- •In praise of the fourth edition
- •CONTENTS
- •FOREWORD
- •The concept of consulting
- •Purpose of the book
- •Terminology
- •Plan of the book
- •ABBREVIATIONS AND ACRONYMS
- •1.1 What is consulting?
- •Box 1.1 On giving and receiving advice
- •1.2 Why are consultants used? Five generic purposes
- •Figure 1.1 Generic consulting purposes
- •Box 1.2 Define the purpose, not the problem
- •1.3 How are consultants used? Ten principal ways
- •Box 1.3 Should consultants justify management decisions?
- •1.4 The consulting process
- •Figure 1.2 Phases of the consulting process
- •1.5 Evolving concepts and scope of management consulting
- •2 THE CONSULTING INDUSTRY
- •2.1 A historical perspective
- •2.2 The current consulting scene
- •2.3 Range of services provided
- •2.4 Generalist and specialist services
- •2.5 Main types of consulting organization
- •2.6 Internal consultants
- •2.7 Management consulting and other professions
- •Figure 2.1 Professional service infrastructure
- •2.8 Management consulting, training and research
- •Box 2.1 Factors differentiating research and consulting
- •3.1 Defining expectations and roles
- •Box 3.1 What it feels like to be a buyer
- •3.2 The client and the consultant systems
- •Box 3.2 Various categories of clients within a client system
- •Box 3.3 Attributes of trusted advisers
- •3.4 Behavioural roles of the consultant
- •Box 3.4 Why process consultation must be a part of every consultation
- •3.5 Further refinement of the role concept
- •3.6 Methods of influencing the client system
- •3.7 Counselling and coaching as tools of consulting
- •Box 3.5 The ICF on coaching and consulting
- •4 CONSULTING AND CHANGE
- •4.1 Understanding the nature of change
- •Figure 4.1 Time span and level of difficulty involved for various levels of change
- •Box 4.1 Which change comes first?
- •Box 4.2 Reasons for resistance to change
- •4.2 How organizations approach change
- •Box 4.3 What is addressed in planning change?
- •Box 4.4 Ten overlapping management styles, from no participation to complete participation
- •4.3 Gaining support for change
- •4.4 Managing conflict
- •Box 4.5 How to manage conflict
- •4.5 Structural arrangements and interventions for assisting change
- •5 CONSULTING AND CULTURE
- •5.1 Understanding and respecting culture
- •Box 5.1 What do we mean by culture?
- •5.2 Levels of culture
- •Box 5.2 Cultural factors affecting management
- •Box 5.3 Japanese culture and management consulting
- •Box 5.4 Cultural values and norms in organizations
- •5.3 Facing culture in consulting assignments
- •Box 5.5 Characteristics of “high-tech” company cultures
- •6.1 Is management consulting a profession?
- •6.2 The professional approach
- •Box 6.1 The power of the professional adviser
- •Box 6.2 Is there conflict of interest? Test your value system.
