulting

firms to advise them on how to use consultants. E-auctions, in which con-

sulting firms enter blind bids for projects and never meet the client before

the contract starts, are used by 15% of organizations that rely heavily on

consultants.

It’s depersonalization which is also behind the commoditization of

consulting services. Like any other product, consulting services have a life

expectancy. In the early days, interested clients will leap on the burgeoning

bandwagon and growth will be exponential. As the service becomes more

accepted and standardized, and the benefits stemming from it shrink,

demand falls and the service becomes a commodity. Like good economists,

we see this process as inexorable, that excess supply brings prices down. This

in turn cuts margins, and tighter margins mean that less time and money

are invested in the service. And we complain that more and more consult-

ing services are being commoditized.


But perhaps this rational approach underestimates the extent to which

clients want to take the personal element out of consulting. There are three

types of consulting projects:

1. Effectiveness projects, where a client is concerned to get the best results

or to do the right thing. These projects focus on outputs more than

inputs; indeed, a consulting firm engaged in such a project will undoubt-

edly be thinking on its feet because there is no set approach.

2. Efficiency projects: here the aim is to get to the desired results as quickly

as possible. Clients know where they want to go, but lack the process or

momentum to get there within a reasonable time, and so look to a con-

sulting firm to provide these things.

3. Economy projects: these are commissioned by clients who know not only

what they want but also have a fair idea of how to go about getting it.

What they now want to do is bring down the price. The service has

become a commodity.

Effectiveness projects are most likely to be commissioned during eco-

nomic booms, when organizations are looking to expand or to adopt inno-

vative ideas. Economy projects are, inevitably, the feature of downturns,

when consulting budgets are at their lowest ebb. Efficiency projects domi-

nate in the periods of low growth in between these peaks and troughs.

Because the prevalence of these projects is tied in to economic cycles, it is

tempting to see falling prices as the main force which moves projects from

effectiveness to efficiency, and ultimately to economy. But perhaps it is

depersonalization which brings down the prices, not the other way round.

Perhaps clients, confident in their abilities to achieve their objectives and

keen not to let their consultants over-reach themselves, want consulting

projects to be less dependent on the individuals involved. They want the

system and the process, but not necessarily the people – and it is this, not

falling prices, which turns a consulting service into a commodity.

The Wrong Standard for Consulting Firms?

Every consultant wants to be a trusted advisor: this is the benchmark against

which they judge themselves. They see their bosses using their networks to

identify opportunities and their relationships to win new business, and they


want to emulate them. But the ramifications to being a trusted advisor are

not always positive.

The most obvious problem is that it puts too great a burden on a single

individual. Independent consultants can only afford to pitch for work they

know they can do in terms of both capacity and expertise. If they take on

too much, they risk annoying clients when they cannot deliver to the dead-

lines agreed; if they try to work outside their own sphere of expertise, clients

will see through them. But someone who works for a consulting firm may

find themselves trying to finish a project they didn’t specify or marshalling

resources that turn out not to be available. They may end up working in

areas where they have no experience or committed to two projects when

they are already behind on one. Small wonder, then, that one of the most

common complaints is that consulting firms don’t keep their promises.

In fact, the relationship between individuals and consulting firms has

never been easy. On the one hand, an individual whose personal brand is

too high-profile can cause problems for a consulting firm: prima donna

behaviour is hard to accommodate and gurus are an inflexible resource, hard

to redeploy when the market moves on. As individuals gain in expertise and

stature, they are likely to move beyond the confines of one firm and start a

consulting practice of their own. On the other hand, the business model

of many firms is highly dependent on being able to hand over as much

responsibility to individual consultants as possible (which is why the part-

nership model remains so prevalent). They do not have the infrastructure

to be able to manage what is often a wide array of activities centrally. Nor,

these days, do they have the margins to be able to afford much in the way

of managerial oversight. Moreover, by empowering individuals on the front

line, consulting firms have created a line of defence. If a client complains,

the firm can treat the problem as an isolated incident: “So-and-so went out

on a limb over this. He’s had his knuckles firmly rapped. We’ll make sure

he doesn’t do it again.” It becomes hard, if not impossible, to point to a sys-

temic weakness in the firm as a whole: the individual consultant carries the

can.

The irony is that putting so much emphasis on relationships between

individuals does not work particularly well from a consulting firm’s point of

view either. Most obviously, it makes the firm too dependent on a small

number of people (its “greatest assets”): if those people leave, they take their

clients with them. The stronger the relationship, the more likely this is, and


the harder it is to bring new people into the relationship even while the key

person is still there. Two’s company, but three’s definitely a crowd.

It also exposes the consulting firm to questions about what it’s there for.

In a world in which clients are looking for specialist know-how, what value

does the firm add? To be sure, it may help clients identify the relevant expert,

and its brand will provide some reassurance of quality. It may even be that

clients appreciate the fact that they benefit from a firm’s training process or

knowledge management system. But the agent who delivers that value is a

person: if that is who a client puts their faith in, then the firm will only ever

play a supporting role.

This brings us to another irony. Clients who are satisfied with a consult-

ing project are likely to praise the key individuals. Those who are dissatis-

fied and who want redress are more likely to blame the firm (there can be

no redress at the individual level: a bad consultant is a bad consultant is a

bad consultant). Thus, strong personal relationships mean that firms get all

the blame and little of the credit. No wonder the reputation of consulting

firms, at least at a generic level, is poor.

The Rule of Three

As Diana, Princess of Wales famously remarked, “there are three people in

this relationship”: the client, the consultant and the consulting firm. The

relationship between the client and consultant is, without a doubt, import-

ant: it is crucial to winning business and it can help diffuse problems at an

early stage. But it cannot deliver the combination of specialist expertise,

large-scale complexity and innovative thinking that clients are looking for

in isolation. To do that, it needs a consulting firm behind it.

The trusted advisor needs to be seen as someone who succeeds as a result

of their firm, not in spite of it.


5The client–consultant–consulting firm relationship

“Trust only builds when you have delivered,” is how Detica’s chief execu-

tive, Tom Black, puts it. Lis Astall, Managing Director of Accenture in

London, agrees: “What matters is how we build trust, and that comes down

to delivery – not one delivery but every delivery. We have to beat client

expectations not once, but over and over again.” Delivery generates trust,

and trust builds relationship (Figure 5.1).

Delivery Trust Relationships

Figure 5.1 The building blocks of a relationship

“Success comes down to speed and how well we can execute,” says Alan

Buckle, who heads up KPMG’s re-formed consulting practice in London.

The consulting firm, he argues, has to deliver to both clients and its own

staff. “We don’t just need excellent people, but we have to have the infra-

structure to support them. If they come in the morning and it takes an age

for their computer to get up and running, or if they can’t easily find a doc-

ument or track down someone to speak to, then we as a firm are failing them.

If we have the right people, then we need to provide them with the right

kind of environment to work in. They should be thinking, ‘it’s good to work

here’. Smart people generally want to work with other smart people, and

they need to be able to network with them if they’re going to make use of

all our capabilities. The firm has to facilitate this process.”

That word “process” is an important one.

Andrew Pawlowicz became a partner in what was then Ernst & Whinney

in 1984. Head-hunted first by CSC Index and subsequently by PA Con-

sulting, he was PA’s global head of operations consulting until 2002. In the

late 1960s, he had been working in industry and saw at first-hand what sort

of impression consultants could make on their clients: “We had a consult-

ant come sniffing around the business,” he recalls, “looking to see where

computerization might add value. But what struck me at the time was just

how traumatic an experience this was for the middle manager of the period,

to be faced by someone saying, ‘Hey, we can now do this by pressing a few

buttons; we won’t need your skills any more’.” It brought home to him even

then how important it is to address the personal impact of a change fully –

the “change implication”. Working later as a systems analyst, he felt his role

was not just to state the obvious requirements, but to look at how people

worked and behaved, and at what motivated them. Only by understanding

these things – by getting under the skin of a business – could you possibly

design a system that people would be prepared to use.

The 1980s was a period of phenomenal growth for the consulting indus-

try: firms were going from a small team of people to several hundred in a

just a few years. But it was the culture and behaviour of the times that stuck

in Pawlowicz’s mind. “I turned up to start my first ‘proper’ consulting job

and discovered they had a novel form of hot-desking,” he remembers, “one

large room with telephones dotted around a single large desk, populated by

very smart and articulate people loudly showing how effective they were at

doing deals. It was more like a trading room than a conventional office.” In

many ways, he thinks, consulting has not changed that much as far as clients

are concerned: “People, albeit they are often better qualified and experi-

enced, are making precisely the same sort of mistakes. Now they don’t lack

knowledge so much as time, which means they delegate too much and

there’s nowhere near the level of supervision or governance required to

ensure that projects, or indeed day-to-day business, are done properly. A

complementary problem for the consulting industry is that very few con-

sultants, if they discover they are not adding value, will walk away. The

result is under-delivery. It’s quite ironic: consultants spend a great deal of

time agonizing over whether they have enough content – whether they

know enough – and not nearly enough on whether they have the right

clients and governance processes in place!”


The Delivery Triangle: Values–People–Process

Consistently successful delivery therefore involves three parties: the client,

one or more consultants, and the consulting firm, and the relationship

between each of these three parties is mediated in a different way (Figure

5.2):

• Client–consultant: As we have noted, the relationship between clients

and consultants is based on people, the personal interaction between

those involved in a project on a daily basis.

• Client–consulting firm: The relationship between a client and a consult-

ing firm is based on process. While the individual consultants provide the

intelligence, personal commitment and energy required to do a piece of

work, a client who wants to see something delivered relies on the firm to

understand their requirements, tender for work and provide a structure

and approach for implementation.

• Consulting firm–consultant: By contrast, the relationship between a con-

sulting firm and the consultants it employs is based on values. Culture,

behavioural norms, social networks – these constitute the glue which

binds people to firms, and firms to people.

T H E C L I E N T – C O N S U LTA N T – C O N S U LT I N G F I R M R E L AT I O N S H I P 53

Client

Consulting firm

Individual consultant

PeopleProcess

Values

Figure 5.2 The delivery triangle – values, people and process

Moreover, each of these three parties needs something from the other

two:

• Clients want to work with high-quality people and they need firms to

bring processes which support that one-to-one relationship. They may

choose to rely most on process – in which case the qualities of individ-

ual people will matter less; or they may put their faith in the people – in

which case the processes add little. But invariably, when you talk to

clients about what made the difference in an outstandingly successful

project, they’ll cite the values of the consulting firm which allowed it gen-

uinely to collaborate with them.

• Consultants have two relationships. One – often the more personal one

– is with their clients; the other – a more dispersed one – is with the firm

and is typically mediated through the firm’s culture and the extent to

which an individual consultant identifies with a firm’s values. However,

for consultants to do their job, they need process: they need the firm to

know what clients are looking for, sell work for them to do and provide

the support and infrastructure required to do that work well. Without

process, the impact of a consultant is limited to what he or she can

achieve independently.

• Consulting firms provide the culture which determines how well their

consultants will want to do their job and the processes that enable them

to do it. Some firms rely more on process to keep their clients happy;

others trust to culture. What consulting firms need, quintessentially, is

people. People are the basic input, the raw material of this industry.

What does this mean in practice?

Managing Values at Ernst & Young

“This firm has a very strong culture,” argues Nick Pasricha, Ernst & Young’s

Managing Partner – Client Service, “but it’s not something we’d ever take

for granted.”

As one of the accounting firms seeking to redefine a segment of the con-

sulting market after a moratorium imposed by the sale of its consulting busi-

ness to Capgemini in 1999, integrity is critical. “We have to be independent,


objective and transparent,” says Pasricha. “We left the consulting market

because we could see that the consulting practice was moving further and

further away from the rest of our business. This trend has continued and

most of the traditional consultancies are now dominated by their systems

integration and outsourcing activities. That has created something of a

vacuum for clients who are looking for independent and objective advice,

something clients don’t think the IT houses and systems integrators are in

a position to provide. This is the segment we want to occupy – providing

independent and objective advice to our clients on how to improve the per-

formance of their business. We aren’t re-entering the consulting market as

currently defined. We want to redefine our segment of the market so as to

capitalize on the strengths of our brand and our values.”

Alongside integrity, the firm also values relationships and a genuine

enjoyment of working with clients. “But clients wouldn’t necessarily see

these as values,” says Pasricha. “When you ask clients why they bought

something from us, the answer we usually get is, ‘because I liked the people

and I believed they could deliver the job’, not ‘because I liked the values’.

We don’t have a monopoly on the best people or the best methodologies.

There’s nothing unique in our business in that sense; there are no magic

bells or whistles. But what can be special is the way our people work together

to create a distinctive experience for the client – our teams and the way

they work together are the manifestation of our values. And we have mech-

anisms for ensuring that we reinforce them: how we build teams; our recruit-

ment process; the way we organize our firm; the process we have for starting

an assignment; our reward structure.”

Relationships are built through constant focus on clients’ needs. Rather

than grouping its people according to their specialist skills, Ernst & Young

organizes them around clients. “We believe in the power that comes from

integrating our services,” says Pasricha. “We have business units that will

look after and address a particular grouping of accounts within an industry;

within that, we will have auditors, risk assessors, regulatory and financial

management experts – all within one organizational unit. We go for people

who like to work in teams and who have a sense of integrity, independence

and those who will operate to our ethical standards. We want people who

will have fun and not take themselves too seriously – in other words, their

values have to match ours.”


Managing Process at PKF Consulting

If you’re a middle-sized accounting firm, offering a range of professional ser-

vices including advisory work, you might reasonably be worried that the

legal agreements preventing accounting firms, such as Ernst & Young, from

undertaking certain types of consulting work have come to an end. But not

Cath Hardaker, Head of Management Consultancy at PKF Consulting. “The

big accounting firms never really left the market,” she argues. “Their clients

would say, ‘Look, I’ve got this problem’ and they weren’t going to say they

couldn’t help. The only difference is they’re now being much more open

about it: they’re putting consulting back into the fabric of their business

model and we expect to encounter at least two of them on every pitch we

make. Our job hasn’t changed: the market has never been anything other

than tough.”

It’s a battle the firm is winning, however. 2005 was a vintage year for its

consulting practice, with more and bigger projects being won in its core

sectors of government, the hotels and leisure industry. “Buoyant would be

too strong a word perhaps, but we’re building a strong business internally at

a time when the market has picked up,” says Hardaker. “That’s a pretty

powerful combination.”

It’s not just winning business that is tough, but recruiting the right calibre

of employees. “We’re all looking for the same highly tuned skills,” says

Hardaker. “The people we want aren’t sitting around at home waiting for

the call; they’re already working for someone else. They’ll spend two years

with one firm, two years with another: everyone’s moving. In order to attract

and keep the best people, we have to show what PKF is, what we can give

that they wouldn’t get at a very large firm or a very small one.”

Keeping that difference while the firm grows and new people come in is

the biggest headache Hardaker faces. “We’ve been in a market where the

smaller firms have thrived, but many of us have also worked for the very big

ones. So we want to have the best of the small with the quality, capacity

and reputation of big firms. Our processes have to be as slick as the big firms’,

but we want the emotional commitment of a niche specialist. How do we

ensure our business processes grow at the same rate as our businesses? How

can we be sure that we don’t end up spending all our time looking for stuff

that should be at our fingertips because we haven’t put the right systems in

place?”


An example would be the information a firm like PKF has on prospect-

ive work: What’s in the pipeline? What proposals have been won or lost? It

is something every firm needs to know, whether they have 50 people or 50

000. “And every firm will have a mechanism for keeping track of this,” says

Hardaker. “The question is whether it’s automatic. If you have to remind

people or pester them to record this kind of information, then the process

will fall apart as you get beyond a certain size, and you won’t know what

you’ve won or where you’re winning business; you can’t rely on people’s

memories. Our business has to be sophisticated enough to sustain growth.

In five years’ time, we can’t afford for anything to be hand-to-mouth.

“When you’re small, you can talk a lot about your aspirations, but when

you’re big you actually have to realize them. We have to be as shiny and

slick on the inside as we are on the outside – that’s the core challenge the

firm’s management faces as we grow.”

Managing People at Booz Allen Hamilton

The wind of delivery is blowing through all types of consulting firm.

“You cannot have a great relationship with a client if you are not adding

value,” says Victor Koss, Booz Allen Hamilton’s Vice President of Financial

Services in London. Booz Allen’s traditional market – bringing good ideas

into business – is a shrinking one. “Having the greatest framework is not

enough,” says Koss. “We have to be able to develop a pragmatic approach

which can be implemented in our clients’ organizations. We have to be able

to start the delivery process.”

That imperative has raised the stakes when it comes to managing people.

Teamwork is essential: “We need people who are strategists, who are experts

in particular industry sectors, and who have strong functional skills such as

operations, IT and change management. If such a person exists, we would

like to hire them, but the reality is that that’s too much to expect from any

one person. The only way to demonstrate our breadth of skills to a client is

to field a group of people. More than that, we need to show that this isn’t

a team of individuals, but individuals who are part of a team, who can work

together. From our point of view, we need people who are willing to intro-

duce their colleagues to their clients so we build up multiple points of

contact. We place a lot of emphasis on peer-to-peer relationships, and we

strongly encourage junior people to get to know people at their own level


– relationships should not be limited to partners. We also try to ensure we

know people in client organizations who have different types of relation-

ships with us – they may be buyers or influencers, procurement people or

end-users.”

Booz Allen does not and cannot rely on personal chemistry to make its

relationships work, externally or internally. Resources have to be deployed

intelligently across the world; consultants have to trust each other in a

dispersed and disparate organization. “We put a lot of emphasis on cross-

practice teams,” says Koss. “It costs a lot of money: we spend more than we

probably need to on getting on planes, having conference calls, organizing

special events where everyone gets together, but we have to create oppor-

tunities for people to share their knowledge. If a client of mine has a par-

ticular issue which I know a colleague in Australia has experience of, I’ll

have absolutely no hesitation in getting in touch. And that personal link is

important because it will have allowed me to gauge how relevant my col-

league’s knowledge will be.” The firm has formal mechanisms for capturing,

institutionalizing and distributing knowledge: Koss and his colleagues can

enter a diverse subject like restructuring the horse racing industry and be

able to look at all the work done in the area, the top five issues and pin-

point someone in the firm who knows about the subject – all in a matter of

minutes. “We have a culture in which, if someone contacts you, you have

to get back to them straight away. Most of our incentives are based around

the firm, not individual performance.”

You get the sense that the firm is Marine Corps in feel – this is not a

bunch of creative types hanging out together – and it is perhaps no coinci-

dence that Booz Allen does a substantial amount of work for the US Depart-

ment of Defense and Homeland Security. “A $3 billion-plus global business

cannot run on chaos,” says Koss. “You need a certain level of organizational

disciplines or systems to make things happen; the scale forces you to make

it work.” Governance is critical: senior partners’ primary task is to build and

protect the firm and its reputation. But there are, as in any good constitu-

tion, checks and balances: the firm’s board of directors is not just made up

from those senior partners, but other grades as well. There is an “up-or-out”

or “perform-or-go” system of career progression: even highly successful part-

ners will be asked to leave if they put their own interests or those of their

immediate team above those of the firm as a whole. “The reputation of the


firm is paramount,” says Koss. “It’s what opens doors for us and we have to

protect it. And that’s what we stress to everyone who joins.”

The Structure of This Book

Consulting firms have spent a long time emulating other businesses: they

have modelled their structures and processes on law firms and IT compa-

nies; today’s ideas on multi-sourcing come from the construction industry.

But success has been limited: no other industry faces the challenge con-

sulting firms face in terms of delivery – people, processes and culture,

operating in a complex environment, often at scale.

The aim of this book is to examine how – by exploiting those people,

processes and culture in a unique way – consulting firms can deliver, create

trust and build relationships.

The rest of the book is divided into four parts.

Part 2: People

We start with the people issue because it is so critical. Good consultants do

not appear by coincidence: they belong to a firm because someone has been

able to spell out the characteristics clients are looking for, someone has gone

through the process of recruiting them, and because someone has taken the

time to work out how such people need to be recognized and rewarded if

they are to be retained.

• Chapter 6 examines the skills consulting firms look for in addition to

technical know-how: the ability to be part of a team; self-motivation;

dependability; openness and honesty; and – most importantly – empathy.

• If these are the attributes consulting firms are looking for, how do they

find them? And, once they have found them, how do they retain and

reward them? These are the questions Chapter 7 seeks to answer.

Part 3: Process (1): Marketing and Selling

Historically, consulting firms did not have to try very hard to win business:

demand for their services far exceeded their capacity, putting consultants in


the front line when it came to determining terms of reference and negoti-

ating fees. But the ups and downs of the consulting industry in recent years

have changed this out of all recognition. Consulting firms are commercial

enterprises, but the need to make money often continues to be seen as inim-

ical to client service. Individual consultants often feel uncomfortable doing

it – it is something the firm puts them under pressure to do, not something

they particularly want to do. Clients rightly resent the ramifications: account

managers who are not involved in delivering real work; partners whose role

seems to be to ferret around for future work; the relentless creep of projects

beyond their original scope. What, if anything, can a consulting firm do to

counteract these perceptions?

• Brand versus specialization: this is the choice today’s consulting firms

have to make (explored in Chapter 8). Do they want to be known for

their overall brand or for their level of specialist expertise? What happens

to firms that fall between these two stools?

• Chapter 9 looks in detail at how firms handle the sales process. In par-

ticular, as clients’ procurement of consultants has become more profes-

sional, how have consultants professionalized their sales efforts?

• Chapter 10 takes this a step further to look at how consulting firms take

ideas and disseminate them in the marketplace. Thought leadership often

seems a misnomer: much of what claims to be leading-edge falls far short

of the mark. How can thought leadership be used to build and cement

client relationships?

Part 4: Process (2): Delivery

It is the word on everybody’s lips, from banks to government departments,

from systems integrators to human resource consultants.

• Chapter 11 goes back to basics. Asked what constitutes good consulting,

clients cite project and budget management: they want a consulting

project to cost what they expected and finish when it was supposed to.

Managing a consulting project has its own, quite distinct challenges:

gaining the buy-in of the clients’ staff, stakeholder management, trans-

parency, resource allocation, the ability to respond quickly and the speed

with which a consulting team can be mobilized.


• Successful delivery is rarely the result of one person’s efforts, however

superhuman they may be. Indeed, one of the most important ways in

which a consulting firm can differentiate itself from the legions of low-

cost, independent consultants is by demonstrating that it can pull

together an effective team. How consulting firms do this and build client

relationships at the team level is analysed in Chapter 12.

• Chapter 13 looks at the methodologies consulting firms use. These

often appear to play an important role in winning business, and consult-

ants themselves regard them as essential. But methodologies are like

high explosives – liable to blow up in your face if you do not handle

them carefully. If you rely on them too much, clients will think you’re

inflexible.

• At the opposite end of the spectrum to a tried-and-tested approach is

innovation, the subject of Chapter 14. Developing original ideas is rarely

the core business of a consulting firm: the money in consulting comes

from fielding thinking which is new, but not too new. However, as many

established services become eroded by creeping commoditization, the

pressure is on firms to identify the tools and techniques which will guar-

antee its premium pricing in the future.

• Listening is an essential consulting skill, but how does this work when

applied at a corporate level? Chapter 15 examines how some consulting

firms are adopting truly open and honest ways of communicating with

their clients.

• Barriers also have to be overcome within the extended families in which

so many consulting firms now operate. While cross-selling between parts

of a multidisciplinary professional firm (tax to audit to consulting, for

example), the synergies between consulting practices and parent compa-

nies whose businesses range from construction to telecommunications

may make more sense. Chapter 16 analyses how consulting firms exploit

their internal markets.

Part 5: Values

A consulting firm can have good people and sensible processes, but it is its

values which will ultimately dictate its long-term success. Yet “values” can

often be interpreted in vague terms, yet quite specific values are needed.


• Chapter 18 describes two projects of extraordinary commitment and

endeavour, both of which illustrate those necessary values.

• Of course, having the values is one thing, keeping them another entirely.

By way of conclusion, Chapter 19 analyses the steps four consulting firms

take to keep their values intact.


PART II

People

6Personal chemistry and relationship skills

Lytham St Anne’s isn’t exactly a name that trips off the tongue, even if

you’re in the know. Located just outside Blackpool, it is dominated by high-

rise blocks built in the 1960s, and by the biting wind that sweeps in from

the Atlantic. But for a period in the mid-1980s this otherwise unremark-

able place was the focus of one of the most complex and demanding IT

projects in the world.

It was a time of rising unemployment: the traditional manual systems

for processing social security payments could barely keep pace with rising

demand. The solution was obvious – automation – but nothing like this

scale of systems development had ever been undertaken before. The result-

ing database would have to hold information on all 60 million UK citizens

and would have to be capable of applying complex entitlement rules and

distributing billions in payments.

Nothing in Ian Watmore’s consulting career could have adequately pre-

pared him for this environment: he’d cut his consulting teeth on a variety

of IT projects which, although large by the standards of the day, would be

dwarfed by the scale and ambition of the project planned by the Depart-

ment of Social Security (DSS). Most had been undertaken for clients in

London’s well-heeled financial district – culturally a world apart from

Lytham. “People said it couldn’t be done,” recalls Watmore, “but there

was also a worry that, if we didn’t do it, the country would have real social

problems on its hands. The existing system would grind to a halt; people

wouldn’t receive their benefits; there’d be rioting in the streets.” In fact, it

became one of the most successful programmes ever carried out by the UK

government: the systems developed then are still running today.

Watmore was a consultant with Accenture (he went on to become the

UK Managing Director and is now in charge of a special unit set up by Prime

Minister Tony Blair, to deliver improvements in public services). Working

with the likes of Fujitsu and BT, he spent six years commuting between

London, Lytham and the DSS’s other major offices in Newcastle. “City-

based companies were all quite similar,” he says. “Moreover, in the run-up

to financial deregulation, they all recognized they needed outside help and

welcomed the input of consultants. Lytham was very different: in a sense,

we weren’t just being hired to design, develop and implement a new IT

system, but to effect a cultural change. The culture was very much one of

stay-as-you-are, and part of what we were bringing was a more positive view

of change and a can-do attitude.” That inevitably meant that Accenture’s

consultants were regarded with suspicion at best: many saw them as a threat,

replacing experienced public sector managers with sharp-suited graduates.

“I learned a lot about being culturally aware,” says Watmore. “We couldn’t

just march in, issue orders and expect things to happen.”

Although starting as a relatively junior person on an enormous pro-

gramme – a small fish in a big, murky pond – Watmore had to be able to

carry his immediate team with him. “There is always a moment of truth in

any kind of project. Mine came at a meeting about the citizen index we were

designing, the mechanism which would allow the computer programs to

identify the right person in a database of 60 million. The index was being

designed in Newcastle, but implemented in Lytham, so on top of all the ten-

sions around using consultants, we also had to deal with Civil Service rivalry

between the north-east and north-west of England.” People were under a

lot of pressure, deadlines were tight and tempers frayed, but a decision had

to be made. “There was a pivotal meeting when we managed to get all the

people round the table and hammer out a way forward that was acceptable

to both sides,” says Watmore. “Nothing after that was anything like as dif-

ficult: the system went live on time. Quite simply, we had, individually and

collectively, decided we were a team.”

Responding to the Moments of Truth

Every consulting relationship has its moment of truth, the few seconds when

you are tested as a consultant and which dictate client attitudes to you as

66 P E O P L E

well as your own self-confidence. Moments of truth like the one Watmore

describes may be spontaneous, but are by no means accidental. How they

are resolved comes down partly to a consultant’s technical know-how in the

broadest sense. Consultants are brought in as experts, perhaps in a particu-

lar industry or issue, or because they have a track-record of being able to

work through a certain type of process or problem. Technical excellence –

having the right answer or the ability to identify the right answer – is, and

will remain, the bedrock of consulting.

But, leaving aside technical know-how, what personal qualities are

required for a consultant to survive that personal moment of truth? “This is

the most elusive bit of consulting,” argues Jules Beck, Head of Transforma-

tional Consulting at CSC Computer Sciences Corporation. “Very few con-

sultants have a real understanding of what ‘consulting’ is about on a personal

level. If we’ve built a good relationship with a client, we often assume that

it’s simply because they like us as people, have specific expertise relevant to

their issues and challenges and because we deliver on our promises. While

all these things are critical, successful long-term client relationships also

require other capabilities – excellent listening skills, the ability to see the

bigger picture, a sense of independence and strong empathy for the client

at a personal as well as an organizational level.” Of course, it’s dangerous to

generalize: consulting work is so varied that no one person or set of skills

will be perfect in all situations. Indeed, most consulting firms would be hard-

pressed to list the core attributes of the people they recruit, the qualities

that mark them out as the “right” kind of person. But common attributes

do emerge.

Playing in a Team

Detica specializes in intelligence systems with a strong emphasis on security.

Like many other firms, it offers a comprehensive service, ranging from help

in drawing up the requirements and business case for a new system, project

management and systems integration right through to operational support

of the completed application. What’s special about Detica? “We drum into

our people that the success of a project is far more important than getting

paid for extra work or overtime,” says Tom Black, the chief executive. “We

put the client first, sit in their seat and see success as they see it.” Most

P E R S O N A L C H E M I S T RY A N D R E L AT I O N S H I P S K I L L S 67

consulting firms would say the same, but they have not all been growing

as quickly as Detica, so what’s different? The firm’s heritage is in systems

engineering and it still retains a strong engineering dimension to its culture,

which means that it takes pride in the quality of its technical solutions.

People at Detica like building complex but intelligent systems: they have to

be smart and flexible, both of which come out in its client feedback. The

vast majority of its consultants are mathematicians, engineers, physicists or

computer scientists. About two years ago Detica realized that three-quarters

of its income came from information intelligence – helping people to

acquire, analyse and act on sets of information – and it has since rebranded

itself as an information intelligence specialist. “We’re gradually rebuilding

the brand along these lines,” says Black. “It plays to our existing strengths,

yet also provides a clearer association for our clients. When they hear

our name, they can attach something quite specific to it: it’s our key

differentiator.”

But, like many other analytical cultures, it has found the softer skills –

change management, training, ensuring the take-up of completed systems –

more of a challenge. “We’re bringing in more people with these skills, but

it is still not the norm for us as a company,” says Black. Moreover, the left-

brain focus of the business could limit growth if these softer skills are not

properly assimilated. “A corporate relationship does not exist without a per-

sonal relationship. People buy from people they like, so if there is no per-

sonal relationship there will be no corporate relationship.”

So what else does Detica look for when it recruits new consultants? What

are the skills it wants to inculcate in its existing people that take the firm

above and beyond its engineering roots? Team orientation is the first thing

Black mentions: “We need people who, while they’re technical experts in

their own field, recognize they can’t have all the answers. They’ve got to be

prepared to put their colleagues forward and work with them effectively.”

Clients will not tolerate a bunch of dysfunctional prima donnas. That’s par-

ticularly important in today’s environment where consultants have to work

closely with their client counterparts, and sometimes with people from com-

petitor firms. “Managing teams and the aspirations of all their individual

members is a real challenge in this context. We might be the prime con-

tractor on one project, but the subcontractor on another. We can be working

with a consulting firm for one client, while competing with them for another

client’s business. We need people who can be grown-up about this, who are

68 P E O P L E

neither so egotistical nor insecure that they can’t have a professional rela-

tionship with whoever is round the table at the time.”

Seizing the Initiative

Self-motivation is the next skill consulting firms look for. “Our people

shouldn’t need to be managed from above; they shouldn’t be sitting around

waiting to be told things. They have to be highly autonomous”, is the typical

comment. A consulting firm, sending out people across a range of different

projects, cannot micro-manage all its activities, but has to depend on indi-

viduals to exercise reasonable judgement and take good decisions, decisions

which balance the needs of a client with the commercial security of the firm

itself. It follows that other valuable qualities are dependability, openness and

honesty.

Most consulting firms would agree that the willingness to take the

initiative is an essential attribute. As David Oliver, Vice President of Kurt

Salmon Associates’ London office, consultants to consumer product and

retail clients, puts it, “We depend on people who want to do a good job for

clients. That driver will always come across; it means that we’re less arro-

gant than the stereotypical image of the consultant and we engage well with

the client. Simply put, we’re easy to get on with.”

Duncan Craig, at AT Kearney, makes a similar point: “We want

smart people; people who have already achieved something in their

lives, not necessarily in business, it may be in relation to their hobby or in

sport. The most important thing is to have done something they’re proud

of.”

Being Believed

For John O’Rourke, who runs Catalise, a much smaller consulting firm – 25

people to Detica’s 500 or AT Kearney’s 3000 – these would also be the qual-

ities he’s looking for in a consultant. “The most important thing we do is

invest in our client relationships,” he says. “It’s a personal thing: it might

take a few weeks or many months until they reach the stage where they

really trust you, where they know they’re in the rapids and need lifejackets,

helmets and boats to cross the stream. The ability to keep that relationship

going is vital, because the economic cycles consultants have traditionally


relied on to drive business are much less certain than they were. It only takes

one breath of cooler economic air for a client to pull the plug on an import-

ant project. Although we have long-term relationships, much of our work

takes the form of high-value, short, sharp interventions – and we have to

be able to keep going.”

“But,” he cautions, “some of the attributes we need appear contradictory.

For example, the ability to listen is very important: every client is different

and you can’t go in with a predetermined solution because you’ll miss the

nuances of that particular situation. But there comes a point where your

opinion as a consultant is much more important than the listening part.

Consultants have to have and be able to articulate opinions; convince a

client that they understand their problem and are proposing a feasible

approach. Clients have to believe in us if we’re going to achieve anything.”

Credibility would also be top of Andy Chestnutt’s list at Compass Con-

sulting. “When we’re hiring consultants, we don’t hire lifelong consultants,”

he says. “We take operational people and train them to be consultants.

We prefer to recruit someone who has been a senior director and who has

operational experience so that, when they talk to a senior director at the

client, they can do so from the vantage point of having done this job them-

selves. That generates a lot of trust with the client.” But experience is not

the only source of credibility at Compass. The firm differentiates itself via

its fact-based approach: typical projects start with gathering detailed in-

formation about the client’s operations in a pre-defined model. This infor-

mation is then analysed and compared with other, similar organizations,

allowing the consultant to identify problems and opportunities through root

cause analysis. “When one of our consultants arrives for a client meeting

with a wealth of data about the performance of the latter’s competitors, it

breeds trust,” says Chestnutt. “We’re not asking people to make a leap of

faith, to trust us purely on the basis of our experience. Experience backed

up by factual evidence carries a different weight to a consultant who is

simply speculating.”

Demonstrating Empathy

What all these factors have in common is that they are as important to the

client who hires a consultant as they are to the firm that employs them. At

70 P E O P L E

first sight, this is not surprising. Clients want consultants with specialist

technical knowledge, so it makes commercial sense for a consulting firm to

hire consultants with that knowledge: the client wants to buy it and the

consulting firm wants to sell it. A consulting firm, with its resources spread

across multiple projects, organizations and locations, relies on individuals to

act with a fair amount of autonomy. Similarly, one of the most important

reasons why clients hire consultants is to get things done – speed up a stalled

project, create a sense of focus in a dysfunctional team; they do not want to

deal with people who have to keep running back to their office for decisions

or moral support.

But perhaps there is an even more fundamental theme that emerges

from this: empathy. Strictly speaking, empathy relates to the way a person

understands – indeed identifies with – someone else’s situation, feelings and

motives. Where consultants are concerned, this translates into their

ability to listen to and respect their client’s agenda and to feel personally

involved in the process and outcome: in other words, not just to try on their

client’s shoes for size, but to put them on and walk around in them day in,

day out.

There are a lot of aspiring “chiefs” at DiamondCluster: the firm defines

its career tracks in terms of a consultant’s progress towards a position as chief

marketing or strategy officer, chief operating officer, chief information officer

or chief technology officer. “Everybody in the firm is designated to one of

these four career profiles,” says Stephen Warrington, the firm’s UK Man-

aging Director. “Each profile requires a different set of skills, but all require

general consulting. The consultants are all bright, practical and respect each

other’s opinions. We take people from different sources. A minority join us

straight from college as analysts, but most come with many years of experi-

ence in line management or consulting. We’ve a close-knit, highly colle-

giate environment.”

Extending that culture to include clients is a crucial differentiator. “Per-

sonal empathy is the most important factor in establishing a good client

relationship,” says Warrington. “I relate to this person, and he or she relates

to me. Our proposition is around helping people execute their strategy: that

means being down-to-earth, flexible, collaborative, willing to roll up our

sleeves and get on with things. It doesn’t mean sitting on a high horse and

looking down on the world.”


Cath Hardaker, who runs PKF management consulting practice, agrees.

“The specialist knowledge a client is seeking will clearly vary from project

to project,” she says, “but the underlying thing people are looking for is

empathy, someone who can say, ‘if I were in your place, this is what I would

do’. It would be someone who wouldn’t ride roughshod over their constraints

and lecture them about their failings, but who would accept their position

as the starting point, however imperfect; someone who would genuinely care

about the problem and help them to solve it.”

Empathy in Action

Creating empathy, even among a small group of people, can be hard enough.

Doing so across a much larger team, spread around the world, and constantly

being reconfigured, is imaginably harder: but that is the challenge consult-

ing firms face.

It is hard to grasp the scale of an organization the size of BT. Serving over

20 million business and residential customers with more than 29 million

exchange lines, it generates £13 billion in annual revenues and employs

48000 people. Its customer contact centre alone employs 13000 people

across 33 sites, two of which are in India. Offline is the back-office for BT’s

contact centre operation and deals mainly with customer enquiries and

complaints. Set up in 2003, Offline lacked the frameworks and organiza-

tional “glue” needed to ensure consistent performance across its 1300

people. Managers were not equipped with the right tools; there were no

reports and key performance indicators to provide meaningful metrics of

individual performance; there was an inconsistent approach to monitoring

quality, coaching and mentoring, setting targets and briefing teams. As Sue

Lennox Lamb, Offline’s General Manager, put it: “Offline was created from

a range of disparate offline groups who came together with little reporting,

few targets and measures, no communication infrastructure, different oper-

ating processes and a mix of management styles and experiences.”

Trinity Horne has specialized in productivity improvement consulting

since 1992: in 2004, BT commissioned it to help improve customer service

and employee attitudes at Offline. Success here led to the firm being asked

to help improve productivity in BT’s front-line operation, Online.

The key in both pieces of work was not redesigning processes or retrain-

ing staff, but changing the behaviour of operational managers so that they

72 P E O P L E

could help their staff work better. And this was achievable only if the behav-

iour of the consultants matched the behaviour they wanted to encourage

among BT’s own staff: it was empathy in action.

The first thing that strikes you about the project was the level of team-

work involved. This was not a question of the consulting team disappear-

ing back to their office to talk about the client behind its back; there was

no superior-than-thou attitude. All the ideas were put together by a joint

client–consulting team; people at BT had the sense that the solutions were

theirs, not ones imposed by the consultants. But that was only the start.

