Consulting Success Factors

Some of the most compelling characteristics of any business are its risk factors. The Bureau of Labor Statistics tracks nascent businesses and has found about half of all new businesses are gone within five years. For professional services the first-year failure rate is about 15% or so, which is better than the average 20% historic first-year failure rate for all businesses.

Ultimately the largest business risk factor, responsible for most business failures, is simply running out of cash. Revenue flows need to be managed, like any other aspect of a business.

Consulting is no different.

Cash In

Several years ago, one survey of consultants found over 12% of them had problems collecting their fees. Unfortunately the survey did not indicate which end—the client end, or the consultant end—was responsible for the slow payers or no payers.

If “the message is in the mess,” then we could assume the problem originated on the consulting end. Perhaps billings were not made on a timely or contractual basis. Perhaps billings were really late.

Or perhaps all billings were timely and the client simply did not pay. Every business can expect to have its share of “doubtful accounts.” But over 12%? That can directly impact profitability.

When it comes to billings and revenue management, we train our clients. Clients sophisticated enough to rely on expert assistance, sometimes—not all the time—can be sophisticated enough to occasionally push the envelope when it coming to paying. It’s a well known fact that a number of top entrepreneurs are more than a little narcissistic in their character.

No matter. Bill on a timely basis and expect to get paid.

A couple of things that can be done to help the payment process include:

  • Always underpromise, but over deliver
  • The “Resale:” Emphasize the benefits you have provided throughout the process
  • List the benefits provided, showing where you have gone beyond expectations

Those are a few things to help capture revenue for work already done and billed for.

Leverage Your Work

The major value of most businesses, some say about 80%, consists of its intellectual property (IP).

In consulting, the inherent value of a firm’s IP is much higher.

To ensure consulting success, especially in times of uncertainty, it’s essential to leverage your work.

Sometimes this means creating templates to work more efficiently. Templates can be used for agreements, statements of work, client reports, and so on.

But, would you be able to sell any of your templates, so you are both efficient and effective and able to produce another stream of revenue?

Writing a book, guide, or manual might be another way to leverage your IP and produce some income, depending on the size of your platform

Could you or your firm produce a newsletter with a paid subscription? Not only would this produce a stream of income, but it would also get your message out there and keep you “top-of-mind” with your clients and prospects.

Savvy consultants are good at organizing things: meet ups, events, seminars, workshops and the like. These things can serve to bring in more revenue and, again, keep you top-of-mind with your clients.

Look for ways to produce more IP, and creative ways to distribute and ultimately sell it. These are critical success factors for any consultant or consulting firm in a hypercompetitive market. ■

Consulting Fuel

“Today, I only collect books; there is no room left for something else.”

Karl Lagerfeld, 2015 Interview

In 2019, when fashion icon Karl Lagerfeld passed away at age 85, his personal library exceeded over 300,000 books. While some books in his collection were indeed rare, Lagerfeld neither collected books as a hobby, nor it seems, hoarded books as a particular condition.

Lagerfeld stacked most of his collection flat, not only because some were big and heavy art, fashion, and photography books, but so he could glance quickly at a title to retrieve it. Karl Lagerfeld’s collection, some of seen it here, spread out among various international residences, was a working library. “There is no room left for something else,” said Lagerfeld of his home in Paris.

If someone had only given Karl a Kindle reader . . .

Stacking the Woodpile

If you need to keep a fire going to heat your house in winter, you need a woodpile, a fairly large size pile at that.

Likewise, to fuel your career, especially in consulting, but almost in any career in 2021, you need an idea pile.

Years ago, one speaker recommended gleaning at least 50 magazines a month for the latest trends. That was in the days before RSS feeds. But magazine articles and RSS feeds, and the like, are only tinder in the idea pile. Tinder gets the fire going, but would never be enough to heat a room, let alone a house.

For a raging fire, kindling, small sticks and branches, and cord wood, the heavier chunks, are both needed. In a short time, a little bit of kindling will produce a toasty fire.

Professional journals and trade magazines provide kindling for a career. But for a raging career, more is needed is sustain it.

Books are the cord wood that fuels the crucible of the mind.

Books are where ideas are made malleable and formed into new shapes and configurations.

Books are where points are made and blunted, stories told and untold, and writers wring out their souls of their last creative expressions.

With that in mind, here are a few new titles to consider for your collection.

Think Again: The Power of Knowing What You Don’t Know by Adam Grant

Grant, an organizational psychologist, espouses flexible thinking and “scientific thinking” by suggesting a more humble stance in our thinking, being open to discovery and experiment, and something he calls “confident humility.” On the other hand, Grant says, “The absence of conflict is apathy—not harmony.” He suggests asking “how” to reduce polarization. (Try it. It really works!)

Fundamentals: Ten Keys to Reality by Frank Wilczek

Wilczek, Nobel laureate and theoretical physicist, is quite prolific, and a joy to read, writes a column called Wilczek’s Universe. Fundamentals introduces the reader to modern physics, the bedrock of known reality. The universe, both outside and inside, is so vast that it is almost immeasurable. For example, there over 100 billion distinct moments of consciousness in an average lifetime. Now that’s a lot to think about.

The Art of Impossible: A Peak Performance Primer by Steven Kotler

Kotler, an investigative journalist, wants you to do the impossible, that is, do stuff you have never done before, or perhaps never have considered doing, by doing your best, feeling your best, and being your best, by staying in the flow. This work is a summary of twenty year’s worth of observations of peak performers.