- •Box 6.3 On audit and consulting
- •6.3 Professional associations and codes of conduct
- •6.4 Certification and licensing
- •Box 6.4 International model for consultant certification (CMC)
- •6.5 Legal liability and professional responsibility
- •7 ENTRY
- •7.1 Initial contacts
- •Box 7.1 What a buyer looks for
- •7.2 Preliminary problem diagnosis
- •Figure 7.1 The consultant’s approach to a management survey
- •Box 7.2 Information materials for preliminary surveys
- •7.3 Terms of reference
- •Box 7.3 Terms of reference – checklist
- •7.4 Assignment strategy and plan
- •Box 7.4 Concepts and terms used in international technical cooperation projects
- •7.5 Proposal to the client
- •7.6 The consulting contract
- •Box 7.5 Confidential information on the client organization
- •Box 7.6 What to cover in a contract – checklist
- •8 DIAGNOSIS
- •8.1 Conceptual framework of diagnosis
- •8.2 Diagnosing purposes and problems
- •Box 8.1 The focus purpose – an example
- •Box 8.2 Issues in problem identification
- •8.3 Defining necessary facts
- •8.4 Sources and ways of obtaining facts
- •Box 8.3 Principles of effective interviewing
- •8.5 Data analysis
- •Box 8.4 Cultural factors in data-gathering – some examples
- •Box 8.5 Difficulties and pitfalls of causal analysis
- •Figure 8.1 Force-field analysis
- •Figure 8.2 Various bases for comparison
- •8.6 Feedback to the client
- •9 ACTION PLANNING
- •9.1 Searching for possible solutions
- •Box 9.1 Checklist of preliminary considerations
- •Box 9.2 Variables for developing new forms of transport
- •9.2 Developing and evaluating alternatives
- •Box 9.3 Searching for an ideal solution – three checklists
- •9.3 Presenting action proposals to the client
- •10 IMPLEMENTATION
- •10.1 The consultant’s role in implementation
- •10.2 Planning and monitoring implementation
- •10.3 Training and developing client staff
- •10.4 Some tactical guidelines for introducing changes in work methods
- •Figure 10.1 Comparison of the effects on eventual performance when using individualized versus conformed initial approaches
- •Figure 10.2 Comparison of spaced practice with a continuous or massed practice approach in terms of performance
- •Figure 10.3 Generalized illustration of the high points in attention level of a captive audience
- •10.5 Maintenance and control of the new practice
- •11.1 Time for withdrawal
- •11.2 Evaluation
- •11.3 Follow-up
- •11.4 Final reporting
- •12.1 Nature and scope of consulting in corporate strategy and general management
- •12.2 Corporate strategy
- •12.3 Processes, systems and structures
- •12.4 Corporate culture and management style
- •12.5 Corporate governance
- •13.1 The developing role of information technology
- •13.2 Scope and special features of IT consulting
- •13.3 An overall model of information systems consulting
- •Figure 13.1 A model of IT consulting
- •Figure 13.2 An IT systems portfolio
- •13.4 Quality of information systems
- •13.5 The providers of IT consulting services
- •Box 13.1 Choosing an IT consultant
- •13.6 Managing an IT consulting project
- •13.7 IT consulting to small businesses
- •13.8 Future perspectives
- •14.1 Creating value
- •14.2 The basic tools
- •14.3 Working capital and liquidity management
- •14.4 Capital structure and the financial markets
- •14.5 Mergers and acquisitions
- •14.6 Finance and operations: capital investment analysis
- •14.7 Accounting systems and budgetary control
- •14.8 Financial management under inflation
- •15.1 The marketing strategy level
- •15.2 Marketing operations
- •15.3 Consulting in commercial enterprises
- •15.4 International marketing
- •15.5 Physical distribution
- •15.6 Public relations
- •16 CONSULTING IN E-BUSINESS
- •16.1 The scope of e-business consulting
- •Figure 16.1 Classification of the connected relationship
- •Box 16.1 British Telecom entering new markets
- •Box 16.2 Pricing models
- •Box 16.3 EasyRentaCar.com breaks the industry rules
- •Box 16.4 The ThomasCook.com story
- •16.4 Dot.com organizations
- •16.5 Internet research
- •17.1 Developing an operations strategy
- •Box 17.1 Performance criteria of operations
- •Box 17.2 Major types of manufacturing choice
- •17.2 The product perspective
- •Box 17.3 Central themes in ineffective and effective development projects
- •17.3 The process perspective
- •17.4 The human aspects of operations
- •18.1 The changing nature of the personnel function
- •18.2 Policies, practices and the human resource audit
- •Box 18.1 The human resource audit (data for the past 12 months)
- •18.3 Human resource planning
- •18.4 Recruitment and selection
- •18.5 Motivation and remuneration
- •18.6 Human resource development
- •18.7 Labour–management relations
- •18.8 New areas and issues
- •Box 18.2 Current issues in Japanese human resource management
- •Box 18.3 Current issues in European HR management
- •19.1 Managing in the knowledge economy
- •Figure 19.1 Knowledge: a key resource of the post-industrial area
- •19.2 Knowledge-based value creation
- •Figure 19.2 The competence ladder
- •Figure 19.3 Four modes of knowledge transformation
- •Figure 19.4 Components of intellectual capital
- •Figure 19.5 What is your strategy to manage knowledge?