Both BT and Trinity Horne believe that the role of first- and second-line

managers is to optimize the effectiveness of the resources under their control;

an “active” manager should be like a sports coach providing guidance, assist-

ance and support to their players. The trouble was that not many of Offline’s

managers were in a position to perform this role. Trinity Horne therefore

ran a series of management development workshops to help people under-

stand the distinction. It backed these up with a programme of one-to-one

sessions focusing on individual management styles and by working side-by-

side with Offline’s managers, showing them how to put the advice they had

been given into practice. Soft and fluffy? Not a bit: alongside the coaching

and guidance, Trinity Horne had helped BT design a new management

framework for Offline, including performance measurements, target-setting

and monitoring, giving its managers a much clearer sense of what was

expected of them and their teams. After all, the primary aim of the project

was a 20% improvement in productivity. In the event, the project resulted

in an improvement almost double that.

Personal relationships were inevitably critical to success.

“No one thought this was rocket science,” says Trinity Horne’s David

Turner. “We weren’t coming in to wave a consulting wand. The magic as

such lay in the process: how we could instil coaching and management skills

so thoroughly that the managers we dealt with could pass these same skills

on to their staff. That meant we had to be involved: just as you can’t show

someone a car manual and expect them to drive a car, we had to show them

how to do it.” Indeed, it’s one of the reasons why clients like BT use Trinity

Horne: they don’t just get the talk, but the warts-and-all experience. “We’re

there for them in the good times and the bad,” says Turner. “Empathy is

hugely important: it’s the first thing we look for when we recruit people.

Obviously, we need clever and experienced people, but we’re also looking


for a cultural fit and an ability to work with people at all levels in an organi-

zation. Some consulting firms tend to feel more comfortable liaising with

people at a senior level: we’re just as happy to deal with people at the coal-

face. As a consultant, your outlook can’t be clouded by the organizational

hierarchy you’re dealing with. You have to be able to translate what’s going

on at the top to what people are concerned about at the bottom. You have

to be able to listen to people and take things on board. To us, an organiza-

tion is less a reporting structure than a giant jigsaw puzzle, and part of our

job is to see how all the pieces fit together.”

But empathy is not just about making people feel good: there is an unwrit-

ten promise that it is a two-way process. If the consultants gain the com-

mitment of those involved on the client side, the latter acquires skills and

opportunities which would not otherwise have been available. “It was

crucial we made it clear what BT’s managers would gain from this process.

As with any process of large-scale change, around 10% of the managers there

were already enthusiastic, around 20% were doing the wrong job and needed

to be moved somewhere else, but the remaining 70% were people who’d

never really had a chance to develop themselves – and it was really those

people we had to win over. In a sense, we’re offering them a deal: profit as

an individual from the big decisions being made about the business.”

Turner’s colleague on the project, Martin Haynes, backs this up. “People

have to take things personally, otherwise changes simply wash over them,

so we ensured there was time to sit down with each manager separately and

get them to think about what they’ve done, how they could manage differ-

ently in the future. We encouraged them to see how their management style

might also have some resonance in their private life, to see connections

between their life inside and outside work. If you have this time, you can

re-energize people on a variety of levels.”

“I’m a great believer in what I’d call authentic conversations,” says Garry

Johnstone, who sponsored the Online project at BT. “If I think something

about you, I’ll tell you to your face, not talk about you behind your back. If

you engage consultants as extensions of your own management structure,

then you have to show them the same consideration and respect you would

show a colleague. At the same time, you should expect the consultants not

to lord it over your own team: they can like to be aghast at how awful things

are. The Trinity Horne team was one of the least judgemental or hierarchic-

al set of people you could come across. The whole emphasis was on engaging

74 P E O P L E

people, not disenfranchising them. The scale of what Trinity Horne

achieved has been amazing. The customer contact centres employ thousands

of people, working across multiple lines of business, many of whom are

agency staff, not full-time employees, who collectively have more than one

million customer contacts a day. Yet, just a handful of people from Trinity

Horne have created changes right across this giant organization.”


7Recruitment, retention and remuneration

Consider these salient statistics:

• Approximately 15% of people recruited by consulting firms are recent

graduates, less than it would have been ten years ago. The focus has

shifted: today more than half of all people joining consulting firms have

between five and ten years’ experience and around 35% have more than

ten years’ experience.

• In 2004, consulting firms recruited the equivalent of 15% of their work-

forces. On average, they also lost around 11% of their existing charge-

able staff, a figure that was down from 15% in the two previous years.

• On average a consulting firm will spend around 1.5% of its total costs

purely on recruitment.

If personal relationships are the most immediate and pivotal point of the

client–consultant relationship, it follows that recruitment and retention are

always at or near the top of almost every consulting firm’s agenda. Even in

lean times, the competition for experienced people who can build client

relationships and win new business is intense. When demand is high, staff

attrition may reach 30% or more, firms poach each other’s high-flyers and

salary expectations rocket.

Winning the “War for Talent”

Balancing Effectiveness and Efficiency in the Recruitment Process

It’s no surprise that recruitment is something consulting firms have to invest

in heavily to ensure they have access to the kinds of skills and people they

need. The 1.5% of costs spent on recruitment may not sound much, but

when you consider that firms’ investment in knowledge management,

research and thought leadership typically accounts for 0.75% of its total

costs, you get some idea of the position recruitment occupies on a consult-

ing firm’s list of priorities.

There are three factors that make recruitment particularly – and increas-

ingly – expensive for consulting firms:

• There is no or little alternative to a time-consuming round of interviews

and assessments if firms are to find the people they need. Ironically, con-

sulting firms are in the same position as their clients are when they come

to deciding which consulting firm should do a particular piece of work.

They are therefore interested in similar issues: the quality of the individ-

ual, their track-record in a particular field and their ability to work as part

of a team. Like their clients, consulting firms don’t always find these

attributes easy to evaluate.

• Carrying out such a labour-intensive evaluation process with the regu-

larity required for a firm to meet demand. With attrition rates compara-

tively high, firms have to run fast just to stay in the same place. Moreover,

there is a real risk that, if you standardize your process too mercilessly,

you will end up with too many people of the same type. The days when

consulting firms looked for a relatively similar profile of business school

graduate have passed. But the more diverse your employee base, the

less it becomes feasible to realize economies of scale by adopting a one-

size-fits-all recruitment process. Moreover, in a volatile market, one big

project can have a disproportionate impact on the availability of certain

kinds of skills – making it very hard for consulting firms to keep pace, let

alone predict demand.

• As consulting firms discovered during the dot.com boom of the late

1990s, you can’t cut corners without compromising quality. In the race

to keep up with a whole host of new entrants, many consulting firms

bypassed established processes and selection criteria – and ended up

taking on poorly qualified staff.

So what are the options for balancing rigour, speed and quality?

“We have never stopped recruiting, even during the 2001–3 downturn,”

says Accenture’s Lis Astall. “Globally, we’ve grown from 90000 people

78 P E O P L E

to 129 000 in two years.” Like many firms, Accenture’s challenge is

complicated by the diversity of skills and experience it is looking for.

This in part reflects clients’ continuing search for ever more specialized

expertise, but it is also the result of Accenture’s broad range of services. “We

look for very different people,” Astall points out. “For our consulting prac-

tice, we still look for the top universities, people with excellent degree

results, team players, the people who were achievers at university, but we

also have quite a few experienced hires – people that have done three or

four years in industry – in our consultancy. On the outsourcing services side,

we recruit people who might be new to the job market to people coming

up to retirement. Additionally, we are very focused on the diversity of our

workforce.”

It is John Campagnino’s job to oversee that Herculean level of recruit-

ment, not just across all of Accenture’s different workforces, but across all

its worldwide locations. He joined the firm 12 years ago, when it was less

than a quarter of its present size. Not surprisingly, a lot has changed. “The

number of people being recruited is an order of magnitude greater than it

used to be, but the market is also much less predictable,” says Campagnino.

“When I started here, as the Recruiting Director in New York, we planned

our recruitment at the beginning of the year and spent the rest of the year

implementing it. Today, we have to be far more nimble, hiring precisely

defined skills on a rolling monthly basis. In order to do that we have had to

evolve a process that balances high technology with high touch, speed and

efficiency with the right level of face-to-face interaction.”

How do he and his team do this? “We undoubtedly rely more on tech-

nology than we used to,” says Campagnino. “We help candidates pre-screen

themselves. Via our website, candidates can create profiles to indicate their

interests and preferences. As relevant opportunities arise, details can be sent

to the candidates via email. However, we also continue to put an emphasis

on face-to-face interactions: we like to get as many people as possible to

meet candidates, so the decision whether or not to offer someone a job is a

shared one. We’re very clear about what we expect to get out of interviews.

Conversations are carefully structured so that the expectations on both sides

are managed.”

Accenture has a proprietary interview methodology in which interview-

ers have to be trained before they are allowed to evaluate candidates. Typi-

cally, questions focus on behavioural issues – how did someone handle a

R E C R U I T M E N T, R E T E N T I O N A N D R E M U N E R AT I O N 79

particular situation in the past? But this approach is backed by a range of

tests. Someone applying to Accenture in one geographical area might have

their level of English tested, while someone in another location might be

tested on relational thinking. Finally, many candidates will also have the

opportunity to meet the leadership of the business to which they are apply-

ing. “People are the raw material of our business,” says Campagnino. “We’re

very selective about who we bring in.”

The upside to this is that it ensures that Accenture recruits high-quality

candidates, but the downside is that it might take Accenture longer than

other firms to reach the point where it is prepared to make a job offer.

“Sometimes I get the question, ‘If one of our competitors can give someone

a job in a week, why does it take us a month?’,” says Campagnino, “but it

comes down to the amount of due diligence we do. Some companies might

be prepared to take more of a risk: we’re not.”

Campagnino cites two lessons learned over the years. “In the first place,

you can’t repeat something too many times. The interview process is about

expectation management. We know interviewers and candidates can be very

selective about what they hear. Sometimes there are hard questions on both

sides which should – but don’t – get asked. That’s one reason why we use

such a structured, consistent interview process. Secondly, we must never

forget that we are dealing with people, and as long as we are dealing with

people, we will always need other people in the process. We cannot rely

solely on technology.”

The firm cannot afford to rest on its laurels: the recruitment market

moves too quickly for that. “One of our challenges now is to ensure we better

accommodate individuals with a wide range of skills and backgrounds,” says

Campagnino. “For example, we need to continue to look at how we support

working mothers or how we leverage the opportunities of homeworking.”

The other key challenge is globalization: a combination of employment

regulations and cultural preferences means that recruiting by definition is a

very localized activity. “Recruiting the right employees is something all our

people feel passionate about,” he says, “but one of the critical success factors

for our business in the future will be our ability to be creative and nimble

in how we identify, hire and move qualified people into appropriate posi-

tions in the company – effectively tapping into non-local/non-traditional

sources of qualified people to meet our business needs.”

80 P E O P L E

Retention: One in the Hand . . .

Sir George Cox is Chairman of the London-based Design Council, but he

started his career in the 1960s as a management trainee in industry. Having

had early exposure to the use of computers in manufacturing companies, he

moved into consulting, joining what was then Urwick Orr. In 1977, he co-

founded Butler Cox, which pioneered specialized consultancy alongside

multi-client research reports on information technology. Having sold that

business to CSC after its flotation in 1990, he moved on to senior roles at

PE International and Unisys, before becoming Director General of the Insti-

tute of Directors.

When you listen to Cox talking about his career a theme emerges: how

the different firms he worked for treated their staff.

There were three levels of consultant at Urwick Orr: associate, consult-

ant and senior consultant. The company was a good employer in many ways,

but rigidly structured. Although no one joined straight from college and

most recruits had, like Cox, considerable experience, only senior consult-

ants could sell work: you had to have been with the firm for five years before

you could get promotion from consultant to senior consultant. “The five-

year rule was ridiculous even at the time,” recalls Cox. “Some of the most

inept sales people were the senior consultants. I remember watching a par-

ticularly bad presentation that one of them made to a government client:

he had to refer all the questions to the ‘junior’ people who worked for him.”

Matters went from bad to worse during the downturn in consulting at the

start of the 1970s: “The firm reacted too slowly,” says Cox, “and cut people

almost entirely on a last-in-first-out basis, including lots of people with

immense promise, but no senior consultant lost his job.” Alienated, Cox

left.

As one of the founders of Butler Cox, he was well placed to put his ideas

on good management into practice. “For example, our pay system was quite

different from the norm of the time. Everyone was paid on performance,

even the word processing department,” he says. The department’s pay was

based on throughput set against the cost of achieving what it was asked to

do, but it was still important that quality was not compromised. “So we set

up a panel of people to ensure the overall quality of work, but then allowed

the people in the pool to manage their own efficiency. It had a dramatic


effect: peer pressure kept costs low and quality high. Poor performers didn’t

survive, and no temporaries were ever required to cover holidays or sick-

ness. As a result we ended up with the highest quality, best motivated, best

value-for-money – and best paid – document producers in the business.”

Cox applied the same philosophy to managers and support staff. The

performance-related part of everyone’s pay was calculated and paid quarterly

(“because an annual performance element only affects behaviour from

October onwards!”). Consultants were paid a flat salary, but the annual

review was largely formulaic, largely dictated by fees earned and sales made.

The philosophy was simple: “If you double your contribution to the busi-

ness, we will double your salary.” Equally, “If you’ve done no more for the

business this year than you did last year, what’s the justification for expect-

ing more pay?” The results were startling. Cox remembers giving a consult-

ant a good increase in her salary at an annual review, only for her to come

back the following day asking for a pay rise because, now that she under-

stood the system, she’d unilaterally put her fees up! Shocked at the response,

Cox explained that she had no authority to do so; moreover the increase

was based on the previous year, so this would make no difference. “I under-

stand that,” she replied, “but I got the client to agree to backdating it!”

“Whilst not condoning or encouraging such behaviour, it illustrated an

important point,” says Cox. “Things like fee rates, utilization, control of

costs and effective use of time should be shared concerns across an organi-

zation. Everyone should give them attention, and the benefits should be

shared fairly.”

The consulting industry attracts plenty of high-achievers, many of whom

enter it with the aim of spending a few years gaining exposure to a wide

variety of organizations before returning to a more senior line-position in

industry. A level of employee turnover is beneficial, providing a consulting

firm with a steady stream of new thinking and up-to-date industry knowl-

edge from the new joiners, and new, potentially lucrative relationships

among past employees. Some turnover is also inevitable: clients will want

to recruit consultants they have enjoyed working with; consultants typically

have a range of career choices – another consulting firm, a different indus-

try, even business school. But, except during real recessions, most consult-

ing firms will admit to staff turnover rates of around 15%. Even assuming

they are playing down the issue, that means that roughly every six years they

are dealing with a completely new employee base – and that has implica-

82 P E O P L E

tions for training, continuity with clients and a firm’s ability to build its

intellectual capital.

“You accept a high turnover rate among junior consultants because

they’re often ambitious and attractive to client companies,” says Vicky

Wright, who was the UK Managing Director at Hay Group in the 1990s

and is now an associate at Watson Wyatt and President of the Chartered

Institute of Personnel and Development, “but turnover among more senior

people can have a significant impact on client relationships and the per-

ception of trust. If consulting firms are to build trust with clients, then how

the firm builds and maintains relationships with its current employees, part-

ners and alumni is an important element of the mix. Yet consulting firms

tackle this issue very differently – all the way from their rigour in selecting

who should be a partner or senior member, the psychological and actual con-

tract, to the management of departures (both voluntary and involuntary)

and the restrictive covenants that they deploy which can draw a client into

a conflict between a firm and its former employees/partners.” Trust, like

charity, begins at home.

So what encourages consultants to stay?

Money Does Matter

Consulting firms like to play down how important money is as a motivator,

preferring to hint at a rosier-tinted picture of the altruistic consultant

putting client service above mercenary considerations. That’s all very well,

but money remains an unavoidably important factor in offering a competi-

tive basic rate and attractive bonuses.

The first of these is much simpler than the second: many firms now sub-

scribe to studies which benchmark their salaries against similar firms so they

can offer the going rate. Salary inflation is one of the big threats the con-

sulting firm faces, especially in today’s market where prices are relatively

static, so it makes sense for firms to act in concert. Of course, that equilib-

rium can be upset by a spike in demand, but at that point consulting firms

can put their prices up to compensate. The real problems occur when new

entrants intensify the competition for resources as they try to build their

businesses.

This was what happened during the dot.com boom of the late 1990s:

firms whose names have now largely been forgotten – Icon Media Lab, IXL,


Razorfish and Scient – all grew rapidly on the back of e-commerce. Riding

an enormous wave of demand, these firms pushed up competition for recruits

to an unprecedented ferocious pitch. Even at the time it became apparent

that, if even the biggest consulting firms were to achieve their targets for

winning new business, there simply would not be enough people to go round.

And that is what happened: supply could not meet demand and standards

fell.

Today’s “new” entrants are accounting firms, looking to re-enter a

booming consulting market after several years – and for a variety of reasons

– when they redirected their attention to their core audit and tax businesses.

Already, incumbents are complaining that this is pushing up demand for

recruits and inflating salaries at a time when fee rates remain depressed. But

even new entrants are wary of pitching the industry back into the days of

the late 1990s when astronomical offers were made, often to under-qualified

people. “We pay people market salaries,” says Nick Pasricha at Ernst &

Young. “In general, we don’t pay bonuses. No one has figured out a bonus

structure that is not damaging to team values, so we deliberately employ a

much more judgemental view of how people contributed. We look for

overall, sustained performance, not one-off sales.” However, if firms do not

want to make widespread use of short-term labour (subcontractors) – and

many do not – some level of variable element to pay is essential if they are

to manage their costs in a volatile market and spread some of the risk/reward

payments they are increasingly taking on.

There are two challenges here:

1. input: choosing the most appropriate basis on which to calculate the vari-

able element;

2. output: choosing the most appropriate “currency” in which to pay it.

Calculating Variable Pay

Consulting firms have a portfolio of possible remuneration options (Figure

7.1), none of which is mutually exclusive. These differ according to:

• The “unit” that gets rewarded: too much emphasis on individual rewards

fosters internecine competition, but giving the same bonus to everyone

allows poor performers to hide.

84 P E O P L E

• The factors that determine reward: most firms have historically relied on

the most easily quantifiable metrics – utilization, contribution to sales,

and so on. However, a better bedrock for long-lasting client relationships

are softer, more qualitative measures, such as satisfaction.

Today’s conventional firm will place most emphasis on firm-oriented

metrics, not least because they are easier to measure. Some – a minority –

have begun to invest in gathering and analysing client-related data. Simi-

larly, most firms have tended to oscillate between applying these metrics at

a corporate level and at an individual level – again, largely because these

were comparatively easy options. Some – again a minority – have begun to

find a middle way, rewarding the team.

“The money is part of what keeps people at a consulting firm,” says Andy

Chestnutt at Compass Consulting, “so it’s important that we pay competi-

tive rates. Our consultants receive a bonus based on the overall success

of the company, a profit-related incentive and our account managers, like

any field sales force, have sales targets and commission plans. But we have

to measure more qualitative performance as well, otherwise we’ll be

ignoring the extent to which our culture also plays a part in keeping our


Metrics

Unit

Client-oriented

Firm-oriented


Firm as a whole

Team

Sales Project profitability

Utilization

Client satisfaction

Value generated

Results

Growth

Profitability

Share price

Market share

Market awareness

Figure 7.1 The reward portfolio

retention rates low. For that reason, we’re fairly religious about measuring

client satisfaction and quality, and basing the individual bonuses for our con-

sultants on these types of metrics. It’s mutual self-respect, as much as money,

that keeps people here – and we have to foster that.”

Finding the Right Currency

But money comes in different forms.

Equity is important, not because it creates overnight paper millionaires

(as it did during the dot.com boom), but because it encourages people to

make a longer-term commitment. That’s certainly the view of Stephen

Warrington at DiamondCluster: “Our attrition rates are quite low for this

industry, around 10%. I think those people who like working here like it

very much. And, if we get our recruitment right, we don’t get too many

people who don’t like it. We pay competitively, but there are firms that pay

a bit more. What attracts and keeps people, I think, is our value proposi-

tion: we try to get at the issue from an employee’s perspective. What are

they trying to get out of working here? We offer equity in the firm and our

benefits package is designed to encourage people to stay: our salary is com-

petitive, our cash bonuses are on par or occasionally lower than others’, but

over time our equity payments could amount to a significant amount. But

it does mean people have to take a longer-term perspective.”

At Accenture, high-performing managers and above can earn shares.

“Everyone in the business gets ranked each year,” says Lis Astall, “and the

top two tiers get options. Partners all have to own a certain amount of shares,

some of which you’re given when you get promoted to partnership.”

Although not a partnership in a legal sense, it is through initiatives like this

that Accenture has worked hard to retain a partnership ethos in a publicly

owned corporation. “We have three areas we measure,” says Astall, “value

creator, people developer and business operator. People, from the most

junior up to senior partners, are expected to deliver on all three of these.

This metric culture drives our delivery culture: if you go and ask a client

what we deliver, what they say will match what we have in our metrics.”

At PA Consulting Group, Jonathan Cooper-Bagnall, a member of its

management group, has no doubts that the firm’s ability to recruit and its

overall culture reflect the fact that the firm is owned by its employees. “In

practice, it means we’re accountable to ourselves: there is no group of exter-

86 P E O P L E

nal shareholders who can put pressure on us to behave in a way which we

think is counter to the firm’s long-term best interests. It also means we can

be more frank and open-minded about the work we’re asked to undertake,

even if that results in our walking away from it. People here aren’t hesitant

to speak their mind.” Not having to bend with the wind saved PA from the

boom-and-bust excesses of the late 1990s and has given it a level of stable

growth unusual in such a volatile sector. But, crucially, by tying people’s pay

to the performance of the firm as a whole, the structure promotes internal

collaboration. “Our model is such that, while the practice area you work in

needs to be successful in its own right, it can’t be so to the detriment of all

the other practices in the business. We either succeed as a firm, or we’re

really not succeeding. It’s very important to create an environment where

people collaborate, where we cross-fertilize our knowledge and skills, and

where people can move relatively freely from one practice area to another.”

PA’s ownership structure, and the behaviour it encourages, also has an

indirect impact on the firm’s relationship with its employees. “PA is a struc-

tured firm and it has operating standards and formalized procedures, all

of which are audited through people’s reviews,” says Cooper-Bagnall, “but

there’s only so far you can go with control mechanisms. We have to trust

our people a lot. In fact, it’s precisely because we trust them and because we

don’t monitor or measure every little action, that we’ve been able to build

this collaborative culture and sustain solid growth.”

Leaving Money Aside

“Retention isn’t based on money,” says Ernst & Young’s Nick Pasricha, “but

by recognizing people’s contribution and giving them an environment in

which they enjoy working and which evidently values them as individuals.

You need to value people. If you don’t they’ll leave.”

Tom Black, Detica’s chief executive, agrees: “We benchmark our salaries

to industry norms, and continually find they’re better than average. But we

operate an equity scheme on top of this which provides an additional reward

to our high-flyers, the top 10–20% of our workforce, in order to keep this

particularly valuable group of people with us. But the challenge of the work

they do is right at the top of why people stay with Detica.”

Adrian Atkinson is one the world’s leading business psychologists and

Chairman of Human Factors International. He’s also not a big fan of


consulting firms: “The essential function of a consultant is to reduce uncer-

tainty, whether that’s giving a chief executive the information he or she

needs to take a decision or to make sure a new IT system is up and running

on time. Consulting firms used to understand this, and most did a good,

straightforward job, but they’ve become much more metaphysical. They’ve

invented complicated theories for things which they believe in more than

their clients; they aren’t sufficiently self-critical; they focus on selling at the

exclusion of delivery; and they also don’t think deeply enough about how

they add value.” The result, he believes, is patchy performance at best.

Those are issues which carry all the way through to the way in which con-

sultancy firms succeed – or fail – to motivate their staff.

“There are three main factors which influence people’s choice of careers,”

says Atkinson. “Some people have a need to appear successful in the eyes

of their peers; others want security and the avoidance of anxiety; others are

driven by a desire to learn. Consulting appears to offer people status and

high salaries, so it’s a common career choice for people who want to impress

others: it has all the trappings of success. What these people don’t realize is

how tough consulting is; they tend to have high expectations which are

almost invariably disappointed. People who join the consulting industry and

are motivated primarily by the avoidance of anxiety usually leave quickly,

irrespective of how much they are being rewarded. Lots of people come into

consulting because they are highly ambitious for rewards yet they’re afraid

of being seen to fail. The crucial thing about this group of people is that

they don’t want responsibility: typically, they’re excellent in technical terms,

often highly specialized in a particular field, but they don’t want to move

into a sales or management role. Yet consulting firms often try to push them

in those directions, trying to motivate them with sales targets or manage-

ment opportunities – precisely the things these people don’t want.” A better

strategy would be to do more than pay lip-service to the idea of a technical

career ladder, allowing people to deepen their expertise and avoid the

anxiety of working in roles they do not feel suited to.

Finally, there are the people who want to learn. “These people make the

best consultants,” says Atkinson. “They are often people for whom going

into academic life would have been an alternative career path. But they

want greater financial rewards and they are fascinated with trying to under-

stand how their area of expertise can add significant value to the success of

private and public organizations. These are the two things which will deter-

88 P E O P L E

mine whether these people join and stay with a particular firm: first, that

they have the opportunity to learn new skills and/or attain ‘mastery’ in a

particular field. Secondly, to keep these most valuable people isn’t a ques-

tion of pure money or status, although these inevitably play a part. What

the consulting firm can do for these people is to provide a thoughtful, stimu-

lating and challenging working environment where new ideas are brought

in frequently from outside.”

That is also what Grahame Russell, the head of Penna’s human resources

consulting practice, believes. It is an especially important issue for Russell

because half of Penna’s consultants are associates, subcontractors who work

with him on projects but who are not employed full-time. While this guar-

antees the firm flexibility in the face of a volatile market, it also has sig-

nificant risks which need to be managed.

“Penna was founded in 1996 and grew further through acquisition, offer-

ing consulting across the employee life-cycle – recruitment, development,

remuneration, career transition and outplacement,” says Russell. “But creat-

ing this proposition means we need access to people who are experts in a

wide range of fields, many of whom choose to be freelance consultants, so

we don’t have exclusive access to them, nor can we manage them in the

same way that we’d manage our full-time employees. The key is to give them

a sense of home, a professional community to which they want to belong.”

Money plays a part, but no more than that: “We’re very transparent,” says

Russell. “Forty per cent of our fees go directly to the associate, and that also

makes us very competitive in straightforward salary terms. But we also treat

them as colleagues so far as we can – inviting them to away-days and regular

networking meetings, and making sure they get to work on interesting pro-

jects. They are proud to represent Penna, but they will also have a portfo-

lio outside of Penna.”

In return for providing stimulating work and a network of likeminded

colleagues, Penna expects consistently high standards of delivery. There are

close parallels here between Penna’s client work, says Russell: “Engagement

is vital: it is what creates meaning for people, how you win over their hearts

as well as their minds. Businesses have spent the last 20 years telling em-

ployees they are responsible for their own development, so much so that it’s

completely accepted. Now, we’re reaping a whirlwind of our own making:

we’ve created a generation of employees who have taken control of

their own careers and feel little in the way of commitment to employers.


Reversing that trend isn’t just about money – for clients or ourselves – but

about creating a first-rate psychological contract between us as an organiza-

tion and our people.”

Consulting firms, too, are discovering that being a trusted firm also means

being a trusted employer.

90 P E O P L E

PART III

Process (1): Marketing and Selling

8Brand versus specialization – the race to the top?

In these days of creeping commoditization, what can consulting firms do to

resist what appears to be relentless pressure on price?

Consulting firms have traditionally competed on many – too many –

fronts. They may have boasted about the range of services they offer or taken

pride in the quality of their relationships and stable client base. They may

have written books and articles that illustrate their intellectual prowess. Yet

all this activity has had remarkably little impact on a market in which clients

still complain that they find it hard to tell consulting firms apart. Every con-

sulting firm likes to tell itself it has bucked the trend, but the feedback they

base this on invariably comes from clients they already know.

No one would dispute that consulting firms can feel very different to work

with: the question is how best to communicate that difference before you

have won the work. Here, the competitive lines are beginning to be drawn

more clearly: you fight on brand or niche expertise. Have neither, and you

will fail.

The Value of Brand

“High performance. Delivered”, the strap-line of Accenture’s advertising,

has to be one of the most ubiquitous slogans in the world today, emblazoned

over everything, from business magazines to airport terminals. As Andersen

Consulting, the firm was the first consulting company to invest in a massive

advertising campaign in the early 1990s – experience that proved immensely

valuable when it had to create a new brand from scratch following its break

with Arthur Andersen. It took the firm just 18 months to return to the level

of brand recognition it had enjoyed before the name change. Today, the

brand’s connection to success is underlined by sponsorship deals with the

golfer Tiger Woods, involvement in major sporting events and by associa-

tion with other leading brands.

Branding is now an important challenge for all consulting firms. “A brand

like ours has to play to three different audiences,” says Steve Gunby at the

Boston Consulting Group. “Our brand is critically important in attracting

the strongest people. No matter how strong your image is in the market, you

are only as good as the word-of-mouth that follows the work you do, and

what we do requires very bright people. The second role our brand plays is

in relation to our client base: a huge amount of our work is repeat business,

or comes to us either from people who leave existing client organizations

and then ask us to help them in their new positions or from referrals from

a colleague or friend they trust. Finally, there are our non-clients. Important

though our brand is in this context, the most it can do is put us on a short-

list, it can help open doors, but it won’t build relationships by itself.”

Of course, the effect brand has on employees and clients is interrelated:

the best people do the best work which attracts the best clients; the best

clients commission the most interesting work, and that helps attract the best

people. The difference between the two sides is that clients pay for it, and

brand doesn’t come cheap. So what is it that clients get for their money

when they “buy” the brand, and what can consulting firms do to maximize

the value of the brand they are “selling”?

Resources, and the Ability to Leverage Them

Branded consulting firms promise high-calibre people: they have the variety

of work which creates a stimulating working environment and training pro-

grammes which reward employees for their considerable efforts.

In fact, a branded firm is more likely to have high-quality junior people,

many straight from college or business school, because the work and train-

ing programmes they offer are particularly attractive to this group. They are

not necessarily as good at recruiting more senior people, nor do they ne-

cessarily want to be. More senior people, entering the firm directly, bring

the baggage of different cultures with them; junior people are more likely to

adopt common values and working practices, creating a more cohesive team.

What these firms are offering instead is an almost bottomless pool of bright

94 P RO C E S S ( 1 ) : M A R K E T I N G A N D S E L L I N G

people who are able to put their hands to almost anything, plus individual

experts in a very wide range of specific areas. Here, the value of the brand

translates into scalability – the ability to resource any project almost at the

drop of a hat – and coverage – the ability to respond to just about any issue

a client raises.

Maximizing brand value therefore partly depends on doing both these

things right. A firm looking to charge premium rates on this basis will need

to demonstrate it has the capacity to resource even the largest projects vir-

tually on demand: how quickly can it move its people around the world,

while still ensuring they deliver to the same, consistently high standards? It

will also need to show that it can tap into its internal network in order to

find precisely the right specialist at the right time. Phoning around to see

who is available who might fit the bill is not acceptable; a firm would need

to demonstrate it can do this efficiently and effectively, and that it has done

so on many occasions in the past. Moreover, while bright, young business

school graduates may be enthusiastic and energetic, they cannot be com-

pletely wet behind the ears: as extra pairs of hands, they still need founda-

tion-level understanding of business issues and standard analytical tools to

be able to do whatever work is required of them. Maximizing brand value

therefore also depends on being able to show a client that sufficient train-

ing is in place for this to be the case and that even the most junior con-

sultants are given exposure to a wide range of challenges and issues.

Ideas and experience are resources too, and branded firms are under an

obligation to demonstrate that they can exploit these as effectively as they

deploy their people. What use is it to a client that you have carried out work

on a similar issue in another sector if the consultants you are using have had

no direct contact with those involved in the previous work, cannot access

information on it and/or do not know how to apply that information to the

specific circumstances they are dealing with? What is more, a firm’s brand

will be damaged if it claims to have collective experience of working on a

particular issue and then is unable to demonstrate that during a project.

Brand value translates into a firm’s ability to leverage its intellectual

capital. To maximize the value of its brand, a firm has to be able to take

ideas from one sector and apply them in another, so that, for example, a

public institution can improve its efficiency by applying lean techniques

used by manufacturing companies. Similarly, it has to be able to apply tech-

nology or business practices it has found effective in one area of a business

B R A N D V E R S U S S P E C I A L I Z AT I O N – T H E R AC E TO T H E TO P ? 95

and implement them in another – enabling, for instance, a human resources

team to improve (internal) customer service. Finally, a branded firm should

be able to take work it has done in one country – perhaps where that country

has a lead in terms of government policy – and help other countries grap-

pling with similar issues.

Brand value also translates into having some genuinely good thinking and

being able to get that thinking in front of the clients who need it. Ideas

need as much investment in them as people if they are to develop. Branded

consulting firms have to show that they have a sustained investment in new

ideas and innovative working practices. They also need to show that these

ideas have an impact, that a new approach to product development, for

instance, has reduced time-to-market in other organizations.

Quality of Relationships

Consultants who stand up in a presentation and claim to have had more

dinners with chief executives in the preceding week than there are evenings

to have dinners are stereotypical hate figures among clients. Rightly, they

are taken to epitomize an industry that can be arrogant and complacent.

While these people are by no means confined to branded consulting firms

(or, for that matter, to the consulting industry), they are perhaps more preva-

lent there because their business model is more dependent on relationships

and the experience of past clients than a specialist firm that is more likely

to win business on the basis of precise expertise.

But leaving hate figures like this aside, the quality of relationships a firm

has may be of genuine value to a client. Someone looking for advice on

an especially difficult issue might well benefit from being able to talk to

someone in another business or sector who has had direct experience of the

same issue: if a consulting firm has good relationships (in terms of the length

of the relationship, the seniority of the people involved and the extent to

which it feels it can “call” on that relationship), it may be able to facilitate

such conversations. It puts itself in the position of a broker, connecting a

client to its network.

There is another side to quality of relationships – the quality of internal

relationships. Many clients, specifically those in unwieldy multinationals or

government departments, find it hard to know what their own organization

is doing, let alone anyone else’s. A consulting firm that has spent substan-


tial time working for one client will inevitably have built up contacts in dif-

ferent areas, an internal network which clients themselves can plug into.

This can be helpful where an issue is politically sensitive: the client can rely

on the firm to know whom to speak to and how to get buy-in from key

people. This isn’t confined to branded consulting firms, of course. However,

specialist firms tend to have narrower webs of relationships simply by virtue

of the fact they concentrate on a specific area.

From a client’s point of view, these facets translate into two quite distinct

characteristics – characteristics which a branded consulting firm must be

able to exhibit if it is to use its brand to fend off commoditization.

In the first place, a branded firm has to be able to demonstrate that it has

more, better and more accessible relationships than its competitors. This is

not just a question of assertion: any firm, like our stereotypical consultant,

can produce a long list of clients it has worked for in the past. Furthermore,

any firm will claim that its most senior people have extensive contacts.

Rather, the branded firm has to show that more of its middle-ranking con-

sultants can facilitate these types of connection; after all, what value does

quality of relationships have for clients unless the consultants they work

with on a daily basis can do this? But that does not mean that every con-

sultant needs to know a handful of chief executives – that is the kind of

thinking that leads to name-dropping. Useful contacts are not necessarily

senior contacts: if you are working for a marketing manager in a consumer

products company, then the person he or she most wants to talk to is the

marketing manager in (say) a financial services company. This is about peer-

to-peer contacts, and seniority is not always an advantage (people may clam

up because they do not want to look stupid).

The same applies to a consulting firm’s internal relationships: these

shouldn’t be confined to its most senior people. But there is a second aspect

here which a client might reasonably expect to see in place. Internal rela-

tionships do not happen by accident or osmosis any more than external ones.

Even a consulting firm working on several projects for a single client might

well find it hard to move outside its distinct pockets of activity, especially

if the demarcation between different parts of the organization is strong. Con-

sulting firms have to build good internal relationships, something that

usually takes place under the auspices of account management. There is a

difference here between the type of account management which accompa-

nies pre-sales and sales activity and that which takes place once a contract


has been signed. Most firms – branded, specialist and unbranded generalists

– would be prepared to invest in walking the corridors of an organization

they thought they were going to win substantial business from; far fewer are

prepared to do that once the work has been won and its scope determined.

One of the ways in which the brand values of a branded firm translate into

real value for clients is in being prepared to do the latter. Equally, one of

the key ways in which a branded firm can defend the premium rates it

charges is by demonstrating just how much effort it is willing to put into

post-sales account management.

Willingness to Bear Risk

Resources and quality of relationships are important – indeed, for some

clients they are invaluable – but when most clients talk about the value of

a consulting firm’s brand, they are probably referring to the firm’s willing-

ness and ability to take on risk.

Risk here can be a host of different things: delivery, reputation, financing.

While many consulting firms would claim to manage delivery risk, only

branded firms cover all three key areas:

• Delivery risk: Risk is often, although not always, closely linked to size

and/or strategic impact. A delay in implementing a massive IT system

can lose a company millions; failing to spot an emerging market can have

a huge opportunity cost; underestimating a competitor’s new product can

decimate your market share. What consulting firms offer here are the

people, processes, technology or tools that make it more likely that the

system goes in on time, that the opportunity is identified or that an effect-

ive response is formulated. Indeed, minimizing delivery risk is not the pre-

serve of branded firms: a niche firm may specialize in negotiating

outsourcing in short timeframes, for example.

• Reputational risk: The “nobody ever gets fired for hiring . . .” principle is

important in the context of branded consulting firms. When difficult

decisions have to be made or the progress of complex projects checked,

clients want consulting firms that can protect them. Even if something

goes wrong, they have the consolation of being able to say to their board

or shareholders: “We did all that could be reasonably expected of us, we

hired X to see what was going on. The fact that X, who are experts in


this field, believed everything was all right proves that we couldn’t have

been reasonably expected to spot that anything was amiss.” What a con-

sulting firm is putting at risk here is its reputation, and clearly the greater

the reputation (or brand), the more reluctant the firm will be to allow it

to be damaged, so the greater comfort a client will have that the firm will

do its job properly.

• Financial risk: The client’s test here is “Can I sue them?” Comparatively

small consulting firms can have big reputations: while this means they

will do everything they can to ensure they protect it, it is not necessar-

ily of value to the client if something goes wrong. Why should a client

worry that a consulting firm’s reputation has been destroyed? If a firm loses

its reputation, that’s no benefit to the client. If something goes wrong, a

client should reasonably want to recover the money it has spent, and

perhaps some more in the form of penalties to allow it to reinvest or sort

out whatever mess has been created. Some consulting firms deal with

financial risk at the outset, by being prepared to put at least some of their

fees on the line, dependent on performance. Others simply know they

have been selected for a piece of work because if their ability to reduce

the delivery risk and protect their client is not enough, the client will be

able to claw back any money it considers to have been wasted. Either

way, the ability to minimize financial risk is related to a firm’s size: in the

event of something going wrong, it is hard to get money from a small firm

– it will simply fold. Only large branded firms have the financial means

to underwrite sizeable projects.