Learning to Pray: A Guide for Everyone by James Martin, SJ

Martin, a Jesuit priest, did not start out in life as a prayerful man. Written for both believers and unbelievers, Martin wrote this book for people who want to change their lives, perhaps in a more spiritual dimension.  ■

If you recently have come across any compelling titles, please leave them in the comments.

The Big Consulting Bet

“A prolonged hard hour in your life has the power to change your nature, to reduce you to a distillate, to the pure version of yourself. One of life’s ironies—that all high character has been produced in the low moments.”

David G. Bradley, Address to 2017 Harvard MBA Class

David G. Bradley sees life as a never ending sine curve, full of highs and lows.

Bradley had his share, once completely losing his voice in his mid-thirties for a year. It turned out to be a struggle to even find a specialist who could help him recover.

A decade later, Bradley again lost his ability to speak for a while, but this time he had to deal with constant pain. Bradley learned to cope using pain management techniques: set a timeframe you think you can endure, and then go about your business.

A Sure Bet

Bradley’s business was research. When he was 26 years old, while still in Georgetown working on his law degree, he started the Research Council to provide legislative and regulatory research.

“I’d done nothing but study at that point, so I was comfortable with research,” Bradley said after receiving the 2017 Alumni Achievement Award. Bradley felt confident he could do research on any question for any industry.

Over the next decade, as the business grew to over 150 staff, Bradley renamed his company The Advisory Board Company, with a focus on researching best practices for the healthcare industry. They produced both major reports and research briefs spanning technology, recruiting, and commonly shared problems and solutions.

In 1993 Advisory Board started a strategic research division, that within 18 months signed up just under half of the the Fortune 500 companies.

By 2009, Advisory Board had four offices and over 1,000 employees.

How did he do it?

Bradley’s businesses were based on a subscription model. Organizations would share the cost (and benefits) of research, “at the quality standard of premier consulting strategy firms, but at a fraction of the cost.” (2006 CEB Annual Report)

When Bradley started, he was familiar with and had a knack for legal research. This is where be made his first big bet.

But Bradley might differ with that assessment. “I don’t believe in 51/49 decisions,” said Bradley in a 2017 talk on resilience at the Aspen Institute. “You want to wait until you are at 90/10.”

A pivotal time in Bradley’s life occurred when he was an intern at the Nixon Whitehouse. From an early age, Bradley was enthralled with the idea of becoming a Senator. After witnessing the Watergate debacle (ironically, later he would own one of the buildings in the Watergate complex), Bradley concluded he would need to become financially independent so he could remain above the political fray, and not be beholden to a particular faction or personality.

Bradley decided to go to business school to learn more about economics, before enrolling in Georgetown law school, taking a year off between degrees to work as a Fulbright Scholar in the Philippines.

Bradley’s initial idea for his consulting practice was to help organizations improve their regulatory expertise and knowledge of new laws. After sending out several hundred letters to East Coast businesses and attending countless meetings, Bradley did not land a single client. Prospects either did their own research or had established other channels for what Bradley was offering.

One meeting at a Washington D.C. law firm changed everything. Told again his particular research services were not needed, Bradley got ready to leave, when the firm’s representative, David Stoner, asked him, “Is that all, David?” Taken back by the question, Bradley responded his presentation was over. Stoner then repeated the question.

A light bulb went off. Bradley realized he was perhaps taking the wrong prospecting approach. It wasn’t his services that mattered to prospective clients. He said, “Well, tell me, Mr Stoner, what do you need?”

Within two months Stoner’s firm, Towers, Perrin, Forster & Crosby, would hand Bradley his first assignment and later a check for $5,000. It wasn’t more regulatory information, but rather, in a quickly changing environment, business best practices research that firms needed.

Firms were willing to pay up to $30,000 a year on a subscription basis to keep current on industry best practices or to direct their current problems to Bradley, instead of retaining consulting firms with a much higher price tag.

Building on initial success, over the years Bradley cautiously branched out, growing his research businesses both organically and through strategic acquisitions. A former classmate, Elizabeth Scheurer, noted, “David always seemed to have a plan for his life. He was very focused.”

In 1997, Bradley also started another firm, Corporate Executive Board with the goal of “increasing the effectiveness of executives and their enterprises.” (2006 CEB Annual Report). In 2017 Corporate Executive Board, now called CEB, Inc., was sold to Gartner for $2.6 Billion.

Bradley is currently the chairman of Atlantic Media, a philanthropist, and, like his thinking, registered as an Independent. ■

Thank you for reading this. Have a consulting topic you want to learn more about? Please drop me a line in the comments section below.

Hanging Out the Consulting Shingle

Gallant’s Gallop

And there are times where your client has a big problem or a tough situation—perhaps to attract and retain talent, to take the organization to a new level, or to resolve a problem that appears to be intractable. A good consultant will not do; they need a great one.

A great consultant is more than someone hired to do a job; they become a trusted adviser. They are sought after. They become the one person with whom the client wants to do business. They work together over time on multiple and varied projects.”

Kris Taylor, Consultant

Michael Gallant, 33 years old, has his own hashtag: #MBAwoBS. But that isn’t the only thing that makes him unusual.

Former Israeli special forces and INSEAD M.B.A. recipient, Michael was featured in a recent Wall St. Journal article, his photo dominating the page, in both print and online versions.

Michael it seems, picked up his M.B.A. after several entrepreneurial attempts including a diving school and the manufacture of bicycles from recycled materials. Oddly enough, he went to M.B.A. status without first obtaining an undergrad degree.

