Each of the next 15 chapters deals with consulting in a specific area of management. The intention is not to provide an exhaustive analysis of management techniques, practices and problems in each area but, in keeping with the spirit of the book, to show how management consultants can help clients and how they normally operate in these areas, and to mention some recent developments of which they should be aware. These chapters can serve, therefore, as an introduction to a more detailed study of consulting in various areas of management.

12.1Nature and scope of consulting in corporate strategy and general management

A considerable amount of management consulting concerns the very existence, the basic goals or mission, the business policy and strategy, and the overall planning, structuring and control, of an organization. These problems were at one time defined as general management, but are now more commonly referred to as corporate strategy or strategic management. Consultants who concern themselves with these issues are strategy or general management consultants – as distinct from specialists who intervene in one functional area (e.g. finance), or deal with a particular technique such as computerized production control or employee incentive schemes.

But how does a company know if it requires the assistance of an all-round management consultant? In some cases this is quite obvious from the state of the business: a deteriorating overall performance, growing dissatisfaction of the staff, the generally bleak prospects of the industrial sector, and so on. The business may be in crisis, or close to it, and it is not clear how to restore prosperity. In other cases, a problem that seems at the outset to be a special or functional one (inadequate marketing methods, say) may have ramifications in

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other areas of management and eventually is found to be only a symptom of a much deeper general management problem affecting the whole organization.

In such organizations it is common to find that top management has no clear idea of where the company is going or what it is trying to achieve. In short, there is a lack of strategic direction. In others, top management has some sense of strategic objectives but has failed to communicate its vision to middle and lower management and to the workforce – and, in consequence, the strategies are never implemented.

A benchmark is now available which makes it much easier to recognize organizations that have lost their way in strategic terms. There is now widespread acceptance that the ultimate objective of private sector corporations

–and therefore the guiding principle underlying all decisions made in those organizations – should be the creation of shareholder value.

Any sign that the organization’s strategies are evolving in directions that do not maximize value – such as excessive diversification away from the core business or pursuit of a range of incoherent and conflicting business objectives

–provides a signal that the Board and top management would benefit from the fresh viewpoint that a skilled strategy consultant can provide.

The issue of shareholder value will be discussed further in Chapter 14, “Consulting in financial management”. Furthermore, Chapter 23 will show how social responsibility can be integrated in corporate strategy in ways that are compatible with the concept of shareholder value.

The special nature of general management

The most prominent characteristics of problems handled in general management consulting are that they are:

●long-term: they involve decisions about major capital investments and other resource allocations, acquisitions, divestments and corporate reorganizations that will have an impact on the organization’s success or failure far into the future;

●multifunctional: the consultant deals with several functions of the business (production, technology, organization, marketing, etc.) and focuses on the interaction between these functions and on problems involving more than one function;

●interdisciplinary: the consultant must be able to view business problems from several angles; typically, a business strategy problem may have technological, economic, financial, legal, psychosociological, motivational, political and other dimensions.

General managers, too, have been chosen for their ability (real or expected) to free themselves from short-term “fire-fighting” and to deal with multifunctional and interdisciplinary problems. Experience shows that many of them find this difficult. There are general managers, previously excellent plant managers, who continue to be plant managers in their new position! This is an

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area where a management consultant can be of great help to the client – the general manager who has to change his or her habits, learn how to deal with new functions, look at the problems of the business from new angles, and above all free himself or herself from day-to-day operating concerns sufficiently to be able to think about longer-term strategy.

In fact, general management consultants are also a kind of specialist: their speciality lies in combining other specialities into a balanced and coherent multifunctional and interdisciplinary approach. Like the general managers, however, general management consultants turn to other specialists when appropriate. They must know how to use the specialist’s skill and advice, and help the client to do the same, to prevent situations where particular specialists (e.g. market researchers or financial analysts) would dominate the business.

Diagnosing organizations

As explained in detail in Chapter 7, many consultants prefer to carry out a quick preliminary survey of the organization before proposing a specific problemsolving assignment. Thus the first technical contact between the client and the consultant is often at the general management level, before the consultant moves into specific areas identified by the survey. It is essential at this early stage that the consultant understands what the client management believe their mission and strategic objectives to be. If they are internally inconsistent – or if they are not consistent with the maximization of shareholder value – these issues will have to be resolved before any detailed diagnosis is undertaken.

There are situations where a thorough diagnostic survey (diagnosis, audit, etc.) of the whole organization is required in preparation for important decisions on the future of the business. This is particularly true where the “value” concept is being introduced for the first time, and the appropriate “value drivers” have to be determined for each operating level. A comprehensive diagnostic survey may also precede a major restructuring or reorganization, an acquisition, a merger, a privatization or a decision to close down a business. The consultant’s mandate is to help the client to diagnose the organization; he or she may even be asked, as an independent expert, to provide an objective and neutral report on the status, strengths, weaknesses and development prospects of the business. The assessment of the management systems used and of senior managerial personnel may be included. The assignment may end with the consultant submitting a report on the diagnosis. Diagnostic surveys of this type may be fairly extensive and difficult assignments. While a quick survey is a matter of a few days, comprehensive and in-depth surveys may take several months, depending on the size and complexity of the organization and on the nature of its problems.

Some comprehensive diagnostic surveys intervene too late, when the company is no longer susceptible of rescue, or when rescue would require resources that are not available. In certain cases a crisis could have been prevented by undertaking a thorough diagnosis at an earlier date, and arranging

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for a periodic business diagnosis, or self-diagnosis, as a preventive measure. The consultant may have an opportunity to help a client to design and install a scheme for regular self-diagnosis. This opportunity should not be missed.

Organizational level of interventions

In many cases the general management consultant intervenes at the highest level in the organization: with the chief executive or the top management team. Even leaders who are keen to introduce change often do not realize what will be involved, or do not see that they ought to start by changing themselves. They frequently have a particular self-image, though the consultant may find that this image is not shared by other people in the organization. The consultant’s problem then lies in persuading management of the need to change thinking and behaviour at the very top.

The possibility of working directly with the chief executive and the management team provides an excellent introduction to the organization, rapid access to key data, a true picture of the operating style of top management, and usually strong support from the top for the consultant’s work. Yet it is often risky to confine intervention to top management level. The general management consultant needs to find out how top management is perceived throughout the organization, and how management policies influence the work style, performance and job satisfaction of employees. Furthermore, general management is also practised at intermediate and lower levels in the management hierarchy, and eventually affects every single worker. For example, supervisory management often constitutes one of the weakest links in the management hierarchy.

Consulting style

In general and strategic management more than in any other area, the consultant cannot avoid dealing with issues affecting management’s personal interests, self-image and authority. Advice on crucial issues of a company’s direction, strategy and leadership can easily be perceived as criticism aimed at particular persons. Yet the objective is to strengthen and improve management, not to undermine it. Also, the consultant does not want to see his or her proposals rejected by senior management. Experienced consultants therefore attach great importance to choosing the right consulting style.

Many entrepreneurs and senior managers are lonely and isolated people when it comes to discussing their basic goals and values and their style. The general management consultant may well be the first person able and willing to talk to them about these issues. Personal counselling (see section 3.7) may be needed, and the consultant should not hesitate to offer it tactfully to the client.

A frequently debated issue is the choice between participative and process consulting approaches, and those where the consultant acts primarily as an

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