The Value of Specialization

When Mercer Oliver Wyman began life as a strategy firm in the 1990s the

only thing to set it apart from all the other strategy firms at the time was

that it focused exclusively on the financial services sector. Although the

services it offers have evolved – the firm concentrates on risk management

these days and has just started to apply some of its thinking in other sectors

– the firm has largely resisted the temptation to diversify on a massive scale.

It is a strategy that saved it from implosion during the dot.com debacle and

enabled it to grow as demand from financial services clients recovered. It

now employs around 900 consultants worldwide. “Financial services have

been a strong market in the last 12–18 months,” says Geoff Nicholson, a


managing director in the firm. “Companies are facing a complex set of stra-

tegic issues. Should they separate distribution from production? Why aren’t

growth rates translating into the price/earnings ratios of other sectors?”

Answering questions like these requires a profound understanding of the

industry. There’s a difference, Nicholson argues, between firms that did

financial services work as part of a broad portfolio and those, like Mercer

Oliver Wyman, that have elected to focus on the sector: “It comes down to

strategic intent. Back in the 1980s, many consulting firms recognized that

the financial services sector was undergoing enormous change, primarily

driven by deregulation. That created substantial opportunities for consult-

ing firms and many strategy firms set up dedicated financial services prac-

tices then. The difference with us is that we’ve continued to specialize:

short-term revenue in other sectors can be appealing to chase, but it can

destroy you in the long term.”

But specialization brings its own challenges. “You have to stay in particu-

larly close contact with the market developments in order to anticipate the

way demand will evolve,” says Nicholson. “When we started, getting basic

information about market size was difficult for clients to do. The Internet

has changed all that, so the work we do today is very different.”

So how do the three attributes of consulting brand value play out when

it comes to specialist firms?

Resources, and the Ability to Leverage Them

While branded consulting firms excel at recruiting high-quality junior staff,

specialist firms do better at recruiting more senior ones. Niche firms offer

experts the chance to deepen their knowledge rather than the chance to

work on an array of different projects. Essentially, both specialist firms and

the specialists they attract are committed to a particular field: neither side

has any incentive to diversify. Quite the opposite: specialists are more likely

to attract other specialists, clients as well as employees.

The value this specialist focus has for clients is that it means the con-

sulting firm has access to a level of specialist knowledge not available to gen-

eralist or even branded firms. This comes in two forms. First, a specialist firm

will have individuals who have much more experience and know-how

because they have been working in the field for longer and have done more

projects in that field. By contrast, specialists in branded firms often find their

metier later in their careers, as the early years have been taken up with


absorbing the wide range of experience their firms put a premium on.

Second, there will be a proportionately larger number of people with these

skills than in a branded firm. This in itself has several important implica-

tions: experts who work together will obviously develop their thinking faster

than someone who is working in comparative isolation; a firm that employs

multiple experts in the same field will get economies of knowledge, devel-

oping new ideas more quickly; it is also likely to have better links with

relevant academic institutions and interested clients; there will be fewer

internal or cultural barriers to knowledge-sharing, as everyone shares a

common skill set; finally, the sheer number of contacts a firm has in a par-

ticular field provides it with an opportunity to gather comparable hard data

on what they do – benchmarking them in effect. Specialization breeds

specialization.

Quality of Relationships

Like branded firms, the quality of relationships a specialist firm has is an

important source of potential value to clients, but only if it converts it into

practical benefits (Figure 8.1). To be able to charge a premium rate for its

specialist expertise, a firm needs to demonstrate that it is part of a wider

community of experts. Once again, this is not a question of namedropping,

of knowing which academic in which institution has written what, but of

being able to bounce ideas or problems off such people at short notice or of

knowing who in that broader network might be the greatest expert on a spe-

cific issue. The firms that do this best involve their contacts in regular events

or workshops; they carry out surveys of them as a means of gathering data

and of staying in touch.

Whether these relationships are with the all-important “c-level” that

consulting firms perennially target depends on a firm’s area of expertise: a

specialist marketing firm may have a network of chief marketing officers or

it may focus on particular sub-groups – the people who manage market

research or those who measure marketing effectiveness, for example. What

matters is not that the specialist firm has the ear of senior people as such,

but that it knows the one person in that organization responsible for work

in its field.

By contrast, quality of internal relationships is rarely part of the picture

where specialist firms are concerned. Precisely because a niche firm will tend

to work in one area, the extent to which they can help clients influence


people elsewhere in their organization or overcome internal barriers to com-

munication is limited.

Willingness to Bear Risk

But how do specialist firms compare when it comes to minimizing risk? To

what extent can they charge higher than average rates based on their ability


Branded consulting firm Specialist consulting firm

Resources (1): People • A pool of bright generalists

• A broad array of specialists

• An ability to field both sets of

resources on demand

• Attracts teams of world-class

experts

• Specialization means the

firm has uniquely intensive

experience in its chosen field

Resources (2): Intellectual capital

• Takes ideas from one

sector/country and applies

them to others

• Takes ideas from one

sector/country and applies

them to others

Quality of relationships • Ability to put a client in touch

with someone at a similar

level in another

sector/organization

• Willingness to invest in post-

sales account management

• Ability to put a client in

touch with someone at a

similar level in another

sector/organization

• Benchmarking

and make internal relationship

work

Willingness to bear risk • Use of experience/techniques

to reduce delivery risk

• Has sufficiently well-known

brand to give a client

confidence

• Can be successfully sued if a

project fails

• Use of experience/techniques

to reduce delivery risk

• May have a sufficiently well-

known brand to give a client

confidence

Figure 8.1 Where can value be added?

to do this? The answer is (probably) to some extent, but not to the extent

that branded consulting firms can. A niche firm’s expertise is primarily

focused on delivery risk. As specialists, they should have the people,

processes and tools to ensure a piece of work has a better than average

chance of success. The fact that a niche firm will be so well known in its

chosen field means that its reputation has to be protected here just as much

as among the branded consulting firms. While the poor quality work of a

branded firm may well hit newspaper headlines, that of a niche firm will

travel round the market by word-of-mouth. Indeed, the more specialized and

closed the market, the faster it will travel. As specialist firms are not nec-

essarily small, loss of reputation can be converted into financial reparations

from a client point of view; however, their capacity to bear financial risk is

undoubtedly not as great as that of the very large, branded firms.

In Summary

It is easy to say “Brand value translates into . . .” from the point of view of

a consulting firm, but how should it work for clients? Or, turning the ques-

tion around, what is it that a consulting firm has to do to give it the right

to call itself a branded or specialist firm and charge accordingly?


9Handling the sales process

Richard Owen began his career with the consulting practice Touche Ross

Bailey and Smart in 1964, and went on to become Chairman of what was

by then Deloitte & Touche in 1987. There were no glass and steel palaces

that consulting firms inhabit today: “My office was a rabbit warren, shared

with umpteen other people – the accounting firm had just doubled in size –

I didn’t even get my own desk.” He was charged out for £200 a week, largely

for carrying out work studies aimed at making post-war businesses more effi-

cient. One such client was the engineering company Rolls Royce. Like most

other organizations at the time, its administrative tasks had been broken

down into their component elements, making the work brutally repetitive;

not surprisingly, there were serious motivational problems. Owen’s remit

included the punch room where 300 young women, in row upon row of

desks, had to transfer the information from paper forms onto punch cards.

“We also needed to save space, so we turned some of the desks around so

they faced each other in groups,” he recalls. “A few days later we noticed

the girls on these desks were smiling and working better – because they

didn’t have to turn round to talk to their friends – so we moved all the desks

around. It worked like a charm and saved space into the bargain.”

Owen was very pleased when he won his first assignment only a few

months after his transfer to the consulting practice: it was for £1,500, which

represented five weeks’ work plus supervision. “It was a bit presumptuous of

me really,” he says. “I’d only been there a couple of months and, when an

opportunity came up to do some more work for the client I’d been with, I

sorted it out myself rather than bringing a partner in.” Marketing was

unheard of: clients saw consultants as experts and it wasn’t unknown for

them to ring up in the morning and ask the firm to send a consultant round

in the afternoon. Indeed, it was quite common for businesses looking for a

consultant to place an advert in the press. Invitations to tender were a rarity,

especially in the private sector where even very substantial pieces of work

could be won on the nod from the chief executive. But that didn’t mean

clients were a walkover: “They thought the fees were telephone numbers,”

says Owen. “They always haggled over the price.”

With the exception of the arguments over fees, it seems a world away

from consulting today. Yet even in the 1960s you could detect signs of how

the process of buying and selling consulting would change. Owen was not

the only junior consultant to find himself selling work: rapidly evolving

computer technology meant that middle-ranking and junior consultants

might have better, hands-on experience than their senior partners and could

respond to clients’ requests promptly because they were based on site; surging

demand also meant that partners could not cope with all the sales opportu-

nities single-handed. As consulting firms started to put more effort into

selling, clients responded by putting more effort into buying: invitations to

tender became standard; even in the private sector most work had to be won

competitively.

The Rise and Rise of the Procurement Department

In the last five years, that evolution has taken a new twist. Shrinking

demand and excess supply in the early years of the millennium shifted the

balance of power to clients. Many of those clients are former consultants

who were laid off during this downturn and who understand the economic

model of consulting well enough to be able to negotiate effectively. On top

of this has been the professionalization of procurement, something consult-

ants contributed to: much of the advice given by consultants to large cor-

porations about how to save costs by reducing the number of suppliers,

winning bulk discounts and formalizing the procurement process has now

been applied to consulting firms themselves. Though they may complain,

consultants are reaping the harvest they sowed themselves.

Nor is this changing as demand for consulting grows. Many consultants

hoped that the recovery the consulting industry has experienced in the last

two years would sideline these changes: client managers would be so keen

to use consultants, and consultants’ skills would be in such demand, that


clients would no longer have the whip-hand. But that has not been the case.

Research now shows that:

• 80% of organizations monitor their use of consultants centrally;

• 65% have a list of preferred suppliers, and a similar number have frame-

work contracts with selected consulting firms;

• 30% have a pre-specified budget for consulting, rather than bringing con-

sultants in on an ad hoc basis;

• 15% use specialist and/or independent consulting firms or freelance con-

sultants to advise them on how to use consultants and on which con-

sulting firm to use for specific pieces of work.

“Framework mania is driving us round the bend,” says Peter Illsley, who

runs the consulting practice at the outsourcing company Serco. “We had

one instance where we had to say what proportion of our people have pro-

gramme management skills: this is core business for us, so the majority of

our 80 consultants are experts, but the number we had to put in was less

than 1%, because we had to express it as a percentage of our entire employee

base of 42 000. This is typical of the clumsy way firms are judged when

bidding to be on frameworks. Yet we had no choice but to bid, which costs

us a great deal of money, and which of course the client pays for in the end.”

It is not just that getting a framework agreement is a demanding and some-

times frustrating process that particularly annoys Illsley, but that Serco some-

times finds itself repeating the process for different parts of the same

organization, each of which has its own framework contracts. “And, at the

end of the day, we often don’t get invited to bid for much business through

them,” he adds, “which I suspect means it’s not adding much value to their

end-users – the people we work with – either.”

The rise of the procurement function radically changes the relation-

ship between a consulting firm and its clients. Consultants may well still be

able to build effective personal relationships with a client once a piece of

work has been won, but the process of winning the work often has to be

done with a specialist procurement team, effectively an intermediary

between the client and the consultant. Relationships with procurement pro-

fessionals are harder to build; the procurement manager’s job is to remain

impartial.

And changes aren’t likely to stop here.

H A N D L I N G T H E S A L E S P RO C E S S 107

E-auctions

According to the same survey, 10% of large organizations use electronic pro-

curement channels such as e-auctions in which consulting firms post their

daily rates for defined pieces of work and have a period of time in which

to reduce them if they find themselves undercut by their competitors. E-

auctions may save organizations a substantial amount where they are buying

a commodity in bulk – their telecommunications costs, for example – but

most consulting services are not (yet) commodities. No one, from large firm

to niche player, has a good word to say about them.

“I really can’t see how clients get anything of value from these,” says Alan

Russell, head of consulting at LogicaCMG. “There might be 15 different

categories; you have a half-hour window in which to put in your daily rates

– effectively, to place your bets. If a firm makes an adjustment in the last

five minutes of that half hour, then the window extends for a further five

minutes. Everything happens in parallel. We discussed where we wanted to

end up, what sot of grades and rates we’d put forward. Then we got the

results back, telling us what categories we’d been picked for and why. A few

days later we got a letter congratulating us on winning and asking for a

further volume discount. The whole exercise was about price, not added

value or quality.” That is something Russell believes will come back to haunt

the procurement teams: “Good firms won’t respond; they will walk away

from situations like this, leaving the procurement team to choose from

second-tier players.”

Troika was set up by three people (hence the name), all of whom had

worked for Big Four firms; their aim was to build a consulting firm that could

offer a credible alternative to the very large consulting firms in that most

demanding of sectors, financial services. Today, with 50 people, the firm is

an acknowledged specialist in its field, providing a combination of strategic

and operational advice. “We’ve only come across a couple of examples of e-

auctions so far, but we’re already clear that it’s a pretty inappropriate mech-

anism for buying anything other than bulk services,” says Andrew Veal,

Trokia’s Marketing Director. “It gets very complicated when every bidder

has five or six different grades, because you have to go through a process of

putting in rates for each grade. What we see is that the big firms put in their

top rates, then whittle them down. There also tends to be a second, seem-

ingly entirely separate process for putting in discounts. This might work if


the client is looking to hire hundreds of computer programmers at relatively

low rates, but if, as we do, you tend to work in small teams on quite short

projects, it’s a lot of aggravation.”

But consulting firms will suffer, too. Even where a consulting team has

been brought in by a procurement department with no regard for the quality

of work they are able to perform or their capabilities, the finger of blame

will undoubtedly be pointed at the consulting firm, not the procurement

process. Being treated as a commodity will result in the consulting industry

becoming further commoditized.

The Professionalization of Sales

“For an industry that has been almost exclusively relationship-based, these are

potentially disruptive trends,” says Victor Koss at Booz Allen Hamilton.

“Essentially, procurement departments are the new intermediaries. The smart

ones understand how important it is for a consulting firm to develop the

requirements for a project in close collaboration with a client. But many adopt

a more transactional approach and focus on price at the exclusion of every-

thing else.” To start with, it was possible to take a stand and walk away from

situations where price had become the only selection criterion, but it’s getting

harder and harder to do this. Instead of personal client–consultant relation-

ships, these changes mean relationships that have to be forged at both the per-

sonal and institutional level: corporate “trust” supersedes personal trust.

If clients are employing dedicated purchasing professionals, it was only a

matter of time until consulting firms employed dedicated sales people.

This has meant a huge cultural change for the consulting industry: trad-

itionally, consulting services were sold by the people who would undertake

their delivery. Moreover, clients constantly complain that consulting firms

bring in senior people to sell pieces of work but leave junior ones to do it.

The separation of sales from consulting would appear to be making the

problem worse. The root of the issue is that consulting requires a peculiarly

consultative approach to selling: however experienced a consultant is, it is

vital that he or she has a good understanding of a client’s set of requirements

and does not come in with a predetermined solution.

“We have to know what we’re talking about,” is how Kurt Salmon’s David

Oliver puts it. “We’re industry specialists who understand the subject

matter.” But that does not mean Kurt Salmon can rely wholly on its


consultants to win work. As people become more senior within the firm,

they tend to follow one of two career paths – either technical specialists or

relationship builders. Moreover, the firm runs “campaigns”, focusing its pro-

motional material and research on a small number of key client issues each

year. “We’ve just done something on product availability,” says Oliver. “We

sent out letters to around 30 CEOs, summarizing our observations and asking

them to contact us if they’d like a copy of a white paper showing our think-

ing in greater depth. We try and make such things as client-specific as we

can: we don’t send out promotional material and demand a meeting. And

it works reasonably well: around a quarter of recipients asked for a copy of

the paper; with the rest, we’ll have increased our brand awareness. We also

have a central marketing team who ensure we don’t approach a client more

than once every three months.”

On the other hand, targeting clients effectively and closing deals often

require the experience, skills and focus of good sales people. Steve Cardell

would be the first person to say that Axon does not have a well-recognized

brand: he’s firmly in the niche specialist school of marketing. “We wouldn’t

invest in a branding exercise,” he says. “We’re already very well known for

SAP implementation. We had a debate about whether we should use our

existing client relationships to move into other areas of consulting, but

decided to stick to our knitting. We couldn’t diversify without diluting the

skills clients associate with us.” In any case, Axon has not really needed to

diversify: it grew rapidly in 2005, bolstered by a couple of small-scale acqui-

sitions and a clearly defined market of large organizations that want to con-

solidate their multiple bits of SAP from past implementations. “The ERP

market among large corporations may look saturated from a licence point

of view,” says Cardell, “but there are still plenty of opportunities to deliver

services.”

One of the ways in which Axon has adapted has been to separate the

people who sell its services from those that deliver them. Because it is

growing, Axon can offer sales people an attractive alternative to working

for a larger firm: they still get the kudos of selling into big companies, but

they are not cogs in a much larger machine; what they sell has a very clear

impact on Axon’s business. The crucial thing these people bring with them

are networks of relationships Axon can tap into.

“We’ve tried everything from boats to black ties to billboards,” says

Cardell. “Relationships are the only things that work. We’re linking our-


selves into networks, piggybacking on other events instead of arranging our

own, and organizing seminars on specific client issues. But our most valu-

able source of leads comes from one of our non-executive directors who has

masses of contacts.” Axon also uses a telemarketing company to help open

doors: “We send them a list of perhaps 100 companies and they cold call

them to make appointments for us. Typically, every four phone calls results

in one appointment made,” he says.

There are almost as many models for organizing the sales function as there

are consulting firms. At one end of the spectrum are those that continue to

use consultants to do the selling; at the other are those with professional

sales teams whose targets, remuneration and culture are quite different from

their consulting colleagues’. In between are firms with an account manage-

ment structure in which consultants and sales people are seconded to roles

which oversee the activity in a small number of important clients or targets.

Each approach has its strengths and weaknesses; few firms stick to one

method but switch between all three over a period of time.

However, the real problem is not that there is no single right answer to

the sales/delivery split, but the assumption that one size fits all, that if you

bring dedicated sales people in, then you bring them in for the entire process.

Such assumptions drive wedges through consulting firms: the sales people

can feel unappreciated; the consultants exploited or marginalized.

Julian Goldsmith has worked as a public relations and communications

consultant to a number of the top strategy, management and human

resources consulting firms: “Good, effective business development is not

something which comes readily to many top consultants. Even the very term

is suggestive of something rather vulgar – the notion of being part of a sales

process – and thus rather foreign to their DNA. Whilst there are exceptions

to prove the rule, relationship-building outside the formality of the board-

room and almost statutory presentation of a large deck of PowerPoint slides,

is unfamiliar ground. Thus there is a reliance on marketing and business

development colleagues (often termed ‘support staff ’ to the annoyance of

such people), to conjure up innovative and compelling events from dinners

to corporate hospitality, which they can attend and tick the account man-

agement box thereafter. Today’s modern management consultant needs to

invest as much time developing their more human and social approach to

relationship building and broader account management as they do to devel-

oping their intellectual property and broader thought leadership.”


It’s against this backdrop that you can understand why account manage-

ment has become so important to consulting firms over the last few years.

Account Management

At the end of Shakespeare’s 2 Henry IV, the newly crowned king, Henry V,

announces his intention to renew his claims to the French throne. As the

Duke of Lancaster remarks:

I will lay odds that, ere this year expire,

We bear our civil swords and native fire

As far as France: I heard a bird so sing,

Whose music, to my thinking, pleased the king.

It seems a strange decision. The king is a reformed rake, presiding over a

squabbling court, so why take on the extra burden of a foreign war? Because

Henry recognizes that the best way to dampen down the internecine rival-

ries which have dogged his country for generations is to give the nobles a

new and common goal beyond their shores.

First and foremost, account management is a mechanism for overcoming

the deep internal divisions that exist in most consulting firms. By drawing

together a variety of people from different parts of the business to focus on

something – the client – outside their own organizational politics, account

management allows people to concentrate their efforts where it matters

most.

“Most clients now use two or more accounting firms as well other service

providers, so the market is very competitive,” says Nick Pasricha of Ernst &

Young. The firm has therefore had to work harder at bringing its different

skills to a client’s attention, deciding which clients to focus on, appointing

a partner in charge of each client account and setting up a multidisciplinary

account team. “Their job is to keep track of what’s happening at that client,

both the issues the organization faces and opportunities for future work for

us, and to introduce the best people from our business to help the client.

We don’t necessarily want more accounts, but to be able to deepen and

broaden our penetration into existing accounts,” says Pasricha. The process

requires focus: “You can’t focus on developing every one of the thousands

of accounts we provide services to and that means you have to make some


hard decisions. Everyone will want their account to be special, so you need

people who can take those kinds of tough decisions and stick to them.”

Halcrow provides planning, design and management services for infra-

structure developments across the world. It was founded almost 150 years

ago, at the height of the nineteenth century’s passion for engineering: today,

its commissions span more than 70 countries and include work on the

second runway at Abu Dhabi’s International Airport, the El Ferdan swing

bridge in Egypt, the British Embassy in Moscow and the Chek Lap Kok

Airport Expressway in Hong Kong.

Despite the variety, complexity and scale of its work, the biggest chal-

lenge Halcrow faces is itself. Like many consulting firms, it has groups of

specialized people based in different offices and working on different pro-

jects. Getting these people to work together can be difficult: each group

tends to view a problem from their own angle and it is perhaps a result of

the training to be an engineer to unpick things and analyse them, rather

than look for common threads in firms. Halcrow relies on client account

teams (CATs) – a relatively recent innovation which have emerged as the

key means by which the company can deliver the joined-up approach

increasingly demanded by clients. An account manager is the single point

of contact: “The idea is that a client talks to an account manager who can

intelligently discuss every issue about our business relationship whether

that’s about future planning or service delivery,” says Andrew Payne, who is

responsible for managing the overall process.

Account managers are not back-office bureaucrats. Most are based at

clients’ sites so they can respond immediately to any queries or requests, but

the CATs also bring together the key people involved in a project from dif-

ferent parts of Halcrow’s business in order to come up with better solutions.

Success has meant that the role of the CATs has been expanded. When the

CATs were set up, it was deliberately intended that they wouldn’t be popu-

lated exclusively by senior managers but by people from across the profes-

sional grades. With more and more junior staff wanting to be involved,

Halcrow has introduced the concept of CAT correspondence, which allows

people who are not on the CAT to communicate with it. CATs are now

being given their own budget so they can organize things independently,

and Halcrow’s internal costing system has been changed so that local offices

are no longer profit centres and are encouraged to contribute to the firm as

a whole.


As one account manager put it, “I’m halfway between the client and

Halcrow. I’m a translator: I translate between the two businesses. I’m com-

pletely sold on the CAT focusing on the big picture: it’s brought our diverse

works teams together to talk about things.

It is perhaps only through account management that the persistent rivalry

between consultants and sales people can be resolved. Consultants have

always been much better at resolving their clients’ issues than their own,

and an account management structure gives them the leeway to do this more

than ever. Accounts can also resolve some of the conflict between what the

firm is trying to achieve (sell more work) and what clients want (reliable,

high-quality delivery). In other words, client accounts force people to work

together far more effectively than any matrix structure ever could.

So what sets excellent account management apart, particularly as far as

consulting firms are concerned?

• Aspiration: It’s tempting to focus the account team’s activities on

obtaining an immediate financial return, but while this is commercially

important, it is rarely enough. As we’ve noted, one of the reasons why

the account management structure works is that it takes people outside

their own organization and gives them new priorities, goals and aspira-

tions. In effect, you’re giving them a free hand to do what they do best

– help their clients – while ensuring that in doing so they are helping

your business.

• Investment in the “relationship chain”: An account team is just one link

in a longer chain of relationships which runs through both the consult-

ing firm and the client’s organization, and it can’t function effectively if

the people in the team do not have tendrils long enough to pull in addi-

tional, specialist resources when a client needs them, and tap into key

people in the client’s organization when required.

• Flexibility and authority: The best account teams are not tied to a rigid

set of rules dictated by the consulting firm, but can adapt themselves

to what the client needs. They are self-organizing and self-perpetuating.

Within certain parameters, they can take decisions for themselves,

without having to refer up a chain of command: a client knows that if

they ask someone in the account team to do something, it will get

done.


• Information: Account teams are good illustrations of the age-old princi-

ple: garbage in, garbage out. Account teams should not just be regarded

as a means of getting things done, but as the focal points for all infor-

mation relating to a particular client. This means setting up processes

whereby feedback on the performance of the consulting firm is gathered

on a regular and systematic basis – and fed back to the account team. It

means investing in external information, so the account team knows as

much about their client’s business as possible. It also means sharing that

information with the client. Why, for instance, are consulting firms so

reluctant to say to a client, “This is what we expect your business to be

worth to us in the coming year, and this is what we will be investing in

you in order to earn this”? Openness breeds openness, and clients are far

more likely to share confidential information about their business when

they can see a consulting firm is putting its cards on the table. Account

teams should be conduits for information, not bottlenecks.

• Rewarding the team: It goes without saying that if you want the account

team to perform as a group, you have to encourage them to do so. Having

bonus schemes that reduce the role of the account team, either by rec-

ognizing the achievements of a handful of individuals or by subsuming

the account team’s contribution into firm-wide performance, sends out

the message that you do not take teams seriously.


10Thought leadership: as much culture as intellect

Clients of consulting firms are inundated with information and analysis from

every direction, and the vast majority is unquestionably binned instantly.

Does this mean it is poor quality work? No, but it does mean that it is being

used in the wrong way and targeted at the wrong people. This chapter there-

fore looks at the content and deployment of thought leadership by consult-

ing firms.

Content – by Design, not by Accident

There are six reasons why a consulting firm might undertake thought lead-

ership, even if the firm has not thought them through systematically:

1. Internal knowledge-sharing: It is ironic that consulting firms – quintes-

sential knowledge businesses – have usually found knowledge manage-

ment problematic. Vast investments have been made in ensuring that

proposals and reports are gathered together in a single system so that a

consultant working for a particular client can see all the work the firm

has done for that client in the past. While this has resulted in more

joined-up consulting, the material is primarily used as information (what

has happened), not innovation (what could be made to happen). More-

over, knowledge management systems function by people selecting

the information they want, not by publicizing new ideas. Internal

newsletters, publishing articles about new ideas or leading-edge projects,

are a more effective way of letting people know what’s going on.

2. Recognition among colleagues: For most consultants, job satisfaction and

being regarded as an expert in a specialist field are just as important as

being paid well. But in busy consulting firms, with most people out of the

office working at clients’ sites, giving public credit where it is due can be

difficult: indeed, paying consultants well is easy by comparison. Even in

the most friendly and collegiate of firms, there is a degree of rivalry,

a not-invented-here mindset that makes people cynical about others’

efforts. Giving people the green light to spend a little time researching

and writing an article or “white paper”, and disseminating the results, is

tantamount to saying, “This person has done well, look at what they’ve

achieved.”

3. Increased presence on short-lists: Once a firm starts to focus on the exter-

nal market as well as the internal one, its initial objective will be to

increase awareness of its specialist skills among clients in the hope of

being invited to tender for more projects. With clients cynical about con-

sulting firms that claim to be able to offer a full spectrum of skills and

continually looking for niche suppliers, the main problem is lack of

information. Among thousands of consulting firms which of them have

sufficient in-depth expertise to do the work required? Sending out regular

thought leadership material on specific issues to potential clients is an

important way to overcome this barrier.

4. Lead generation: Improving your ability to get on a short-list is critical,

but it is also limited to reacting to initiatives from clients and usually to

people you already know. Floating ideas more broadly – in the media or

at conferences – may prompt clients to call, express an interest and create

more openings.

5. Differentiation: Using thought leadership to help build or reinforce a

consulting firm’s brand is a step beyond this, and a hard step at that. Hard,

because brands and thought leadership tend to be at opposite ends of the

spectrum: brands are usually quite generic (“We work in partnership with

our clients”; “We deliver results”), whereas the messages of thought lead-

ership are almost always very targeted (“We know more about setting up

call-centres in banks than any other consulting firm”). Reconciling the

two is possible. Accenture’s strap-line – “High performance. Delivered”

– works well in several respects: not only does it combine important char-

acteristics clients are looking for when they use consultants (quality,

results and delivery), but it also acts as a focal point for the firm’s thought


leadership. You can have articles on high-performing banks or retailers,

high-performing systems or teams. The possibilities are endless. But this

is the type of exception that proves the rule.

6. Agenda-setting: Given enough data from a wide range of companies and

countless practical examples, it is possible for thought leadership to have

a profound impact on the way business works. If asked, most of us would

probably point to the same small group of people whose work falls into

this category. Part of the success comes from having the right idea at the

right time; part from hard data; part from being something new, rather

than something old and repackaged; and part from there being a market

opportunity, an incentive for suppliers to promote the idea. Thomas

Edison’s observation – “Genius is 1% inspiration and 99% perspiration”

– is applicable to management thought leadership as much as scientific

endeavour.

Realizing these aims requires different inputs and outputs (Figure 10.1).

The foundations of internally focused thought leadership (aims 1 and 2)

are case studies of one or a small number of client projects. Case studies

are less interesting to clients, however: concentrating on perhaps just one

organization, they are too narrowly focused for most managers; based on work

already done, they may appear out of date. But above all, clients suspect that

T H O U G H T L E A D E R S H I P : A S M U C H C U LT U R E A S I N T E L L E C T 119

1 Internal knowledge-sharing

2 Recognition among colleagues

3 Increased presence on short-lists

4 Lead generation

5 Differentiation

6Agenda setting

Quantitative research

Qualitative research

Case studies

Press coverage

Books

Inputs Outputs

Articles in external journals

Conferences

In-house journals

“White papers”

Figure 10.1 The six degrees of thought leadership

the experience of one organization cannot be extrapolated to others; they

want to see the same points being made about a wider range of organizations.

For thought leadership to change client behaviour – to get them to add a firm

to the short-list for a particular piece of work or to pick up the phone and call

a firm directly – it needs to be based on hard data – the more, the better. In

the first instance, this means carrying out interviews with different organiza-

tions and using their input to validate the conclusions the consulting firm has

drawn. Beyond this, if a consulting firm wants truly to differentiate itself or

to set the agenda in an entire market, it has to carry out quantitative surveys

to back up its claims – only this will persuade clients to act.

Turning to the outputs, it is clear that while in-house publications, “white

papers” and descriptions of individual client projects may have considerable

credibility internally, they do little to promote a firm to its clients, let alone

a wider audience. Qualitative and quantitative research is more likely to

be of interest to external journals, newspaper journalists and conference

organizers.

Most firms start their thought leadership endeavours at levels 1 and 2,

and many stop there. They want to enable their consultants to learn from

one another and to gain internal kudos for their work. Far fewer firms

manage to generate leads (aims 3 and 4 above) from their thought leader-

ship, and only a minority of those boost their differentiation or drive client

attitudes. That doesn’t mean they don’t try: in fact, the majority of com-

plaints clients make about thought leadership stem from consulting firms

using the wrong inputs and outputs to achieve their means. They may expect

to generate leads, but are only prepared to invest in case studies to do this.

Hardly surprising, then, that journalists are not interested. They may think

they are saying something earth-shatteringly innovative, but if their con-

clusions are based on a handful of interviews, few clients will take them seri-

ously. You cannot create demand by publishing a white paper, but this is

what many consulting firms send their clients. You don’t build a brand or

change a market on the basis of self-publication. Serious thought leadership

requires serious investment.

Staying on a Client’s Desk and in their Mind

So what are the factors likely to attract a client’s attention? When, if at all,

will an article, book or survey produced by a consulting firm prompt a client

to make contact and perhaps even buy their services?


1. Immediate relevance: For a client to hang on to a piece of thought lead-

ership, even for a few seconds, they have to be able to recognize it as rel-

evant to their work. And because most executives have a very narrow

definition of what is relevant, it is comparatively rare for a “generic” piece

of thought leadership – something designed to apply to any sector – to be

seen as relevant. Bankers want to read about people development issues

in banks, not across industry as a whole; retailers want to see how other

retailers have improved their technology infrastructure. Yet two-thirds of

the thought leadership covered is focused on a specific sector. Perhaps

consulting firms don’t want to limit the potential market for their ideas to

just one or two sectors; perhaps having invested in developing the thought

leadership material they can’t afford to. Either way, consulting firms con-

tinue to be reluctant to meet this most basic need.

2. Something new: Where consultants excel is in pouring old wine into new

bottles and relabelling them. Clients are indeed looking for something

different, but experience and cynicism have taught them to regard any

thought leadership piece that trumpets its own originality with consid-

erable scepticism. They complain that, despite its pretensions, most

material produced by consulting firms is indistinguishable from that pro-

duced by their competitors: most thought “leading” is in fact thought

“following”. With a little more time invested in seeing things from a

client’s perspective – how one firm’s output sits alongside its rivals’ – con-

sulting firms could significantly improve the level of differentiation

achieved.

3. Practical application: Occasionally management ideas capture the im-

agination of executives. Customer relationship management is a good

example: although the thinking produced on it in its early days was com-

paratively abstract, almost all managers could relate to the idea of recon-

necting with their customers. But for the vast majority of thought

leadership, it is the practical application which will attract people’s atten-

tion: not only do they want to know it’s something relevant to them and

that it has something new to say on a particular problem, they also want

to know what they can do. This is not the same as ending an otherwise

interesting thought piece with a series of diagrams illustrating a complex

consulting process: detailed frameworks have to be balanced with quick

wins.

4. Hard data to back up ideas: Whether a client buys into the idea a con-

sulting firm is trying to put across also depends on the evidence. Clients


don’t take a consulting firm’s word; increasingly, they’re sceptical of the

testimonials of a small number of supportive clients. Surveys are helpful,

although too often they are focused on executives’ attitudes rather than

actions, but what clients would really like to see is a wealth of named

companies whose experience reinforces the message the consulting firm

is trying to get across.

5. But not a hard sell: It goes (almost) without saying that the more a client

believes a consulting firm is trying to sell it something, the more likely

they are to reject the ideas the firm is putting across.

Taking these points and working backwards, what does a consulting firm

have to put into its thought leadership in terms of content and process in

order to get its message across?

strategy + business + Booz Allen Hamilton

Booz Allen Hamilton went through a rocky patch in the early 1990s. The

partnership was still recovering from the shock of having to take back into

private ownership a firm they’d floated in the 1970s. In the struggle to

survive, any sense of direction had been swept away by the waves of change

breaking over its traditional consulting markets. By the mid-1990s, as the

e-business machine was starting to pick up speed, it became clear that the

firm needed to re-establish its reputation for serious management thinking

if it was to recover its position in the marketplace. The personal relation-

ships built up between individual clients and consultants would not be

enough. The choice was stark: it could either take the exclusive route, devel-

oping thinking to which only a small and privileged number of clients would

have access, or it could open its shop for the outside world to browse in.

In retrospect, launching a printed magazine, strategy + business, was a bold

decision. A whole new generation of dot.com-inspired magazines was hitting

the newsstands: creating any kind of distinctive impact would be hard. Ten

years on, strategy + business has outpaced and outlasted most of its rivals, and

continues to be one of the best-written and original collections of thought

leadership associated with a consulting firm anywhere.

“Management is the application of organizing intelligence to very

complex and large-scale problems,” says Art Kleiner, the current editor. “We

wanted some kind of incubator in which we could test out and develop new


ideas, and we wanted to invite leading people from business and academia

to debate the issues. But, as a consulting firm, Booz Allen makes its money

from selling and delivering its services on an exclusive basis. strategy +

business is a way of solving that conundrum, of reconciling openness

with commercial necessity.” Kleiner argues that what is unique about

strategy + business is that it takes management seriously. “We don’t treat it

as an arcane set of rituals that no one understands and which is therefore

potentially bogus, but as a legitimate branch of knowledge. Based on the

way people and organizations work, it’s embedded, actionable knowledge,

and it’s getting more relevant and coherent all the time.” Another differ-

ence lies in the audience strategy + business is pitched at: “We’re clearly

aimed at top-level executives, rather than giving hands-on advice to middle

managers.”

Aspirations are all very well, but for thought leadership to be successful

and sustainable, it has to be linked to a consulting firm’s services. Without

this, it loses the practical focus that sets it apart from conventional academic

research. Without this, the consulting firm loses faith and cuts back its

investment. Although editorially independent, strategy + business has to be

closely integrated with the mainstream consulting practice. Formal processes

therefore exist that ensure that the firm understands where its work comes

from – whether it is the result of a longstanding relationship with a partic-

ular partner, or whether a particular issue has prompted the client to call.

Downloads from the strategy + business website are also tracked so that the

firm has some sense of what ideas are resonating well in the market. The

account planning includes reviewing what ideas should be taken to clients,

how much development the ideas need and what investment may be

required. “Our responsibility is to keep up with what’s going on in the firm,”

says Kleiner, “to keep our tendrils out there in the firm and in the world at

large. As editors, we’re in the privileged position of being able to look even

further afield.”

“That this is a legitimate magazine is very important to us,” says Kleiner.

“Readers come to us because they respect Booz Allen as a firm, but also

because it’s a very good magazine.” So what do Kleiner and his colleagues

look for when it comes to the quality of ideas they include? Timeliness heads

the list: good thought leadership addresses an issue that is important to

people right now. Second, it has to have what Kleiner terms “explanatory

power”, the ability to articulate the hidden patterns that drive the


phenomena we see. It also has to be capable of being put into practice to

produce replicable results and has to have been rigorously tested in the real

world. Finally, it needs a constituency – a group of key people who are ready

to hear it.

He is not too impressed by the thought leadership produced by other

firms. “A firm’s attitude to thought leadership has a lot do with its concep-

tion of management consulting. If you treat consultants as sales people, then

you need to produce just enough intellectual capital to open a client’s door,

and not a smidgen more. But if you think a consultant is an advisor, then

you need them to be purveyors of knowledge about the nature of organiza-

tions and the world around them. Our understanding of management is the

equivalent of where medicine was before we understood the circulation of

blood – there’s no unifying theory of organizations. Most management

thinking is the medieval barber-surgeon – and there are plenty of Sweeney

Todds out there.”

As a vice president in Financial Services in London, Victor Koss sees

strategy + business from the Booz Allen side. It all works, he says, because

thought leadership has become such an ingrained part of the firm’s culture.