Michael runs a freemium M.B.A. admissions coaching service, hence the hashtag, spreading the word, that some grad schools are looking for candidates with, shall we say, different or unusual backgrounds. And in some cases, a four-year bachelor’s degree can be optional for a grad school, based on your life experiences rather than an academic imprimatur.

Key Take-aways

Being featured in the Wall St. Journal is no mean feat. The national exposure alone would cost tens of thousands of dollars. The validity conferred is invaluable.

How did he do it? What’s the secret formula?

  1. Solve a client problem. Michael wants to help change your life, as he feels having an advanced degree changed his.
  2. Have authority. Michael walked the talk. He is the go-to-guy, if you’re looking for advice on obtaining an M.B.A.
  3. Tell an interesting story. Michael has an unusual background. An interesting background.
  4. Build an audience. Michael shares his knowledge with his blog and newsletter, Business, People, Education.
  5. Establish brand authority. It’s crowded at the bottom. It is absolutely essential to be different. The number of school admissions coaching services is legion. Michael honed his focus to help not only M.B.A. candidates, but in particular, those without conventional backgrounds. In consulting this is called “making the big bet.” In marketing, creating differentiation and opening up new markets and new customers/clients is known as a blue ocean strategy (named after the book, written by—you might have guessed it—professors at INSEAD).

And speaking of people making big bets, on to our next topic . . .

2021 Hiscox Encore Entrepreneur Report

In recent years, there has been an increase in encore entrepreneurs, entrepreneurs over the age of 50 who are starting their first business. According to the Kauffman Foundation, the 55 to 64‑year‑old age group accounted for 26% of new entrepreneurs in 2018.

2021 Hiscox Encore Entrepreneur Report

This newly released report should be encouraging news for those, perhaps later in life, who want to get into consulting by starting their own gig.

The report found the motivation for new startups included:

  • 24% Have a passion and love what they do
  • 23% Want greater financial independence
  • 22% Want to make more money
  • 5% Were unemployed

The report noted greater earnings were achieved by 68% of the new startups, but it could take about two years, on average, to reach that goal.

About one-third of the startups would have liked to have had more marketing or e-commerce knowledge.

About 60% jumped into full time, while 40% started as a side-hustle.

“Encore entrepreneurs
are courageous and not afraid to step out of
their comfort zones. Our survey found that
44% of respondents started businesses in a
different industry than the one they worked in
as employees at their last full-time job.”

2021 Hiscox Encore Entrepreneur Report

Whether on a full-time or part-time basis, consulting can be a rewarding career and/or a profitable side hustle.

Bonus News

Looks like both Accenture and PcW, India are handing out some bonuses, one week and two weeks pay, respectively, while Deloitte, India doled out what it termed “special increments” for its partners, directors and other senior executives, and a straight up salary increase for all others.

A number of consulting firms held the line on salaries and bonuses in 2020. These bonuses are another sign, perhaps, that Covid is starting to fade in the background. We can only hope. ■

Thank you for reading this.

McKinsey Mystery Solved! Research This . . .

Quick . . . What’s the biggest industry in the world?

Ponder that question while we jump back for a bit to the topic of our previous blog.

McKinsey’s New Leader: Mystery Solved!

On Wednesday, March 10, 2021 the Wall Street Journal heralded the name of McKinsey & Co.’s new head honcho, their 13th leader, the new Global Managing Partner, a Rhodes Scholar and a 26-year veteran of the firm, who is also their current chief operating officer (the second in command, so to speak), as well as a private pilot, and a former polo player.

In short, he is a true gentleman and a scholar. His three-year term begins on July 1, 2021.

He is 52 years old, born and raised in California, a Stanford graduate. He is currently based in McKinsey’s San Francisco office. His name is Mr. Bob Sternfels.

In addition to the perfunctory press release, Mr. Sternfels was interviewed for McKinsey’s blog. Some quotes include:

“I’m an optimist. I believe in potential.”

” I would say that I’m pretty direct. I’ve always liked the saying, “Do what you say, and say what you mean.”

“I believe you can have a faster and safer firm, and I think the origins of how you square that get into design. I come from an operations background; if you get the design of a product right, you don’t have to do recalls and modifications and so forth—it just works.”

“We take on leadership roles at McKinsey because it’s an obligation not because it’s a desire.”

“Leadership isn’t about avoiding setbacks—it’s about knowing how to pick yourself and others back up when you run into them.”

“I always start (the day) with some form of exercise. My wife and I used to run ultra-marathons. These days my knees can’t take the mileage, so I need to be more varied. I try to keep up with her on the road at the weekends, but that is proving harder and harder to do.”

McKinsey did not permit an interview with the Journal. We wish Mr. Bob Sternfels well.

McKinsey observer, Bloomberg’s Chris Hughes, opined at the announcement of Mr. Sternfels’ selection:

“McKinsey needs a new start. This is usually best achieved by an external candidate taking the helm, but the partnership chooses from within. In Sternfels, it has chosen someone who has been in charge of McKinsey’s overall client offering since 2018. His star rose when Sneader’s predecessor, Dominic Barton, led the firm, which is when the opioid work was conducted. So he’s hardly a break with the past. Nevertheless, he says he will build on Sneader’s changes.”

It’s not that McKinsey has a proclivity for a certain type of rogue clientele. All clients are not created equal. Some have special challenges.

Sometimes, unfortunately, it’s in everyone’s best interest to part ways with a client. The mere appearance of impropriety is enough to take anyone down. For example, the prestigious accounting firm, Arthur Andersen was pilloried, then unjustly destroyed, by government prosecutors for its nexus to Enron.

