Management consulting

their consequences. If – as sometimes occurs – a consultant agrees to run a client’s business and make decisions on his or her behalf, he or she stops being a consultant for that activity and period of time.

As mentioned earlier, consulting does not have to be a full-time occupation. If other professional criteria are met, it is not important whether the consultant is primarily (and for most of the time) a business school professor, a researcher, a retired executive or any other sort of worker. Also, if quality and independence are assured, consulting does not have to be an external service.

Our definition

Following this short discussion of the basic characteristics of management consulting, we offer the following definition:

Management consulting is an independent professional advisory service assisting managers and organizations to achieve organizational purposes and objectives by solving management and business problems, identifying and seizing new opportunities, enhancing learning and implementing changes.

We have chosen a definition that omits certain characteristics that are not common to all consulting, such as “external” service, or service by “specially trained” persons. Conversely, our definition includes the fundamental, or generic, purposes of consulting that are discussed in the next section.

1.2Why are consultants used? Five generic purposes

A manager may turn to a consultant if he or she perceives a need for help from an independent professional and feels that the consultant will be the right source of this help. But what sort of help are we talking about? What can be the purpose of using a consultant?

Consulting purposes can be looked at from several angles and described in various ways. Let us look first at five broad, or generic, purposes pursued by clients in using consultants, irrespective of the field of intervention and the specific intervention method used (figure 1.1):

–achieving organizational purposes and objectives;

–solving management and business problems;

–identifying and seizing new opportunities;

–enhancing learning;

–implementing changes.

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Nature and purpose of management consulting

Figure 1.1 Generic consulting purposes

Achieving organizational purposes and objectives

Achieving organizational purposes and objectives

All consulting to management and business tends to pursue a general and overriding purpose of helping clients to achieve their business, social or other goals. These goals may be defined in various ways: sectoral leadership, competitive advantage, customer satisfaction, achieving total quality or productivity, corporate excellence, high performance, profitability, improved business results, effectiveness, growth, etc. Different concepts and terms reflect the thinking and the priorities of both clients and consultants, the current state of the art of management and consulting, and even fashion. Different purposes will be stressed in commercial enterprises, public services and social organizations. The time horizon of a consultancy will differ from case to case. Yet the common denominator remains the same: consulting has to add value to the client organization, and this value should be a tangible and measurable contribution to achieving the client’s principal purposes.

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Management consulting

This global purpose of management consulting provides a rationale and a sense of direction for all consulting work. What would be the sense of organizational learning or costly and risky restructuring if the client organization could not get closer to its principal goals? What would be the use of successfully solving a few seemingly pressing management problems if “like the mythological hydra that grows two heads for every one cut off, the solutions we develop are often rapidly overwhelmed by a plethora of new problems”?8

The purpose of achieving the client organization’s goals assumes that the client has defined such goals. In some organizations this is not the case, and management operates without any perspective, goal or sense of mission. The consultant’s main contribution may well be in helping the client to develop a vision of the future, set ambitious but realistic goals, develop a strategy, focus on results, and start viewing current problems and opportunities in the light of longer-term and more fundamental organizational goals.

Consultants must appreciate that client organizations may be pursuing different sorts of goals. At times, the objective of a consultancy may be to advise the client on how to maintain the status quo or even how to get out of business.

Solving management and business problems

Helping managers and other decision-makers with problem-solving is probably the most frequently mentioned purpose of consulting. The consultant’s task is described as professional assistance in identifying, diagnosing and solving problems concerning various areas and aspects of management and business.

Within a business firm, a “problem” justifying the use of a consultant can result from any of the following (and readers can undoubtedly think of many other causes):

The reader should be aware of the different uses of the term “problem” and of their practical implications. If “problem” is used to mean only mistake, failure, shortcoming or missed opportunity, the client’s and the consultant’s perspective will tend to be essentially backward-looking and narrow, and the focus will be on corrective action (with implied criticism and determination of responsibilities).

The term “problem” can also be used as a more general concept to describe a situation where there is a difference or discrepancy between what is actually

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Nature and purpose of management consulting

happening or will be happening and what should be happening. In this definition, a problem is described in relative terms, i.e. as a difference between two situations. In addition, someone has to be concerned about this difference and aim to overcome or reduce it. The problem must “belong” to someone – there must be a “problem owner”.

Frequently the current situation of the client organization is compared with a situation that existed in the past. If there has been a deterioration such as falling sales or profits, the problem is defined as a need to restore the original condition. This explains why consultants are sometimes called “troubleshooters”, “company doctors” or “business healers”.

Alternatively, the current situation may be compared with some standard (benchmark). The problem is then defined as the need to meet or surpass the standard, e.g. a competitor’s product quality, range of models offered or aftersales service.

In this sense, even a successful and forward-looking company that has been pursuing and achieving ambitious business objectives may have “problems” – a desire to further enhance its competitive advantage, to become a sector leader, not to miss a new marketing opportunity, to identify a new business partner, to explore an emerging technology, and so on.

In this guide, the term “problem” will be used in this second way – as a generic term describing a client’s dissatisfaction with the difference between any comparable (but mainly between existing and desirable) situations in the organization. Thus, some of the problems will be related to past errors and shortcomings that need to be redressed; many others will concern perspectives, opportunities and strategies for improving the business in the future.

A correct definition of the problem to be resolved, and the purpose to be achieved by the consultancy, is critical. Experienced consultants warn against accepting the client’s perception of the problem at face value. If the problem has been wrongly defined or misjudged, the consultant will be caught in a trap. He or she will then work on the wrong problem, or the problem and potential benefits from its solution may not justify the consultant’s intervention and the costs incurred. To avoid this, most consultants insist on making their own independent assessment of the problem presented to them by the client, and on developing an agreed definition in discussion and collaboration with the client.

The purpose of the consultant’s intervention provides a perspective for dealing with particular problems (see box 1.2). It could be argued that “the purpose is to solve the client’s problem”, but this provides little insight. It has been observed that “effective leaders and problem solvers always placed every problem into a larger context”.9 This implies getting answers to a number of questions about the purposes of the client organization and its key constituents, the focus and the significance of the proposed assignment, and the immediate and ultimate benefits to be obtained by the client if the current problem is resolved. In this way, it will be possible to select the “focus purpose”,10 avoiding purposes that are too narrow, as well as those that are too wide and distant to be tackled by the client at present. However, these wider and longer-term purposes ought to be kept in mind in order

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