The consulting industry

are advisory missions of managers and specialists to subsidiaries and plants within a corporation, temporary task forces and project groups, short-term detachments, personal coaching and counselling, ad hoc advice provided by staff departments, and so on. Some of these forms will be described in Chapters 3 and 4 in the discussion of consulting modes and organizational forms and interventions for managing and assisting change. They are often used in connection with a consulting project carried out by an external or internal consulting unit.

Although this sort of helping activity is not normally referred to as consulting, it tends to produce better results if the individuals involved are familiar with the principles and methods of consulting.

2.7Management consulting and other professions

In previous sections, we have made several references to three trends: first, management consultants have been increasingly moving into new service areas, which may be emerging areas of management consulting, but also areas outside the management consulting field; second, other providers of professional and business services have tended to do more and more management consulting; and third, firms from different professions tend to work together more frequently than in the past. Professions no longer enjoy impenetrable borders and absolute protection against “intruders”. They are undergoing profound transformations, which are reshaping individual professions, shifting their borders and changing their status, relationships and methods of work.

Professional service infrastructure of the market economy

To function smoothly, the market economy needs a well-developed, reliable and effective infrastructure of professional services. Management consulting is one of them. The total infrastructure comprises many other services (figure 2.1), all of which serve the same private and public sector client base, including business firms, administrations, social organizations and individuals. They also serve each other.

The structural changes through which business and governments have passed in recent decades have had a major impact on professions providing services to them. The services of lawyers, accountants, investment bankers, management consultants and others are in great demand as the pace of structural changes accelerates and as these changes become radical and complex. Mergers and acquisitions, joint ventures, privatization, structural adjustment, trade liberalization, export development, new forms of cross-border trade and financial operations, major development projects, business alliances, and new laws and agreements regulating business nationally and internationally – all are green pastures for businessand management-related professions.

Most of these business transactions and structural changes do not fall under the jurisdiction of one single profession. They involve legal, financial, accounting, organizational, managerial and other aspects, although one of these aspects

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Management consulting

Figure 2.1 Professional service infrastructure

Management

consulting

Audit,

accounting,

Information

tax advice

technology

Management

development

Investment

and training Other banking

(business

information, market research, executive search, etc.)

may dominate in a given case. An international perspective and expertise, and a good knowledge of the perspective taken and services offered by other professions, are increasingly required from all professions.

Management consulting has grown and evolved in this context. It has been changing in interaction with other professions, which has included both competition and cooperation. This interdependence is best documented by the spectacular growth of management consulting services of international accounting firms. Within less than 20 years, these firms have been able to become world leaders in consulting in addition to having strengthened their leadership position in accounting and audit.

Competition among professions

Tough competition is one of the main characteristics of the current state of the professions. There is competition both within and among professions. When a

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The consulting industry

new market for professional services starts emerging, firms from several professions may claim that this market is primarily within their province. This has been the case, for example, with privatization, where accounting firms, investment bankers, management consultants and law firms have all been competing for a leadership position and a bigger market share.

If the work to be done requires an interdisciplinary approach – which is more and more the case – a firm in one profession may decide to establish a new service line in an area that falls under another profession from a strictly technical point of view. A management consultant might branch out into tax advice, or a computer firm decide to offer management consulting. The firm thus becomes multiprofessional or multidisciplinary. If there are legal or other barriers preventing a combination of certain service lines within one firm, a solution can usually be found by establishing a new sister or affiliated firm for the new service.

In some grey areas competition is straightforward. For example, in many countries, company valuation is not a guarded domain of any profession. Management consultants may have advantages in the field: assessing the potential future earnings of a manufacturing company requires an ability to analyse demand and sectoral trends, the maturity level of the technology used, emerging technologies, raw materials, local and foreign competitors, quality and cost of labour, and the like. Still, accountants and investment bankers also offer valuation services, stressing the accounting and financial market aspects and implications. There are, too, independent experts in property, real estate and company valuation. Thus, several professions compete for the same clients.

Cooperation among professions

Cooperation among different professions is an equally important trend. Clients are not interested in interprofessional skirmishes and jealously guarded borders between professions. They resent corporatist attitudes that put the profession’s self-interest before the clients’interests. What they want is a coordinated and even integrated service in which no important aspect of the problem in hand is ignored or treated unprofessionally. If a consulting firm cannot deliver such a service with its own resources, collaboration with other professions can provide a solution.

Management consultants collaborate closely with lawyers on many issues with legal aspects and implications. The initiative often comes from the legal side: legal counsel may feel the need for management or financial advice in dealing with a legal problem, and so turn to a management consulting firm, which may or may not already be on contract to a mutual client. However, the management consultant may also perceive the need for legal advice in a given situation, invite a lawyer to participate in a joint assignment, seek consultation with internal counsel or recommend that the client engage outside legal counsel.

Another area with numerous links to consulting is audit. Statutory audits in the legal sense of the term, that is, checking and certifying accounting records and financial reports, are not consulting. However, they are only a step away. Auditors who express an opinion on the client organization’s financial records

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