That kind of outside objectivity in a client situation is, at best, difficult, if not impossible, to achieve. When an institution operates within its own echo chamber, like the crazy person arguing with traffic as he stands in the middle of the street, from his point of view, it’s not him, but it’s the world that is crazy.

Yep. McKinsey is doomed.

And that’s a shame.

Research This . . .

A lot of consulting involves research. I do my share. Most consultants are curious creatures and like learning new stuff.

Some research is always necessary because no two clients, no two client situations, are ever the same. Even similar organizations in the same sector or industry can hold different values, have different objectives and goals. One company might be looking to grow and perhaps achieve operational efficiencies in their core business, while another sees their industry as mature and seeks new vistas.

So, what exactly is research?

“Research is a systematic inquiry to describe, explain, predict, and control the observed phenomenon.”

Earl Robert Babbie

Well, the answer can depend on whom you ask.

Research is conducted, for different purposes, ranging from a simple search on Google, or a call to your “go-to” person, to an exhaustive investigation, perhaps taking months, years, or even decades. Some mathematical mysteries can take centuries to solve.

Most consultants, in some manner, bill out their time, and have neither the luxury of a leisurely, nor the time for a completely exhaustive, perusal of all available data. The clock is always ticking.

Yet we still need to get it right the first time.

So certain assumptions are made and a hypothesis is generated, and data and information are collected. We then marshal the facts to interpret or evaluate the hypotheses.

Easy-peasy, right?

While the concept is easy, the practice of research is not. Bad research abounds. Science is in a quandary, perhaps in a crisis, because of so many scientific studies which are neither replicable or reproducible.

Why is Research soooooo Difficult?

In working with clients, a number of things have to line up for a successful conclusion. It has to be a good match between client and consultant. Both parties need to be engaged at some level with the work. Everything rests on an open and honest relationship.

As Babie noted, “Research is a systematic inquiry.” Systematic infers things are done in an orderly, methodical way. 

Years ago I used to represent clients in administrative hearings. All hearings are in a question and answer format. One thing I learned was not to use leading questions. Another thing was not to ask ‘yes or no questions.’ Sometimes questions seemed redundant, but are asked “for the record.” That is, if the case was appealed, the facts and who spoke when, are made clear to any reviewing admin judge or panel.

These type of questions have helped me in working with clients. For example, looking at a client’s website can give a rather opaque or aspirational view of what they actually and currently do.

Me: “I see you’re in the business of waterworks remediation?”

CEO: “I don’t know what you are talking about. We only do underwater construction.”

A better question might have been a for-the-record, open-ended question, “What does your company do?”

Things can change fast. Asking clients those redundant questions sometimes results in a much better picture of objective reality.

Once all of the client-consultant preliminaries are out of the way, there’s still “the Question of the Question?”

  • Are we working on the real problem?
  • Have we asked the right questions?
  • What’s the main issue? What other issues are important?
  • Have I probed deeply enough?
  • What’s my real mandate here?

Go from the broad and start to narrow things down. Find out the specifics. Determine the real problem(s). Sometimes they can be hidden.

Tip: It’s been said in conducting research, if you can state your core problem statement in four or five words (for example, “We want to increase sales.”), it is probably too broad.

Tighten things up. We want to increase online sales by 20% over the next 24 months. These kind of specifics can then be reflected in your scope of work, and, over time, can be further broken down for billing purposes.

Then the real research can start.

After all, research is still the biggest industry in the world. ■

Thank you for reading this.

Is it over for McKinsey and Company?

Who’s in the wheelhouse at McKinsey and Co.?

McKinsey partners (yes it’s a hugh partnership, so things can get complicated, and have, as of recently), voted not to extend the three-year term of their current and twelfth global managing partner, Kevin Sneader. A successor has not been announced.

Sneader took over from No. 11, Dominic Barton, now global managing partner emeritus, who served nine years as the partner in charge. In the interim, Barton had overseen stupendous growth, with the McKinsey partnership almost doubling in size to over 2,000 partners, worldwide.

“My passion professionally is meeting and learning from extraordinary leaders around the world and sharing my views on the disruptive forces reshaping the global economy. My long-term goal is to help as many organizations as possible be successful in this new environment – by adapting to changing conditions and taking a longer-term view on value creation.”

Dominic Barton, Linkedin

Is McKinsey & Co. Imploding?

On September 15, 2019, its client, Purdue Pharma L.P., sought protection from further litigation through bankruptcy proceedings. On November 24, 2020, Purdue pled guilty in federal court “to conspiracies to defraud the United States and violate the anti-kickback statute.” In a plea-bargain, Purdue agreed to a criminal fine of $3.544 billion and an additional $2 billion in criminal forfeiture, a record amount in the pharmaceutical industry.

Authorities then switched their focus to McKinsey, based on its Purdue Pharma nexus.

McKinsey has taken a pounding in the press and beyond from its own $573 million settlement last month with the attorney generals of 47 states, D.C., and five U.S. territories, as well as separate settlements with Washington and W. Virginia.

Particularly infuriating to many critics was the seemingly lack of a genuine mea culpa from McKinsey.

“As part of the agreement, the Attorneys General recognized McKinsey’s “good faith and responsible corporate citizenship in reaching this resolution.” McKinsey believes its past work was lawful and has denied allegations to the contrary. The settlement agreements themselves contain no admission of wrongdoing or liability.”