- •19.3 Developing a knowledge organization
- •Figure 19.6 Implementation paths for knowledge management
- •Box 19.1 The Siemens Business Services knowledge management framework
- •20.1 Shifts in productivity concepts, factors and conditions
- •Figure 20.1 An integrated model of productivity factors
- •Figure 20.2 A results-oriented human resource development cycle
- •20.2 Productivity and performance measurement
- •Figure 20.3 The contribution of productivity to profits
- •20.3 Approaches and strategies to improve productivity
- •Figure 20.4 Kaizen building-blocks
- •Box 20.1 Green productivity practices
- •Figure 20.5 Nokia’s corporate fitness rating
- •Box 20.2 Benchmarking process
- •20.4 Designing and implementing productivity and performance improvement programmes
- •Figure 20.6 The performance improvement planning process
- •Figure 20.7 The “royal road” of productivity improvement
- •20.5 Tools and techniques for productivity improvement
- •Box 20.3 Some simple productivity tools
- •Box 20.4 Multipurpose productivity techniques
- •Box 20.5 Tools used by most successful companies
- •21.1 Understanding TQM
- •21.2 Cost of quality – quality is free
- •Figure 21.1 Typical quality cost reduction
- •Box 21.1 Cost items of non-conformance associated with internal and external failures
- •Box 21.2 The cost items of conformance
- •21.3 Principles and building-blocks of TQM
- •Figure 21.2 TQM business structures
- •21.4 Implementing TQM
- •Box 21.3 The road to TQM
- •Figure 21.3 TQM process blocks
- •21.5 Principal TQM tools
- •Box 21.4 Tools for simple tasks in quality improvement
- •Figure 21.4 Quality tools according to quality improvement steps
- •Box 21.5 Powerful tools for company-wide TQM
- •21.6 ISO 9000 as a vehicle to TQM
- •21.7 Pitfalls and problems of TQM
- •21.8 Impact on management
- •21.9 Consulting competencies for TQM
- •22.1 What is organizational transformation?
- •22.2 Preparing for transformation
- •Figure 22.1 The change-resistant organization
- •22.3 Strategies and processes of transformation
- •Figure 22.2 Linkage between transformation types and organizational conditions
- •Figure 22.3 Relationships between business performance and types of transformation
- •Box 22.1 Eight stages for transforming an organization
- •22.4 Company turnarounds
- •Box 22.2 Implementing a turnaround plan
- •22.5 Downsizing
- •22.6 Business process re-engineering (BPR)
- •22.7 Outsourcing and insourcing
- •22.8 Joint ventures for transformation
- •22.9 Mergers and acquisitions
- •Box 22.3 Restructuring through acquisitions: the case of Cisco Systems
- •22.10 Networking arrangements
- •22.11 Transforming organizational structures
- •22.12 Ownership restructuring
- •22.13 Privatization
- •22.14 Pitfalls and errors to avoid in transformation
- •23.1 The social dimension of business
- •23.2 Current concepts and trends
- •Box 23.1 International guidelines on socially responsible business
- •23.3 Consulting services
- •Box 23.2 Typology of corporate citizenship consulting
- •23.4 A strategic approach to corporate responsibility
- •Figure 23.1 The total responsibility management system
- •23.5 Consulting in specific functions and areas of business
- •23.6 Future perspectives
- •24.1 Characteristics of small enterprises
- •24.2 The role and profile of the consultant
- •24.4 Areas of special concern
- •24.5 An enabling environment
- •24.6 Innovations in small-business consulting
- •25.1 What is different about micro-enterprises?
- •Box 25.1 Consulting in the informal sector – a mini case study
- •25.3 The special skills of micro-enterprise consultants
- •Box 25.2 Private consulting services for micro-enterprises
- •26.1 The evolving role of government
- •Box 26.1 Reinventing government
- •26.2 Understanding the public sector environment
- •Figure 26.1 The public sector decision-making process
- •Box 26.2 The consultant–client relationship in support of decision-making
- •Box 26.3 “Shoulds” and “should nots” in consulting to government
- •26.3 Working with public sector clients throughout the consulting cycle
- •26.4 The service providers
- •26.5 Some current challenges
- •27.1 The management challenge of the professions
- •27.2 Managing a professional service
- •Box 27.1 Challenges in people management
- •27.3 Managing a professional business
- •Box 27.2 Leverage and profitability
- •Box 27.3 Hunters and farmers
- •27.4 Achieving excellence professionally and in business
- •28.1 The strategic approach
- •28.2 The scope of client services
- •Box 28.1 Could consultants live without fads?