“Having good ideas and being seen to have them is highly valued here. That

means we’re in the fortunate situation that we have far more ideas than we

could ever invest in. Anyone can submit an idea, but of course that is only

part of the story.” Consultants have to make a pitch for their idea in order

to win investment to develop it further. It’s a process that ensures that only

the ideas which are applicable, relevant and easily communicable get to the

top of the ladder. Ideas come through a variety of channels such as postings

on Booz Allen’s intranet, Knowledge On Line, via internal competitions or

through excellence in delivering value to clients. “There is huge kudos to

winning,” says Koss. “It counts towards our professional excellence awards,

our highest internal recognition of adding value to clients.”

Thought leadership is, he believes, one of the most important ways

in which individuals leverage the resources of the firm. “The sheer

variety of work we get involved in means we have plenty of interesting

stories to tell clients, but clients don’t want to rely on our personal experi-

ence. We can say, ‘this is what I’ve done’, but as a firm we’ve done this kind

of project ten times before: that’s very powerful. ‘We’ is much more com-

pelling than ‘I’ over the long term, provided you can leverage it to the

client’s situation.”


A Laboratory of Management Thinking

PA Consulting Group does not produce a glossy magazine like Booz Allen,

yet for its size (it employs around 3000 consultants) it punches substantially

above its weight when it comes to thought leadership, covering more topics

in more depth than many of its larger rivals.

“We take thought leadership seriously,” is the first point David

Elton makes. Elton is responsible for the firm’s thought leadership, a process

which even he admits can be slightly chaotic. This is not the discipline

epitomized by Booz Allen, but a rather more freewheeling approach. “One

of the first things people are told when they join the firm is that they’re

expected to have ideas,” says Elton. “Thought leadership isn’t confined to

senior partners but is part of the life-blood of the firm. That can be frus-

trating because it creates so much noise we can hardly hear ourselves speak,

but it also results in a vibrant, debating culture that goes right across the

firm.”

It helps, he argues, that PA’s work is very varied, spanning 2–3-day strat-

egy projects all the way to 2–3-year implementation programmes. “Client

work is the starting point of all our thought leadership: we’re not going in

to sell them a particular idea, but try to start from what the client’s oppor-

tunity or challenge is. That means ending up with a different answer each

time: no two projects are identical.” An idea might emerge as a result of a

particularly important, high-profile client project or because someone in the

firm has noticed a common theme emerging in several disparate pieces of

work. Both sources generate a lot of material; most ideas stay relatively

small-scale; a practice area may decide to use an idea to attract press cov-

erage or as the basis for a paper it can send to clients. Even junior consult-

ants receive very extensive training in producing thought leadership

material. “No one needs permission to have an idea,” says Elton. “The formal

approval procedures kick in only at the point where a practice area wants

to put something down on PA branded paper; that’s how we control the

reputational aspects of all this. What we do have to do is ensure that every-

one knows how to structure their thoughts and write well. Our thought lead-

ership should be logically argued, well supported and clearly communicated

– just as we expect our consultants to be.” It also means that PA tends to

focus on ideas which are business critical, rather than innovative for inno-

vation’s sake. “Clients are more prepared to listen when we talk about issues


which are directly relevant to them,” says Elton. “Outsourcing has been

around for at least a decade, but there are still plenty of new lessons being

learned.”

But why should a busy consultant make time to develop an idea? PA does

not give people bonuses for contributing to thought leadership, although it

is clear that you get promoted to a senior position only if you have done

this. The answer lies partly in peer pressure – that there is a critical mass of

people doing this to make it an accepted standard for everyone – but also

in the opportunities thought leadership brings for networking. “This is as

important as promoting the intellectual credentials of the firm,” says Elton.

“We want to create communities of interest around ideas which give people

in the firm an incentive to stay in touch with each other and their clients.”

Similarly, it makes sense for people to demonstrate their ability to produce

thought leadership before they are promoted because thought leadership is

integral to their being able to build the kind of high-profile networks they

need to forge relationships with clients and win business.

But, warns Elton, consulting firms are making a mistake if they try to link

thought leadership too closely to sales. This makes PA wary of trying too

hard to involve clients in developing ideas jointly. If clients become inter-

ested in an idea because an individual consultant they are working with is

interested in it, then thought leadership is a valuable way of cementing rela-

tionships at a personal level.

Output Follows Culture

As the experience of Booz Allen Hamilton and PA Consulting

demonstrates, the quality and nature of a consulting firm’s thought leader-

ship is determined by its culture. You can’t take a firm that doesn’t believe

intellectual endeavour is an integral part of the consulting process and make

it produce high-quality thought leadership. You could hire journalists to

write up your ideas, but if you haven’t got any good ideas, you would be

wasting your money. Equally, you cannot ensure serious, sustainable invest-

ment in thought leadership if your colleagues don’t believe that the firm’s

long-term commercial success (but not its immediate revenue) depends on

it.

Nothing comes of nothing, as the Roman philosopher Lucretius once

said.


Deployment – Getting on Your Clients’ Desk in

the First Place

Consider the following frightening statistics:

• On average, 57% of the thought leadership material produced by con-

sulting firms is in the form of self-published articles, either standalones

listed on the firm’s website or gathered together periodically in a journal

(like Booz Allen’s strategy + business).

• 26% start and end their life as a “white paper”, an internally published

document which smacks of work-in-progress, rather than a set of coher-

ent, finished thinking.

• 8% appear as press articles.

• 5% are published by the consulting firm in separate, sometimes quite sub-

stantial, reports or surveys on specific issues.

• 4% appear as books.

On top of this are the innumerable electronic options, such as firms’ own

websites, and business, newspaper and television websites. But does this dis-

tribution make sense? What are the most appropriate channels for such

material?

Potential channels can be characterized in two ways: by the form they

take (print or electronic) and the “agent” who takes them (a third-party

publisher; a consulting firm’s proprietary channel; a hybrid between the two,

for example when a consulting firm buys advertorial space in a third-party

magazine or website); or personal, when the thought leadership is delivered

by individual consultants dealing face-to-face with their clients.

In today’s marketplace, consulting firms use a combination of 11 chan-

nels, each of which has different strengths and weaknesses (Figure 10.2).

• Public/print and electronic: There are two approaches here:

– Authored articles: this is where a consultant writes an article in a third-

party publication or website. Typically, the article will cover an area of

specific interest to the audience and its objective will position the con-

sultant as an expert in the field. The neutral context lends authority

to the author too. One of the key advantages of this approach is that

it is very flexible: markets and media can be finely segmented,


allowing a firm to focus precisely on the areas its target clients are likely

to come into contact with. The downside is that it can be difficult to

orchestrate: while most consulting firms are not short of individuals

willing to raise their profile in the wider market in this way, these are

the same people who may find themselves too busy on client work to

be able to write something worthwhile. Without some central push,

this type of activity rapidly becomes marginalized. Moreover, the stan-

dard set by external media is often (though not always) much higher

than a firm would set for itself. So it may be possible to write one of

those ubiquitous white papers, but harder to convince an outsider that

your comments are worth publishing.

– Topical sound-bites: Many newspapers and websites are reluctant to

carry articles by outside writers – the quality is too variable and deliv-

ery often unreliable. They are, however, always eager to have informed

input to newsworthy items – someone to comment on a company that

decides to offshore some of its work, for instance, or on one that has

turned in worse or better than expected results. Being able to get the

right person to talk about the right issue at the right time is the chal-

lenge here: consultants, busy on clients’ work, are notoriously slow to

respond to such requests; being able to ensure they can and are willing


Print Electronic

Public

Hybrid

Private

Personal

• Authored articles • Topical sound-bites

• Advertorials • Sponsored links

• In-house journal • Ad hoc articles

• Online archive/search of thought leadership

• E-alerts • Pod-casts

• External clients • Internal colleagues

Figure 10.2 Potential channels for thought leadership

to do so requires something of a cultural shift as well as sharp

coordination.

• Hybrid/print: Advertorials are a temptation for consulting firms keen to

get their ideas in front of clients, but they are often a waste of time.

Effective at name- and brand-building they may be, but they are too obvi-

ously sales vehicles to be taken seriously by clients. They are easy

to organize and orchestrate, but unlikely to yield much in the way of

tangible results.

• Hybrid/electronic: A more promising channel is to sponsor links in

popular business websites: users can click through to the firm’s website to

read an article in greater depth or may be given free or privileged access

to a firm’s journal (if it has a subscription-based one). A small point,

perhaps, but it is sponsored links which are the prime reason why the

number of people who “subscribe” to a consulting firm’s journal online

may be ten times that of the print version. Sponsored links are an easy

option: you do not have to corral hundreds of colleagues to make them

work and a consulting firm’s brand will benefit from association with

other, independent brands. However, while this is an effective (often

cost-effective) way to reach a wide audience, it too rarely translates into

measurable sales.

• Private/print: This is the traditional channel chosen by larger consulting

firms, and with good reason. For all the aspirations of the electronic

age and the paperless office, we still like reading high-quality printed

material, on planes or at home in the evening. There are two options

here (some firms combine the two):

– You can produce standalone articles, surveys and reports on different

subjects. This has the advantage of being easy to organize, requires

minimal decision-making and can be very focused – it is possible for

just a couple of consultants to write an article to send to selected

clients. The disadvantages are that the impact is limited to a few

people, so this is not an effective way of building a firm’s brand among

non-clients; the quality bar is often set quite low as people do not have

to vie with their colleagues for limited space.

– You can choose to launch a proprietary journal like strategy + business.

Here, the quality bar can be set much higher and reinforced by recruit-

ing professional journalists and editors who recognize what most con-

sultants choose to ignore: no self-respecting executive would be truly


engaged by the dry, preaching tone of much of the thought leadership

produced. Good journals or magazines undoubtedly help raise a firm’s

overall profile and confer the status of an authoritative voice in busi-

ness; because they are published regularly, they are also a mechanism

for staying in continuous touch and for gathering feedback. However,

to do it well takes substantial commitment, time and money, so the

temptation is periodically to roll up a batch of articles on different

issues into a magazine format and pretend the whole is greater than

the sum of the parts.

• Private/electronic: Popular though printed material continues to be, there

is a new generation of managers who find the relevance, immediacy and

convenience of electronic media attractive. There are three potential

tools, none of which is mutually exclusive, although very few firms use

all three to any great effect:

– Every consulting firm’s website has a search facility, but very few allow

clients to browse their thought leadership archive specifically. In most

websites, typing in subjects you are interested in is likely to yield far

more in the way of marketing brochures and press releases than the

thought-provoking articles you might have been looking for.

– Email alerts are the way round this, enabling people to sign up to

receive information on specific areas in which they are interested. In

most cases, however, the benefits to the consulting firm are probably

greater than those to clients. Both sides undoubtedly benefit from the

level of segmentation possible: clients are sent less unwanted mail; con-

sulting firms waste less effort. But because an email alert is designed

for instant gratification – the manager interested in something can be

alerted to new, relevant thinking – its contents can be perceived to

have short-lived value. The contents of email alerts are also less likely

to be taken for reading matter on long-haul flights. By contrast, the

consulting firm sending out the alerts will gather a lot of information

about what kind of person is interested in which thought leadership

topics.

– Some of the drawbacks with email alerts may be solved by the most

recent addition to the thought leadership armoury – the pod-cast.

These combine convenience and the ability of managers to personal-

ize content to suit their needs with the opportunity to provide think-

ing in greater depth.


• Personal: One of the key roles thought leadership plays is to provide col-

lateral for the people in consulting firms with responsibility for winning

new work, whether that is a professional sales force or consultants them-

selves. Thought leadership provides an excuse to stay in touch, to go back

on a regular basis with new ideas relevant to specific circumstances. There

are, however, many barriers, as almost every consulting firm will testify:

consultants do not necessarily feel comfortable about taking other

people’s ideas to their clients, especially if those ideas fall in areas outside

the consultants’ field of expertise. Overcoming these – ensuring take-up

internally – is the key to securing it externally.

Of course, it would be a peculiar firm that elected to use only one of these

channels: most – deliberately or accidentally – use a combination.

Content, Channel and Connectivity at Accenture

Terry Corby thinks he has one of the most interesting jobs in business – and

he may well be right. In addition to being responsible for the global mar-

keting of Accenture’s strategy and HR consulting practices, he is in charge

of Accenture’s thought leadership marketing.

Three years ago, when he took on the thought leadership role, “it was

difficult to get people to agree on a definition of thought leadership and it

was quite possible to spend hours in meetings discussing the issue,” he

recalls. The thinking, he believes, had become over-complicated, so one of

the first things he did was cut through that debate, opting for a definition

of thought leadership from the Information Technology Services Marketing

Association (ITSMA) as “new vision and thinking in business and tech-

nology”. He was also clear that thought leadership fell into two distinct cat-

egories: innovation and ideas. “Ideas are the kind of thought leadership that

often comes out of primary research and think-tanks,” he says. “We have

three think-tanks: the Institute for High Performance Businesses based in

Boston, which focuses on the way we will manage business and create high

performance businesses in the future; the Policy and Corporate Affairs group

based in the UK, which is mainly a think-tank on government policy and

CEO topics centred around citizenship; and our technology labs in Palo

Alto, California. Innovation is different: it’s the kind of thought leadership

that comes from things we have invented or done differently with clients as


part of our work with them, but which is also an ‘asset’ that can be used to

help other clients. An example here would be technology we have devel-

oped to support a process.”

To help organize a global thought leadership strategy for Accenture,

Corby used a three-dimensional strategy. He started with the first of his

“three Cs” – content – carrying out an audit of what ideas the firm was cre-

ating, assessing the top ideas in the media and researching what clients were

talking about. “This is still the starting point of everything we do,” he says.

“We try to understand what ideas are out there in the marketplace and to

what extent we have been successful in getting our thinking on the emer-

ging issues across. We ask, how many of the top ideas did we cover? To what

depth did we cover them (a book, for example, would show more depth in

a topic than a press release)? Have we got our content strategy right?”

Corby’s second “C” is for channels. “We don’t expect thought leadership

to sell work,” he says, “but good thought leadership, if compelling and rel-

evant, should yield interesting conversations with clients. In order for it to

do that, we have to be sure the right content is getting to the right clients.”

It is a process that begins with segmentation: What are the topics we need

a point of view about in our market? Who wants to read about them? What

do they read? From research Accenture has done in conjunction with

ITSMA, Corby argues that printed material remains important – people like

it for reading on long flights, for example – but the best channel is personal

briefings, when consultants take particular pieces of thought leadership

directly to their clients. Part of the attraction is relevance – the consultant

only takes material of interest – but a larger part is the level of interaction

possible. “We found that the thing clients like best is to be able to go through

some sort of diagnostic tool which has been tailored to their circumstances

and which ranks them against their competitors,” says Corby. “It’s an

approach which also fits well with our culture. In the past, people com-

plained that our thought leadership was very academic, but this approach

tallies with our focus on delivery.”

On the basis of this research, Accenture has adopted a multi-pronged

strategy. It hired a top business editor to oversee its journal, Outlook. It has

established related channels: Outlook Points of View, into which shorter art-

icles on good ideas which were still being thought through can go; and My

Outlook, which allows people to tailor the content of the firm’s thought

leadership into personalized email alerts. “We only email people if we’ve


something relevant to their interests – content they have asked for,” says

Corby. “If we don’t have anything relevant, then we don’t email them. We’re

trying to ensure this is the opposite of junk mail.”

But the biggest challenge has been linking ideas and innovation with the

people who need them. “There have been too many occasions in the past

when we had lots of people running around saying do we have any ideas on

a given subject,” says Corby. “We needed a way of getting our people con-

nected to our best ideas in a more dynamic way. Technology can help in our

culture: we’ve set up ‘Ideas Mart’, which lists all of our current and planned

thought leadership to all practice professionals; this can be sorted in differ-

ent ways including by title, so it’s possible to see what all the material a mar-

keting director might be interested in, for example. We’ve also given our

marketing professionals responsibility for advising the capability groups

(which provide three-quarters of all our thought leadership) in terms of the

best channels to use so we have an integrated approach to marketing.” But

perhaps the most important factor in driving internal take-up has been to

ensure that the capability groups collaborate effectively with Accenture’s

market-facing industry groups. “The capability groups have to test-market

their ideas with the industry group at the outset: if there’s no enthusiasm

from the latter, then they have to drop it. However, if they do get an enthu-

siastic reaction, they may find the industry will support the research with

time and money in return for configuring the work for their particular sector.

They effectively have to pre-sell the idea, so take-up is built in from the

outset.”


PART IV

Process (2): Delivery

11Managing consulting projects

Mission Impossible?

Regulatory compliance is something that hits large and small companies

alike. But, without economies of scale, smaller companies can find them-

selves weighed down by the administrative burden. It was for this reason

that Bradford & Bingley decided to convert its network of 200 independ-

ent advisors to “single-tie” advisors who would be employed by, and sell the

investment and protection products of, a market leader.

That was the aspiration: making it a reality was a huge challenge, espe-

cially as Bradford & Bingley wanted to complete the changeover in just four

months. A partner had to be found; contracts had to be drawn up; internal

processes had to be redesigned – all within a strict regulatory framework.

“Sorting this out was the biggest issue we faced,” says Roger Hattam, Man-

aging Director, Group Products and Marketing at Bradford & Bingley. “Once

we’d made the decision to go down the single-tie route, we were locked in

to the January deadline. If we failed, we stood to lose one of our largest busi-

ness lines in its entirety. It was an awesome challenge. On top of which, we

had to keep the deal absolutely confidential until we were in a position to

announce it.”

Bradford & Bingley asked a small team from Troika, a specialist financial

services consultancy, to help. “From selling financial products from the

whole market, Bradford & Bingley was shifting to a more simplified business

model,” says Simon Kent, who was in charge of the Troika team. “Roger was

concerned that his people didn’t have enough up-to-date product or market

knowledge, the experience of completing deals like this, or simply sufficient

resources to make it happen.”

“I always remember one of Simon’s slides,” says Hattam. “It said, ‘This is

not impossible’. ‘So, it’s possible?’ I asked. ‘Yes,’ said Simon, ‘but it’s never

been done before.’ ”

Troika’s help came in two forms: support in concluding a deal; and the

project management of the operational change.

When Troika started work on the project, in August 2004, “Requests for

Information” (RFI) has already been issued to several potential partners. Its

first step was to produce a more focused RFI to which a small number of

companies were asked to reply within a week. At the same time, Troika took

Bradford & Bingley’s board back to basics to establish the key commercial

principles they wanted to achieve. Shortlisted suppliers were asked to sign

up to these principles, which set out how the model would operate and the

products that would be included, as well as the financial arrangements.

“Our aim was a signed contract in ten weeks,” says Kent. “Four weeks to

go back over what Bradford & Bingley wanted from the deal and pick the

preferred partner [Legal & General]; two weeks to write an outline of the

agreement; and four weeks to negotiate the final contract.”

The key to success was not to let Bradford & Bingley’s tight timescales

weaken its negotiating position or skimp its planning of the operational

details. “We wanted a good deal, but fast deal,” says Lucinda Hallan, another

member of the Troika team. Kent and Hallan ensured that the majority of

commercial decisions were incorporated into the Heads of Terms. There

were a myriad of practical issues to consider. What would happen if the deal

became uneconomic? What kind of management information would be

required? What were the regulatory implications of sales which were half-

completed when the changeover occurred?

With an outline agreement in place, planning could start on implemen-

tation. “We had two months to do everything,” says Jo Higgins, the Troika

project manager who coordinated all this. “The timescales were extraordi-

narily tight. We were also changing a revenue-generating part of the busi-

ness: we couldn’t just take the branch advisors out for a month of retraining,

nor could there be any delay in moving to the new arrangements in January.

Time really was money.”

The traditionally quiet period around Christmas was used to take the sales

force out of the branches, retrain and reauthorize them. “We had to ensure

that someone who left a Bradford & Bingley branch on 16 January as a Brad-

138 P RO C E S S ( 2 ) : D E L I V E RY

ford & Bingley employee, selling products from the whole market, could,

quite literally, walk back in on 17 January as an L&G employee, knowl-

edgeable about L&G products, and carrying an L&G laptop, without the

whole business collapsing,” says Kent. “We were turning off one business on

one day, and starting a new one on the next.”

It would be tempting in these circumstances to take a heavy-handed

approach, but that’s not Troika’s style. Although Higgins was responsible for

the overall coordination of the project, almost everyone who worked with

her was a Bradford & Bingley employee. Moreover, a significant part of her

role was to coach her successor. “As we got closer to the 17 January dead-

line, my job became more of an advisory one,” says Higgins. “We wanted

Bradford & Bingley’s staff to feel completely confident that they could

manage the next phases of the project.”

The timescales and complexity of the project meant Bradford &

Bingley’s reputation was on the line. “We had to make a lot happen in

a short period,” says Higgins. “If it went wrong, Bradford & Bingley would-

n’t have a branch-based business. There was a lot of money at stake, and

the risk that some of the best independent advisors might leave.” “The key

challenge lay in trying to dovetail changes to the company’s rule-book

(which governs how it sells its products) and the transfer to new owner-

ship,” agrees Hallan. “Almost all their world was due to change on a single

day.”

Although large numbers of Bradford & Bingley people were involved in

the project, very few worked on it full-time. “Helping everyone from the

business juggle what they were trying to do with their day-to-day responsi-

bilities was another challenge,” says Ed Wells of Troika. “A key part of what

we had to do was retain the overall vision of what was going on: small

changes to one process could have huge implications elsewhere. It was a

question of making all the bits of the jigsaw fit together.”

Since 17 January 2005, Bradford & Bingley has been able to offer its cus-

tomers leading financial products, double the gross profit it earns from this

business line and increase its sales conversion ratio from 1 :3 to 1 :2. “We

wouldn’t have done this without Troika,” says Roger Hattam. “Their team

brought a strong combination of relevant industry experience, rigour and

realism to our negotiation process and enabled us to strike a first-class

deal. In large part, their willingness to roll up their sleeves and ability to

drive the project to completion ensured an extraordinarily fast and smooth

implementation.”

M A N AG I N G C O N S U LT I N G P RO J E C T S 139

“We only had four people on the project,” says Kent. “We were the small

lever with which Bradford & Bingley effected an enormous change.”

Pushing the Boulder Uphill

One of the most important reasons why clients use consultants is momen-

tum. On complex projects where many of the client’s key staff will be

involved on a part-time basis only – as at Bradford & Bingley – staying

focused, simply keeping going, can be enormously difficult. Consulting firms

like Troika can field a team of dedicated and undistracted individuals, who

can bring the commitment and energy required to get stuff done.

Is this anything more than good project management? The answer is no,

but yes. Clearly, many of the tools and techniques of good project manage-

ment are as relevant in consulting projects as they are in internal ones, but

the peculiar challenges of consulting relate to the fact that people from

different organizations are involved and that the project team is a bridge

between their two organizations. The following issues have to be addressed:

1. How are resources allocated to the project, bearing in mind that a client’s

staff invariably have day jobs from which they are pulled and that the

consultants may be working on more than one project at a time?

2. What is done to ensure that the project team is up and running from day

1?

3. How easy is it for the consulting firm to adapt what it is doing to suit a

client’s changing needs, given the constraints it operates under?

4. Engagement.

5. Stakeholder management.

Some of these factors relate to the efficiency with which a project is run,

some help ensure its overall effectiveness, others do both (Figure 11.1). All

have to be in place for a project to be successful – yet recent trends have

meant that none is easy to manage.

Resource Allocation

The biggest initial challenge the project manager of a consulting team faces

is finding a team. Good people don’t hang around consulting firms waiting


to be put on projects; they are already busy, and fighting for their attention

can eat into the project manager’s scarce time at the start of a project.

However, not getting the right people could compromise the quality of the

work done.

Three factors make a difficult situation even worse:

• Greater specialization: The more clients want world-class experts in a spe-

cific field, the less choice a project manager has. The days when con-

sulting firms could operate a pool of generalists have gone: even graduate

entrants need to be trained in something before they can be put on a

project, and that reduces the room to manoeuvre. With margins tight,

few consulting firms are prepared to solve this problem by recruiting addi-

tional staff and bringing utilization down.

• Spikes in demand: When interest in a particular field surges, it creates

additional challenges.

• A culture of instant gratification: We all have greater expectations of cus-

tomer service than we had ten years ago. Banks have had to cope with

people who expect their loan to be approved instantly; retailers, with

people who expect a product to be shipped to them in 24 hours. Why


Resource allocation

Stakeholder management

Ability to respond to change

Mobilization

High

High

Low

Low Efficiency

Effectiveness

Engagement

Figure 11.1 Factors specific to managing consulting projects

should consulting firms be any different? Clients who take months to buy

a large-scale IT or outsourcing-related project may expect consulting

firms to respond instantly when they are looking for input on smaller-

scale advisory projects.

As a result, the process by which specialists are pulled into teams has had

to become more flexible: clients want to know that the composition of a

consulting team has been based on the unique requirements of the project,

and not on a standard formula. Resource allocation is therefore like a com-

plicated game of chess: most of the pieces can move in one way only –

the challenge comes from being able to move them better than your

competitors.

“One of the most substantial challenges a consulting firm faces is its

ability to manage scarce resources,” says Jules Beck, who heads up CSC’s

Transformational Consulting practice. “Consulting firms have lots of good

people in them, but only a small number of those people will be truly excel-

lent. Knowing the select group of people who are critical to solving a client’s

issues is a core skill. Managing them and allocating their time where it has

the greatest impact is undoubtedly a competitive advantage. At the same

time, clients have become much savvier about this issue. They know they

don’t get the best people purely by luck, and therefore want to know how

we make these decisions and to be involved in the process. Fifteen years ago,

it would have been perfectly acceptable for a consulting contract to have

provisions in it which allowed the consulting firm to move people on and

off a project as it chose. Now clients expect the decision to be a collabora-

tive one. Indeed, it can be one of the reasons why they choose to work with

a particular firm: they know they are more likely to get access to those key

resources. On top of this, a consulting firm has to take into account another

set of potentially competing demands – those of the individual consultant

who may have particular constraints or aspirations. A consulting firm has

to balance each of these different demands – the firm’s, clients’ and con-

sultants’. That’s not something you can do from a spreadsheet: firms which

automate the allocation of resources may enjoy short-term productivity

improvements, but they won’t ever pick up all the nuances involved. Man-

aging resources isn’t a process you can dumb down. You need to put time,

effort and some of your best people into it.”


Mobilization

“Mobilization” smacks of consulting jargon, bureaucracy and unnecessary

form-filling – the kind of thing large firms inflict on unsuspecting clients;

an excuse to inflate their fees still further. But if clients are using consult-

ants to inject energy and momentum into an issue or organization – as they

increasingly seem to be – then the first few days of a project will be critical

to instilling urgency into the situation.

Getting a consulting team together is only the beginning: coming from

different parts of the consulting firm and the client’s organization, they may

know little about what is expected from them. That creates an overhead:

being able to manage it efficiently is crucial, especially in a world where

clients want to achieve more and more in less and less time.

You don’t have to be big to do this. LCP Consulting is a niche firm that

specializes in redesigning organizations’ supply chains. “The aim is to ensure

the supply chain is driven by what the customer wants, not by the internal

metrics of efficiency,” says John Lockton, LCP’s Managing Director. The

sectors LCP works in are not renowned for their patience: carmakers, man-

ufacturers and retailers all expect just-in-time delivery from their suppliers,

and they apply the same standards to consultants. So LCP cannot afford to

hang around: “Hitting the ground running isn’t something we can leave to

chance,” says Lockton. In early 2002, the company had found itself at an

impasse: clients liked the results they were delivering, but they were finding

the process somewhat hair-raising. “We’re really a bunch of experts and

entrepreneurs with what we like to think are some good ideas,” says Lockton,

“but we’re weren’t paying enough attention to what the process felt like from

a client’s point of view. Even our employees were getting frustrated. So we’ve

brought all our experience together into a structured process we call BPS –

behaviours, processes and skills. It’s a guide rather than a prescription: clients

are suspicious of anything that smacks of rigid standardization. But over the

years we’ve been able to prove it can make a big difference to the success

of a project.”

The process and systems aspects of BPS are the bits you would expect

to see in any good project management tool – indeed, LCP took what it

thought were the best aspects of several different tools as the starting point.

A process map prompts the consultant to ensure certain documents have


been completed at the start of the project, stakeholders consulted and

objectives communicated. But it is the behavioural component that sets BPS

apart.

Richard Budd, LCP’s operations partner, takes up the story: “Integrated

into the standard project management material are the behaviours we

expect: delivering real value as a team; taking our clients on a journey in

which they will develop as people; using time in a disciplined way; com-

municating openly, clearly and frequently; recognizing good work and

people’s commitment. What we found was that we could have the systems

and processes in place, but if we didn’t back those up with the behavioural

aspects, then it was all pretty meaningless.” BPS is therefore designed to be

a reference point. “It gives us a common language to talk about complex

projects,” says Budd. “We don’t talk about process flows, but ‘swim lanes’.”

BPS also gives everyone, including people on the client’s side, the opportu-

nity to see where they fit in, how what they do will have an impact. Part of

this lies in articulating the interdependencies between different parts of a

project – again, a standard project management technique – but part lies in

strengthening people’s commitment to seeing things through. While many

consultants can be criticized for riding roughshod over middle and junior

managers in client organizations, BPS is intended to be inclusive. Finally,

BPS provides a common standard to which everyone in LCP, no matter how

senior, is expected to adhere. “It’s a common reference point which allows

more junior people to challenge the leaders of the projects if they think

they’re getting out of line,” says Budd.

“We don’t insist on using this approach, but we do encourage it,” says

Lockton. “If a client is interested, all well and good, but we don’t like to

impose it on people. The only problem is that we usually live to regret it: if

ever there’s a problem on a project, we can track it back to one of the elem-

ents in BPS being missed out. It’s like a guiding light we follow: we deviate

far from it at our peril.”

The point about having a common language is picked up by Jonathan

Cooper-Bagnall, a member of the management group at PA Consulting

Group. PA uses its own proprietary approach to a project, a five-point model

covering “entry”, “visioning”, “diagnosing”, “planning” and “implementa-

tion”, which all its consultants are trained in. “It’s not particularly revolu-

tionary,” says Cooper-Bagnall, “but it recognizes just how important it is for

us to have the same fundamental approach to the work we do, despite its


variety. The entry stage looks at how you’re going to build a relationship

with the client, and what you have to do to ensure the project is a success.

We also know that people’s personal goals have to be in line with those of

a project – there’s no point asking them to work immensely hard on some-

thing they’re not interested in – and the entry stage is the opportunity to

air such issues. Unless we get the entry stage right, everything about the sub-

sequent project will be difficult.” Another advantage to formalizing this

stage of a project is that it takes a lot of smaller decisions out of the equa-

tion, allowing the consultants to focus on what is important. “They can stop

reinventing the wheel and engage with the client!” says Cooper-Bagnall.

But does all this make for something which the client will find is too

rigid? “The process isn’t necessarily explicit from the client’s point of view,”

argues Cooper-Bagnall, “and details have to be adjusted to fit the profile of

different types of project, but it’s a useful framework for the project as a

whole. We need to have a common language – an underpinning structure

– otherwise things start to go awry.”

Ability to Respond to Change

“I don’t particularly care for consultants,” says Robert Sternick, “but I get

round this by not treating the ones I use as consultants.” It sounds like one

of those rather specious arguments, like the alcoholic who justifies an extra

drink for medicinal purposes. But in Sternick’s case, he’s making a serious

point.

In 2001, Sternick was appointed chief executive of Infast, a specialist

parts manufacturer and supplier to the automotive, rail and industrial

sectors, based in the UK. Over the next three years, caught between rising

prices for raw materials and customers who were looking for annual cost

reductions, it became clear that continuing to manufacture in the UK was

virtually impossible. But the board faced a difficult decision: moving the

work to low-cost suppliers in Asia and the Far East would mean laying off

Infast’s 200 highly skilled workers.

It was going to be a difficult, heartbreaking process, and Sternick knew

from the word go that he could not do it by himself, so he did what many

chief executives have done: he hired a team of consultants – in this case

from the Rossmore Group and its parent company, Arup. “We badly needed

neutral feedback,” he says. “Emotions were running high and we badly


needed someone who had no vested interest in the outcome and who could

give us another view on the real issues, and what the opportunities were in

moving overseas versus the drawbacks.”

The consultants’ original brief was to plan and implement the strategy

for exiting manufacturing in the UK and for sourcing products overseas. This

would involve working out the priority of the parts to be sourced from else-

where, ensuring that they were all approved and accepted by the customers,

planning stock levels to protect supply and keeping production going in the

UK in the interim.

“We quickly realized this wasn’t going to be straightforward,” says Matt

Cooper at Rossmore. “Getting the same quality at competitive prices was

proving difficult.” Customers were understandably nervous: the announce-

ment of the closure programme had had a devastating effect on Infast’s man-

ufacturing operations: productivity and morale both plummeted. “Being able

to keep our customers while we shifted production became a serious worry,”

says Sternick.

The situation was compounded by the lead-times involved. Infast’s

customers demanded products with as little as three weeks’ notice, even

though the lead-time for the steel Infast used was more than 16 weeks.

Transferring supply to the Far East would create a product lead-time of up

to 26 weeks, and the higher stock levels Infast would need to cover this

would eat into any potential savings. It started to become clear that the UK

manufacturing operation was far more valuable than originally supposed,

able to provide short-lead manufacturing of high-value, low-volume spe-

cialist parts.

That realization triggered a rapid and, from Sternick’s point of view,

welcome about-turn. Virtually overnight, Cooper’s role switched from over-

seeing the transition of all production overseas to sourcing only a limited

number of standard parts from the Far East while transforming the UK man-

ufacturing business into an agile supplier of high-quality, specialist parts.

This meant reviewing the product mix to see how best to source each part,

analysing the supply chain, assessing productivity and what skills and

resources would be required to make long-term survival a possibility, working

with customers and suppliers on the way forward and implementing a pro-

gramme that balanced outsourcing with restructuring. However, relations

between Infast’s board and the manufacturing division were beyond recov-

ery: dealing with its managers was more than uncomfortable. Cooper’s tyres


were slashed one evening, and he could only recall the words of Winston

Churchill: “If you’re going through hell, keep going.”

But the result? Within half a year, the monthly losses were converted into

equivalent profits, and the jobs of more than 200 people were saved.

“The Rossmore consultants were never a separate team,” says Sternick.

“Some of them reported to people in our organization; some of our people

reported to them. That wasn’t easy to do – we had plenty of people who

complained about the arrangement – but it meant we could get things done

within a very short space of time, and time was of the essence if we were

to save the plants.” It was the equivalent of taking independent input

intravenously.

“I think Rossmore learned from the process too,” says Sternick, “that

there’s more to working with clients than just being a consultant, that being

in the thick of things can be a lot more rewarding than just giving advice,

that it’s easy to make recommendations but a lot more challenging to deliver.

Together, we also learned there are no walls: if you work on a project where

the rules surround you like walls, then you’re bound to fail.” For Sternick,

the key to the project’s success was the ability on all sides to hold two con-

flicting forces together: the need for a clear vision, defined goals and a tight

schedule which gives you the discipline to deliver, with the ability to think

the unthinkable and do the undoable.

“Be comfortable being uncomfortable,” says Sternick. That’s advice he

would offer to the consultants he works with, as well as his colleagues.

Engagement

The more you talk to clients, the more it becomes apparent that it is how

a consulting firm engages with middle and junior managers that determines

their long-term, sustainable success.

Indeed, the extent to which individuals at all levels gain from a consult-

ing project is one of the most important factors in determining its success.

A recent survey by the Management Consultancies Association showed that

70% of clients who were happy with the work done by consulting firms

gained as people from working with the consultants, compared with just 4%

of people who were not satisfied (Figure 11.2).

That is ironic, given how much consultants like to boast of their

relationships with “c-level” people: the chief executives, information,


marketing and finance officers. Undoubtedly, these are the people who sign

the cheques, but it is the people who report to them, the people who so

often feel pushed out by consultants, who make or break a project. Histor-

ically, consultants have tended to view this relationship as one-sided: in so

far as they interacted with these people, the role of consultants was to trans-

fer their knowledge and skills to them. While important, this assumption

has spawned an unbalanced, more than slightly patronizing view – some-

thing that clients have been quick to detect.

“Engagement is always an issue: if it’s not immediately apparent, then you

have to look for it,” says Rob Davies at Water for Fish, a niche consulting

firm specializing in organizational effectiveness and change management.

Resistance to change is something change management experts commonly

talk about, but as Davies points out it is a barrier that grows the further down

an organization’s hierarchy you go. “Typically, you could expect one in ten

board directors to object to a major change, one in four senior executives,

and one in two middle managers,” he says. “It’s tempting for consulting firms

to underplay the issue, to propose to do exactly what a client has asked for

without flagging up the likely obstacles, because it’s going to increase the

cost substantially.” Some would argue that you can’t justify the cost, but

Davies is adamant that a consultant has a moral obligation to take this into


I personally gained experting an opinion

70%

4%6%

61%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Agree Disagree

Satisfied Not at all satisfied

70%

4%6%

61%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Agree Disagree


% o

f re

spondents

exp

ressin

g a

n o

pin

ion

Figure 11.2 Who gains from consulting projects? (Comparing clients satisfied with work done by

consulting firms with clients who are dissatisfied)

account: “There’s a tendency to sit back in blissful ignorance until the con-

sultants arrive and then say, ‘Oh shit, what happens now?’ ”

Engagement, Davies believes, has to take place at two levels if a con-

sulting project is to stand any chance of success: the individual and the team

level. Again, we are comparatively used to evaluating individuals’ attitude

to change: some will actively embrace it, others will actively resist it, but

the majority will take a passive role, sitting on the sidelines, waiting to see

which way the wind blows. Consultants, like managers, make the mistake

of focusing on the people who respond enthusiastically – it’s the more com-

fortable route – but they would do better to pay more attention to creating

subtle shifts in the passive majority. “Minute adjustments here and there,

getting people to allow change, even if they don’t want to drive it, will deter-

mine whether long-term change will take place,” says Davies.

Davies is very much against the culture of coaching which is now endemic

in change management consulting: “People also don’t tend to mobilize as

individuals, but as groups. The analogy of the sheep dip is instructive, even

though it’s often used in terms of contempt – ‘you can’t dip people like you

dip sheep’. The whole point about sheep dipping is that you do all the sheep

at once, so they can’t cross-infect one another.”

You could get some idea of how this works in practice by looking at how

HM Revenue and Customs (HMRC) has been using “lean” techniques to

cut the time taken to process tax returns. Not the most prepossessing of start-

ing points, you might think, but behind the stolid façade of government,

there is a dramatic change going on.

HMRC is a relatively new government department, created in early April

2005 by combining the Inland Revenue and HM Customs & Excise (most

of the UK government’s tax-collecting machinery) under one roof. This is

integration on a tremendous scale: the department employs 100000 people,

30000 of whom are involved in processing tax returns. Scale is not the only

challenge: the department is also tasked with improving customer service

while simultaneously achieving the equivalent of a 30% reduction in pro-

cessing costs by March 2008. “On top of this, we had a backlog of work from

the old Inland Revenue and widespread cultural inertia,” says Eilish Henry,

who had the unenviable task of sorting out the problem. “As an organiza-

tion, we were good at hitting numerical targets: the real problem was

improving quality. We didn’t seem to be able do both, but it was crucial for

our customers that we did.”