– McKinsey & Company, February 4, 2021 Press Release

This begs the question, how did things get that bad? Will the masters of disruption survive their own disruptive forces? What lessons can be learned?

The place to start, might be at the beginning.

The McKinsey Connection

James “Mac” McKinsey studied at St. Louis University and in 1914 he taught bookkeeping. In the First World War, McKinsey served in the Army Ordnance Department, quickly picking up both a CPA designation and a Master’s after the war. McKinsey became a full-time academic at the University of Chicago, writing tomes on accounting. McKinsey’s fifth book, Budgetary Control (1922), was perhaps the first book to move accounting from being a historical look at an enterprise’s financial performance, to being a more future-oriented projection through the use of budgeting and variances, something at that time, unheard of in most organizations.

In 1924 this book was followed by two more: Managerial Accounting, and Business Administration. The last book contained McKinsey’s General Survey Outline, a means to view a company holistically and thoroughly and in a way suggestions could be made for improvements.

In 1926, Mac started James O. McKinsey & Company, Accountants and Management Engineers, in Chicago, working initially for Armour & Company (now Smithfield). McKinsey’s first partner was A. Tom Kearney, who later went on to found Kearney. McKinsey’s professional interests began to shift from accounting to management. In 1929 McKinsey wrote Accounting Principles, which remained in print in twelve subsequent editions until 1980.

On  November 30, 1937, McKinsey’s firm weathered its first major crisis with the passing of its namesake from pneumonia.

Enter Marvin Bower

“I made it an immediate objective to learn why it had been so successful. From observation and analysis during my Jones, Day years began the formulation of the program that I later brought with me to McKinsey.”

Marvin Bower, Founder

In 1928, Marvin Bower, a freshly minted esquire with a degree from Harvard Law School, was turned down for inadequate grades by Jones, Day, a Cleveland law firm. Fuming, Bower returned to Harvard, picking up an MBA, graduating in the top 5% of his class. He then reapplied at Jones, Day, and got the job.

After work as a corporate lawyer at Jones, Day, helping restructure businesses affected by the Great Depression, and another firm, in 1933 Bower joined the New York office of James O. McKinsey & Company.

In 1939, with the loss of James O. McKinsey, Marvin Bower and two associates, founded the professional service firm known today as McKinsey and Company. Bower changed $100 a day for his consultants and $500 a day for himself, making Bower the highest paid consultant in his day.

Bower kept the McKinsey & Co. name on the door because he wanted his freedom. Bower witnessed how clients would sometimes insist on having Mac on an engagement, and no client would be dictating how Bower spent his time.

It was Bower who instituted the practice of hiring grads directly out of business school as consultants. It was Bower who shaped McKinsey with its ‘up or out’ mandate for new associates. And it was Bower who instituted a number of modern business practices, beyond consulting, the topics of Harvard case studies and numerous papers and books.

By 1951 McKinsey and Company had 88 staff members. Over the years, it continued to grow, faster and faster.

To his distinction, Bower was elected to the National Business Hall of Fame and is considered by many as one of the great American business leaders of the 20th century. And the father of modern management consulting.

McKinsey and Co. would go on to dominate management consulting, becoming known simply as “the Firm.”

Bower had another idea for the firm, a rather grandiose idea, which, like his study of the success of Jones Day, when he first started there, he formulated at the beginning of McKinsey and Company. Not only would McKinsey, based on its internal values and principles, and high level of professionalism, become the premier firm in management consulting, but it would outlast, every other firm. McKinsey and Co. would become an institution that would last, well, forever.

Physician Heal Thyself . . .

Notable McKinsey alumni include Tom Peters, Kenichi Ohmae, and Richard Pascale, and many others who went on to distinguished careers in academia, business, consulting and other fields. Financial writer Brett Arends, for example. Another is Pete Buttigieg, current U.S. Secretary of Transportation. This list would also include four managers at Valeant Pharmaceuticals, a company allegedly in a financial relationship with McKinsey’s investment arm.

During a growth spurt over the last decade, McKinsey, dubbed, “the world’s most influential consultancy,” by the New York Times, has recruited a new breed of consultants and partners, perhaps taking on the type of risky work that would have been declined in the past. While the firm has doubled in size over the span of the last ten years, under Marvin Bower and his immediate successors, McKinsey was known as much for the clients it didn’t take on, as for the work it had agreed to do. Potential clients like Howard Hughes, for example, or companies they judged not yet ready to change would be routinely denied the Firm’s services.

Besides the Pharma imbroglio, McKinsey has had to deal with a scandal in South Africa costing the firm $100 million, and fallout from consultations and the resulting ripples from the relationships with the ex-president of Ukraine, Russian companies under sanctions, controversial foreign governments as Saudi Arabia and others, and recent Covid-related work for the embattled Gov. Andrew Cuomo. The NY Times reported McKinsey has advised 22 of the 100 largest Chinese state-owned enterprises.

McKinsey also operates the McKinsey Investment Office, or MIO Partners, a private, secretive hedge fund with an estimated $12 Billion or so under its management. MIO has been accused of various alleged conflicts of interest.

There can be no doubt at this time current events point to the fact that McKinsey is at a critical inflection point.

The next move it makes will determine its trajectory, perhaps even its survival. Its options, however, are limited.

Option 1: Do nothing.

This seems to be McKinsey’s current strategy. Keep growing, take a hit now and then, but weather the storm.

This is probably not a viable option as McKinsey does not have time on its side. Who really knows how many other client relationships out there are smoldering, waiting for the right conditions to fan into a roaring flame?