- •28.3 The client base
- •28.4 Growth and expansion
- •28.5 Going international
- •28.6 Profile and image of the firm
- •Box 28.2 Five prototypes of consulting firms
- •28.7 Strategic management in practice
- •Box 28.3 Strategic audit of a consulting firm: checklist of questions
- •Box 28.4 What do we want to know about competitors?
- •Box 28.5 Environmental factors affecting strategy
- •29.1 The marketing approach in consulting
- •Box 29.1 Marketing of consulting: seven fundamental principles
- •29.2 A client’s perspective
- •29.3 Techniques for marketing the consulting firm
- •Box 29.2 Criteria for selecting consultants
- •Box 29.3 Branding – the new myth of marketing?
- •29.4 Techniques for marketing consulting assignments
- •29.5 Marketing to existing clients
- •Box 29.4 The cost of marketing efforts: an example
- •29.6 Managing the marketing process
- •Box 29.5 Information about clients
- •30 COSTS AND FEES
- •30.1 Income-generating activities
- •Table 30.1 Chargeable time
- •30.2 Costing chargeable services
- •30.3 Marketing-policy considerations
- •30.4 Principal fee-setting methods
- •30.5 Fair play in fee-setting and billing
- •30.6 Towards value billing
- •30.7 Costing and pricing an assignment
- •30.8 Billing clients and collecting fees
- •Box 30.1 Information to be provided in a bill
- •31 ASSIGNMENT MANAGEMENT
- •31.1 Structuring and scheduling an assignment
- •31.2 Preparing for an assignment
- •Box 31.1 Checklist of points for briefing
- •31.3 Managing assignment execution
- •31.4 Controlling costs and budgets
- •31.5 Assignment records and reports
- •Figure 31.1 Notification of assignment
- •Box 31.2 Assignment reference report – a checklist
- •31.6 Closing an assignment
- •32.1 What is quality management in consulting?
- •Box 32.1 Primary stakeholders’ needs
- •Box 32.2 Responsibility for quality
- •32.2 Key elements of a quality assurance programme
- •Box 32.3 Introducing a quality assurance programme
- •Box 32.4 Assuring quality during assignments
- •32.3 Quality certification
- •32.4 Sustaining quality
- •33.1 Operating workplan and budget
- •Box 33.1 Ways of improving efficiency and raising profits
- •Table 33.2 Typical structure of expenses and income
- •33.2 Performance monitoring
- •Box 33.2 Monthly controls: a checklist
- •Figure 33.1 Expanded profit model for consulting firms
- •33.3 Bookkeeping and accounting
- •34.1 Drivers for knowledge management in consulting
- •34.2 Factors inherent in the consulting process
- •34.3 A knowledge management programme
- •34.4 Sharing knowledge with clients
- •Box 34.1 Checklist for applying knowledge management in a small or medium-sized consulting firm
- •35.1 Legal forms of business
- •35.2 Management and operations structure
- •Figure 35.1 Possible organizational structure of a consulting company
- •Figure 35.2 Professional core of a consulting unit
- •35.3 IT support and outsourcing
- •35.4 Office facilities
- •36.1 Personal characteristics of consultants
- •36.2 Recruitment and selection
- •Box 36.1 Qualities of a consultant
- •36.3 Career development
- •Box 36.2 Career structure in a consulting firm
- •36.4 Compensation policies and practices
- •Box 36.3 Criteria for partners’ compensation
- •Box 36.4 Ideas for improving compensation policies
- •37.1 What should consultants learn?