Lean techniques appeared to offer a solution, and HMRC commissioned

a pilot project in Scotland to see what benefits it might yield. Consultants

from McKinsey were involved and, as the department started to explore

whether the initially highly promising results could be replicated in other

areas of its business, it also hired a team from PA Consulting to roll out the

ideas in two other large offices. “The feedback from the pilot was very pos-

itive,” says Henry. “For the first time, both turnaround times and quality

improved.” New, “lean” processes played an important part here, but they

would probably have been irrelevant if the people who performed the

processes hadn’t wanted to make them work. “Engagement was immensely

important for us,” says Henry, “because the scale of cultural change here is

enormous and we couldn’t afford to underestimate the challenge it posed to

the front-line of the business. We had to promote a very high level of per-

sonal accountability and activity, and that meant managers had to have dif-

ficult conversations about individuals’ attendance and quality of work. This

is not easy for the managers or team members involved and emotions are

still running very high.”

In this environment, Henry could not afford to use consultants to force

the changes through: what good would a team of first-rate consultants be if

30000 people did not want to cooperate with them? This meant that PA’s

role, as well as testing the lean approach and redesigning HMRC’s core

processes, was to help the department become self-sufficient. “If we could

build up a critical mass of good people, a core of people who could mentor

others, then we’d be able to roll out the new processes across the depart-

ment as a whole without external support,” says Henry, “but everything

hinged on engagement.” First, there was an inevitable degree of cynicism to

be countered: some people viewed “lean” as yet another fad; many believed

that the consultants would not understand their business. “We put a lot of

effort into explaining what we were doing,” recalls Henry, “setting the scene,

saying why we’d hired consultants, making it clear that they weren’t coming

in to replace people but to supply specialist skills we needed in the short

term.” For the immediate team, initial concerns were dispelled by the speed

with which the consulting team became conversant with the minutiae of

their work. “The great lengths they went to, in order to understand how we

worked, genuinely impressed our managers.” Front-line managers also had

to be trained in effective and active management – something that has had

its own payoff in terms of improved performance and better management


skills. On top of this, as Henry’s team began to roll out standard processes

across the business as a whole, they encouraged processing teams to talk

about how they had been working: rather than a control tool, standardiza-

tion has prompted people to defend their own ideas. “If it’s a good idea, we

adopt it,” says Henry.

All three ways of engaging people – consultants who took their clients’

work seriously enough to understand it properly, better training and listen-

ing to ideas rather than dismissing them – have something in common.

Engagement happens when ordinary people in organizations believe that

they and/or their team will personally gain. Consultants need to stop bran-

dishing a stick at middle managers and start offering them a few carrots

instead.

Stakeholder Management

There are usually more stakeholders to deal with in a consulting project than

in an internal one, partly because the intervention of consultants can trigger

all kinds of positive and negative reactions, even when it has barely begun,

but also partly because one of the most important roles a consultant plays

is as an arbiter, an honest broker, between people with different vested

interests on the client side. Indeed, research has shown that consultants –

not clients – put stakeholder management at the top of the list of challenges

they face in doing their job.

“We like to think of ourselves as the Special Forces of the consulting

industry,” jokes John O’Rourke at Catalise. “Our solutions aren’t always the

most elegant, but they’re professional, dependable and fast.” Being a niche

firm, Catalise has almost a family feel to it: “People take things personally

here. For a bunch of burly men, we can get quite emotional.” Not surpris-

ingly, the firm runs on trust rather than seniority or status. “It’s very open:

we all have to look at the CV of someone before we offer them a job,” says

O’Rourke. “Newcomers have to earn our trust and demonstrate their capa-

bility: we’re not going to accept someone just because they look good on

paper. The core of what we do relies on sound relationships – internally as

well as externally – and we try to embed that culture in the social fabric of

the firm.”

All of which should mean O’Rourke and his colleagues are in a strong

position when it comes to handling the sensitivities that arise when you’re


trying to integrate five organizations, in five countries with five different

cultures and five different technology platforms. The client was one of the

largest and most profitable logistics companies in the world with global mail,

express and logistics services. The size of the business is daunting: revenues

in excess of €40 billion, 380000 employees and a customer base extending

to every corner of the globe. Acquisition had given the company scale, but

it had also brought it the problems and opportunities of integration.

It was just such an opportunity that was confronted by their Financial

Accounting Shared Service Centre Integration team in January 2004. Their

challenge was to integrate the finance processes of five business units and

then transfer them to a shared services centre. This represented not only a

considerable business integration and technical challenge (each of the five

businesses had different IT systems) but also a cultural minefield.

Catalise walked into the middle of this, called in when it became clear

that the in-house team had run into problems. “We quickly realized that

cultural and organizational issues were just as important as the systems ones,”

recalls O’Rourke. “Creating cohesion was crucial.” But it wasn’t easy: there

were 200 people on the team, many of whom came from different, often

competing, consulting firms. “People had different understandings of the

project objectives and were trying to keep issues close to their chest rather

than discussing them openly. If anything the barriers were going up, not

coming down.”

Time was short, so Catalise flew all those involved in drafting the pro-

ject’s business requirements to a single location. “We virtually put them in

a room together and didn’t let them out until the requirements were agreed,”

says O’Rourke, “but it had a double benefit. Not only were the requirements

completed on time, but we’d managed to kick-start the process of building

an effective team.”

Building on this success, Catalise found themselves being asked to

manage all the communication between the project’s multiple stakeholders,

ensure those stakeholders had realistic expectations and build a confident,

collaborative team spirit. The project duly went live on 1 July 2005: against

a backdrop of many parallel integration projects, it has been hailed as a land-

mark success – demonstrating what can be achieved through effective use

of change management techniques. “I’d say our approach was bold, rather

than innovative,” says O’Rourke. “The change management techniques we

put in place weren’t rocket science, but it was the speed and timeliness of


our intervention that mattered most, against a background of growing

intransigence and cultural entrenchment.” The outcome of the project

speaks for itself, but it is not all that O’Rourke is proud of: “We got people

to leave their company badge at the door, and wear our client’s badge

instead.”

The success of a consulting project lies in not being a consulting project.


12Three types of teamwork

Welcome to the Murky World of Consulting

If you thought consultants sit in an office analysing data and putting pre-

sentations together, think again.

Metronet is a consortium of Atkins, Balfour Beatty, Bombardier, RWE

Thames Water and EDF Energy. In 2003, it won two 30-year Public Private

Partnership (PPP) contracts for upgrading two-thirds of London Under-

ground’s infrastructure. Maintaining rail track is labour-intensive and often

can only be done at night in physically demanding conditions: productiv-

ity has changed little in recent years. However, under the terms of the PPP,

Metronet had agreed to improve productivity substantially, so it hired a spe-

cialist consulting firm, Boxwood, to help them achieve this. Working with

Metronet for just four months, Boxwood helped the company increase the

speed with which sleepers were replaced by 250% and track renewal by more

than 300%.

The consulting firm’s initial priority was “discovery”: identifying what

needs to change and determining what is and is not possible. Replacing

sleepers involved gangs of around 20 operators who could replace two sleep-

ers per shift. Four Boxwood consultants worked alongside these gangs for

two weeks in order to observe and analyse their performance, map the key

operational processes and identify potential solutions. Some ideas were

simple ones, such as introducing lights on helmets and increasing the

amount of preparation work that could be done above ground. Others were

more demanding – introducing a continuous improvement culture, for

example.

The next stage of the work was “consensus”: piloting potential solutions

and building consensus for change among the operators, managers and

unions. All the testing was done on live projects, underground and at night,

with project team members from Boxwood and Metronet working alongside

the operators. Traditionally there had been a divide between the under-

ground night workers and the daytime planning workers, so this shoulder-

to-shoulder approach earned the team enormous respect from the operators.

And respect became enthusiasm as the operators realized that performance

improvement often meant that their work was easier, not harder. It meant

cutting out duplication, delay and rework – all of which had been hugely

frustrating. The results amazed everyone: instead of two sleepers, the gangs

could now replace six per shift.

In the last stage of the project – “mobilization” – the same joint team

rolled out the new processes for sleeper replacement to all the gangs of oper-

ators, revised the processes for renewing track and trained a Metronet team

in how to make further improvements.

The project was characterized by an extremely strong partnership

between Boxwood and Metronet. For people outside of the immediate team,

it was hard to tell who worked for which company, such was the level of

integration. Indeed, the project would have been a disaster if those involved

had believed in the common misconceptions about each other – that man-

agement consultants are faceless analysts who operate at arm’s length, pro-

ducing reports that are incomprehensible and ineffective; that former public

sector workers are lazy and unable to adopt new working practices. Nothing

could have been further from reality.

“Our ability to work as a team depended on three factors,” says Dan

Tonkin, one of the consultants from Boxwood involved in the project. First,

as consultants, they had to be absolutely open and honest with everyone.

“If we gave any information about potential efficiencies to the directors,

we’d also show it to the charge hands and their teams so we could involve

them in decisions. Often all they needed was the chance to step back from

their work, but they worked so hard that they didn’t often get the opportu-

nity to do that. Where we could, we’d also take the time to meet those teams

beforehand so we could explain what we were doing and where we needed

their help. These were all important factors in ensuring that the recom-

mendations made were really theirs, not ours.” Second, the consultants had

to make it clear that they were not there to take people’s jobs away. “We


had to ensure this wasn’t perceived to be a threatening process,” says Tonkin.

“Once we’d got over that hurdle, they were completely up for improving the

system.” Finally, the consultants had to respect the people they worked with.

“If we’re brutally honest, I think some of us, before we started, suspected

that the Metronet teams were simply lazy. It was quite the opposite. They

worked immensely hard: some people were working 12-hour shifts, six days

a week – and you don’t see many consultants doing that!”

The Team as a Source of Competitive Advantage

There are four reasons why teamwork has become an essential attribute of

a successful consulting firm.

Give Us Specialists!

First, client demand for ever more specialist knowledge is fragmenting con-

sulting projects. Whereas ten years ago a project might be staffed by a small

number of experts – often the senior partner, supported by bright, but less

specialized staff – today’s clients want everyone in the team to be a special-

ist. In practice, that means that team members may be drawn from differ-

ent parts of a consulting firm; so not only may they never have worked

together before, but they may have very different opinions and perspectives.

More and more, team members will come from different firms, as clients

move away from the notion that a single firm can provide every service and

as they begin looking to obtain services from a variety of large and small

firms. That creates new challenges: how can you work effectively with

someone with whom you may, in other circumstances, be in competition?

The Bundling of Services

Nor is this just a question of peaceful coexistence, the consulting equiva-

lent of toddlers’ parallel play in the sandbox. For many clients, the oppor-

tunities to do something innovative lie in bringing together different skills.

In a recent survey, almost every project discussed by the clients of consult-

ing firms involved more than one area of consulting. In other words, there

appears to be no such thing as a “pure” HR project or a “pure” marketing

project. Even strategy consulting, which has conventionally been classed as

T H R E E T Y P E S O F T E A M WO R K 157

a very distinct area of consulting, was combined with other services in 85%

of cases. Almost 40% of the consulting projects discussed had a change man-

agement component.

Keeping the Freelance Consultant at Bay

Moreover, teamwork at all levels creates an important point of difference

between consulting firms and independent consultants. Sole traders have

become an increasingly important part of the consulting marketplace over

the last five years. They are accepted among even the largest corporate

clients, who recognize they may have specialist skills and excellent creden-

tials – many, after all, have worked for large, prestigious consulting firms in

the past. Their fees are attractive: they carry neither the overheads of a large

firm nor the risks of an offshore supplier. Faced with this challenge, con-

sulting firms have had to be clearer about the value they add as a collective

entity, what they can do that a sole trader cannot. Most firms have there-

fore focused on building their brand, increasing their research and knowl-

edge management capabilities or on ensuring they have the financial muscle

to carry innovative pricing deals. But they are starting to appreciate that

they have another advantage – the ability to work as a team. Of course, any

independent consultant worth their salt will say they can work as part of a

team, but the question is not so much whether they can work with others,

but how long it takes them to do so effectively.

Imagine you boarded a plane and discovered the crew were all used to

working independently. They would probably have very different ideas about

cabin service and they would have to invest some time at the beginning of

the flight in negotiating how they were going to work. You might strike

lucky, they might be able to sort things out quickly and you would get your

peanuts – or you might not. In fact, the likelihood is that some bits of the

service would work, but it would be patchy and inconsistent, and you prob-

ably wouldn’t choose to fly with that airline again. Compare that experi-

ence with a regular airline: although the cabin crew may never have worked

together before, they have been trained in the same procedures and they

share enough of a common culture that they can form an instant team.

So it is with consulting projects: as a client you could hire a group of inde-

pendent consultants and ask them to work together. With a bit of luck and

considerable good management you might arrive at your destination in one

piece, but it will probably have been a bumpy flight. One of the things you


are buying from a consulting firm is the confidence that while their people

may never have worked together, they are, like the cabin crew, capable of

forming an instant team.

Bringing the Client in from the Cold

Finally, the “team” has to expand to include clients themselves. If there is

one word which could be used to sum up the reason why some consulting

projects are more successful than others, it’s partnership. Neither clients nor

consultants benefit from a confrontational environment in which each side

is seeking to promote its own interest at the expense of the other. Of course,

partnership is a dangerous word to use in this context, abused as it has been

by a generation of marketing literature from consulting firms which paid lip-

service to an idea that was rarely realized in practice. A genuine partner-

ship works at two levels. At the individual level, all the people involved in

a consulting project have to work together as an effective team. The whole

has to be greater than the sum of the parts. But the willingness of individ-

uals to work together has to be reinforced at a corporate level. Here, the

aims of the client’s organization and the consultants’ firm need to be closely

matched. Each party needs an incentive to behave and contribute in a way

that supports the collective effort, not self-interest. Create teamwork that

extends from the individual to the corporate and you can achieve extraor-

dinary things. “What’s the key lesson?” asked one client. “The power of

working together.”

Working together happens at three levels:

• Tactical – making groups of people, often from different backgrounds and

with different agendas, work together as an effective team on the ground.

• Firm-wide – overcoming internal demarcation within consulting firms.

• Strategic – ensuring that, at a corporate level, two organizations can work

together successfully, clearing obstacles which might inhibit the ability

of their teams to collaborate.

Tactical Teamwork

Kurt Salmon is unusual among consulting firms, a niche specialist (in retail-

ing and supply chain management) whose revenues put it among

the middle-sized consulting companies. “Our consulting style is quite


collaborative,” says David Oliver, Vice President in the firm’s London office.

“We’re less arrogant than the stereotypical consultant. We may even be too

self-effacing: we sometimes criticize ourselves for not pushing our clients

hard enough, but the flip-side to this is that we engage well. We’re good to

work with.”

The firm takes all the steps you’d expect to ensure that its teams can func-

tion quickly and instantly: ensuring those involved in delivery are properly

briefed by those involved in winning the work, if the two are different; pro-

viding background material to ensure that even the most junior team

members are fully prepared; agreeing the internal rules of engagement that

make high-pressured working environments bearable – who gets to go home

when, how many nights away from home for how long. But Kurt Salmon is

lucky: it works in a well-defined market in which most of its recruits have

experience, so there is common ground from the start. It needs relatively

little in the way of standardized methodologies because its consultants

already have direct experience of the issues manufacturers and retailers face.

What Goes Around Comes Around

Unless you are very lucky, teamwork doesn’t just happen. Indeed, in talking

to consulting firms it becomes clear that the most important factor is estab-

lishing a quid pro quo culture in which everyone is treated – and is seen to

be treated – fairly.

Richard Owen, Chairman of Deloitte & Touche in the late 1980s, recalls

a seminal moment when someone who had been seconded from the client

to his consulting team rang him at home late on a Friday night. “He was in

a panic because he’d left some vital papers in our office for a course he was

running on the following Monday. I rang the office and managed to find a

security guard who went to see if he could find the papers, but they weren’t

there. They’d been spotted by another member of the team who arranged

for them to be delivered to the secondee.” The secondee was stunned by the

supportiveness of the consultants’ working environment: he’d never called

his boss at home. “In a consultancy,” says Owen, “no one enjoys another’s

discomfort.”

But, like every professional organization, consulting firms are dogged by

their internal divisions. The combined pressures of specialization (which

clients require) and diversification (which consulting firms need to spread


the risks of specialization) have created organizations that function around

intense pockets of activity. Joined-up consulting becomes difficult: different

business units may have different recruitment criteria; they may pay people

more or less; they may develop their own, distinct subculture, especially if

they are successful. Moreover, what is hard enough when the market is

growing becomes almost impossible when times are hard. Internecine com-

petition can break out between business units as each one scrambles to

secure the limited work available.

Cross-divisional teams are one of the key ways in which a consulting firm

can overcome these issues, but this depends on making it clear that each busi-

ness unit is being treated equally; that fees and profits are divided equally (if

there are separate P&Ls); that one business unit does not bear more

of the burden than another. The foundations of teamwork in consulting firms

are fairness and transparency. A brilliant colleague will attract so much work

that it will improve everyone’s prospects; the fact that one person is better

suited to the needs of a particular project than someone else does not make

the former a better consultant.

Marakon recruits from a broad range of backgrounds. “We’ve got histori-

ans and lawyers, as well as economists, engineers and psychologists,” says

Herman Spruit, Marakon Associates’ Regional Managing Partner in Europe.

“When we’re putting a client team together, our first task is to match what

we have with what the client is looking for. One of the most important ways

in which we can add value over and above what the client expects is to

create a diverse team that looks at issues in different ways and constructively

challenges the client’s thinking.” When people are not assigned to a par-

ticular project or are taken off one they are already on, it is important

they recognize this is not because of failure on their part. The firm works

hard at matching what their clients want and need with what their con-

sultants seek to get out of their career. “We move people around to give

them variety,” says Spruit. “We find that clients benefit from the diversity

of our consultants and welcome the breadth of experience we bring from

other sectors.”

Firm-wide Teamwork

One of the most significant barriers to effective teamwork originates in con-

sulting firms themselves, in the rigid internal boundaries that persist, despite


all the attempts to instil matrix management. Specialists want to belong

with other people working in the same field; they form teams which can be

dismissive of others’ expertise and reluctant to share ideas.

“Consulting firms have struggled with the way they’re structured,”

acknowledges Jules Beck at CSC. “They’ve tended to rely on pools of expert

resources, each led by a guru in that field. This works well if there’s strong

leadership but it’s ultimately inflexible. It creates too much hierarchy, and

too much ‘one-think’ occurs in which people in groups tend to agree with

each other rather than challenging their collective assumptions and coming

up with new ideas. Finally, this model is very vulnerable to people becom-

ing territorial: it’s a recipe for political battles.” At the same time, Beck

believes, clients have become much more demanding. “We need to be able

to move people in and out of projects much more quickly than used to be

the case,” he says. “Clients don’t want to pay to have an expert there for a

week if they’re only really needed for a day, or for a day when they’re only

needed for one hour-long meeting. This creates enormous challenges,

because we’re not dealing with just one project or trying to place just one

expert. We have to be flexible, yet also run a lean business with high levels

of productivity. We have to be able to pull in people from other parts of our

organization, not just our immediate consulting colleagues, because this is

what stimulates innovation. And we have to ensure that the person we put

on a job is the one best placed to solve the problem whatever it is, irre-

spective of whether that person is very senior or junior. We’re not – and we

can’t afford to be – rigid about who works where and in what capacity.”

How CSC achieves this relies on a combination of practical initiatives.

Training courses and other events have become a means of bringing differ-

ent parts of the organization together and encouraging people to exchange

ideas. Key performance measures are not owned by individual lines of busi-

ness – a recipe for protectionism – but by two or more business areas in order

to ensure people collaborate internally. There is a very strong mentoring

process. “But perhaps the most important way in which we remain flexible

is by valuing difference,” says Beck. “It’s comparatively easy for a consulting

firm to become very homogeneous and that stifles debate. CSC is a broad

church: we recruit people who may not always have the background of

orthodox consultants but who are highly experienced in a wide range of

business environments, and we encourage them to challenge assumptions

and the status quo.”


“Global deployment fundamentally requires a combination of the trusted

advisor and the trusted firm,” argues Steve Gunby at the Boston Consult-

ing Group. “The trusted firm has to deliver the resources you as a client

need, and the trusted advisor is someone you know who is personally sweat-

ing to make sure the firm is delivering. If you’re in New York and you’re

getting the input of a world-class expert based in Singapore, you still want

someone you can look in the eye and know they’re on your side.” That dual

function has become increasingly important as clients’ needs have become

more specialized, putting more pressure on a firm’s internal networks. “Our

senior people go from country to country more than they would have done

ten years ago – an expert in banking might fly from New York to London

to Frankfurt to Tokyo,” says Gunby, “and the key to making this work is

connectivity.” All the firm’s 450 partners get together twice a year, largely

with the aim of making sure they all know each other; on top of this are

global practice area meetings and a host of other sessions. But the most

important thing is to ensure people actually work together. “Networking for

its own sake only gets you so far,” says Gunby. “We have 120 people working

in our consumer practice, and I’ve worked with at least half and know 90%

of them. That’s invaluable when it comes to global assignments. Good

working relationships with our colleagues are based on trust, just as much

as the good relationships with our clients.”

Even firms that focus on specialized and therefore more homogeneous

markets recognize the challenge here. “We tend to recruit very analytical

people,” says Geoff Nicholson, Managing Director at Mercer Oliver Wyman.

“Typically they’re mathematicians, engineers and economists – very

numbers-oriented people – and we give them an opportunity to work with

other bright people on real-world problems. What we can’t afford is to have

too much in the way of process when it comes to putting the right person

on a project – or, indeed, in any aspect of our business. People here have a

very low tolerance threshold for bureaucracy.” Mercer Oliver Wyman gets

round the problem by using technology to deploy its 900 consultants all over

the world. “Every office has access to a real-time system showing who is

available and what their specialist skills are,” says Nicholson. “We also

monitor how much travel people are doing and whether they’re working in

different areas or focusing exclusively on one – it’s quite possible to have a

very good career as an expert in mortgages here, precisely because we’re so

specialized.”


Of course, the challenge is even greater when the firm-wide “team” is

126000 strong.

Kris Wadia is a partner in Accenture’s Global Delivery Network (GDN).

He likens the evolution of the way in which the firm deploys its GDN

resources to levels of Carnegie Mellon’s Capability Maturity Model Inte-

gration model. “In Level 1, processes are unpredictable, poorly controlled

and reactive,” says Wadia. “At Level 2, processes involved in a project

become repeatable, standard and consistent; by Level 3, organizational

processes are being defined and are predictable; Level 4 introduces managed

processes and you are looking for continuous improvement. At Level 5 –

and this is where Accenture is today – our focus is on continuous improve-

ment and optimizing our use of resources.”

Accenture’s tradition of offshoring goes back to the mid-1980s when the

firm set up a facility in Manila; the roots of this practice can be traced to a

“spin-off” of a regional accounting firm. In the early 1990s, the firm took

over the upstream accounting for BP’s oil and gas business in the North Sea,

a pioneering business process outsourcing deal that paved the way for

Accenture to provide similar services for other oil companies in the area.

As it became increasingly clear that service delivery did not have to take

place at a client’s site or even in the same country, Accenture began to estab-

lish a variety of “centres” around the world: centres of excellence, delivery,

solutions.

By 2001 it had become clear that this sprawling structure required a

different type of management and the firm therefore took two important

decisions. The first was to create two new workforces, in addition to its estab-

lished consulting practice and support personnel. The first was “solutions”,

the core of which would be its deeply skilled IT people; the second was “ser-

vices”, which would support its business process outsourcing deals. “We rec-

ognized that we couldn’t run every part of our business like a consulting

practice,” says Wadia. “There were projects which needed deep technical

skills but at a relatively low cost, but we still needed an onshore presence

where clients didn’t want to offshore a particular function.”

The second key decision was to take the myriad of different centres and

groups that had sprung up and turn them into a true network. “The defin-

ing moment was to place one person in charge of this,” says Wadia, “so that

we had consistency of everything – infrastructure, the quality standards to

be achieved, client satisfaction metrics. It brought the level of central coor-


dination and control necessary for multi-centre delivery.” This new style of

working suited the type of large-scale projects Accenture was increasingly

involved in, but it also had other benefits. “You can’t have good business

continuity planning and recovery if you don’t have a network,” Wadia points

out. “You can’t shift an entire local workforce in times of trouble, so you

have to be able to store data in other locations and have other people who

know what exactly to do because you’ve established common training stan-

dards and processes throughout your business.”

But how does it all work? By no means all the work Accenture does needs

resources from the GDN: small-scale consulting projects are still staffed by

people from the relevant industry groups within the consulting workforce.

“But the moment a relationship partner has won a piece of work which he

or she can’t staff or which needs a combination of different skill sets and

different price points, then they have to tap into the network,” says Wadia,

“and, because we have 40 facilities which employ a total of 24000 people

around the world [in June 2006], we can match any combination of onshore,

near-shore or offshore requirements a client has.” To make this happen, rep-

resentatives of the GDN are embedded in the industry groups, but there has

also had to be something of an education process, internally and externally.

“Some clients can have rigid ideas about how they want a project to be

resourced. We’re all learning how to work in this new, genuinely global

environment. Teams don’t have to be based in the same physical location

for them to be effective. In the eight years I’ve been at Accenture, I’ve never

led a team that is entirely based in the same country. That people can com-

municate effectively across geographies is a testament to the standards we

have in place, and the methods, tools, architectures we train people in.”

In addition to having one person in charge of the entire network, Wadia

cites other critical success factors. “The GDN needed its own culture,

because the people who work in this part of our business need as much a

sense of belonging as those in other areas. If you’re just one of 134000

employees, then it’s easy to feel lost. We do a lot to encourage people to

exploit the opportunities of belonging to this community. There was a team

in India that created a project management tool that proved very valuable,

so we asked them to develop their idea further and then roll it out across

all our delivery centres.” Indeed, an important part of making the network

work has been to build mutual respect. “Accenture has always had the phil-

osophy of using the right person on the right job, and almost everyone who


works here has spent time in different places,” says Wadia, “but there was

still a fair amount of caution about the GDN when we first floated the idea,

none of which was helped by the negative press coverage of jobs moving

wholesale overseas. However, we also have a culture of respecting colleagues:

once people started working together, they began to realize they could

benefit from each other’s expertise. It comes down to trust,” Wadia says.

“We’re all tied up in GDN’s success – and our clients’.”

Strategic Teamwork

But talking about fairness and transparency is not enough where clients are

concerned. Teamwork at this level depends on having a common set of

goals.

One of Accenture’s key aims is to bring its consulting and outsourcing

practices together. “Transformational outsourcing”, the peg on which the

firm is hanging its growth, combines a drive to improve performance (the

consulting element) with a lower-cost means to deliver the improvements

(outsourcing). It accounts for around half of Accenture’s revenues. More

than consulting or outsourcing in isolation, transformational outsourcing

requires effective teamwork, between Accenture’s consulting and outsour-

cing workforces and between the client and Accenture. “There has to be

mutual respect and the recognition of each others’ interests,” says Lis Astall

at Accenture. “If there’s an imbalance here – for example, if one firm puts

its self-interest ahead of the collective endeavour – it will always start to

show in the process.”

The vast majority of Accenture’s projects are long-term, multi-strand,

spread across different countries, so the team is all-important. “We don’t

look at individual people, but the overall team,” says Astall. “Our clients

often say what they like is the strength of our bench.” Making these teams

work starts with Accenture’s structure: the firm is organized along industry

lines, but this is criss-crossed by its workforce groupings: solutions (carrying

out systems integration work onshore and off); services (outsourcing); enter-

prise (largely consulting); and contractors.

“The relationship often starts at the personal level, but rapidly becomes

more corporate,” says Astall. “Winning and delivering work on this scale

takes far more than two individuals sitting down and hammering out the

details.”


That is exactly the kind of philosophy Accenture has been putting into

practice at Thomas Cook UK & Ireland, Europe’s second largest leisure

travel group which employs some 12000 staff, operates almost 600 travel

stores and takes more than 3 million customers on holiday every year to

more than 1000 destinations. It is a substantial oak to have grown from a

very small acorn: Thomas Cook began his travel company in 1841, with a

successful one-day rail excursion at a shilling per head between two stations

in central England. Cook’s first foreign holiday was a grand circular tour of

Brussels, Cologne, the Rhine, Heidelberg, Baden-Baden, Strasbourg and

Paris.

Such a long and distinguished history may have bequeathed the company

one of the world’s best-known travel brands, but it also left it with a legacy

of operational challenges. In fact, it is three separate business units alone in

the UK – sales, tour operations and the airline – none of which operated as

an integrated business. On top of this, the company had 23 offices in the

UK, and the rest of its infrastructure, from its IT systems to its HR admin-

istration and finance function, was a patchwork of disparate and discon-

nected processes. In the face of new entrants with much lower cost

structures, new airlines and online travel companies, these inefficiencies

were threatening its survival. “Everyone had their own way of doing things,”

remembers Ian Ailles, Managing Director of Thomas Cook’s Specialist Busi-

nesses. “There had been a lot of acquisitions, so we had multiple head office

sites, several ledgers. And there were plenty of challenges around the busi-

ness – strengthening the brand, customer delivery, operational issues. There

was a limit to how much we, as a management team, could do: we decided

to concentrate on running the travel business and to find a partner who

could take on the back-office functions, streamline them and run them more

efficiently.”

The last thing the company was looking for was a typical them-and-us

supplier relationship: this would be a long-term project and they needed an

organization that would be willing to share their objectives, risks and – hope-

fully – rewards. Accenture signed a 10-year “co-sourcing” arrangement in

which it committed to delivering a series of major change and continuous

improvement programmes. What is most innovative about the deal is that

it focuses on business outcomes, such as capability improvements, new ideas

to move the business forward and cultural fit, not just on systems delivered

or deadlines met, and that it is flexible enough to translate into an


operational plan that really works. Thomas Cook controls strategy, policy,

investment and critical decisions, while Accenture is responsible for the

operational management of the work to transform the former’s back-office

processes and subsequent service delivery, and the overall performance and

profitability of the shared services centre. The arrangement not only eases

Thomas Cook’s cash flow concerns; it frees the company to concentrate on

what it does best: selling holidays.

Accenture’s priority was to create a high-performance, cost-effective

shared services centre, based in Peterborough, and within a year a signifi-

cant number of back-office functions had been relocated there. Four years

into the agreement, 70% of the work originally transferred to Peterborough

has moved again, this time to India. “The transformation has been just phe-

nomenal,” says Carl Dawson, Thomas Cook’s Chief Information Officer. “To

change a business of this size at the speed it happened and to help us to

deliver the dramatic financial performance is an incredible success story. We

are now well positioned to grow our business.”

Clearly, in a project as large and complex as this, there is a multiplicity

of critical success factors: the extent to which Thomas Cook could tap into

Accenture’s Global Delivery Network; the speed and momentum with

which changes were rolled out; the fact that Accenture was able to halve

the number of redundancies when Thomas Cook’s processes were offshored

by redeploying people on different contracts. However, the fact that the two

companies shared in the success was not insignificant. “One of the reasons

we chose Accenture was that the firm was willing to be innovative around

the financing of the deal,” says Ailles. “We needed to invest, but were under

pressure in terms of profitability. This deal allowed us to change our cost and

capital structures. The fact that success was also defined in terms of what

we wanted to achieve as a business was also hugely important. If the project

failed, then neither we nor Accenture could gain, and that promoted a very

strong ethos of working together at all levels of both our organizations. Now,

we’ve the flexibility to change as our business changes direction. Accenture

has also encouraged innovation, something we didn’t have the capability for

before and do now. That combination of discipline, efficiency and innova-

tion has paved the way for continual improvements in the performance of

our business.”


13When is a methodology not a methodology?

Clients want to have their cake and eat it: a recent survey by the UK

Management Consultancies Association showed that exactly the same

proportion of clients chose a consulting firm because the latter had a

tried-and-tested approach to doing something as those that chose a firm

because they had an original approach to the work in hand. In some cases,

the same client wanted both a structured methodology and innovation.

Wanting something new is a basic human desire for difference and excite-

ment. Managers are not really different from toddlers: they try out new toys,

bore of them and demand new ones. But managers are also risk-averse, they

want guaranteed success. Consulting firms find themselves walking a pre-

carious tightrope between these two sets of expectations: tip too far towards

the methodology side and they are criticized for hawking pre-packed solu-

tions; tip too far towards innovative processes and they are accused of being

disorganized or seeking to enlarge the scope of a project to increase their

fees.

There are issues from the supply side too (Figure 13.1). Methodologies

started to become important at the point where the consulting industry

began to recruit more junior people who did not have in-depth skills or years

of experience to draw on. They would, as one client put it, use methodolo-

gies like a drunk uses a lamppost – for support rather than illumination. But

a methodology does much more than this: it acts as structural glue and a set

of accepted standards in an environment where employees may be distrib-

uted across a multitude of different projects, perhaps in different countries.

As consulting projects have grown in size and complexity, methodologies

have become the primary means by which a consulting firm controls quality

and delivery. At the height of the ERP boom, when armies of consultants

went from client to client, a methodology became a necessity, a way of exert-

ing control over consulting done at scale. In more recent years, as clients

have become more reluctant to commission these massive IT projects,

methodologies have morphed into a way of doing things quickly, a means

to devolve authority to their front-line, setting out the rules of what con-

sultants can and cannot do. These aspects all remain pertinent today, as

massive IT projects have been superseded by large outsourcing and off-

shoring deals, and as a host of new entrants espousing highly structured

approaches, such as Carnegie Mellon’s Capability Maturity Model Integra-

tion (CMMI), have emerged.

The core of Axon’s business is SAP implementation: not surprisingly, the

firm has an approach which it can apply again and again. “We have an

overall framework for the consulting process,” says Steve Cardell, Axon’s

Chief Operating Officer, “together with tools, templates and examples of

ways of doing things. Different teams are responsible for each set of tools,

so that those working on HR systems are charged with developing the HR

tools. We recruit senior people, often from much larger consulting firms, who

are very experienced: we don’t need something that tells them what to do.”

“Some tools don’t change much from year to year,” says Cardell. “The

fundamental issues they’re addressing remain the same. To be honest, I don’t

think they represent a competitive advantage: all the consulting firms we


1980s 1990s 2000s

To supplement the

skills of junior

consultants

To provide structural

glue and standards in

large-scale, complex

projects

To ensure control of quality and delivery

To increase speed of

delivery

Figure 13.1 The evolving role of methodologies

compete with have learned the same lessons about what works and what

doesn’t during the course of implementing an ERP system, and we all have

pretty much the same tools. Ten years ago, having a methodology used to

be a differentiator, but clients no longer believe in a single, holistic method-

ology. We can’t stand up and say, ‘We have the best method’; indeed, it

would be hard to think of an instance where we’ve won a project on the

basis of methodology. But we would be shot if we stood up and said we didn’t

have one.”

However, the problem with this evolutionary path is that it has taken

parts of the consulting industry dangerously close to what many people

regard as commoditization. Methodologies demystify the consulting process;

they allow clients to have a clearer idea of the costs associated with differ-

ent tasks and to negotiate the price of these separately. “As an industry, we

have to be careful about our reputation,” says Duncan Craig at AT Kearney.

“Client attitudes are deteriorating: there’s too much emphasis on price, not

value; the quantitative analysis of our capabilities common to so many pro-

curement processes will lock us in to the commodity space. One reason why

prices are depressed at the moment is that as an industry we’re on the defen-

sive, scared we can’t actually justify the rates we need. We have to go back

to clients and defend the value we’re adding and restore confidence in the

quality of work we’re delivering, otherwise the industry will continue to be

commoditized.”

A methodology is a double-edged sword that has to be wielded with care.

To get round this dilemma, consulting firms need methodologies that protect

them against commoditization, not pave the way for it.

Traditionally, the way firms have solved this problem is by making it clear

that their methodology is not something to be slavishly adhered to, less a

set of prescriptive rules and more the equivalent of a recipe book from which

the good chef picks and chooses. “We don’t sell pre-packaged solutions,”

says David Oliver, Vice President of Kurt Salmon Associates’ UK practice,

“but we use them. A good example would be inventory management in the

retail sector: this is always an issue, and we have lots of methodologies

around improving inventory management, but we don’t sell these. A client

will see the problem in terms of poor availability, too much stock or too

many end-of-season markdowns. Everyone will be concerned about this,

even the most efficient companies. So what we sell them is better avail-

ability or less stock in the system. In so far as our tools feature anywhere in

W H E N I S A M E T H O D O L O G Y N OT A M E T H O D O L O G Y ? 171

the process, it is around giving a client confidence that we can solve these

issues: most of our credibility comes from being able to discuss the issues

intelligently in the first place. Obviously, it helps if we can refer to similar

work we’ve done for another retailer, but it’s very rare that we’ve done

exactly the same thing, so even our case studies need to be pretty robust and

get stale quickly.”

Two things will be critical to exploiting the advantages of a methodol-

ogy in the future while minimizing its disadvantages:

1. content – providing genuine insights which are directly and explicitly

related to the creation of lasting value;

2. process – ensuring that the methodology involves people rather than

alienates them.

Content – Avoiding the Emperor’s

New Clothes Syndrome

There is barely a consulting firm on the planet that does not lay claim to a

methodology of sorts. Sadly, in many cases, this adds up to little more than

a patchwork of ideas from client work, stitched together in a rudimentary

fashion and falling to pieces when pulled, leaving the average consultant

more or less naked.

Kurt Salmon Associates is unusual among consulting firms. In the first

place, it has been around a long time: the eponymous founder trained as a

textile engineer in Germany before emigrating to the United States in 1930.

Becoming a consultant because it paid more than working in a hosiery mill,

Salmon applied a combination of sharp analytical sense and old-world

charm to persuade clothing manufacturers they could benefit from outside

help. Nor did he just want to offer advice: “We don’t just lay eggs, we hatch

them”, was one of the aphorisms he used to sum up his firm’s approach to

consulting. Today, Kurt Salmon Associates employs 800 people across the

world, but it is still providing a combination of analysis and implementa-

tion, largely to consumer products companies and retailers.

Working in such demanding sectors for so long, the firm has accumulated

a vast array of specialist knowledge: the question is how to employ it. “Given

our client base, it’s ironic that we probably lean too much towards being a


bespoke tailor,” says David Oliver. “We’re not as highly leveraged as many

of the other big firms, so we typically have more relevant experience within

the project team and we don’t need to underpin our work with a single

methodology. On the other hand, our apprentice-artisan model means we’re

less scalable and it takes time to develop the next generation of experts.” It

is also a model that is under increasing pressure from clients who, like con-

sumers, are looking for instant gratification. “Many of the benefits of the

way we work only become visible to clients when they work with us,” says

Oliver. “They love the experience of working side-by-side with people who

know as much, if not more, about the industry as they do. But that’s not

something that’s easy to communicate when we’re trying to win work from

new clients. These days, clients want to know we have a methodology, a

way of demonstrating that we can deliver results more quickly than if they

were to do the work for themselves. You can’t start with a blank sheet of

paper any more.”

