Do management consultants bring real value to companies?

by Jaineel Aga

This chapter is a free excerpt from The Best Book on Getting Consulting Jobs In India.

Steve Jobs said, "We do no market research. We don't hire consultants” You may have friends also of a similar opinion.  What value do consultants bring to the table?

I will dedicate this question to my elder brother – a rocket scientist,  with a PhD in Aerospace engineering, who has been a rather vocal critic of this profession ever since I ventured down the path of management consulting  - ironically, his “boss” is an ex- management consultant !  However, there is some truth to this criticism of consultants and I could argue either side of this assertion. Let me start by donning the hat of the critic –
  • Management consultants are generalists and do not know enough about the industry to truly solve any problem
  • Management consultants do not provide feasible advice.  Since they are paid for their advice and not for the feasibility of its implementation ,  their strategies in most cases are not pragmatic
  • Management consultants  are an expensive  resource – I would rather hire an in-house strategy team to do the same analysis/ answer a strategic problem
  • Management consultants are paid by the hour / by the project - they won’t be around to see the results of their recommendations – good or bad, so why should we even take them seriously?
What a management consultant is generally thinking -
  • The management is running a company and kudos to that, but if they could have solved the problem by themselves, consultants wouldn’t be around would they? You need the objective analysis of a neutral unbiased third party to truly identify your problem
  • Let’s face it, management consultants come with excellent CVs. Ivy League schools, IITs/IIMs and the works – when a bunch of really smart people are focussed on solving a single problem , the probability of “cracking the case” ( jargon for identifying the root of the problem and recommending a solution) is pretty high.
  • Because we play the role of an external advisor (as opposed to an in-house team), we do not have to be part of company power politics. We are effective because we do not have to fear stepping on anyone’s toe. For. eg  If the head of operations is doing a shoddy job -  we have no qualms in stating the fact. 
As someone who has been on both sides of the table – here is my view -

Complete 10-second survey to read full article!
Steve Jobs said, "We do no market research. We don't hire consultants” You may have friends also of a similar opinion.  What value do consultants bring to the table?

I will dedicate this question to my elder brother – a rocket scientist,  with a PhD in Aerospace engineering, who has been a rather vocal critic of this profession ever since I ventured down the path of management consulting  - ironically, his “boss” is an ex- management consultant !  However, there is some truth to this criticism of consultants and I could argue either side of this assertion. Let me start by donning the hat of the critic –
  • Management consultants are generalists and do not know enough about the industry to truly solve any problem
  • Management consultants do not provide feasible advice.  Since they are paid for their advice and not for the feasibility of its implementation ,  their strategies in most cases are not pragmatic
  • Management consultants  are an expensive  resource – I would rather hire an in-house strategy team to do the same analysis/ answer a strategic problem
  • Management consultants are paid by the hour / by the project - they won’t be around to see the results of their recommendations – good or bad, so why should we even take them seriously?
What a management consultant is generally thinking -
  • The management is running a company and kudos to that, but if they could have solved the problem by themselves, consultants wouldn’t be around would they? You need the objective analysis of a neutral unbiased third party to truly identify your problem
  • Let’s face it, management consultants come with excellent CVs. Ivy League schools, IITs/IIMs and the works – when a bunch of really smart people are focussed on solving a single problem , the probability of “cracking the case” ( jargon for identifying the root of the problem and recommending a solution) is pretty high.
  • Because we play the role of an external advisor (as opposed to an in-house team), we do not have to be part of company power politics. We are effective because we do not have to fear stepping on anyone’s toe. For. eg  If the head of operations is doing a shoddy job -  we have no qualms in stating the fact. 
As someone who has been on both sides of the table – here is my view -

I believe in the efficient market theory, i.e. the market is always rationale and if consultants wouldn’t add value – they wouldn’t have been around for decades and companies wouldn’t be willing to pay such high billing rates for their service!  It is also true that consultants attract the cream of B- schools and universities and they come with an analytical bend; very handy when you are solving some complex problems and an important skill to have in the field of consulting.

However, are management consultants brought on because the company (“client”) doesn’t have the intellect to solve the problem on its own? NO… (Although consultants would like to believe that!) Management consultants are hired for a number of reasons –
  • Management has limited bandwidth – A company that produces cars, should focus on producing quality cars at competitive prices, their management should focus on the core business, while outsourcing the competitor landscaping to the consultants. It is not worth investing time in non-core areas of their work
  • Independent assessment avoids “Passing of the Buck” – A consultant is an external advisor, comes in with no biases to side the marketing team, product development or operations team.  Often, blame games start within the company when a problem crops up. For example, in a scenario of declining revenue growth the product development team could always assert that the sales team is not doing enough, in return the sales team would argue the product is losing favour of the customers. Where does the buck stop? Let the consultants identify the problem – through an objective assessment and most importantly remain UNBIASED!
  • Breadth of experience (not necessarily depth) – A CEO will most certainly know his own company better than any 20 years younger MBA straight out of an ivy league school. Although he may have depth of knowledge, he may not necessarily know the best practices followed by his competitors. Often, consultants with their breadth of experience developed through their work with other similar companies bring a holistic view of the industry – this perspective can be refreshing to a CEO and would assist in benchmarking his company’s internal processes with the best in industry.
On an ending note, I believe management consultancies are to stay and will continue to draw the interest of the crème de la crème of Business Schools!
Price: $25.00 Add to Cart
  • Lifetime guarantee
  • 100% refund
  • Free updates