The Myths of Consulting

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Non-profits often think of consultants as too costly or too out-of-touch to bring real value to an organization.  But properly understood, the consulting industry seems like a perfect fit for the non-profit sector.  Below are the principal misconceptions I once had about consulting.

[Disclosure: the following observations were made during a failed attempt to solicit internships from top tier management consulting firms. I did not even get any bites. This may threaten the validity of my conclusions. Oh well.]

Myth 1: Consultants are industry and/or functional experts

It always blew my mind to think that management consulting firms hire an endless stream of twenty-somethings, have them analyze multi-billion dollar businesses and present their recommendations to C-level executives. What about the validity of these kids’ conclusions?  Well, I quickly learned that what consultants are truly expert at is knowledge management.  They amass tons of information about every company they serve, every balance sheet they analyze, every project they implement, every management issue they see; organizations of every size, shape and  mass.  Every country.  Everywhere.

Information is documented, organized and at the fingertips of every single consultant in the firm.  If you need advice, there is the primary human recall of hundreds of people that have willingly drowned themselves in these issues.  And by the way, they work for every company in every sector.  They record every best practice and basically distribute freely.  Copyright law need not apply.

In a way, its scary.  They sort of have their hand on entire industries.  Entire economies.  That is damn BIG PICTURE.  But they are able to test different theories in different circumstances.   They are able to see what works and what doesn’t and are paid to share these secrets with you.

Myth 2: Consultants don’t understand my organization

At the big management consulting firms, consultants spend anywhere from three months to multiple years working on a single project for a single company at a time.  They spend four business days a week embedded in the company, and every waking hour sifting through complex management questions.  They have management and staff at all levels available to answer questions.  I’m sorry, but if you can’t teach someone the ins and outs of your organization in three months, now would be a good time to reevaluate your training programs.

Myth 3: Consultants brings unique skills and perspective

Whenever I asked a consultant about the work that they did for clients, I often heard that they did exactly what I understood was supposed to be the client’s primary value proposition.  Due diligence for private equity firms?  I thought that is what PE firms did.  Why would you hire a consultant for something you are already damn good at?

But then it hit me; consultants often bring nothing more than extra capacity.  They are highly competent individuals that understand how to complete functional tasks.  Often, they are brought on to fill the gaps when extra hands are needed at a company.  In that way, they are like sub-contracted employees and can be seen as an effective way to turn fixed costs into variable costs.

Together, these reasons are why the non-profit sector should embrace consultants.  Non-profits are fundamentally resource-constrained organizations.  Consultants offer the opportunity to bring in the best practices and knowledge of the sector that non-profits often do not have the time and resources to obtain themselves.  They should be able to immerse themselves in an organization, understand how it fits in the larger world, and work with management to develop coherent and promising strategy.  And they make strategy development ad-hoc for organizations, saving critical resources that might otherwise be spent on full-time staff that do not have access to the same knowledge-base that will allow them to develop strategy quicker and comprehensively.

Posted on March 23rd 2010 in ideas

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