So how is Kurt Salmon reconciling the push to develop, not just indi-

vidual tools and techniques, but some more overarching process? In the first

place, it is not changing how it develops its ideas: setting up a separate think-

tank would be anathema here. “Our ‘methodology’ is really a set of tools

which have grown out of client work, rather than a regimented method,”

says Oliver. “Our challenge is how to codify the best of what we have done

for clients and to keep that up-to-date. We don’t develop methodologies off-

line, but through interaction with our clients: this is the only way of being

able to understand the important issues from their perspective and separate

the interesting but academic ideas from those with real, practical implica-

tions. We read management journals, but that’s mostly to help us understand

what other consulting firms and academics are talking about!” It follows

from this that the firm adopts a rather self-organizing principle to develop-

ing ideas, allowing them to emerge through a process of natural selection

rather than picking one single idea to invest in at too early a stage. “The

best approach is to allow people to follow their passion for a bit,” says Oliver,

“to give them the freedom to go off and develop their thinking to a certain

point.” At that point, investment from the firm comes into play. “You need

the oversight of a fairly senior person,” he continues, “who takes responsi-

bility, taking the idea further, editing it, and ultimately for deciding whether

it’s better than something we had before so that we don’t have six versions

of the same thing. It’s easy for things to get too big, too fast.”


The challenge lies in taking this a step further and in linking the differ-

ent tools so that the whole is greater than the sum of the parts. “It used to

be enough to have tools for designing and modelling distribution networks,

but you can now get off-the-shelf software that does that. The next variable

is the goods a client is transporting – that might be items in boxes versus

items on hangers – in order to look at how detailed merchandising can affect

the costs and efficiency of a distribution network. Thinking around single

issues has become commoditized: what clients struggle with is driving cross-

functional change, and that’s where we’re developing new approaches,” says

Oliver. Joining up the dots is clearly part of the solution, but so too is cap-

turing the value to be derived from applying the approaches it develops.

“Codifying client work is only part of the picture. We also need to track the

benefits that accrue from using it. Consulting firms often take it for granted

that clients recognize that value; in practice, they tend to focus on opera-

tional metrics. Clients will happily say we have improved productivity by

20% or improved efficiency so that they can take on 15% more business,

but they’re less likely to link that result to the way we’ve worked. Being able

to articulate that value is now at the heart of our ‘methodology’.”

Value is also something that crops up when you talk to people at Marakon

Associates. So far as the strategy consulting market is concerned, Marakon

is a relatively new kid on the block: it was founded in 1978 with the idea

of combining innovations in investment and strategic management in order

to help executives in large corporations run their businesses more effectively.

Initially, the firm focused on performance measures such as economic profit

and equity value, labelling its approach “value-based portfolio manage-

ment”. “But we rapidly realized that we had to link these metrics with the

strategic planning process,” says Herman Spruit, Marakon’s Regional Man-

aging Partner in Europe, “hence the idea of ‘value-based management’.” This

focus on value continues to underpin everything we do, even as our

approach has broadened to include execution, growth, productivity, leader-

ship and organization, as well as strategy.” It is a disciplined approach that

differentiates Marakon’s position in the market, and it plays a key role in

the relationships Marakon has with clients.

“We call it fresh advice and lasting impact,” says Spruit. “First, it’s not

about choosing a specific model to work from, but holding up a mirror to

the organizations we work with and asking fundamental questions about

strengths and weaknesses. We marry that with an analysis of what’s hap-


pening in their market in order to understand what choices they have, what

will maximize the value of their business.

“The second aspect is to use objective decision criteria. Having a lasting

impact is not about one-off decisions. To maximize its value, an organiza-

tion has to take all its business decisions in a better way. This involves under-

standing how a client got to the situation in the first place, and what kind

of information, standards and dialogue are the norm. How should they

change the processes and boundaries of an organization to spot decisions

that need to be taken? How can they make decisions in a way that adds

value and ensure that they will be implemented? These are the things that

create lasting impact.”

How Marakon works with its clients depends on the kind of decision the

company is facing. “What is common among all our engagements is a focus

on providing the highest quality data with careful consideration of how to

engage with people. It’s this combination of content and engagement that

makes our approach so successful in gaining client ownership,” says Spruit.

“So we will rarely make a presentation and say, ‘This is what you should do’.

It’s more important to have the right dialogues in the business with the right

people. What kind of conversations should these people be having with each

other? They each have valuable information to share. Framing the choice

is important, as there is usually at least one alternative to the decision that

needs to be tested, so we have a rigorous process where all the alternatives

are evaluated. That ends up changing the conversation people have with

each other, so our approach has a strong behavioural aspect to it.

“Although it’s sometimes tempting to follow a rigid structure and be pre-

scriptive, we never tell our clients what to do. Every decision an organiza-

tion makes is different and we have to take account of that. We also find

that our clients like to work with us in different ways. There’s one level

where you work with content and another level where you are almost a

coach. Sometimes you can add tremendous value just by asking the right

questions, and that builds a lot of trust and confidence. Inevitably, we find

that every successful organization has an agenda of four or five highest value

things to focus on. Less successful companies are much less focused and con-

sequently their energy is dissipated across a wide range of lower-value issues.

Sometimes we have to deal with the issue that’s uppermost on everyone’s

mind first, but we do it in such a way that it has lasting impact. This gives

us a mandate to then work on the highest-value issues. It’s important to look


at where the organization is currently focusing its effort and work with the

sources of energy and frustration to get people excited about the opportu-

nities waiting to be tapped. Most of our client relationships last for years, so

we aim not just to improve the quality of one decision, but to improve their

decision-making process and the way they gain sustainable competitive

advantage.”

Flexibility – seeing every client issue as unique – has to be underpinned

with discipline, and discipline does not come from a manual so much as

from culture. “People who join Marakon have to go through a process of

learning our common values and language,” says Spruit. “In a sense, we try

to mould them to the culture of the firm, but then use that common set of

values to give them the confidence to be different. Business solutions are

about strategy, finance and organization: no one at Marakon is ever allowed

to specialize in just one of these areas. They have to understand issues

through all three lenses in order to develop sustainable solutions. Over the

last couple of years, Marakon has also switched from an evaluative culture

to a developmental one. It encourages you to ask the right questions,” says

Spruit, “because coaching people to interpret what’s going on is one of the

most important skills in arriving at the best solution. Just as with our clients,

we don’t want to tell people what to do on a specific occasion, but to ensure

they can make the right decisions on a sustainable basis. As with our clients,

we want to have a lasting impact on our people too.”

Process – Methodologies for Engagement

Hot-housing is something you do to seedlings and bright children, but can

you do it to a group of airport security officers? That was the challenge facing

Capgemini.

Mark Murphy is the Customer Service Director at the UK’s third busiest

airport, Stansted. Half of his staff work in security: “The content of work is

dictated by machinery, regulation and the volume of customers travelling

through the airport – it’s as simple and complicated as that.” It is not hard

for people to feel disenfranchised in such an environment, where they have

so very little say in their work; however many good ideas they have about

what could be improved, the opportunity to put those ideas into practice

can be limited. “Because people’s lives depend on us getting this right,

people are reluctant to change things,” he says. The pattern of activity at


the airport makes Murphy’s job an unenviable one. As the hub for many of

the low-cost airlines serving London, Stansted’s rush hour is between 5 am

and 7 am, with smaller peaks during the day. With 14 x-ray machines in its

central search comb, the airport has a finite capacity, but is keen to find ways

of increasing customer throughput so that this capacity can be safely

increased. “We clearly need more capacity during the busiest periods, and

more flexibility during the quieter ones,” says Murphy.

Having worked with a team from Capgemini in his former role at Tesco,

Murphy asked the firm to help engage these essential employees and channel

their ideas and energy into solving the problem. But he also wanted to avoid

the parent–child relationship that often sets in when you hire consultants

and which would only exacerbate the situation: “The culture has been quite

paternalistic, but we needed to devolve more decision-making to the people

close to the customer without compromising security.” He was particularly

interested in “hot-housing”, a way to develop new ideas from front-line

people as quickly as possible, which he had seen Capgemini put into good

effect at Tesco and which had also been applied at Gatwick airport. “I

thought there’d be a good fit.”

“It didn’t feel like it at the time,” laughs Michael Harrington, who had

led the hot-housing project at Gatwick and had the task of persuading a

group of cynical security officers that hot-housing could be applied to any-

thing other than delicate seedlings. “Essentially, hot-housing is a test-bed

environment for thinking up, testing and trialling new ideas as fast as pos-

sible,” explains Harrington. Ten security officers were taken out of their day

jobs and asked to canvass their colleagues for good ideas for resolving fun-

damental issues; they were given ten weeks to formulate and test their ideas,

with help from Harrington and his team.

“We tried to pre-empt the inevitable scepticism of such situations by pre-

ceding the actual hot-housing with work on developing the core skills of

the security management,” says Murphy. “We’d spent time training and

coaching them, making the point that we wanted to invest in them and

their operation.” The aim was to change the outlook of enough people

to reach a tipping point, triggering widespread change in the organization.

The attitude of Harrington and his colleagues also helped: “They weren’t

coming in with a holier-than-thou approach, but one which was open and

honest, and treated people as individuals. The hot-housing provided a

neutral, almost detached environment where it was possible to have some


challenging discussions on how to improve. If there’s anything I think I’d

change if I did something like this again, it would be to find a way of involv-

ing more people in order to spread the word.”

Just across the North Sea in Rotterdam, Herman van Herterijck makes

similar points about consulting methodologies.

Unilever Foodsolutions, where van Herterijck is the Chief Operating

Officer, is a significant player in the European food service market, cover-

ing 23 countries from Ireland to Russia with a team of around 2000 employ-

ees. Discriminating customers and a shrinking market cut little ice with

Unilever’s head office: growth was still expected. Moreover, van Herterijck

and his board would need to balance the efficiency of standardizing their

pan-European supply chain with the need to stay in touch with the

company’s local markets. Their challenge was to ensure that those 23 dif-

ferent teams could pull together.

“I’m a strong believer in running a business through emotional ties, rather

than hierarchy,” says van Herterijck. “The time when the manager sat at

the top of a pyramid exerting indirect influence through a complex report-

ing structure has passed. People should be able to reach me: if a field sales-

person in one country has a good idea, they should be able to talk to me

about it. Equally, if I have something I want to happen, I should be able to

talk directly to the people who can make it happen. We both should be able

to go through a well-organized network – that’s my dream for this company.”

The first signs were not promising: “When I arrived here, it was a bit chaotic.

We had all the overheads of being a multinational corporation with none

of the benefits: people didn’t work together.”

Van Herterijck had worked with Steve Smith at Quest International on

change management issues before, and he asked Smith if his Strategy into

Action approach could help. “I said, ‘Let me explain my dream . . .’.” Strat-

egy into Action is an approach developed by Smith and his colleagues over

many years; essentially, it aims to help people work out what is important

in complex environments and make them happen. “The engagement and

commitment of leadership teams at all levels is a core ingredient,” says

Smith. “The process involves holding workshops aimed at creating one-page

plans; enabling structured debate on the ends and means encapsulated in

these plans, up, down and across the organization; encouraging people at all

levels of buy-in; and launching practical initiatives via a series of high-

impact events. But the value to Foodsolutions lay not so much in the


conceptual model as in the extent to which it provided a structured process

for agreeing a plan and making it work.”

“As a newcomer to the business, I didn’t know enough about it to chal-

lenge people when they told me something wasn’t possible,” says van Her-

terijck. “Moreover, it’s not my role to know everything inside out. With my

executive team, our job is to create the right vision, put the right people in

place, to ensure they have the right priorities and to coach them to help

achieve that vision. What we could bring was process, not content, and

that’s where Strategy into Action would help, it would provide strict discip-

line in terms of how we went about things, but didn’t tie us down in terms

of content.” Four months of work ensued. Van Herterijck’s team knew that

any shorter timescales would push the business units into second-guessing

what was wanted from them, rather than analysing what they actually

thought they could achieve. The individual country operations prepared

their business plans and submitted them to van Herterijck; he and his team

went back with comments, perhaps areas where they thought a country

might be being too pessimistic or hadn’t thought through its approach. They

then compared the aggregate of all the local proposals with the top-level

targets for the year set by Unilever’s head office. “We could see where the

gaps were,” says van Herterijck, “and we could go back to the countries and

say, ‘Here are some ideas, see what you can do with them’.” When the second

set of plans produced by the countries took the company to within a whisker

of the top-level targets, van Herterijck’s board accepted the plans as they

stood. “One of the important lessons we learned,” he says, “is how import-

ant it was to accept these second attempts even though we thought there

were minor imperfections. If we’d gone back a third time, people would have

thought we weren’t listening to them but were simply trying to force them

to accept the head office numbers. That wasn’t what we wanted at all: the

countries have to own their own plans.”

“Today,” he says, “we’re close to realizing my dream. We recently held a

leadership forum which brought together 125 people from across the entire

business and you could tell they felt completely connected to each other. I

listened and coached, but didn’t have to say much: the teams were running

the show.”

The drawback to most consulting methodologies is that they are entirely

focused on process (doing things faster) and content (doing things differ-

ently), but rarely consider people (those that do the doing). Because it is


the consulting firm that has developed them, methodologies are necessarily

things that are done to clients, not with them. Clients may like the idea –

hence the importance of having a methodology if you are a consulting firm

trying to win work – but they rarely enjoy the practice. This is, surely, the

next step on the evolutionary ladder.


14Innovation – beyond the borrowed watch?

What does innovation really mean to consulting firms? The industry con-

tinues to be haunted by the ghost of the consultant as someone who takes

your watch, tells you the time and asks to be paid for the information.

Research shows that 90% of clients know the joke, a figure that rises the

more money an organization spends on consulting. Of those who have heard

it, slightly more than half do not think it is outdated (three-quarters in

high-spending organizations). At the same time, fresh thinking is the second

most important reason why clients use consultants after access to specialist

skills.

There are significant barriers to innovation in consulting. The first is the

clients themselves: while they may talk about the need for creative think-

ing, it is a comparatively rare client that means it. All too often, innova-

tion is something that sounds good in theory, but is difficult to handle in

practice. Innovative projects are often leaps of faith and many managers do

not feel comfortable with the level of risk involved. There are risks, too, for

the consulting firms. Innovative projects are hard to plan for and the flexi-

bility they require makes it difficult for a firm to use its limited resources effi-

ciently. Innovative projects are also more likely to disappoint: clients may

set out with high but unrealistic expectations, then blame the consultants

when they achieve less in practice. On top of this, innovation is rarely a

consulting firm’s core competence: while there are a minority of firms which

specialize in, and have an established record of, doing groundbreaking work,

the overwhelming majority are better equipped to interpret and deliver ideas

which have been developed and tested elsewhere – by clients themselves,

in business schools or research projects. Spotting and nurturing embryonic

ideas takes time and a degree of entrepreneurial talent few consulting firms

have.

The Boston Consulting Group is one consulting firm which can legiti-

mately claim to have generated ideas that have since passed into common

business practice. The experience curve evolved out of analysing semicon-

ductor production in the 1960s and the recognition that costs tended to

decline with cumulative production volume as producers convert their expe-

rience into increasing efficiency. The BCG Growth-Share Matrix remains

a mainstay of MBA case analysis. Within a couple of years of being founded,

the firm was producing essays aimed at stimulating executive thinking across

a broad range of issues: “The subject matter is chosen to be deliberately

provocative, significant in implication, and relevant to the policy decisions

of corporate competition,” the firm announced in 1964.

“There is always a market for innovative approaches, especially where an

organization is undergoing wholesale change,” says Steve Gunby, Head of

the Americas region at the Boston Consulting Group. “At the most abstract

level, companies are entities optimized around their historic business model:

everything in them – people, processes, systems and culture – contributes to

the status quo, so changing this is enormously difficult. The whole re-

inforcing system of values and structures needs to change too. While the

fundamental questions we address as consultants remain the same, the

specifics of how we respond to these challenges – how we change an organ-

ization – have to be ever more sophisticated, and that creates enormous pres-

sure on us to ensure our thinking continues to move on. To be innovative

with clients, we have to innovate ourselves.”

There are two aspects which distinguish the Boston Consulting Group’s

approach. The first is the extent to which innovation is woven into the fibre

of the organization. “Our firm is built on the notion that there is an enor-

mous amount of learning embedded in our clients, ourselves and in past ways

of doing things. We’ve developed complex knowledge management systems

to ensure we can exploit this learning: although the results of a particular

piece of work may obviously be confidential, if we think we’ve developed a

new or better tool, for doing market research for example, then that’s some-

thing we’ll leverage by disseminating it across the whole firm.” Each prac-

tice area has its own budget for developing new ideas, whether that is putting

a team of people together to work on something for a period of time or giving


someone time off to study or write a book. “At any one time, there is a

myriad of different initiatives underway,” says Gunby. “But systems and

processes are not enough. To sustain this level of activity, we have to recruit

people whom we think will be genuinely innovative individuals and then

use our training programme to strengthen that predisposition.” Because new

ideas often cross conventional boundaries between disciplines, Boston Con-

sulting Group’s training is much more broadly based than it used to be; being

able to engage an organization’s willingness to change is now a fundamen-

tal part of the training: “There has to be process, as well as insight,” says

Gunby. But much more comes down to the gentle application of peer pres-

sure: “We spend a lot of time sharing ideas in meetings via informal net-

works: all our staff have to feel that developing new ideas and taking them

to our clients is part of their work.”

There are very few consulting firms which could claim to put as much

emphasis on innovation as Boston Consulting Group does. True, some of

the other large firms have innovation “centres” into which fee-earning con-

sultants may be seconded to sit side-by-side with full-time researchers, in

order to develop new ideas. But what this means is that innovation tends

to be regarded as an “extra”, something that happens outside your normal

day job. True, many firms would claim to develop thought leadership, but

that is not the same as innovation.

So does this mean that the consulting industry is stuck with the take-

your-watch-to-tell-you-the-time image? Is the level of innovation it offers

always going to fall short of clients’ expectations?

The Stardust of Consulting

The underlying problem seems to be our understanding of the word: inno-

vation smacks of big ideas which have groundbreaking impact. It sounds like

the kind of thing only the biggest firms, which can afford to spend millions

on standalone think-tanks, can do. It conjures up images of science labs, of

serious conversations in hushed voices, of ivory towers. Such an image does

not help clients (they expect the impossible); and it does not help consult-

ants (they feel it is beyond their reach).

Perhaps when we use the term innovation we should be thinking of some-

thing smaller-scale and more down-to-earth.

I N N OVAT I O N – B E YO N D T H E B O R ROW E D WAT C H ? 183

Bending the Rules

To many clients innovation is synonymous with flexibility. Innovative con-

sultants are those who are prepared to break out of the strictures of their

firms’ methodologies, to bend and even flout the rules when the situation

demands it – a variation of the consultant good, firm bad perception. Thus,

while consulting firms develop methodologies, it is individual consultants

who circumvent them, as the following comments (all made by clients)

illustrate:

• “Very disappointing – it was too much of an off-the-peg solution.”

• “The firm ended up telling us what we already knew.”

• “What we valued most was the consultants’ good knowledge of the

market and their flexibility.”

• “They were innovative, taking the time to understand our real require-

ments and tailoring their approach to meet our needs.”

• “A bad firm is one who either does not listen or appears initially to listen

but who comes up with a pre-packaged solution.”

Indeed, comparing the responses of clients who have been pleased with the

work done by their consultants with those who have been disappointed

shows just how important flexibility is seen to be. Happy clients are roughly

eight times more likely to believe their consultants took a flexible approach

(Figure 14.1).

Moreover, it is almost certainly lack of flexibility that gives rise to jokes

about consultants taking your watch to tell you the time, rather than lack

of creative thinking as such. The people who hire consultants, and who are

more removed from the actual process of consulting, tend to have a far more

positive view of a consultant’s flexibility than those who work closely with

them – project managers, people seconded to a project to work alongside

the consulting team and even end-users. Indeed, end-users, the people most

directly affected by the work consultants do, are half as likely as the deci-

sion-makers at the top of their organization to believe consultants can be

flexible (Figure 14.2). Innovation can therefore be seen in terms of what it

is not – not following a rigid procedure.

British Airways’ London Eye is one of the most beautiful additions to the

London skyline in recent years: an elegant structure combined with breath-

taking views have made it the city’s most popular tourist destination. It’s an



The consultants rolled up their sleeves

and got on with things; they were very

flexible

85%

0%11%

56%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Agree Disagree


Figure 14.1 Perceptions of flexibility comparing clients satisfied with work done by consulting firms

with clients who are dissatisfied

The consultants rolled up their sleeves and got on with things; they were very

flexible

61%55%

48%44%

35%

0%

10%

20%

30%

40%

50%

60%

70%

Decision-makers Influencers Project

managers

People

seconded to the

project

End-users

Figure 14.2 Comparing the attitude of different people in a client organization to the flexibility of

the consultants they work with

architect’s dream, but an operational nightmare. As a business, it is very

space-constrained: it has only a tiny shop and no restaurant so, unlike most

attractions, the opportunities to drive up revenue per customer are very

limited.

“We’ve been very successful at attracting a high volume of customers,”

says Eleanor Harris, London Eye’s Operations Director, “but by 2004 we’d

reached a crossroads: our costs, insurance and rents were all going up, but

where were the new opportunities for growth going to come from?” Such

opportunities as there are involve trading up from a conventional ticket:

having champagne and roses for romantic evening “flights”, combining a

ticket with a hotel package, designing a weekend in London round a visit

to the Eye. “We have more in common with lastminute.com, than we do

with a traditional tourist attraction,” says Harris. “They needed to take the

flexibility we didn’t have in physical terms and apply it to the kinds of tickets

and deals we could offer.” But the obstacle here was the Eye’s ticketing

system, which had originally been designed with theme parks in mind and

was not capable of handling all the different elements the Eye now wanted

to bring together. Harris therefore approached BT, which had been provid-

ing on-site support for the existing ticketing system, to help them develop

a system which suited their specific needs.

“The unique aspect of the new e-ticketing service was that it was to be

integrated with third-party systems so people can book a hotel, get discounts

from restaurants, get tickets for other shows, all at the same time they

booked their tickets for the Eye,” says Alex Barrie, BT’s project manager.

“Everything had to be automated: the system had to be capable of process-

ing direct and indirect sales while stripping out costs for the Eye and its busi-

ness partners.”

It is far more complicated than it looks on paper. If someone bought a

ticket from a third party, they would get a voucher which they would then

have to queue to convert into a ticket when they got to the Eye, which

negated one of the reasons for paying in advance. Moreover, it was only

when the voucher went into the till that the Eye and the third party which

supplied the voucher would know that it had been consumed. This meant

that calculating how much commission various third parties were entitled

to would create a mammoth paper chase to reconcile the invoice sent with

the vouchers redeemed. “One of the things we were bringing was expertise

in business-to-business trading,” says Barrie, “a combination of industry


knowledge and innovative technical thinking. We had to be able to design

a solution in which everyone won: visitors wouldn’t have to queue up; third

parties would know how much commission had been earned; the Eye could

reduce its back-office costs while also offering more flexibility and choice.”

No one had done anything quite like this before and both sides were at

pains to ensure that none of the creative thinking was lost in the process of

designing and constructing the system. Ideas, as well as time, were money.

“It helped that BT knew our business very well,” says Harris, “because it

meant we could all sit down together and go through what we wanted and

how we might be able to make it happen. We had a vision of the kind of

system we wanted – fast, front-of-house ticket collection machines, state-

of-the-art scanners. Alex and his team had to take a creative approach,

interpreting the challenges we faced as a business and translate them into

technical ideas.”

“It helped that the Eye is such an innovative and intelligent client,” says

Barrie. “They knew exactly what they wanted and why it was important. It’s

a tightly run business in which everyone understands what their role is and

how they contribute. We were each pushing the other to come up with

better and better ideas: it was an exciting process for everyone involved.”

Harris agrees: “I’ve been involved in consulting projects where both sides

have claimed to be partners but still applied the old them-and-us mentality

in practice. Our relationship here was excellent: BT has been open-minded

and listened to what we have to say; where we’ve suggested changes, they’ve

taken them on board in a positive, not grudging, way. And that’s generated

a huge amount of trust between us. This project was a real leap of faith,”

says Harris, “and we’ve all invested a lot in it. But we think we’ve got one

of the best systems in the marketplace, and we’re already seeing the bene-

fits in financial terms: special flight tickets have doubled this year.”

Generating Insights

Innovation in consulting projects is not just about flexibility any more than

it has to be about blockbuster ideas. For most clients, innovation means

insight.

Bob Dench used to run Barclays’ investment management businesses and

is now on the board of AXA UK; he also has a variety of non-executive

roles for other financial services companies. As you’d expect, he has seen a


lot of consultants come and go. “After years of cost-cutting, Barclays had

absolutely no fat left in key areas of its organization,” he says. “Any signif-

icant new initiative, whether it was aimed at taking out more costs or

increasing revenue, meant bringing in short-term additional resources –

‘body shopping’ consultants – from outside.” The organizational upheaval

caused by waves of change in the financial services sector meant that many

specialist skills were in short supply: “Like other companies, they found it

hard to recruit the specialist skills it needed,” says Dench. “Moreover, we

were also conscious that we wouldn’t require these skills in perpetuity: it was

more a question of filling specific short-term gaps.” Although faced with

little choice, Dench was, and remains, cynical about the way some consult-

ing firms operate. “You have to be sure you use the right firm,” he says, “so

you don’t get too great a divide between the people in charge and the people

who actually do the work. There are too many firms whose business model

depends on having a partner who swans in once a fortnight while the junior

people crack on with the work, who use you as a rung on their personal

ladder through your organization and forget you’re the one signing today’s

cheque.”

Against this backdrop, one group of consultants stood out, Troika, which

specializes in the financial services sector. “One of the main reasons why we

set Troika up was that we wanted to be able to work closely with clients and

to avoid the arrogant air or boffin-in-the-corner approach that character-

ized many other consultancies,” says Andrew Stewart, one of Troika’s co-

founders. “It sounds heretical to say it in this industry, but we don’t want to

employ gurus who put clients’ backs up. We have bright people who know

what they’re talking about but whom clients enjoy working with. These are

people who won’t stab them in the back and whom we can trust to get on

with things and make the work they do a positive experience for all

concerned.”

Freedom is one of Troika’s most cherished values. “Like other consulting

firms, we have frameworks and processes, but we want them to liberate

people’s thinking, not limit it,” says Stewart. “Once we’ve established that

we can trust someone, we give them a lot of freedom.” There is freedom of

information, too. “Knowledge isn’t power here,” says Stewart. “We can’t

even understand why people should think like that.” It helps that every time

someone goes to see a client, they write up a summary of the meeting and

distribute it to everyone in the company, including the support staff. “Very


occasionally something comes up that’s confidential, but it’s the exception

that proves the rule,” says Stewart. “Our default view is that everyone should

know everything. This is the best – indeed, only – way to ensure that we

keep up with all the gossip about what’s going on in this industry and to

perpetuate a culture in which everyone thinks, ‘Oh, that’s a good point, I

should be talking to my client about that’.”

Andrew Veal is Troika’s Sales and Marketing Director: “Capturing all this

information doesn’t mean we have an expensive customer relationship man-

agement system and lots of formal procedures. Instead, we have simple

mechanisms for monitoring who’s doing what and indexing the information

so that everyone can find what they need. We also don’t limit contact with

important clients to senior people on our side, but encourage everyone to

get involved; the connections they make don’t necessarily pay dividends

straight away but they do in the long term. At the same time, we don’t want

people to feel under pressure to sell work: it’s much more important that

they build up their credibility within their own network. Creating a culture

in which freedom, knowledge-sharing and networking are just the way we

do business is the most important thing.”

Bob Dench first came across Troika in 1999, when they had been asked

to advise on a project in another part of the bank. “They were very bight

people, but the reason why they really stood out was not just how much they

knew about our industry but also how open and honest they were. We could

use them to sound out ideas about our business on subjects ranging from

potential acquisitions to how to improve our brand in markets where Bar-

clays was relatively weak. When we moved on to thinking how we would

move out of the life insurance business, it was Troika who helped us do a

deal with Legal & General and manage the transition. Theirs is a low-key

approach: they don’t ask for business but we use them because we know they

can deliver. When we were evaluating the Legal & General deal, their

analysis indicated that we’d get a 30% increase in sales, and that’s what we

got. They don’t claim they can do something when they can’t: they’re honest

about their strengths and weaknesses, and they don’t try to lock us into a

long-term process – we don’t get multiple phases of work.”

The other factor that set Troika apart in Dench’s eyes was the extent to

which they could surprise him. “Many consulting firms follow a set script,”

he says, “and they won’t deviate from that no matter how much you need

them to. The people at Troika are more like disciplined jazz players; they


think on their feet and that improvization produced insights we hadn’t

anticipated. Those moments are like stardust: they’re few and far between

in business, let alone consulting, so you treasure them.”

The mistake we make with innovation in the consulting process is that

we liken it to a wave – massive in scale, sweeping everything before it. In

practice, it is the stardust which clients value most.


15The two-way mirror:

listening and talking to clients

One of the main criticisms levelled at consultants over the years is that they

surround themselves with mystique. Clients, uninitiated in the ways and

rituals of the consulting process, were expected to hover on the threshold

of the shrine, waiting for the oracle to speak. Yet some firms are learning

that it is better to throw open the doors and invite the client in.

From Small Acorns . . .

Billund, in western Denmark, does not immediately look like a place for a

grand business experiment. Its rolling hills and small farmsteads speak of a

gentle life, not the cut and thrust of the metropolis. But it was to a univer-

sity campus there that Implement, a Danish consulting company, invited

some of its clients and all of its employees in August 2005.

Implement employs more than 130 people helping clients plan and imple-

ment changes. It is a broad remit, covering everything from strategy, lead-

ership development and supply chain management to IT, but what

distinguishes Implement from other consulting firms offering a similar range

of services is its stress on using the consulting process – the experience

people have from working with Implement consultants – as a means of

ensuring the improvements delivered outlast the consultants who helped

deliver them. People learn best from their own experiences is part of the

firm’s credo; so too is the idea that real change is never easy but requires

extraordinary effort. “Every project is a change project,” says Niels Ahren-

got, one of Implement’s founders, “because they all involve changes in

attitudes, behaviour, structures and technology. Implementation isn’t some-

thing that happens at the end of a project, the last of a series of phases: it

should be the focus throughout.”

The trip to Billund was the latest meeting of Implement’s “university”, a

couple of days set aside every year and timed to coincide with the point at

which most Danes are returning to work after their summer break. It is an

opportunity to review the previous year and make plans for the coming one

– all the things you would expect from a conventional company get-

together. The difference is that Implement invited its clients as well.

Thus, it was not just employees, but clients too, who contributed to the day-

long debate on how Implement is perceived, what it can do to improve its

services, even what its future strategy should be. For a couple of days,

the tables were turned: the clients became the consultants, advising Imple-

ment. “We thought it would be a good idea to invite clients because we want

an honest relationship with them,” says Ahrengot. “We don’t want to walk

into their offices pretending we’re something we’re not; we want them to

know everything about us, even if that means washing our dirty linen in

public!”

It was a high-risk strategy from Implement’s point of view. What would

happen if one client bad-mouthed the firm to another? How comfortable

would the consultants feel about receiving advice rather than giving it? In

fact, the proposal split the company almost equally: “Some of our older con-

sultants did find the idea quite threatening,” says Ahrengot. “They were used

to being in charge and they didn’t think they’d feel comfortable having an

open discussion in front of their clients. But the younger consultants

thought it was a very natural thing to suggest: they think this kind of open-

ness and honesty is the way business will be run in the future. The younger

generation is also perhaps a more confident one: they are more prepared to

say when they don’t know something or to walk away from a piece of work

they know they can’t do – and our proposal showed them that we want to

be authentic as a business, not just at the individual level. Moreover, when

we’re working with clients, one of the things we try and show them is how

important it is that they don’t pretend to be something they’re not, other-

wise they can’t learn and change. If they can do this, then they’ll gain the

courage to do or be something different. And that same thinking applies to

Implement: we have to be brave if we’re going to be different.”


Clients reacted very positively to the idea: “No one said no,” says Ahren-

got. “Everyone thought it would be an interesting experiment.” There was

a quid pro quo: Implement invited the clients to take part in the profes-

sional development workshops which brought together leading speakers on

a variety of change-related topics. “Part of the aim was simply to bring

together a lot of bright people and give them a chance to talk about the

issues – and that was an attractive proposition for all sides,” he says.

So, for two and a half days, Implement’s clients sat down with their con-

sultants, talking about change management issues, discussing Implement’s

style – what was good and what might need to change in the future. “The

most important thing we learned was how critical the simple things in a

project are: that it’s often not the complicated issues which derail a piece of

work but the basic things, because these are the things that matter to the

people with whom we work side-by-side. They’re much less interested in the

grand strategy than in practical questions about what they as individuals can

do differently and better. We were lucky enough for the overall feedback

to be very positive and constructive, but it also brought home to us how

easy it was for people on the ground to get confused or frustrated. That’s

something we’re taking into account in terms of the development of our

consultants.” The process does not stop there: Ahrengot plans to invite

clients to Implement’s next “university” and to organize smaller, interim

meetings on specific issues. “We want clients to feel they have a stake in

how we develop,” he says, “that they should be able to shape our future to

fit their needs. Everyone will gain from this.” Consulting by the client for

the client.

. . . to Spreading Oak Trees

It would be hard to find a firm more different from Implement than Halcrow,

the giant engineering consultancy, yet there are clear parallels between what

both firms are trying to achieve.

To build on its account management structure (see Chapter 9), Halcrow

has what it terms a Strategic Relationship Development programme aimed

at its most valuable accounts: “SRD ensures we’re far more joined up inter-

nally,” says Andrew Payne, who is responsible for the programme, “but it’s

also an assessment and review system, fuelled by feedback from clients.”

T H E T WO - WAY M I R RO R : L I S T E N I N G A N D TA L K I N G TO C L I E N T S 193

Clients like the opportunity to provide feedback because they benefit too:

Halcrow is able to point to areas where the firm has been criticized in the

past and show how it has improved. In some ways, SRD replaces traditional

means of building client relationships with something more comprehensive

and systematic. “Clients perceive it to be important: we’re not always

playing golf with them and we’re not always taking them out for lunch,

because we’re all busy working,” says Payne.

Three things set Halcrow’s approach apart from that of other consulting

firms.

First, Halcrow doesn’t gather feedback from senior executives only, but

from people at all levels in a client’s organization. Different areas are scored

separately, but it’s possible to get an aggregate score for the project as a

whole, so that those involved can see whether they’re doing better or worse

than the previous year. The results are mulled over by the account teams

and Halcrow’s executive in order to identify areas for improvement. The

feedback also indicates the relative importance of different aspects of a

project to a particular client, so that Halcrow can see if it is investing too

much time in low-priority areas. “It’s a very powerful mechanism which

allows us to see what our clients are thinking about us in real-time,” says

Payne. “We find it incredibly useful: we know where the strong performance

is and where the not so strong performance is. There’s a real drive to under-

stand the client’s needs, to work with them, never mind how difficult some

of their requests, and to build our relationship such that it aligns with the

client’s ultimate business objectives.”

That information helps Halcrow be more proactive, enabling them to

suggest solutions to problems that are just surfacing. It can diffuse difficult

situations by allowing Halcrow’s consultants to understand the context in

which a client’s apparently unreasonable demand is being made. It builds a

picture of a client’s needs from multiple perspectives – from the point of

view of different national subsidiaries, for example – which means Halcrow

can appreciate the pressures it is under. And herein lies the second import-

ant facet of Halcrow’s approach. The information isn’t ignored, but is used

to drive change at all levels in Halcrow’s organization. Client feedback

carries a currency and weight that no amount of internal memoranda could

ever match. As Payne puts it: “When we say, ‘Look, the client is telling us

we’ve got to improve this’, we find people listen.” So it is not just telling

the truth that matters, but doing so quickly and consistently. Communica-


tion has become one of the most important mechanisms Halcrow has for

uniting the firm, and every channel is exploited: regional coordinators liaise

with project managers to discuss feedback; client account teams will debate

it; there’s an intranet and an internal magazine.

Third is the use to which Halcrow puts this information. Follow-up is

crucial: one of the main reasons why clients are willing to invest so much

time in providing feedback is that they believe it will be acted on. And it’s

not just clients who benefit: using what the client says can act as a catalyst to

bring Halcrow’s organization together, overcoming its residual division, far

more effectively than internal programmes or edicts could ever do. But

perhaps the most stunning aspect of the SRD process is that feedback isn’t

just disseminated internally. A letter goes out from Halcrow’s chief executive

to every client who participated, thanking them and summarizing the results.

But it may not stop there. “We had one office where we’d had really tough

feedback,” says Payne, “so we organized a face-to-face feedback session with

everyone in the office – all our staff went to it – and we held the session in

the client’s office, so the client’s staff were there too – and there were some

fairly agonizing comments. It was very difficult, but it really created an envi-

ronment of trust. With another client the very first feedback session was

shared jointly with our client. An indipendent survey team relayed to the

client what we thought their strengths and weaknesses were and what they

thought ours were. It helped us retain a £2 million annual contract and we’re

planning to carry out this type of 360 degree feedback exercise every year.”

Breaking through the Sound Barrier

Consulting firms talk a lot about the importance of listening to clients, yet

they often find it hard to do it. Technical expertise – the status of being an

“expert” – encourages consultants to preach. Yet communication – from

client to consultant as well as consultant to client – is one of the most

important factors in determining the success of a project. Clients who are

happy with what the consultants have done are far more likely to believe

the consultants have been open and honest with them and have listened to

what they have to say (Figure 15.1).

The real problems, as Implement and Halcrow have found out, lie in the

simple stuff: being able to explain what is going on to people involved in a


project. Consultants tend to focus their talking and listening on the most

senior people in a client’s organization – the people who take or influence

the decision to hire consultants or who manage the project. Those caught

up on a day-to-day basis, either because they have been seconded to a joint

project team or because the consulting project will have an impact on their

work, are much less positive about the experience. These are the people

whose work will most directly have an impact on the success or failure of a

project, and these are therefore also the people with whom consulting firms

most need to creat a dialogue (Figures 15.2 and 15.3).