Even if time was on their side, the partnership can only underwrite so many maelstroms before running out of money.

Option 2: Create touchstones to a new paradigm

McKinsey could recast its vision and vision statement.

To help our clients make distinctive, lasting, and substantial improvements in their performance and to build a great firm that attracts, develops, excites, and retains exceptional people.

McKinsey and Co., Mission statement

A new mission statement could say, if we can’t make things better, then we will strive not to make things worse for our clients—or ourselves.

Or something along those lines . . .

Option 3: Undergo a complete transformation

McKinsey could transform itself, positioning itself as the consulting firm of the future. McKinsey has strengths and resources available, which makes it unique. It needs to build on its reserves and whatever remaining goodwill it has left.

All transformations carry risk. Most transformations are neither easy nor successful.

Is McKinsey nearing the end to business as usual?

Has McKinsey reached its nadir? What has it done in a remarkable way since 2007, when, for example, it released its forward-thinking McKinsey Solutions? Will mad growth alone continue to be the magic elixir to carry it forward?

McKinsey has survived other scandals like its failed strategic plans for Swissair (1990s), and later, its link to the Galleon insider trading scandal. But both the frequency and severity of its payouts and reputational risk seem to be exponentially increasing. It cannot afford any future hits in the Billion-dollar range. Few service organizations could and still survive.

Whether it sets its sights future forward, or backwards to the edicts of Marvin Bower, who impressed upon the partnership that everyone put the interests of the client and the firm above their own, the ultimate question for Mckinsey might be, Is it ready to change?

Would McKinsey take itself on as a client?

Or is it too late?

Will it be said, in spite of the great hopes of Marvin Bower, that nothing lasts forever?

Will 13 be a lucky number for the next global managing partner? Stay tuned . . . ■

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The “Good” Consultant

Which consulting firms are recognized as the world-class champions of integrity, the standard bearers for ethical behavior? What are the criteria for this distinction?

For the fifteenth year, on April 20th, 2021 | 4:00 pm ET, the WME Gala will honor some of them.

Some of the 135 WME honorees will include:

  • accenture (514,000 employees)
  • AECOM (engineering, with 47,000 employees)
  • Booz | Allen | Hamilton (27,500 employees)
  • Capgemini (270,000 employees)
  • Genpact (90,000 employees)
  • IBM (352,600 employees—parent of IBM Services)
  • Infosys (243,000 employees—first time listed)
  • Leidos (38,000 employees)
  • Parsons (16,000 employees)
  • teradata (8,000 employees)

The WME stands for the World’s Most Ethical Companies®—an annual list put out by Ethisphere. Firms are selected by a methodology focused on their business values, practices, governance, and exceptional ethical compliance.

For cynics out there who say devotion to ethics doesn’t bring any extra financial return, please note that Ethisphere calculated what it calls “the Ethics Premium” — the stock performance of WME 2021 winners over the last five years, versus a general large cap index over the same five years. This year’s winners outperformed that large-cap average group by 7.1 percent.”

Matt Kelly, Radical Compliance

Congratulations to all.

Who Didn’t Make the Cut?

Organizations on the WME list choose to participate in the WME program and conform to its requirements. Not being on the list doesn’t infer a firm operates unethically.

Take McKinsey & Company (34,000 employees), for example. On the Forbes magazine list of 500 of America’s Best Large Employers (Feb. 14, 2021 blog) McKinsey is one of the top three management consulting firms (known in consulting circles as the MBB (McKinsey, Bain and Boston Consulting Group)).

McKinsey has been in the news. While McKinsey ($10 Billion in annual revenue) did not admit to any misconduct, in early February 2021 it agreed to pay $573 million to settle a case involving a client, Purdue Pharma.

The settlement prompted a response by a well known, former McKinsey consultant:

“Disregard of higher societal purposes is nothing new. But for me, the McKinsey-Purdue Pharma affair represents a new low.”

Tom Peters

Peters even asked a colleague, if he should drop McKinsey from his CV?

No, he should not, was inferred in another former McKinsey consultant’s response, entitled, In defence of the current McKinsey leadership:

“Wrong is wrong and should have no place in any professional services practice.

But all mega-sized firms will have a few bad apples. The key is the speed with which they are “cut out” and the acceptance of “mea culpa”, both of which I believe McKinsey’s leadership led by Kevin Sneader have done to an exemplary extent.”

John A Dembitz
Senior Partner, Dembitz & Associates

Alas, it was too late for McKinsey & Company’s global managing partner, Kevin Sneader, who became the first managing partner since 1976 not to be re-elected to a second term. Leadership elections are held every three years at McKinsey. McKinsey’s new global leader is yet be officially announced.

Lessons Learned

Weber Shandwick, with KRC Research, conducted an online survey on the value of reputation among 2,227 executives worldwide.

“A primary finding from the research is that reputation today is omnidriven.

That is, a company’s portfolio of reputation drivers is no longer dependent on solely a few select factors. Everything matters today, from quality of employees, to quality of products, to financial performance, to corporate culture, tocommunity. The list goes on. In an environment where business leaders are being caught off guard by dangers that seemingly lie in plain sight, companies must ensure they are hyperalert to all factors when working to build and safeguard their reputations.

Weber Shandwick, THE STATE OF CORPORATE REPUTATION IN 2020

One on hand, growing businesses need to always take face uncertainty and take risks. Sometimes big risks. Every large firm or company started when someone made a decision to take advantage of uncertainty.