- •Box 37.1 Areas of consultant knowledge and skills
- •37.2 Training of new consultants
- •Figure 37.1 Consultant development matrix
- •37.3 Training methods
- •Box 37.2 Training in process consulting
- •37.4 Further training and development of consultants
- •37.5 Motivation for consultant development
- •37.6 Learning options available to sole practitioners
- •38 PREPARING FOR THE FUTURE
- •38.1 Your market
- •Box 38.1 Change in the consulting business
- •38.2 Your profession
- •38.3 Your self-development
- •38.4 Conclusion
- •APPENDICES
- •4 TERMS OF A CONSULTING CONTRACT
- •5 CONSULTING AND INTELLECTUAL PROPERTY
- •7 WRITING REPORTS
- •SUBJECT INDEX
Consulting in company transformation
Overcoming resistance
To cope with resistance to change, the consultant and management have to start by creating discomfort and dissatisfaction with the existing situation. Changing the mind-set of the key players in the organization generally requires a strong jolt of some kind. Pressures from inside and outside the organization can effectively promote awareness of the need for change. Creating a shared mind-set characterized by collective ambition, commitment, motivation, a sense of urgency that some form of action is needed, and an external focus is critical to start the transformation.
The next move is to create hope for something better in the form of a new vision and mission, in order to break the vicious circle of despair. It is the leaders, with help from consultants if necessary, who should identify the challenges faced by the organization, point out the source of the distress, and clearly present the negative consequences of a failure to act. Benchmarking with other organizations is a good way to illustrate performance gaps and their consequences. As a buffer against excessive stress, leaders must present a viable alternative to the existing situation. At this point drawing up an action plan is crucial so that staff can perceive the change programme as something realistic.
To create awareness and support for transformational efforts and to implant a strong message that “something is deadly wrong in this company”, Gary Hamel proposes that an “insurrection” should be started in the following way.3
1.Establish a point of view. It should be powerful, credible, coherent, compelling, and based on data, speak to people’s emotions and have a clear link to the bottom line.
2.Write a manifesto. You need it to pass on your idea to others. It must capture people’s imaginations, and provide a vision and hope.
3.Create a coalition. Build a group of colleagues who share your vision and passion. It is easy to dismiss corporate rebels when they are fragmented and isolated.
4.Pick your target. Identify and target a potential champion – someone who can yank the levers of power and get the support of senior management.
5.Coopt and neutralize. You need to disarm and coopt opponents, not demean and humiliate them.
6.Find a translator. You need someone who can build a bridge between you and the people with the power.
7.Win small, win early, and win often. None of your transformational efforts is worth anything if you cannot demonstrate that your ideas actually work.
22.3 Strategies and processes of transformation
Organizational transformation can be slow, incremental, evolutionary and peopleoriented, or rapid, revolutionary, dramatic and company-wide, with economic performance as the first priority. Different approaches require different
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transformation strategies and consulting approaches. The consultants’ role is to facilitate the process and to be a resource.
Although consultants come with certain values and ideas about what makes an effective human organization, they should not recommend a corporate-wide programme through which top management should implement their ideas. They should rely rather on stimulating and supporting the process of discovery and learning. If beliefs and values need to change, if change emerges from employee participation in solving problems, and if the objective of change is to create a learning organization, then large consulting firms delivering elegant packaged solutions will not always succeed. Process consultants, who do not come with prefabricated solutions, can lead managers and other employees through a process of gradual analysis, redesign and change.
Some useful principles
Today there is renewed interest in organizations that are organic, flexible, agile, or “reconfigurable”. Their structure consists of a stable part and a variable part. The stable part consists of “homes” for specialists in functions, which also host generalists on rotating assignments. The variable part of the structure consists of mechanisms and networks integrated across the functions, for example, cross-functional teams used in most companies today. Such organizations can be easily adjusted to incremental changes.
The larger and the more radical the transformation projects, the greater the likelihood that the client organization lacks the requisite implementation skills, managerial consensus, and motivation to change. A better alternative to these highrisk mammoth consulting undertakings is a model based on a series of rapid-cycle sharply focused projects. Each one will yield some measurable return while also expanding the client organization’s capacity to learn and carry on subsequent change.