If we look at the experience of Implement and Halcrow, six common

points emerge:

1. Equality: Feedback has to be solicited from every level in a client organ-

ization. Typically, consulting firms gather information at levels which are

both too high and too low. Formal market research is used to collate feed-

back from clients on a systematic basis, but the data are often aggregated

to a point where they become hard to act on. Thus, you might get feed-

back that you are not being proactive enough in taking new ideas to your

clients, but you will need more detailed information if you are going to

be able to respond correctly. Is this all clients, or just some? Are some of


Communications between us and the

consultants were open and honest;

we felt we knew what was going on

91%

2%6%

56%

0%

20%

40%

60%

80%

100%

Agree Disagree


The consultants listened to what we

had to say and respected our input

91%

0%17%

56%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Agree Disagree


Figure 15.1 Comparing the perceptions of satisfied and dissatisfied clients

your people better than others at this? Are there circumstances where it

wouldn’t be appropriate, and if so, what are they? At there other end of

the spectrum, many firms rely on individuals walking the corridors of

their clients’ organizations, picking up nuggets of information as they

go. The problem here is that such information is hard to disseminate: it


Communications between us and the consultants were open and honest; we

felt we knew what was going on

70%65% 63%

33%

43%

0%

10%

20%

30%

40%

50%

60%

70%

80%


managers

People

seconded to the

project

End-users

Figure 15.2 More senior people tend to be more positive about a consulting firm’s ability to

communicate

It was very frustrating: we didn't know what the consultants were doing

9% 10%13%

33%

13%

0%

5%

10%

15%

20%

25%

30%

35%


managers

People

seconded to the

project

End-users

Figure 15.3 More senior people tend to be more positive about a consulting firm’s ability to

listen

may be that the person involved can fix the problems, but escalating

issues beyond his or her immediate circle often proves difficult.

Moreover, a firm that relies on nuggets of information being filtered up

its organizational hierarchy will inevitably be slow to pick up trends. A

better approach is to gather the views of everyone involved in a con-

sulting project, from the project sponsor to those whose work may be

only indirectly touched by the work the consultants do. This is the only

way an accurate picture can be formed of a project’s progress, and the

chances of its success and failure.

2. Seeing things from the client’s perspective: Consulting firms are as guilty

as any other type of business of choosing feedback metrics which tell

them what they want to hear, not necessarily what clients want to say.

The best feedback captures the client’s experience – how a particular con-

sulting project felt from their point of view. As Implement has found out,

that experience is the foundation on which sustainable improvement can

be made.

3. Bravery: Most consulting firms keep their client feedback to themselves;

they may not even share it with people in their organization. Indeed, the

worse the feedback, the greater the temptation to bury it. Halcrow and

Implement stand out because they are willing to share the findings of

their client research (bad as well as good) with their staff and their

clients. No firm is perfect, so this will never be an easy process, but the

worse the feedback, the more important it is.

4. The promise of change: Halcrow and Implement’s clients are willing to

invest the time to provide feedback because they have an unspoken guar-

antee that the firms will act on what they say. Clients want responsive-

ness: they want to know that the consulting firm revolves around them.

This could be something as simple as moving someone out of a particu-

lar team or changing the way a project manager reports progress, or it

could be something as substantial as going back to the drawing board and

starting a project from scratch.

5. The catalyst for internal change: Consulting firms, whether they are part-

nerships or not, often have rather diffuse power structures built around

consensus and consultation, rather than action. In many cases, this quasi-

collegiate environment evolves into a formidable bureaucracy aimed at

gently but firmly preserving the status quo. In such an environment, it

can be difficult for individuals to act decisively – there are too many


checks and balances – but someone borrowed from a client, and speak-

ing with authority, will carry vastly more weight among their client-

focused peers.

6. Continuous listening: Soliciting feedback should never be a stop-start

process. It may be that, like Implement, you initiate a rolling series of

meetings, or, like Halcrow, that you put in place a systematic process for

surveying clients. Either way, it is the continuity and commitment that

are implied which count. Never pause; never take your eye off the ball;

never give up.


16Partners and parents

Tim Lloyd has firsthand experience of the impact of mergers and acquisi-

tions (M&As) between large-scale consulting firms. “The first one came out

of the blue,” he recalls. “You work somewhere for 15 years, then someone

just tells you in three months’ time you’re going to be merged with one of

your arch-competitors. If you’re a consultant working at the coalface, it all

comes as a bit of a shock.” In fact, it turned out to be a less painful experi-

ence than he’d anticipated: “There was a lot of moaning, but it went rea-

sonably well, but then I was fortunate not to be senior enough to have to

jockey for position with people in the other firm. Moreover, the cultures of

the two firms were pretty similar: we had common clients, skill sets and

values. It was a merger of relative equals.”

The next one was a completely different story. “It wasn’t a merger, but a

sale, and just about everything was different between the two firms – ser-

vices, culture, approach to the market. There was angst from day 1, a culture

of them-and-us from both sides, and it went from bad to worse.” Leaving

the firm along with many colleagues, Lloyd set up a business advising clients

on business process outsourcing and shared services strategy, providing inde-

pendent advice to help them navigate their way through an increasingly

complicated picture on the supply-side. Riding on this wave of activity,

Lloyd and his colleagues found themselves working for global clients who

expected them to be able operate throughout the world. “We could have

flown people around, but it didn’t make sense, so we looked around for a

US partner, and found that some of our ex-colleagues had set up a similar

business there. We’d all been part of the same business in the past and had

known each other for ten years, so it made perfect sense to work together

again.” Nor was this just a case of working together on the occasional

project: the two companies shared clients, marketing expenditure and intel-

lectual capital. “It gave us a chance to open up a new market for both firms

– multinational clients. We could say to a client in Europe that we could

carry out similar work in the US, and vice versa. Now, five years on, the two

companies have finally merged to form Alsbridge – a process that has been

far less painful than the ones Lloyd went through previously.

So M&As in the consulting sector can work. But, as Alsbridge’s experi-

ence illustrates, there are critical factors which determine whether a deal

will work:

1. Lloyd knew and trusted the people in the other company; each side knew

how the other operated and thought.

2. The two companies were trying to achieve the same thing.

3. They shared a similar culture and a consistent set of values.

4. They had never been in competition with each other: there was no legacy

of acrimony.

5. The market in which they operated was particularly fast-growing, so there

were opportunities to be exploited, not scraps to be fought over.

6. Economies of scale (sharing certain internal resources) and being able to

leverage each other’s skills and knowledge base proved possible in prac-

tice. These prime motivators of many deals are often the hardest things

to achieve.

Another factor was undoubtedly size: neither company had accrued the scale

or complexity to make the integration process a nightmare. So, does that

preclude M&As between larger consulting firms?

In fact, an important shift has been taking place in the consulting indus-

try over the last couple of years. While most people would rightly be wary

about the chances of being able to bang two very large firms together suc-

cessfully, a new wave of firms is emerging which combine the specialist focus

of a niche firm with the resources, capital and clients of a much larger one.

The Software Company

Software companies have classically concentrated their efforts on their core

business: developing and selling software. But as time passed, many


expanded their portfolio to include consulting services and software train-

ing. This trend began with repositioning their software developers to service

customers who needed support in implementing the new software or in

migration projects. These employees had highly developed skills in their

company’s core business: the product side of the house. But, by the late 1980s

and 1990s, many software companies had also started their own consulting

firms. Initially, their objective was to ensure they could service the bur-

geoning market in implementation services. Protecting their brand became

a priority too, as news of horribly expensive failed projects filtered through

to the press.

A company that has seen all these waves of activity wash over the market

and remain one of the world’s largest software companies is SAP. SAP has

created professional consulting services for its customers from within the

company, as well as brought in specific expert services that complement its

consulting portfolio. Bernd-Michael Rumpf is Global Head of Field Services

and Senior Vice President of SAP’s Consulting and Education arm. He has

been with SAP since 1999. One of the tasks he was charged with was bring-

ing together eight different entities owned by SAP which were offering

consulting services in Germany. “We chose to integrate these smaller, com-

patible companies rather than make one single big acquisition because we

wanted to address issues related to integrating people, programmes and

processes as they came up. We were able to ensure our new employees have

the opportunity to embrace our values and are committed to SAP; thus max-

imizing the potential of bringing them on board,” says Rumpf.

There’s a link here – almost a mirror image – of the way in which Rumpf

views SAP’s relationships with its clients. “Good client relationships are

founded on a mutual perception of the value of that relationship,” he says.

“If you can’t demonstrate and get value from the relationship then it’s not

going to be sustainable.” That means having to put a lot of effort into estab-

lishing value, early in the client relationship as well as at the end. “It’s easy

to make promises, but you need proof, credible and meaningful references

from other clients that demonstrate what you can deliver in practice.” To

this end, Rumpf and his team have worked out offerings that provide ser-

vices for SAP customers’ entire IT lifecycle. This offering ranges from stra-

tegic consulting services, solution delivery services, all the way to operations

services and lifecycle management services. SAP Consulting opens a

gateway to unparalleled SAP expertise. “Our mission is to maximize

PA RT N E R S A N D PA R E N T S 203

customer success,” he says. “That’s our overarching goal: we don’t only talk

about project success.”

Rumpf applies the same philosophy to the relationship SAP Consulting

has with the product side of the SAP business. All involved parties have to

be able to get value from it. This works in several ways. SAP provides a pool

of highly skilled resources that projects can draw on: “Our credibility comes

from having people with specific industry skills and leading-edge technical

knowledge,” he says. “Those are the types of qualities that develop over time:

you don’t get them from a two-week training course. Bringing in experts

from SAP means we have people who have deep technical knowledge of

the software and exposure to new products – they may, for example, have

been involved in testing them – and can bring this to clients. SAP Con-

sulting also offers deep insights into business and business processes. It’s the

mix of business and technical skills which is crucial for maximizing our cus-

tomers’ success.” Rumpf believes in this next generation of experts and is

continuing to invest in employees who are making fast headway in this

direction.

Technical architects and business process experts can be very different

types of people, so SAP is very active in ensuring these two sides can work

together effectively. “Whatever their background, we have to make sure they

share SAP’s core values – it’s one of the most important things we check

when we recruit someone,” he says. “Those values – customer focus,

integrity, quality, commitment, product excellence – are the same for every-

one; they’re embedded in the way we work. We’re also clear that each group

has a specific and high-value skill and that both sides benefit from working

together. There’s a lot of day-to-day reinforcement of this message and we

make sure our people also have the time to gain experience from working

on international projects which involve both sets of expertise. But, at the

end of the day, the fact that every project requires them to work together

binds us all together.”

Another factor making the relationship between the software and con-

sulting sides of SAP is that the company sees itself as part of a wider value

chain. “SAP can only be successful if there is a strong network of partner

organizations, consulting firms that can project manage and implement the

installation of our software,” says Rumpf. What that means in practice is

three things. SAP also invests in training its partners and keeping them up-

to-date on new releases. SAP offers its customers and partner ecosystem


several engagement modes, from expert services, to quality assurance and

safeguarding. “We end up working in many different modes,” says Rumpf.

“In many cases, SAP simply gets a licence fee for the software, but there are

also clients who prefer to see us getting more involved. They want the re-

assurance of knowing that they have recourse to our technical knowledge.

There are even occasions when, because we make the software, we are asked

to be the prime contractor on a deal. To dispel any confusion about

what we’re trying to achieve, we’ve made it clear that we don’t want to grow

faster than the market: in other words, we don’t want to take market

share from our partners. That gives us a degree of stability and our partners,

reassurance.”

The Telecoms Company

T-Systems is a wholly-owned subsidiary of Deutsche Telekom, providing a

wide range of technology and systems services, from network architecture

through to business process outsourcing. Its 52000 employees support

around 160000 medium-sized and large-scale customers across 20 countries.

Dr Arnulf Heuermann is the Managing Partner in charge of the interna-

tional telecoms practice at Detecon International (founded in 1977), T-

Systems’ consulting subsidiary. Although it is wholly-owned, Detecon has

retained its own, well-established brand.

“We’re a different type of organization from other consulting firms” says

Heuermann, “because we’re entirely focused on the telecoms and ICT

sectors.” Detecon employs a substantial number of senior consultants with

vast experience. (In fact, the company also provides interim managers to

clients.) “We can afford to have the specialists which generalist firms don’t

have,” he says. “Over the years we’ve also managed to build up strong rela-

tionships with universities, as well as offering internships.”

Detecon can also call on the technical skills of T-Systems when it comes

to full-scale implementation, which means its staff can concentrate on what

they do best – providing expert input and advice. Then there is also the

relationship with Deutsche Telekom itself: “Deutsche Telekom gives us

access to innovation and research which would otherwise be difficult to

obtain as an independent niche firm.”

These relationships are paying dividends as Heuermann’s colleagues

take the knowledge they have of setting up networks and operations to less


developed telecoms environments in Asia, Africa, the Middle East and

Eastern Europe. “Clients can depend on us to have up-to-date knowledge of

everything from economic business issues to technology developments.”

Heuermann says that working with other consulting companies is defi-

nitely the exception rather than the rule: “We do work with partners who

have complementary skills, for example law firms on regulatory work or

research institutes on postal regulation. We are used to making relationships

work externally, as well as internally.”

The Outsourcing Company

Serco has been in the business of delivering essential public services for 40

years, and is at the forefront of the changing relationships between the

public and private sector, delivering services that range from running airport

control towers in North America to operating the kilometre-long Ghan

train, one of three transcontinental services the company owns in Australia.

Since 1964, it has been maintaining the ballistic missile early warning

system at RAF Fylingdales in the UK.

In 2003, Serco established a consulting practice. Organic growth and an

acquisition followed, culminating in the launch of Serco Consulting in early

2006. “We’re a very small part of Serco’s 42000 staff,” says Peter Illsley, who

heads up Serco Consulting, “but we’re growing fast. We have to win market

share in a fiercely competitive environment, and the only way to do this is

by being better than anyone else.”

Most of Illsley’s team were recruited individually into Serco rather than

through the acquisition. “Acquiring another consulting company would

have been very difficult,” he argues. “We’ve had plenty of approaches, but

it’s like buying the wind: you think you’re getting lots of good people, then

half of them leave or turn out to be associates on short-term contracts, in

which case all you get is the associate phone list.” He’s equally cynical of

alliances: “We get calls all the time about this too, but we’d rather not do

it because it just complicates our lives. We’ll work with a few, small, highly

specialized firms who genuinely add something different or keep us on our

toes, but generally success lies in having a simple business model.”

Making the relationship work with that much larger parent is vital: Serco

mainly delivers services, whereas Serco Consulting works mainly “client-

side”, helping its customers procure and manage services providers. “We use


knowledge from Serco’s experience as a highly successful service delivery

organization to help our clients manage deals which are often very complex,

help them get over the transition process as quickly and painlessly as possi-

ble, and deal with the multiple stakeholders,” says Illsley. “In addition, we

carry out work for our core divisions, or work alongside them to provide

a seamless service for external clients, shaping client organizations prior

to them taking on services run by the operational side of Serco.” Success

depends on the fact that each side of the business can benefit from the other.

The main Serco divisions need the consulting expertise of Illsley and his

team, and the consulting business needs the operational and deal-making

expertise and contacts of the Serco divisions to generate work for it: “We’re

not intended to be a sales machine or tasked with forging relationships with

more senior people and using them as a channel for Serco’s wider services,”

says Illsley. “We just do consulting.”

The Engineering Consultancies

“2005 was another good year for us,” says Peter Madden at EC Harris.

“Although as a consulting business we’re relatively small, we’re a critical

part of the services offered by the wider firm.” EC Harris focuses on helping

clients get better value from their physical assets. Not surprisingly, its client

base includes commercial property developers, airports, rail companies,

hotel chains – indeed, anyone with a substantial amount of capital tied up

in buildings or infrastructure. Its services include quantity surveying, project

management, building surveying, management consultancy, software devel-

opment, facilities management and 15 other disciplines, including engi-

neering and design-related professions. An embarrassment of riches on

paper, it has all the makings of complexity in practice. So how does

Madden’s team make it work?

“We don’t go to market by ourselves,” he says, “which means that all

potential entanglement about who owns which client is immediately irrel-

evant.” Instead, his practice, like all the others, forms horizontal groups in

the company’s matrix, but it is the vertical groups, focused on specific indus-

tries, which are responsible for winning business. The sales force sells the

whole business, not just individual practice areas. “Moreover, rather than

trying to interest clients in a service, this cross-practice focus means we

can develop ideas that bring together skills to solve very specific problems


– how a water authority can best meet its regulatory commitments, for

instance.”

The various parts of the business also depend on each other. “One of our

biggest projects at the moment is for a major airport,” says Madden. “It’s

such an enormous, complicated endeavour that the business case for using

our consulting skills is compelling. If we can look at costs across their whole

supply chain and identify even small percentage savings, the absolute

amount of money saved is huge. At the same time, our consulting business

couldn’t survive independently: being tied in to implementation means

we’re less likely to be commoditized.”

Nor is that sense of mutual dependence limited to EC Harris’s own organ-

ization: “We’re building what we describe as managed communities,” says

Madden, “networks and alliances of consultants, clients and supply chains,

all of whom can work together on particular issues.”

“You get new and better ideas when you cross-fertilize people from dif-

ferent backgrounds and experience,” agrees Alan Marsden, chief executive

of Rossmore. “Eighty per cent of our business is behaviourally-based, so you’d

expect us to be able to engage with people in our parent company, because

if we couldn’t, we shouldn’t really be in this business.” Although a separate

organization, Rossmore is 64% owned by Arup (and will be wholly-owned

by the end of 2006), another global engineering consultancy, whose 7000

consultants dwarf Rossmore’s 30.

The structure and history here are different from EC Harris’s: Rossmore

was a separate company, although some of its shares were owned by Arup

even then, but in 2004 it became a wholly-owned subsidiary, moving into

an Arup office. It has been a significant change – business psychologists and

engineers do not have much in common – but it is one that has started to

pay dividends as the two companies work together on more and more

projects.

Marsden’s philosophy is not far from Rumpf’s at SAP: treat your parent

organization in the same way you treat your clients. But whereas for Rumpf

the key lay in value, for Marsden, not surprisingly, it lies in engagement.

“When we work with clients we put considerable effort into understanding

their culture and history, talking to them about what they’ve done well in

the past and what has gone wrong. That’s the best way to engage people:

most managers, the more so the more senior they are, are very proud of their

achievements. We have to apply the same level of dedication and sensitiv-


ity internally: our relationship with Arap won’t work if we’re continually

trying to impress them with how clever we are. And that’s paying off:

in 2005 we jointly worked on 13 large proposals, compared to just two

the previous year. It’s just like having another set of clients to deal

with.”

Ian Hackett, a fellow director at Rossmore, agrees: “If we look at what

distinguishes the way we work with clients, these are exactly the same things

we’d apply internally. External clients are looking for us to transfer knowl-

edge to them and providing a spark of innovation is what keeps a client

coming back: new original ideas can actually move the business forward. But

they don’t want us to be didactic – no one likes being preached to – and

they want us to do things with them, not to them. The same is true in our

relationship with Arup. Every side, internally and externally, has to benefit

from the relationship. If something isn’t good for the client, then it’s not

good for either Arup or us; equally, if something isn’t good for Arup, then

it’s not good for us and vice versa.”

The idea of small consulting companies operating as standalone parts of

larger ones offers an alternative solution to some of the operational prob-

lems dogging consulting firms: acquiring financial security without having

to compromise their focus; getting access to a variety of skills without having

to recruit them on a full-time basis; and being able to handle large-scale

projects with a small resource pool.

As the examples above illustrate, making this work depends on:

• clearly different skills involved, so the opportunity for internal conflict is

negligible;

• a common culture, irrespective of the different services offered and

backgrounds of the people involved, ideally built up over a period of

time;

• both sides understanding, respecting and investing in the value the other

gets from the relationship; backing this up with a structure that supports

interdependency;

• being accustomed to working with other organizations and creating

effective internal and external networks; not being put under pressure

to achieve the kind of financial targets that create internecine

competition;

• applying the same way of working internally as externally.


PART V

Values

17Values

What better way to talk about the values a consulting firm should have

than by witnessing them in action in some of the most gruelling conditions

imaginable?

Turning the Lights back on in T’bilisi

Georgia, the former Soviet Union republic, is probably not the top desti-

nation for a consultant in search of an easy or glamorous existence.

With economic growth depressed by strained relations with Moscow,

regional disputes and corruption, keeping even the most basic of services

going has been difficult. “During the energy crisis in the early 1990s, people

got used to living in darkness,” says Tariel Mazmishvili, a regional manager

of the state-owned electricity company, United Energy Distribution

Company. It was a vicious circle: unable to supply electricity all the time,

UEDC’s revenues fell, making investment impossible. “Working in the

sector was very difficult,” says Mazmishvili. “We sometimes had to use our

own money to solve problems.”

By 2002, UEDC was a financial, technical and operational disaster. A

consolidation of 59 smaller companies, it had mounting debts and was vir-

tually incapable of collecting charges for electricity it supplied; it could not

pay its taxes, borrow funds or even use a bank account, let alone attract new

investment. Earlier government attempts to privatize the company’s assets

had failed, leaving it at the mercy of endemic corruption. Employees were

paid erratically and often had to give kickbacks to their supervisors to keep

their jobs. No one knew exactly how many employees there were: although

it claimed to have around 3200 employees, in practice there were twice as

many.

Service was terrible. Some customers had no electricity for most of the

winter: those who did usually had up to six hours’ supply each day but some-

times had none. Even in the summer, daily disruptions were common. More

often than not, faults were repaired by customers themselves. The only way

to get a 24-hour supply was to steal it.

A desperate Georgian government approached the US for help.

The US Agency for International Development (USAID) stepped in and

asked PA Consulting to take over executive control of UEDC for an initial

period of 18 months (subsequently extended by another 24). PA’s job was

to rebuild UEDC’s commercial and technical operations; strengthen its

financial management; help the company meet wholesale electricity con-

sumption targets; and help the government rationalize the energy sector,

attract investment and eventually privatize UEDC.

PA found the UEDC without money, credit or management systems and

controls, and without reliable information about its burgeoning staff or

its dwindling assets. In tackling the problems, its consultants faced abuse,

threats and physical assaults. Information was destroyed, facilities were shot

at and attempts to collect bills provoked demonstrations, often backed by

prominent politicians. The situation was initially so bad that USAID con-

sidered cancelling the project.

However, the PA team took over full management control and executive

authority, initially staffing all key positions, including general director, chief

financial officer, technical director, director of legal and regulatory affairs,

director of human resources and administration.

The first priority was to roll back the tide of corruption which had

engulfed the company for so long. New processes and functions were

put in place which, for the first time, established who had authority to

execute contracts and undertake legal proceedings. The new team also

restored UEDC’s ability to use the banking system (and thereby avoid hand-

ling cash), and established a commercial security service to undertake

unscheduled audits of books and records, launch “midnight raids” on facil-

ities and investigate possible embezzlement or mismanagement. PA also

rotated individuals – especially if they had been in post for a long time and

taken no leave – knowing that corrupt employees like to stay in position to

avoid detection.

214 VA L U E S

The next step was to restructure the company’s labour force: almost three-

quarters of the original 6200 employees left; new people were recruited,

taking the total to around 4000. A more attractive salary structure, com-

bined with objective criteria for dismissal, helped to secure union support

for this programme and, as the company’s reputation has improved, so has

its ability to attract better people.

“Working conditions improved, salaries increased and social welfare issues

were addressed,” says Lasha Chokheli, chairman of the labour union. “The

current management of the UEDC is now the only one in Georgia to have

taken responsibility for paying off salary debts incurred by previous man-

agement. The labour union expresses sincere gratitude for the professional-

ism and personal dedication of every member of PA’s management team.”

Finally, the PA team strengthened UEDC’s legal operations. Previously,

the company seemed unable or unwilling to defend any court cases: former

managers were alleged to have colluded with successful plaintiffs to share

settlements. UEDC has also initiated over 30 prosecutions for corruption

and theft, and pursued over 600 cases of electricity theft (versus none prior

to PA’s involvement); a handful of former management and staff have been

jailed.

Adapting established management approaches to Georgia’s unique

culture and condition was essential. Although stealing from state enterprises

is common in Georgia, stealing from neighbours is taboo, so the PA team

pioneered communal metering, whereby groups of UEDC customers took

on joint responsibility for paying for electricity recorded via a single meter.

Recognizing the exceptional diversity of UEDC’s customers, especially the

Azeri and Armenian communities, PA encouraged each of the UEDC’s

regions to pursue its own PR and outreach efforts. New computer systems

took into account Georgia’s multiple languages, telecommunications prob-

lems and lack of IT skills.

The effect has been extraordinary. “Since PA’s arrival, we have been able

to supply electricity almost 24 hours a day,” says Mazmishvili. “By July 2004,

the collection rate had reached 96%. That means we can pay people more,

invest in transportation and the latest computer technologies. I’d like to

express my gratitude to each and every member of PA: they restored my

hopes.” Mazmishvili is not alone. “At the peak of the energy crisis, Kutaisi,

our regional capital, was dead, businesses could not function,” recalls Temur

Suladze, now Head of Sales for the West Central Branch of UEDC. “I led

VA L U E S 215

demonstrations throughout the city against the electricity company. Then

the consultants came: metering started, illegal connections were cut, power

started to flow. That’s why I took a job at the company: I wanted to be able

to contribute to the positive changes. For a year we battled corruption,

energy theft and threats from criminal gangs. Today, I’m proud: my town is

alive again, it has power, business is developing, and its people are grateful

to my PA colleagues.”

Eter Tsitsikashvili is a grandmother who lives in Old Rustavi: “Before PA

came, we might have electricity once in a new moon at most. The worst

part was having power for only one or two hours a day. That was the only

time you could cook food and it was like a contest: you had to do it during

a certain time, otherwise your family would go to bed hungry. Once, in mid-

winter, when the city was completely dark, I was taking our ‘ration’ home

– a hot dinner I prepared at my neighbour’s for my grandchildren. In the

unlit street I slipped and fell; the dinner spilled. I felt such helplessness I did

not want to get up. I will never forget that awful feeling: we had no hope.

It’s not only me who should be grateful to them, but the whole district. If

it wasn’t for them, our children would be cold; many families could have

died during those difficult years. Everything changed on PA’s arrival: those

people have kept their promise.”

PA is now in the process of transferring management responsibilities back

to local employees – both PA’s Georgian team members and managers within

UEDC. Already three of the five top management posts originally staffed by

PA expatriates have been occupied by Georgians. By helping to make

Georgia self-sufficient in management expertise for the energy industry, PA

is supporting the government’s aim of industry reform and increasing the

likelihood that UEDC’s success will be sustained after the management con-

tract ends.

It is exceptional for a consulting firm to manage an entire organization,

especially in such appalling circumstances. Donor support for transitional

economies is usually limited to technical assistance or advice, but with

UEDC, almost for the first time, USAID financed a management team to

achieve aggressive reforms. The results were achieved with very limited

external investment. In fact, UEDC achieved a collection rate superior to

a more favourably located Georgian competitor, Telasi, which had received

more than 50 times as much investment.

What made the difference?

216 VA L U E S

Dean White, who oversaw the engagement and later took over as

UEDC’s general director, is in no doubt. “We pulled together five expatri-

ates and around 30 locally recruited staff into a highly motivated team with

a strong sense of mission. They worked seven days a week, for most of their

waking hours. That dedication, allied to the sensitivity it displayed towards

local issues, created a new spirit in the company and with its customers and

stakeholders. We showed that a committed, creative and courageous team

can turn round even the most deeply troubled organization, rooting out cor-

ruption so that honest employees can get on with their jobs. We showed

that proper management is a prerequisite for improving utilities in devel-

oping nations – and should precede large-scale investment and/or privati-

zation. More than anything else, the UEDC assignment is a lesson in what

can be accomplished through excellent teamwork. I’m so proud of the

handful of us expats and our 30 Georgian loyalists. I’d take them into battle

anywhere.”

Lessons from the Freezer

The Polar Challenge is a competitive, 320-mile team race in the unforgiv-

ing conditions of the Arctic, known to be one of the toughest in the world.

Seven teams of three set out to travel on skis for 19 days, travelling for a

minimum of 12 hours a day, pulling sleds weighing 70 kg, in temperatures

reaching –70 degrees.

But the Polar Challenge is not just about the exhilaration and excite-

ment of these challenges; there is also a longer-term perspective to its work,

which aims to give something back to the communities of the remote and

often underdeveloped territories where the challenges are held, through

education and environmental programmes.

The physically demanding nature of the challenge, combined with the

extreme weather conditions, mean that safety and survival are paramount.

Base camp is in Resolute, Canada, and every team has to transmit their loca-

tion daily. Any team failing to communicate with base camp triggers the

first stage of a rescue plan. The Polar Challenge team itself consists of expe-

rienced adventurers, supported by logistics experts and leadership and team

specialists, but, for the first race in 2004, they also needed someone who

could design and build the kind of robust, reliable communications systems

they needed to stay in touch.

VA L U E S 217

Extreme temperatures, and the limited number of people on the ground

able to man a telephone system, meant that a voice-only approach to com-

munications would have been impossible to support. The challenge, there-

fore, was to come up with an alternative means of communicating with base

camp and with home, using technology appropriate to the environment.

Moreover, the technology had to integrate with the daily routine of the

teams and be 100% reliable, achieving the balance between safety, usabil-

ity and portability. To complicate things further, the Polar Challenge was

also going to be filmed by the BBC as part of a series on human endurance,

and the BBC had stipulated that its crew had to be able to communicate

with staff in London via email.

Fujitsu had only five weeks before the start of the race to design, develop,

test and implement the system, so there was no room for mistakes. It had

to enable the race teams to transmit their location information, identify

devices the teams could carry and use easily in freezing temperatures and

blizzards, identify a secure, robust wireless system to allow the BBC crew to

send emails, and balance the technology requirements with the needs of real

people in extreme circumstances. In testing conditions, keeping things

simple could be a matter of life and death.

“There is no room for dead weight,” says Polar Challenge’s Chris McLeod.

“If something doesn’t work first time, every time, it gets ditched. We can’t

afford to carry equipment that doesn’t work.”

This was the first time anything like this had been attempted. The solu-

tion was based on the Motorola satellite phone running on the Iridium satel-

lite network. A unique graphical interface was developed to improve

usability and navigability when the teams were physically frozen and less

agile. By contrast to a voice-only solution, the Fujitsu data-led solution

means that Polar Challenge will be able to accommodate more teams in the

future. In a voice-only solution voice slots would be limited, and would have

to be scheduled and managed very tightly. The Fujitsu data-led solution

meant that support staff were able to receive team reports concurrently,

enabling them to focus on potential emergencies rather than managing calls.

The basic data communications available at the magnetic North Pole are

provided by the Iridium satellite network, but only 2.4 kbps are available

and connections are charged at $3 a minute, including connection set-up

time, which can take 45 seconds. With such expensive communications, it

was important to make efficient use of the limited bandwidth and connec-

218 VA L U E S

tion time. The Fujitsu team decided to use store-and-forward messaging

based on standard Internet email, with text-based content and a high level

of compression. Using this approach it was possible to maximize limited con-

nection times and move messages in both directions as quickly and effect-

ively as possible. Another important factor in keeping the connection times

as short as possible is management of battery life; within the constraints of

the race environment there are limited opportunities to recharge batteries.

The store-and-forward messaging service was used for two primary commu-

nications services – personal email and team status reporting.

Making it work in sub-zero temperatures was a challenge in itself and

demanded creative thinking. Electronic equipment had to be kept in sealed

bags when transferred from the external temperature of –40 degrees to the

relative humidity of the tent. To keep the batteries warm, the Fujitsu team

improvised a “hot box” using a microwave-sized camera case, insulated inter-

nally with sponge and heated by candles, an idea inspired by the way Indian

restaurants keep their curries warm at the table. The technology also had to

be easy to use, something that is critical when you are suffering from snow

blindness and cannot move frozen fingers. Fujitsu’s design of the PDA used

colours to contrast with the snow and ice, and drop-down selections for ease

of use.

The challenges of the Arctic conditions can only be understood by people

who have experienced them, so the only way for the Fujitsu team to be sure

the technology they had put together would work – and keep working in

this environment – was to go to the North Pole with it, to join the teams

and the BBC, living in tents out on the ice. As Tony Martin, co-founder of

Polar Challenge, put it, “The Polar Challenge is now an annual event and

growing every year as more and more volunteers attempt to achieve their

challenge of a lifetime. Fujitsu’s team literally went to the ends of the earth

on our behalf; we had – and continue to have – an ‘on ice’ engineer to

provide support when we need it. They have met our objectives head-on.”

It is stories like these that make you realize that the consulting industry

has one of the best commercial propositions on the planet. What better job

can you have in the corporate world than to help other organizations

achieve their potential? What better way is there of making corporate social

responsibility a reality?

However, these stories bring us full circle, back to the point at which this

book started – but not quite. The values demonstrated by the teams from

VA L U E S 219

PA and Fujitsu – total dedication and commitment to the goals of their

clients, exemplary teamwork and the willingness to think laterally even in

the most taxing conditions – are the ones clients associate with the best

consultants, but not necessarily ones they link to consulting firms. Whether

they recognize it or not, when a client buys a consultant, they are buying

the values of a firm: the irony is that such values, like living organizations,

need a sympathetic environment in which to flourish. The consultant who

has these values, but who does not find them in the firm where they work,

will leave.

These values have, of course, to be mediated through and reinforced by

all the aspects of the client–consultant–consulting firm relationship we have

already examined. They determine what kind of person is recruited into a

firm, how they are remunerated, recognized and developed. They must be

underpinned by the way in which the firm stays close to its clients, wins

business and designs its processes. But what more does a firm have to do to

protect and sustain its values?

220 VA L U E S

18Living the values, valuing the lives

How do consulting firms sustain their culture? How do they ensure

the values they want to recruit are the same values they protect and

nurture?

Creating a Consulting Culture

Each of the following companies faced a different challenge to its identity.

BDO Stoy Hayward is a middle-sized accounting firm in London which had

to claw back its confidence after being caught up in a corporate scandal.

DiamondCluster’s brand lies in its people and way of working. Celerant cel-

ebrates its 20th birthday in 2007: as a relative newcomer, it has had to estab-

lish a distinctive culture from scratch.

Taken together, these companies illustrate what is difficult – and differ-

ent – when it comes to sustaining the culture of a consulting firm.

Faith in the Team at BDO Stoy Hayward

Polly Peck was one of those Icarus-like stars of the stock exchange. During

the 1980s, its share price soared on the back of extraordinary growth under

the chairmanship of Asil Nadir, only to come crashing down in 1990 when

the profits supposedly generated by Turkish and Northern Cypriot sub-

sidiaries disappeared.

Stoy Hayward, as Polly Peck’s London auditors, were inevitably burned

by association. “From being a high-growth, entrepreneurial and quite glam-

orous accounting firm, we became outsiders; in the words of the media at

the time, we were ‘unclubbable’,” says Simon Bevan, a former managing

partner of the firm. But the debacle forced Bevan and his fellow partners to

think through what kind of firm they wanted: “We wanted to be market-

not marketing-led, to focus on delivering a good service rather than selling

ourselves. We set out to make sure that everything we did centred on the

proposition: ‘expert advisors to growing businesses’, a strategy which guided

us through the 1990s.”

It was the start of a decade-long process of transformation at what is now

BDO Stoy Hayward. It put together a team who’d been to different business

schools, to develop a business education programme focusing on: organiza-

tional effectiveness; innovation; corporate strategy; and growth and entre-

preneurship. Everyone in the firm, from the most junior to the most senior,

went through a version of this course. As the learning from the initial busi-

ness education programme took root, a group of senior people developed a

methodology for helping the owners and management of growing businesses

achieve their aspirations. As a result, the firm now had people who under-

stood the growing business market – and a unique tool that had been devel-

oped specifically to help clients in that market.

But the real turning point came in 2001–2 when the firm moved from

being a national association of local independent partnerships, led by the

largest of them in the south-east, to a single national firm. “We realized that

we needed to ensure that the strong culture that had made the south-east

firm successful reached the rest of the country. From the early 1990s, we’d

been carrying out regular staff surveys,” recalls Bevan. “We’d focused on all

the conventional stuff – satisfaction, management style, morale and so on

– but it was only when we started benchmarking ourselves against other

organizations did we realize how positively we all felt about the behaviour

and values of the people we worked with. And because we hadn’t under-

stood how important these were, we’d never attempted to codify them: we’d

just taken them for granted. We’d also always had strong client relation-

ships, but we’d never really invested any money researching how these were

forged.” Extensive workshops, involving partners and staff from all parts of

the country, identified four core values: honesty and integrity; taking per-

sonal responsibility; strong and personal relationships; and mutual support.

In 2002 the firm started to promote these values explicitly, codifying the

acceptable behaviours that underpinned them and identifying the unac-

ceptable ones, which would not be tolerated. Recognizing that its people

222 VA L U E S

had always shared these attributes renewed the firm’s self-confidence and

made the integration of a number of independent firms into a national firm

much easier than it might otherwise have been.

The firm developed an annual client listening programme for its top 500

clients, consisting of either face-to-face meetings between client manage-

ment and partners who had not been involved in working for them; or tele-

phone interviews by an external agency. The client interviews rate BDO

Stoy Hayward’s strengths and weaknesses, and flag up any issues. According

to Bevan, “Their remit is to drill down through any problems, so, for

example, if someone mentions they’re not happy about fees, the interviewer

will ask if that’s to do with the absolute amount of money involved, trans-

parency – they don’t understand how their fee has been calculated – or value

for money.” Feedback is given to the relevant client service team, the busi-

ness unit leader and all the way up to the firm’s senior management. “If a

problem crops up in just one client service team, then it’s up to that team

to sort it out. If it comes up more often, then we flag it as an issue the firm

as a whole has to resolve. We also go back to clients and ask them if things

have improved.”

The process of change has now extended to the firm’s key account man-

agement process. “We sometimes got feedback from clients that some of our

older, often very senior partners were trying to do all the work themselves,”

Bevan says. “They should have been acting as a conduit, but were ending

up as bottlenecks: these have to be business relationships, not individual

ones.” Client service teams were re-engineered, with account planning

support, to facilitate communication across the firm and to ensure client

managers didn’t focus only on the here-and-now, but would try to anticipate

client needs. However, it quickly became apparent that some teams were

more effective than others. “When we piloted the idea of key account teams,

we picked out a range of clients in different sectors – public versus private

companies, new clients versus long-standing ones – in order to gauge the

critical success factors. Of all the potential variables, one stood out: team-

work. When time had been spent picking the right people, doing psycho-

metric tests and team-building exercises, it made a significant difference to

the key account team’s effectiveness.” As a result, each team had an away-

day to help them function effectively together, to brainstorm ideas and to

put together concrete plans. Teams have reasonable targets and budgets –

and there is a single profit pool for the firm as a whole, which means there

L I V I N G T H E VA L U E S , VA L U I N G T H E L I V E S 223

is little incentive for cut-throat competition internally. Mutual support is

paramount: “People are expected to work together with the goal of improve-

ment, to give feedback to each other, for others to tell them if they are not

behaving in the right way. If someone doesn’t respect his or her colleagues,

they simply won’t work with them.”

A Shared Sense of Identity at DiamondCluster

Formed in 1994 at the beginning of the dot.com boom, recent years could

hardly have been more difficult for DiamondCluster. In Europe, mobile

phone operators, weighed down by their investments in Third Generation

licences and technology, were in a tailspin; fixed-line operators, faced with

a different set of challenges, were adopting a rabbit-in-the-headlights

approach to solving them. Against the odds – and in contrast to most of the

firms that sprang up around the e-business bubble – the firm survived, then

thrived, growing by 25% in 2005. Today, the firm’s revenue is spread across

seven vertical industries, including financial services, healthcare and the

public sector, as well as telecoms.