One the other hand, when it comes to ethical dealings or potential damage to one’s reputation, all risks need to be prudently balanced against public perceptions. Good intentions don’t guarantee positive impacts or outcomes.

Arthur Andersen LLP was known as the premier auditing, tax and consulting services firm, when its nexus to Enron resulted in an over-zealous criminal prosecution by the federal government. It fought the conviction and won, but it was too late to save the firm. Today, accenture, which resulted from the fallout and dissolution of Arthur Andersen, is one of the firms on the WME list.

I don’t believe there are any particular “secrets” to ensuring an excellent reputation as an ethical standard bearer. Too many “controls” can lead to scoliosis in a firm and can be as bad as too few.

Leaders need to ensure everyone shares the firm’s values through communicating, demonstrating, and enforcing ethical behaviors. It’s up to the leadership and management of a firm or organization to set the standard, monitor behavior, and take action when it falls short. This needs to be based on a human-centered company culture, which is sometimes lacking in many organizations.

Creating a thick policy book and setting it on the shelf probably won’t be helpful. Studying the companies on the WME list is a start. ■

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The Prosperous Consultant

Consulting in some ways is a lot like major-league baseball. How is that?

Consulting is a team sport.

As Peter Drucker once said, the purpose of a business is to create a customer. Likewise, the purpose of consulting is to create a client. Your team may not have nine positions to field like baseball, but at a minimum there will always be at least two: the consultant and the client.

Who is the client? A client is always the person footing the bill.

A client is entitled to the consultant’s courtesy and consideration at all times, including the consultant’s professional expertise, and undivided loyalty, without any possible conflicts of interest. All of the client’s questions and concerns need to be addressed in a prompt manner and all communications returned in a reasonable amount of time. Status reports also need to be conveyed to the client, especially at the onset of potential trouble, so at all times the client is kept informed. Clients have the right to absolute privacy, whether or not the consultant has signed a nondisclosure agreement (NDA). Clients should be dealt with in an ethical manner by the consultant. This includes not taking on a client, if previous professional commitments preclude adequate attention to the client, or if the services requested are beyond the scope of the consultant’s expertise. Finally, the client can withdraw from the consulting relationship at any time.

As a team player, the client has some obligations as well, including rendering the same courtesy and consideration to the consultant, being upfront with information and facts, and being cooperative, including following up with any promised actions. A client is obligated to honor the agreed upon fee arrangement.

Not every chance to bat results in a home run .

Baseball players score a point each time they complete a run around the first, second and third bases and return safely to the home plate.

The other team may strike the batter out, or catch the ball once in flight, or tag the batter between bases. In fact, most major-league games may result in only a couple of home runs by a batter, and four or five completed runs by a team.

If you are a major-league player, hitting a home run or scoring a point is not easy. Nor is hitting a home run any easier for a major-league consultant.

Why do consultants “strike out?” Typical reasons include:

  • There is, at some level, a lack of client commitment
  • The client provides insufficient information or is unable to access the information
  • The client is overwhelmed “putting out fires”
  • The client sits back and waits for results
  • The consultant’s mandate was not the real problem

These are things that crop up and need to be worked out to make progress. Building consensus and commitment is an ongoing task of the consultant. A client who quickly agrees with my suggestions or recommendations makes me a little nervous. A quick “yes,” can really mean a “maybe” or a “no.” At best, it might only mean the client has heard me, but is not yet ready to take the next step.

Good pitching always beats good hitting.—Baseball maxim.

Baseball is one of the few sports in which the “defensive” team has control of the ball. The pitcher determines the speed and angle of the ball. The team in the field can coordinate their efforts to tag the opposing players with the ball, especially when the bases are loaded (risks are extant), and the batter is weak (a high level of uncertainty exists).

In consulting, it’s all about the ball and who controls it. And the ball is influence.

Consultants cannot control the client. To gain the trust which can lead to influence and further integration and collaboration, we need to engage in a dialogue or a dialectical conversation, viewing issues from various perspectives.

In addition to asking the tough questions, we can enable client buy-in or influence by a strong narrative or storyline. Research has found stories can be much more memorable than “just the facts.” Start with the client’s pain points. Walk them through what success might look like, and then walk them back and tell them how they might achieve it.

To be a major-league consultant rock-star, take control of the ball, focus on pitching more than hitting home-runs. Your clients may become your biggest fans. ■

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Award-Winning Consulting

Consultants generally operate anonymously, bound by non-disclosure and similar agreements. When firms make the front-page headlines, rare as it is, it’s usually because of an alleged failure, malfeasance, or other anomalous behavior, and the resulting litigation.

So the other day, it was encouraging to see a number of consulting firms listed on the Top 101 Companies in the Nation, recently put out by the National Association for Business Resources (NABR), a group dedicated to sharing best practices in the business and professional community. This award, under the auspices of the The Best and Brightest Companies to Work For® program, recognizes exceptional human resource (HR) practices and organizational commitment to staff.

Participants in the year-long NABR program are exposed to advanced profiling reports based on employee feedback, continued education, and other essential tools.

Other Consulting Awards

There are a number of other venues for recognition of excellence.

For example, the Washington Post’s Top Workplaces list names 200 organizations as the best places to work in the Washington D.C. area. Entities are nominated by staff, and organizations must employ at least 50 people.

In 2020, the Post interviewed Steven Gunby, the president and chief executive of FTI Consulting, winner in the Top Workplaces‘ large-employer category, who emphasized the importance of remaining calm during COVID, “. . . we have to, as a management team, keep our head and protect our people and protect our future.”