To implement such focused and modest projects, dozens of interrelated changes need to be realized in an integrated and coordinated way. While the consulting team might help to make some of the technical changes, they will be able to assist with only a small number. The rest will have to be identified and carried out by the organization itself. In this way, the company starts to learn. The first and most common way is to start the change with rationalization, by instilling more discipline and support, then moving to revitalization by spreading the action and building trust, and finally moving on to regeneration. The second way is for the company to start with more integration and then to move to regeneration. The third – and the most difficult – way is for a company to go straight to regeneration (as General Motors did) trying to balance discipline, support, stretch and trust.
When dealing with large-scale, radical changes in a turbulent environment the consultant may help to put the following key elements in place:
●Pattern-breaking, to free the system from structures, processes, or functions that are no longer effective or useful; to eliminate dysfunctional patterns of behaviour to allow new learning and new options.
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●Experimenting, to generate new patterns better suited to the present environment, by providing direction, generating commitment, strengthening bonding and cultivating support.
●“Visioning”, to choose a new perspective around which the system can be reorganized, to generate alignments, cultivate mutual trust and encourage commitment.
●Bonding and attunement, to harmonize members to move the system towards new ways of doing, thinking and learning. This could yield more options and choice, provide flexibility and encourage openness.
The following conditions are the most important ones for transformation; if they are not already present, they should be created:
–Shared vision and strategy for transformation. These should define business requirements, outline expected results, link technology clearly to the achievement of business objectives, and provide a plan for achieving results.
–A breakdown team to manage the transformation process. Appoint a group of people that has the mandate, skills and vision to manage the changes, as well as the resources to drive the restructuring.
–Empowerment of line managers and staff to make change a bottom-up process that drives decision-making down to the lowest managerial level.
–Partnerships between technical and business specialists. Mechanisms must be in place to optimize overall results rather than those of individual procedures or departments.
–Innovative procedures, institutionalization and reinforcement of results. Employees must acquire new skills, job knowledge and procedures as well as develop new mental models.
The greatest opportunities for improvement are often found in the “white spaces” between functions. It is important to identify and concentrate on critical processes, which have a strong impact on total organizational performance. All non-value-adding activities such as the movement of materials and other physical assets should be kept to a minimum or eliminated because they add cost without adding value. Process management, as a major concern in improving company operations, ignores functional power, hierarchy and bureaucracy. It concentrates on horizontal integration to reduce costs and improve quality, service and speed, and focuses on the whole process, working backwards from output or sales to decide which actions and functions are required. The basic objective of process management is to take a holistic view of the process and align the whole value chain to provide a high level of customer satisfaction, achieve the best possible performance, and increase competitiveness.
Before making judgements about the transformational strategy, both consultants and managers need to understand clearly where the company is in its business life-cycle and its development sequence – in evolution or
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Figure 22.2 Linkage between transformation types and organizational conditions
Incremental Radical
nonlinear
business
innovation
concept innovation
continuous
business
improvement
process improvement
Component System
Source: J.G. Hamel: Leading the revolution (Boston, MA, HBS Press, 2000), p. 18.
revolution. In Leading the revolution, Gary Hamel4 illustrates relationships between different types of changes starting with continuous improvement (the evolutionary approach) and going to business concept innovation (the most radical, revolutionary approach) when the whole system is to be fundamentally changed (figure 22.2).
The most difficult problems arise when large mature organizations are to be transformed. Despite the fact that many of these attempts fail, there are companies that provide good examples of transformational efforts. The experience of these companies provides some lessons that are of interest to consultants intervening in similar organizations. Here are a few hints on how mature organizations approach successful transformation:
●They renew by instilling a customer perspective and focusing on customer demands. Competitive advantage comes from understanding and meeting customer needs in unique ways. Hewlett Packard did this by incorporating internal and external customer satisfaction into its performance appraisal system.
●They renew by increasing their capacity for change. To experience renewal, business cycle lengths must be reduced and capacity for change increased.
●They renew by altering both the hardware (strategies, structures, and systems) and the software (employee behaviour and mind-set). Transformation comes only when new hardware is supported by appropriate software.
●They renew by creating empowered employees who act as leaders at all levels of the organization. They become leaders by having influence and control over the factors that affect their work performance and possessing the necessary competencies.
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