“We do three things,” says Stephen Warrington. “We help people trans-

late the strategies they’ve started to define into something they can do some-

thing with, something that’s detailed and actionable. We help them through

the technology choices associated with the implementation of their strat-

egy, and we’re totally objective – we’re not in the market to sell systems

implementation or hard-/software, and clients find value in that. Finally,

we’ll help bring everything together by assisting with overall programme

management: we drive things through and get things done. Clients have

been increasingly looking for this over the last two or three years: what dif-

ferentiates successful organizations is not the uniqueness of their strategy,

but their ability to get on with what they want to do. Most consulting firms

tend to focus on just one of these things – strategy, technology or project

management – we combine them in a multidisciplinary way.”

Personal empathy: that’s what Stephen Warrington, UK Managing Direc-

tor for DiamondCluster would say is the firm’s core value.

“Our proposition means we have to have the kind of people who roll up

their sleeves and get on with things; we need to be flexible and down-to-

earth,” says Warrington. “But the single, most important thing we need is

personal empathy. Listening to people, understanding their constraints as

224 VA L U E S

well as their aspirations, recognizing what is possible – these all lie at the

heart of getting things done.”

That value articulates itself in many ways, not just in the people Dia-

mondCluster recruits. “We avoid tried-and tested frameworks,” says War-

rington, “we’re more bespoke tailoring than off-the-rack. Every project is

managed in a separate way, reflecting its unique nuances. Not having a

standardized approach forces people to be creative in every project. We’ll

also take a pragmatic view: rather than aim for perfection, we’ll focus on the

20% of work that produces 80% of the benefits.” Similarly, rather than ride

roughshod over middle managers in a client organization, DiamondCluster

will try to work with them. “We don’t attempt to stratify projects,” says

Warrington, “but to operate across the spectrum. We don’t do what many

other consulting firms do and ‘man-mark’, designate particular individuals

on our side to work with specified people on theirs.”

Nor is empathy confined to the firm’s external relationships with clients.

“This is a very collegiate environment,” says Warrington. “Everyone owns

our culture; everyone has a stake in the firm.” There is little in the way of

hierarchy or even structure: “It’s a very fluid organization, so that we can

cover a lot of ground with a relatively small number of people.”

What comes around internally, goes around externally. Having a

supportive culture is the key to building the firm’s reputation, Warrington

believes: “The importance of brand is diminishing as consultancy firms

mature: clients are looking beyond that. They know what they want and are

getting better at distinguishing one firm from another, even among the small

consulting firms.” A reputation is harder to build than a brand, because it

depends on clients seeing the firm in action. “One of our challenges is to do

more to reinforce our cultural distinctiveness and thus our competitive edge

in the market place,” he says.

Getting Results at Celerant Consulting

Celerant Consulting was founded in 1987, merged with Cambridge Tech-

nology Partners ten years later to become Cambridge Management Con-

sulting, and re-emerged as Celerant Consulting in 2001.

“We know what we do, and what we don’t do,” is how Peter Clements,

a long-serving Vice President with Celerant, sums up the culture of his firm.

“We’re an operational consulting firm which helps clients implement their


plans and quantifies the benefits achieved. Clarity is all-important: it dic-

tates not only what Celerant does, but who its clients are and how it

approaches its work. It’s how we’ve built our reputation, by doing what we

say we will. The only reason we exist is to help our clients improve the per-

formance of their business, so we are very outcome-focused and driven by

the results of what we do.”

This focus on results shapes and sustains the firm’s culture.

It makes it pragmatic: “We don’t believe there is a perfect solution for

anything,” says Clements. “We’ll apply any suitable tool or new idea that

helps in the delivery of results quickly and effectively. We’re very down to

earth, and the people we employ have gone out and done real work – they’ve

got their hands dirty.”

It sets the standard for recruitment: “Every time we have the opportunity

to bring new people on board, we’re reinforcing our culture. If you were to

lay all our CVs out on a table, you would see a very diverse mix. We have

people from a broad group of industries, as well as many from a consulting

background.

“But everybody talks about results, and our view is the only thing that

can ultimately differentiate us, and that’s how our people work closely with

our clients at all levels – from the boardroom to the shop floor – to drive a

change in behaviours which leads to lasting financial results and perform-

ance improvement. They have a strong sense of reality and that tends to

lead to some very practical and hands-on people, people who can develop

close working relationships with clients. It’s all about fit”.

It imbues the firm’s business processes: “When we talk about results, we

talk about financial performance, operational improvement and about cul-

tural and behavioural changes. We set targets for these at the start of an

engagement and measure them throughout its course and at multiple levels.

A portion of our fees is typically tied to the delivery of measurable results.”

The focus on results is also the currency of authority externally and inter-

nally: “Every client should have an agenda of the four or five highest value

issues that they are focused on. If we and the client are not working on the

highest value agenda items, then neither of us is working on the right things.

Tackle the issue that’s top of the mind first, but do it in such a way that it

has lasting impact.”

Moreover, the best results can only be achieved, Celerant believes,

through the relentless pursuit of quality and joined-up consulting. “We can

226 VA L U E S

recruit great individuals from a wide range of backgrounds, but it’s the

meeting of those minds that’s crucial,” says Clements. Over the last five

years, the firm has transformed its executive education process, organizing

courses with Stanford, INSEAD and attendance of select senior manage-

ment at Harvard. Like every sizeable consulting firm, Celerant has to give

its people a “home” to which they belong – in Celerant’s case, there is a

functional structure so that people are grouped by functional skill rather

than industry or geography. But, having divided people up, it needs to bring

them together, by rotating them through roles rather than allowing them to

stay too long with a single client, by awarding bonuses that are based in part

on overall performance as well as individual contribution, and by having

an equity structure that has enabled around a third of employees to be

shareholders.

“The reputation we build and the relationships we have depend on doing

what we say we will,” says Celerant’s Peter Clements. “Relationships have

to be multi-level – there’s a real clarity about what we do and what we don’t

do. From a Celerant perspective it is very important, as there is no point in

taking on a piece of work that does not fall in our area of consulting. That

is what gains you a reputation. Being focused is important, because 1) you

build a reputation, and 2) you build a high degree of trust in terms of doing

what you say you will. Every client engagement is tailored and there is no

one answer, that’s our view of the world. Every organization is different

because it’s full of different people, and different organizations are at differ-

ent stages of their evolution.”

With such a single-minded culture, it should be no surprise that Celer-

ant is utterly uncompromising in its commitment to its values: as Clements

puts it, “We don’t adapt our culture: when you buy us, you get our culture.

Ours is a culture where results are key, and the way we get to the results –

working with real people who do real work, to improve the way they go

about their daily business and in doing so enhance their firm’s overall per-

formance – is what we believe truly sets us apart.”

The Flexibility of a Single Value

No two consulting firms are alike.

Many firms share similar values – indeed, so many share so much that

these values have become devalued through overuse. Anyone can say they


want to work “in partnership with clients” or that they have a “collabora-

tive, hands-on” approach; everyone is “open and honest”. What strikes you,

though, when talking to successful consulting firms, is how important it is

to have, not a set of values, but a single, overarching dominant value, a sun

around which everything else in the firm orbits.

Perhaps it is simply hard to remember a single, all-encompassing value:

how many managers do you know who, when asked to list the values of their

organization, count them on their fingers and then say, “Now, there is a

fifth/sixth/umpteenth, but I can never remember it”? Perhaps, if you have

just one value, then it can become the one, unequivocal standard against

which every decision or activity can be judged. Finally, it may also be that

a single value allows a consulting firm to adapt much of what it does to suit

the needs of individual clients, without compromising the “soul” of the firm.

Without this flexibility, a firm’s processes and culture can become ossified,

unable to absorb new ideas. But too much flexibility results in an organiza-

tion that bends with the wind, one that is too willing to sacrifice its stand-

ards when the need arises. “We’ll lose a job if we don’t have empathy with

a client, but we’ll also lose it if we have exactly the same culture,” is how

Duncan Craig at AT Kearney sums up the delicate balance. “A client wants

us to be able to work with them, but they don’t want us to be them. Con-

sulting should always involve a degree of challenge, of asking why some-

thing is always done in a certain way.”

Lis Astall at Accenture makes a similar point: “I’d say our core value is

about client delivery. That’s something we’ve held on to, despite the fact

that a third of our partners have joined the firm from other organizations in

the last five years. Success depends on being able to bring in fresh thinking

without compromising that value.” The same is true, Astall argues, if you

look at Accenture’s relationships with its clients and the extent to which it

is willing or able to adapt its culture to match that of a client. “Most often,

an organization will select us because they can see cultural empathy because

there’s a cultural match between us, but there are occasions when someone

hires us precisely because their own organization isn’t sufficiently focused on

delivery and they want us to come in and change that. We recently had a

session with a government department where we each separately, and with

the help of an external facilitator, set down what we liked and disliked about

the other side, and what we thought the other would say – this is the closest

228 VA L U E S

we come to adapting the culture. There were some surprises and we’ve used

the technique several times since.”

With 30 people compared to Accenture’s 120000+, you would think the

Rossmore Group would have a different perspective. In fact, Alan Marsden,

Rossmore chief executive, also agrees: “Our culture is an incredibly open

one – everyone gets to see our results every month. It’s supportive and con-

structive. When we recruit people we want them to be free spirits and they

can take from our culture what they want: we don’t want to mould them to

our culture. But there’s a cultural line that we’re not prepared to cross, with

both employees and clients. It takes a lot of guts to say to a client that we’re

not prepared to do something the way they want to do it if we believe it’s

not right for the business: it’s too easy to tarnish your reputation.”

A single value, closely held, allows a consulting firm to balance the need

to work collaboratively with its clients while retaining its organizational

integrity.

Counting the Value, not the Cost

It is one thing to talk about – indeed, live – a specific value, but quite

another to be able to explain to the outside world how that value translates

into value to a client.

This is the heart of the problems consulting firms face in defending their

existence to an increasingly sophisticated and cynical client base. Going

back to that simple conclusion so many clients have reached – consultant

good, consulting firm bad – it is clear that the reason why individual con-

sultants are valued is because a client can immediately see they are doing

something. I will never forget being asked to call a client many years ago

who wanted to commission a study on whether to launch an in-store loyalty

card. As I had been warned he was a bad-tempered, shoot-from-the-hip type,

I did so with some trepidation. Indeed, the first ten minutes of the conver-

sation were a one-sided harangue on how he had been passed from person

to person in the consulting firm where I worked. “They’re all talking to me

about approach, ways of working, adding value, other businesses they’ve

worked with,” he ranted. The penny eventually dropped: I almost had to

shout over him, “It’s OK. I’m going to do the work. It’ll be me turning up

on Monday morning.” That stopped him in his tracks: in all his dealings


with the firm, he had not spoken to a single person who was actually going

to do something.

The irony of consulting firms’ insistence on values is that they are rarely

articulated as something that is valuable to a client. But wait, you might say,

surely values such as integrity, openness and honesty are valuable? Of course

they are, but, by their very nature, they are not things clients would find

easy to see as an immediate and tangible benefit. The challenge, therefore,

remains to connect the “values” with the “value” they generate.

Watson Wyatt is a global consulting firm which focuses on human capital

and financial management. Adrian Mathias has been with the firm almost

20 years, most recently in charge of an office and a team of 80 consultants.

“The culture here is a very informal and open one,” says Mathias. “When I

came to work here in 1988, the senior partner came down to shake my hand

and said: ‘We are as we are, so take us or leave us. If you like us you like us,

if you don’t you don’t’. That’s the kind of straight-talking place it is. You

can go up to the senior partner and ask for his or her help.” But the heart

of the firm’s culture, he says, is always putting the client first: “If you look

after the client, then everything flows from that: happy clients create great

career development opportunities which attract the best people and gener-

ate the most profitable business.” If anything, the firm takes excellence for

granted and has not done enough to recognize the efforts people make to

maintain the high standards expected of them. In recent years, that problem

has replicated itself externally: like other consulting firms Watson Wyatt

now finds itself increasingly having to deal with procurement departments

rather than directly with the end-users of its services. Here, too, it is easy

to make assumptions about an excellent standard of service – after all, every

firm claims that – and difficult to show what these values mean in practice.

With this in mind, Mathias and his colleagues have been changing the

way they work. “We start off by sitting down with each client in order to

establish the criteria the client will use to judge whether we’ve done a good

job,” he says. “Everyone in the team, from the most senior to the most junior,

will be aware of these criteria.” So far, so conventional. Where Watson

Wyatt takes it a step further is in the way it tries to track and report on the

value it has delivered, project by project. “The teams working at our major

clients are encouraged to record everything, no matter how small, we did to

help our clients. It might range from something as significant as changing

their reward structure to helping a manager prepare for a particularly import-

230 VA L U E S

ant board presentation. The aim is to circulate this internally and externally

in the form of a formal report. It helps our client relationships – they can

see what our commitment to clients yields in terms of tangible results. It

helps internally: we’re constantly drumming into people right through the

firm that everyone contributes in a big or small way to keeping the client

happy, even the tea-girl who sets up the biscuits and tea for an important

meeting.”

But clients, too, have to be able to appreciate the values of a consulting

firm if the latter are to be at all meaningful.

This takes us straight into fraught territory: both clients and consultants

have traditionally shied away from trying to value the input of consultants

for a combination of good and bad reasons. Clients have been reluctant to

expose their decision to use consultants to outside scrutiny; consultants have

resisted demands to quantify the value of their input on the grounds that

no two consulting project are alike, and that much of what they do is intan-

gible and therefore unquantifiable.

Paul Sedgwick admits he has struggled with the value of consultants from

time to time in his role as Commercial Manager for the UK’s Environment

Agency: “It’s something that is neither straightforward nor easy to do,” he

says. But it is important: Sedgwick and his team are responsible for letting

around £150 million in contracts to a combination of engineering and man-

agement consulting firms and contractors. Since October 2000, they have

been putting framework agreements in place, sharply reducing the number

of suppliers involved (the Environment Agency now deals with just six con-

sulting firms instead of 46). “Before we put the frameworks in place, each

contract would have been individually priced and would have required a

separate procurement process, often for a low-value piece of work,” says

Sedgwick. “The savings in efficiency alone have been considerable, and

that’s before we take the better prices we have been able to negotiate into

account.” The process has had other benefits, too: because the money is

spent with a small number of suppliers, both sides have a greater incentive

to invest in the relationship. Regular meetings are held with all the suppli-

ers in a particular framework together, backed up with individual supplier

development meetings. “These meetings give both sides the opportunity to

explain their objectives,” says Sedgwick. “Each supplier has an action plan

which we monitor, and one member of our team is responsible for supplier

development. We take them through a presentation of what has been


achieved and the challenges the Agency faces in the coming year. It looks

at the targets we have to meet and how we expect suppliers to help us meet

them. The suppliers give us a presentation of what they’re delivering and

can raise areas of concern. For example, someone might say that we don’t

have the right balance between incentives and risk – between carrots and

sticks, in effect. On top of this, we try to identify and develop best practice

with suppliers. The Agency should be a conduit: taking good ideas from one

supplier and applying them elsewhere.”

But the most recent innovation has been one of the Agency’s own

making, to introduce “value registers” which aim to capture the savings

made during the course of a project – the costs avoided or the time saved,

for instance – as distinct from the benefits of the overall project. This is

quite different from the way most organizations think about the costs and

benefits of using consultants: typically, the latter are rolled up into the busi-

ness case for a project as a whole, making it hard to see what value has been

added by the consultants involved. By contrast, the Environment Agency’s

approach aggregates all the small-scale benefits often missed in big projects.

“One of the advantages of the value registers is that it increases peer pres-

sure among suppliers,” Sedgwick says. “They can look over each others’

shoulders and see how they’re doing by comparison. It raises the stakes for

the suppliers and, because we now deal with a smaller number of suppliers,

there’s a genuine incentive to come up with good ideas. We can also allo-

cate work on the basis of performance.”

Sedgwick believes there are several reasons why the scheme is working

so well. “It’s based on goodwill,” he says. “Although we don’t force suppli-

ers to take part, they clearly stand to gain by doing so. They all want their

contribution to be recognized. Second, we include softer issues, such as

effective communication, as well as the more obviously measurable ones, so

we try to take account of the overall relationship we have with a supplier.”

The potential downside, though, is complexity: the process is rigorous and

quite a lot of work is involved in managing it and in validating the claims

made. “We don’t want to spend our lives capturing this information,” says

Sedgwick. “Similarly, the No. 1 priority of our suppliers is to deliver proj-

ects on the ground, not fill in forms. To get round this, we focus on project

savings and don’t attribute them to individual parties, which would proba-

bly have resulted in endless arguments. Suppliers’ reputations thus stand on

the overall success of a project.”

232 VA L U E S

The solution to the valuing-the-values problem is not hard, but it may

be frightening. Consulting firms’ attempts to capture and even quantify the

value they add to clients is a major step in the right direction. But encour-

aging clients to do this, systematically and regularly, using one standard

process for all their consulting suppliers which is based on metrics clients

(not consultants) find useful would be a massive leap forwards.

Value, like beauty, is ultimately in the eye of the beholder.


19Conclusions

This book set out to examine the three-way relationship between client,

consultant and consulting firm.

Its essential premise has been that trusted advisors need the support of

trusted firms, firms that deliver on the promises they make to clients and

employees alike. It has also argued that unless clients’ trust in the consult-

ing firm can be strengthened, then those firms face an uncertain future,

trying to defend their fee rates in the face of increasing competition from

low-cost suppliers and independent consultants. That firms are not doing

this successfully at the moment is borne out by the assumption clients habit-

ually make – consultant good, consulting firm bad.

Each party in this three-way relationship is dependent on the other two

(Figure 19.1):

• Consulting firms need people in order to build relationships with clients

and deliver services. A firm’s relationship with its consultants is mediated

through its culture. As far as clients are concerned, the relationship is

primarily channelled through processes – the way the firm wins and then

delivers work.

• Those processes are what consultants need consulting firms to provide if

the latter is to add value; they are what distinguishes a consultant who

works for a firm from an independent consultant working alone. By con-

trast, the relationships consultants have with their clients are clearly per-

sonal ones – this is the heartland of the trusted advisor.

• Similarly, clients interact at a process (or corporate) level with consult-

ing firms, but at a personal level with consultants. What they need are

for both clients and consultants to exhibit the right set of client-centred

values.

This book has focused on the interactions between the three groups

involved:

• Part 2 looked at the people issues: how do consulting firms attract and

retain people of the calibre they need?

– The best personal chemistry takes place between a client and consult-

ant where the consultant exhibits, in addition to technical expertise,

the ability to be part of a team; take the initiative; be believed; and

demonstrate empathy. The greatest of these is empathy.

– In today’s market, attracting people with these characteristics requires

efficient as well as effective recruitment processes. That is hard to

achieve because recruitment is necessarily a labour-intensive process.

Put too much emphasis on face-to-face interaction, and you will not

be able to keep up with the market; too little, and you may end up

compromising the quality of the people you bring on board.

• Part 3 looked at how consulting firms win business:

236 VA L U E S

Client

Consulting firm


PeopleProcess

Values

Figure 19.1 The delivery triangle – values, people and process

– In these days of encroaching commoditization, two factors stand

between a consulting firm and falling prices – its brand and the degree

to which it specializes in a particular area. Although in different ways,

brand and specialization confer three advantages on a firm: the quality

and nature of the people it has at its disposal, and its ability to deploy

them as and when required; the quality of relationships it enjoys across

its client base; and its ability to bear risk. However, these factors give

the firm the opportunity to charge high prices only if they translate

into benefits from a client’s point of view.

– Commoditization is fuelling and being fuelled by the growing power of

centralized procurement teams, particularly in large, multinational cor-

porations and government institutions. This has created a new barrier

between the end-users and consultants themselves, and consulting

firms have responded by professionalizing their approach to sales.

However, dedicated sales forces have their drawbacks. The key to

solving the potential conflict between the sales and delivery arms of a

consulting firm is to look externally, to focus on client accounts rather

than internal processes. Good account management combines the

aspiration to serve a client as well as possible; investment in the rela-

tionship “chain”; giving the account teams the authority and flexibil-

ity to take decisions for themselves and act on them; a ready exchange

of information between the account team, their client and the con-

sulting firm as a whole; and a focus on rewarding the team as a whole,

not the individuals within it.

– In the battle to outpace commoditization, thought leadership has

become one of the most important ways in which consulting firms are

trying to put space between themselves and their competitors. Yet,

despite the rhetoric, thought leadership for many firms remains prima-

rily – and ironically – an internal issue, a means of sharing informa-

tion across practice boundaries. Where firms have a more ambitious

approach to thought leadership, how they operate may vary, but one

common theme emerges: thought leadership has to be part of a firm’s

culture.

• Part 4 turned to the delivery of consulting services:

– Consulting projects vary from internal projects in five important

respects: the way in which resources are allocated to a project; mobil-

ization – what is done to ensure that the project team is up and running

C O N C L U S I O N S 237

from day 1; how easy it is for the consulting firm to adapt what it is

doing to suit a client’s changing needs; how the consultants engage

with people in a client’s organization; and stakeholder management.

– In delivering services, one of the most important ways in which a con-

sulting firm can add value is through teamwork. This comes in three

forms: the tactical teamwork that takes place when clients and con-

sultants work together; the consulting firm-wide teamwork required

to resource complex jobs, increasingly in different locations across the

world; and the strategic teamwork that occurs when consulting firm

and client share the same goals, risks and rewards.

– Clients expect consulting firms to have methodologies, but they com-

plain when these are applied too rigidly. Two factors determine whether

a methodology will add value to a client: content and, less obviously,

the way in which it engages the people on the client’s side.

– The pressure on a consulting firm to have, and be seen to have, a

methodology is huge, yet most consulting firms would like to be inno-

vative. As a result, clients tend to be dissatisfied with what they see:

the innovative thinking they receive is rarely as exciting or as radical

as they expected. Where innovation does occur, it is often on a smaller,

but no less important, scale: it comes from being able to change a

process and from generating insights which genuinely surprise clients.

This is the stardust of consulting.

– The mystique that has traditionally veiled consulting firms can only do

them a disservice: much better to open themselves up to their clients’

feedback, bad as well as good. Gathering this kind of information needs

to be: done at all levels in a client’s organization; articulated from the

client’s point of view, not the consulting firm’s; shared with all those

involved, even – perhaps especially – if it is negative; acted upon; a

catalyst for internal change; and never-ending.

– While mergers and acquisitions involving consulting firms have often

led to problems, an increasing number of consultancies have parent

companies. These parents are providers of additional, diverse resources,

a potential channel to the market and a large internal market in their

own right. Making these relationships work involves: being clear about

the different skills involved; having a common culture; an under-

standing on both sides of the value each brings to and obtains from the

relationship; having a culture that is used to working with other organ-

238 VA L U E S

izations; and, above all, applying the same way of working internally

as externally.

• Part 5 looked at the culture and values of the consulting firms. It argued

that there is no single, “right” culture, but that it is important for a firm

to have one overriding value that drives its aspirations and behaviour,

rather than a multitude of values which become confused in practice. It

also argued that a “value” of a consulting firm had to translate into some-

thing a client “valued”.

If there is one word which comes up more than any other in this book,

it would have to be engagement. When you talk to clients who have been

involved in particularly successful consulting projects, it is the word they

invariably mention. When you listen to people complaining that consult-

ants are not worth the money spent on them, it is often because no one has

taken the trouble to explain why consultants have been brought in or what

their role is.

Engagement is the key to being a trusted firm.

C O N C L U S I O N S 239

Accentureadvertising strap-line 93, 118–19Astall, Lis 51, 78, 228brand 93–4, 118–19DSS project 66Ellis, Vernon 3, 7firm-wide teamwork 164–6Global Delivery Network (GDN)

164–6, 168global integration 7recruitment 78–80remuneration 86strategic teamwork 166–8thought leadership 118–19, 131–3values 228–9

accountability 28–9account management 97–8, 111–15ad hoc articles, thought leadership

129advertorials 129agenda-setting, and thought leadership

119, 120Ahrengot, Neils 191–3Ailles, Ian 167, 168Alsbridge 202Andersen Consulting 6, 93arrogance 23, 96Arthur Andersen 7, 93articles, thought leadership 127–8, 129Arup 145, 208–9Astall, Lis 51, 78–9, 86, 166, 228–9AT Kearney 69, 171, 228Atkinson, Adrian 87–9attrition rates 77, 78, 82–3, 86authored articles, thought leadership

127–8

autonomy 71and accountability 28–9initiative, seizing the 69and organizational values 39

AXA UK 187Axon 110–11, 170–1

backgrounds of consultants 5, 77, 79, 81bad relationships 23–4Barclays Bank 187–90Barden, Roy 38, 39Barrie, Alex 186–7BBC 218, 219BDO Stoy Hayward 221–4Beck, Jules 67, 142, 162Bennett, Anne 29Bevan, Simon 222, 223–4Black, Tom 51, 67, 68, 69, 87Blair, Tony 66bonuses 84–6Booz Allen Hamilton

Koss, Victor 109people management 57–9strategy + business 122–4, 127thought leadership 122–4, 126, 127

Boston Consulting Group (BCG)brand 94Gunby, Steve 11, 94, 162, 182firm-wide teamwork 163innovation 182–3

Boxwood 155–7Bradford & Bingley 137–40brand 43, 93–9, 102, 103, 237

importance to clients 15, 225thought leadership 118–19

British Airways’ London Eye 184–7

Index

242 I N D E X

British Steel 5BT

London Eye 186–7Offline project 72–3Online project 72–5

Buckle, Alan 51Budd, Richard 144bundling of services 157–8Burnford, Philip 4, 5, 7business process re-engineering 44business schools 38Butler Cox 4, 81–2

Cambridge Management Consulting 225Cambridge Technology Partners 225Campagnino, John 79–80Campbell, Andrew 36Capability Maturity Model Integration

(CMMI) 164, 170Capgemini 54, 176–8Capita Advisory Services/Capita

Consulting 19–20Cardell, Steve 110–11, 170–1career development see training and career

developmentCarnegie Mellon 164, 170case studies

methodologies 172thought leadership 119–20

Catalise 38, 39, 69–70, 152–3Celerant Consulting 221, 225–7centralized procurement departments see

procurement departmentschange, ability to respond to 140, 141,

145–7change implication, addressing the 52change management 44changing nature of client–consultant

relationship 3–12Chartered Institute of Personnel and

Development 83Chestnutt, Andy 70, 85–6Chokheli, Lasha 215Clements, Peter 225–7client–consultant–consulting firm

relationship 51–2delivery triangle 53–9, 236

client–consultant relationshipsbad 23–4people 16–20, 43–4, 49, 235–6pressures 46promises 20–3

clients’ perspective of client–consultantrelationships 13–24

coaching programmes 38, 149

commoditizationand brand 97depersonalization of consulting 46, 47e-auctions 109methodologies 171, 174procurement teams 9

communication 18, 191–9, 238leadership 39

compartmentalization 28Compass Consulting 70, 85–6complexity of consulting project 45Cook, Thomas 167Cooper, Matt 146, 147Cooper, Tony 20Cooper-Bagnall, Jonathan 86–7, 144Coopers & Lybrand 5, 6–7Corby, Terry 131–2, 133core business 27–8, 30–1corporate governance 58Cox, Sir George 4–5, 81–2Craig, Duncan 69, 171, 228credibility 69–70cross-divisional teams 58, 161CSC Computer Sciences Corporation

Beck, Jules 67, 142, 162Butler Cox 81firm-wide teamwork 162Neal, Doug 30, 33, 35, 38Pawlowicz, Andrew 51resource allocation 142–3

culture see values

Davies, Rob 148Dawson, Carl 168dedication 17delivery risk 98, 103delivery triangle 53–4, 235–6

Booz Allen Hamilton 57–9Ernst & Young 54–5PKF Consulting 56–7

Deloitte 7Deloitte & Touche 105–6, 160demand spikes, and resource allocation

141demographic change 9Dench, Bob 187–8, 189–90Department for Work and Pensions (DWP)

19Department of Social Security (DSS)

65–6dependability 69depersonalization of consulting 46–7Design Council 81Detecon 205–6Detica 51, 67–8, 69, 87

I N D E X 243

Deutsche Telekom 205–6de Voge, Sylvia 36DiamondCluster 71–2, 86, 221, 224–5dot.com bubble 8, 78, 83–4Driscoll, Fiona 29, 35

e-auctions 46, 108–9EC Harris 207–8economy projects 47Edison, Thomas 119EDS 7effectiveness projects 47efficiency projects 47Ellis, Vernon 3, 6, 7Elton, David 125–6email alerts, thought leadership 130, 133empathy 18–19, 67, 71–5, 224–5employee market 28–9, 31engagement 18–20, 89, 239

managing consulting projects 140, 141,147–51

methodologies 175, 176–80parent companies 208–9remote working 34teamwork 160

Enron 44Environment Agency 231–2equity payments 86, 87ER Consultants 29Ernst & Whinney 51Ernst & Young 54–5, 56, 84, 87, 112–13extended organization 28, 31externalities 32, 34

facilities management, outsourcing of 27feedback 191–9, 238financial risk 99, 103firm-wide teamwork 161–6flexibility 18

account management 114firm-wide teamwork 162innovation 181, 184–7, 189–90methodologies 176resource allocation 142of values 227–9

fragmentation of work 28framework agreements, procurement

function 107freelance consultants 158Fujitsu 218–20

globalization challenges 9firm-wide teamwork 163recruitment 80

Goldsmith, Julian 111

Goold, Michael 36governance, corporate 58Gunby, Steve 11, 94, 163, 182–3

Hackett, Ian 209Halcrow 113–14, 193–5, 196, 198, 199Hallan, Lucinda 138, 139Handy, Charles 37Hardaker, Cath 56, 57, 72Harrington, Michael 177Harris, Eleanor 186, 187Hattam, Roger 137–8, 139Hay Group 6, 7, 36, 83Haynes, Martin 74Henry, Eilish 150–1Heuermann, Arnulf 205–6Higgins, Jo 138, 139history of consulting 3–9HM Customs & Excise 150HM Revenue and Customs (HMRC)

149–51homeworking 80honesty 17, 69, 74, 192, 195hot-desking 52Human Factors International 87

IBM 7Icon Media Lab 83Illsley, Peter 107, 206–7Implement 191–3, 195, 196, 198, 199Infast 145–7information technology see technologyInformation Technology Services

Marketing Association (ITSMA)131, 132

in-house journals, thought leadership129–30

Outlook 132strategy + business 122–4, 127

initiative, seizing the 69Inland Revenue 150innovation 181–3, 238

branded firms 96clients’ desire for 14, 45firm-wide teamwork 162flexibility 184–7generating insights 187–90methodology versus 169parenting advantage 38strategic teamwork 168thought leadership 125, 131–2, 133

insights, generating 187–90instant gratification culture

methodologies 173resource allocation 141–2

244 I N D E X

Institute of Directors 81interviews

recruitment 78, 79–80thought leadership 120

invisible firm 25–40Isaac, Peter 3–4, 5IXL 83

Johnston, Garry 74–5journals, thought leadership 129–30

Outlook 132strategy + business 122–4, 127

Kent, Simon 137–8, 139, 140Kleiner, Art 122–4knowledge 16–17

parenting advantage 38people management 58thought leadership 117see also innovation; specialist skills

Koss, Victor 57–9, 109, 124KPMG 51Kurt Salmon Associates 69, 109–10,

159–60, 171–4

Lamb, Sue Lennox 72LCP Consulting 143–5leadership 38–9

thought see thought leadershipLegal & General (L&G) 138, 139, 189leverage

branded firms 94–6history of consulting 6niche firms 100–1

listening skills 70, 191–9, 238Lloyd, Tim 201–2Lockton, John 143–4LogicaCMG 108London Eye 184–7London Underground 155–7

Madden, Peter 207–8Maister, David 10managers

employees’ views of 25–6, 34, 35need for 34–5

managing consulting projects 137–40,237–8

change, ability to respond to 145–8engagement 147–51mobilization 143–5resource allocation 140–3stakeholder management 151–3

Marakon Associates 161, 174–6Marsden, Alan 35, 37, 38–9, 208–9, 229

Martin, Tony 219Mathias, Adrian 230–1Mazmishvili, Tariel 213, 215MBAs 38McGregor, Sir Ian 5McKinnon, Charlie 19–20McKinsey 150McKinsey model 6McLeod, Chris 218mentoring 37–8, 162Mercer Human Resources Consulting 26,

39Mercer Oliver Wyman 99–100, 163mergers and acquisitions (M&As) 201–2methodologies 169–72, 238

content 172–6process 176–80

Metronet 155–7mobilization, managing consulting projects

140, 141, 143–5moments of truth 66–72momentum 140, 143MSL 4multidisciplinary consulting teams 44–5,

46multinational corporations, desire for

innovative thinking 14Murphy, Mark 176–8

Nadir, Asil 221Neal, Doug 30, 33–4, 35–6, 38, 39networking, parenting advantage 37Newberry, Pat 8niche firms see specializationNicholson, Geoff 99–100, 163Niehoff, Walter 3–4

objectivity, clients’ desire for 14offshoring

Accenture 164challenges 9, 30–1organization–employee relationships 27

Oliver, David 69, 109–10, 160, 171–4openness 115, 191–9, 238

account management 115organizations

consulting firms as models for the future30–4

invisible 25–40management 34–5need for 35–40shaping forces 27–30strained relationship with employees

25–7organization-wide teamwork 161–6

I N D E X 245

original thinking see innovationO’Rourke, John 69–70, 152–3outsourcing 27–8, 30–1

to business schools 38leadership 39and managers 34organization–employee relationships

27of training and development 38transformational 41–2, 166

overcapacity in consulting industry 8Owen, Richard 105–6, 160, 161

PA Consulting Groupengagement 150–1HM Revenue and Customs project

150–1mobilization 145ownership structure 86–7Pawlowicz, Andrew 51T’bilisi project 214–17, 220thought leadership 125–6

parent companies 201–9, 238–9parenting advantage 36

knowledge 38leadership 38–9teamwork 36–7training and development 37–8values 39

partnership between clients and consultants159

partnership model of consulting firms48

Pasricha, Nick 54–5, 84, 87, 112–13Pawlowicz, Andrew 51–2Payne, Andrew 113, 193–5PE International 81Penna 89–90Pension Service 19–20people, delivery triangle 53, 54

Booz Allen Hamilton 57–9performance-related pay 81–2, 84–6, 87personal chemistry 43–4, 65–6, 236

empathy 71–5moments of truth 66–72

PKF Consulting 56–7, 72pod-casts, thought leadership 130Polar Challenge 217–20Polly Peck 221previous work 43

importance to clients 15Pricewaterhouse 7PricewaterhouseCooper 8process, delivery triangle 53, 54

PKF Consulting 56–7

procurement departments 8–9, 106–9depersonalization of consulting 46and values 230

productivity of employees 25, 29professionalization of sales 109–12promises 20–3

failure to keep 48promotion 81

thought leadership 126Proudfoot 3, 5

Quest International 178–9

rapport 18Razorfish 84recruitment 77, 236

branded firms 94employee market 31innovation 183niche firms 100process management 56“war for talent” 8, 77–80

referrals 15relationship skills 65–6

empathy 71–5moments of truth 66–72

remote working 28, 31, 32engagement 34

remuneration 81–2, 83–7, 89reputation 43, 171

branded firms 98–9generic level 49governance, corporate 58importance to clients 15niche firms 103people management 58–9risk 98–9, 103thought leadership 125and values 225, 227, 229

resource allocation 140–2innovative projects 181

respect, mutual 17–18teamwork 157, 165–6

retention of consultants 77, 81–90risk

branded firms 98–9innovation 181niche firms 102–3reputation 98–9, 103

Rolls Royce 105Rossmore Group

Infast project 145–7Marsden, Alan 35, 37, 39, 208, 229parent company 208–9values 229

246 I N D E X

Rumpf, Bernd-Michael 203–5, 208Russell, Alan 108Russell, Grahame 89–90

salaries 83–4, 89see also remuneration

sales process 105–6, 237account management 112–15procurement departments 106–9professionalization 109–12

Salmon, Kurt 172Sanchez, Paul 26–7, 39SAP 203–5, 208scale of projects 45–6Scient 84Sedgwick, Paul 231–2Serco 107, 206–7shares 86Sherry, Pat 5, 6, 9size of consulting firms

financial risk 99process management 56–7

Smith, Steve 178–9sole traders 158sound-bites, thought leadership 128–9specialist skills

clients’ desire for 9, 14–15, 16–17,44–5, 71

extended organization 28freelance consultants 158and managers 34–5teamwork 157

specialization 93, 99–103, 237firm-wide teamwork 163methodologies 172–3resource allocation 141

sponsored weblinks 129Spruit, Herman 161, 174–6stakeholder management 140, 141, 151–3standalone articles, thought leadership

129standard setting 22Stansted airport 176–8Sternick, Robert 145–7Stewart, Andrew 188–9Stoy Hayward/BDO Stoy Hayward 221–4strategic teamwork 166–8strategy 44strategy + business 122–4, 127Suladze, Temur 215–16sustainable results 21–2

tactical teamwork 159–61teamwork 66, 155–7, 238

and competitive advantage 157–9

and empathy 73firm-wide 161–6moments of truth 67–8parenting advantage 36–7people management 57–8scale of projects 45–6strategic 166–8tactical 159–61

technologyfirm-wide teamwork 163history of consulting 5, 6, 8impact on organizations 29–30, 32offshore companies 9outsourcing 27sales process 106thought leadership 133

Telasi 216tendering 106, 118think-tanks 131Thomas Cook UK & Ireland 167–8thought leadership 117–26, 237

deployment 127–33Tonkin, Dan 156–7topical sound-bites, thought leadership

128–9Touche Ross Bailey and Smart 105training and career development

32–4branded firms 94, 95firm-wide teamwork 162history of consulting 6innovation 183parenting advantage 37–8

Trinity Horne 72–5Troika 108–9, 137–40, 188–90T-Systems 205–6Turner, David 73–4turnover rates 77, 78, 82–3, 86

Unilever Foodsolutions 178–9Unisys 81United Energy Distribution Company

(UEDC) 213–17Urwick Orr 4–5, 81US Agency for International Development

(USAID) 214, 216

values 213–20, 239creating a consulting culture 221–9delivery triangle 53, 54–5methodologies 176parenting advantage 39thought leadership 126, 132as value for clients 229–33

van Herterijck, Herman 178–9

I N D E X 247

Veal, Andrew 189virtual company 36

Wadia, Kris 164–6Waller, Graham 20Warrington, Stephen 71–2, 86, 224–5Water for Fish 149Watmore, Ian 65–6Watson Wyatt 83, 230–1

websites, and thought leadership 129, 130

Wells 139White, Dean 217white papers 110, 118, 120, 127, 128Wilkinson, Gordon 20Wright, Vicky 6–7, 83

year 2000 8

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