Consultancy.org Guide to the Top Consulting Firms in the World 

As with any ranking, there is in consulting no clear definition of what defines a top consulting firm. It basically depends on who you ask, when you ask it, what type of service / expertise is assessed, and a range of other criteria. 

Consultancy.org

Consultancy.org, an online platform for the global advisory and consulting industry based in the Netherlands, keeps running lists of top consulting firms in the world in various categories, including Top award-winning consulting firms, based on a variety of data points and their “holistic view” of the industry.

Consultingmag.com’s Rankings

Consultingmag.com, based in New York City, makes annual lists of consulting firms, including its Best Firms to Work For, Best Small Firms to Work For, and Fastest Growing Firms, based on revenue growth (not profitability), encompassing “the fastest-growing consulting firms in the world, of any size and from any sector.”

Forbes’ America’s Best Large Employers

On February 9, 2021, Forbes business magazine released its list of 500 of America’s Best Large Employers, of firms employing at least 1,000 employees, based on an anonymous survey of at least 50,000 employees by the market research firm Statista. In the area of Professional Services, top-ranked consulting firms include:

#64 McKinsey & Company (34,000 employees), #240 Baker Tilly US, LLP, an advisory, tax and assurance firm, with a mere 4,600 employees, #248 Booz Allen Hamilton (26,300 staffers), #258 Boston Consulting Group (18,500 employees), #263 Deloitte (330,000 employees) #305 PricewaterhouseCoopers (50,000 employees), #334 KPMG (35,000 employees), #407 engineering firm Zachry Group (4,500 employees), #433 construction and engineering firm Day & Zimmermann (41,000 employees), #464 Accenture (492,000 staffers), and #494 Ernst & Young (298,965 employees).

Benefits of Awards and Accolades

Consulting firms enjoy a number of benefits from receiving an award and/or recognition. Benefits include:

  • Branding—being recognized as a top firm in your sector
  • Marketing—recognition of one’s service areas
  • Recruiting—exposure as an employer of choice
  • Media exposure—exposure of the firm’s expertise as an available resource
  • Validation—as a sustainable, growing firm or practice employing best practices and the best people

Consulting is a people business. Awards can help to determine which firms put their people first and who are the movers and shakers in the world of consulting. They are recognized simply as being the best. ■

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The Future of Consulting

The best way to predict the future is to create it.

Peter Drucker

What is the future of consulting? Where is the consulting industry headed? Who will fill the consulting talent pipeline? Will it be you?

To look ahead, it is sometimes good to look backwards. The origin of modern consulting perhaps started in the middle 19th and early 20th century.

For example, in the late 1880s, John D. Rockefeller, Sr., one of the wealthiest men of his day, wanted to increase his philanthropy, and found effectively giving away money was much more difficult than making it. In 1889 “The Gospel of Wealth” by Andrew Carnegie was published. ““The man who dies thus rich dies disgraced,” said Carnegie. In that year, Rockefeller met with Frederick T. Gates, secretary of the American Baptist Education Society for his advice on the matter, and a long consulting relationship ensued.

In 1893, Frederick Winslow Taylor opened his consulting business, as a “Consulting Engineer” in Philadelphia. Taylor would go on to publish The Principles of Scientific Management, voted in 2001 the most influential management book of the twentieth century, by the Fellows of the Academy of Management. Taylor is considered the father of the Industrial Engineering discipline.

The first management consultancy, Arthur D. Little, was started in 1886 in Boston by Arthur Dehon Little, a chemist from the Massachusetts Institute of Technology, dedicated to solving unsolvable problems with unique solutions. Little started the first research lab for General Motors. Today the firm has 40 offices around the world.

Other firms would follow. In 1914, Edwin Booz started the Business Research Service, later turning into Booz Allen Hamilton, as it is known today. In 1926  James O. McKinsey founded the James O. McKinsey & Company or now simply, McKinsey & Company.

In the 20th century, two world wars provided boosts to the industry, as the need for organizations to change directions both during and after the wars provided the impetus.

For example, Cresap, McCormick & Paget (CMP) was founded in 1946 by Willard Francis McCormick to help blue chip corporations. In 1982, CMP later merged with Towers Perrin. Today few have heard of CMP, which was based at 120 Broadway, NYC, a venue once considered “the original symbol of power and stature.”

The Present

 In 2019, 53 percent of Gen Z workers freelanced.

Freelancing in America: 2019 Survey

Many other firms would follow, not only in the U.S., but worldwide. In the U.S. it has been estimated there are over 1 million consultants. If freelance or contract workers are added into the mix, the total was in 2019 at least 57 million Americans, or about 35 per cent of the workforce according to a survey by Upwork.

The Future

Consultants bring expertise, specialized knowledge, and experience which is out of the reach of most organizations. The majority of the work is in the following areas:

  • Coding
  • Marketing
  • Digital skills

Consultants are taking on the role of catalysts by :

  • Bringing new ideas
  • Sharing proprietary algorithms
  • Pointing out new initiatives
  • Creating action plans
  • Creating new client tools
  • Personalized services

Consultants are augmenting organizational legitimacy by:

  • Conducting reviews
  • Helping to map strategy
  • Integrating with organizational teams
  • Collaborating with third-parties
  • Making observations and drawing conclusions
  • Providing end-to-end solutions

Individuals and firms with the above skills will be the new vanguard of the consulting industry.

Where do you see the future of consulting? What role will you play in it? ■

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