- •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
Management consulting
–What roles will be played by the consultant and what by the client? What will be their mutual commitments?
–Who will do what, when, and how?
–Does the client want to obtain a solution from the consultant, or does he prefer to develop his own solution with the consultant’s help?
–Is the client prepared to be intensely involved throughout the assignment?
–Are there specific areas that the consultant should cover without trying to involve the client? And vice versa?
These and similar questions will clarify the client’s and the consultant’s conception of management consulting and of the roles that the consultant can effectively play. The answers will define the strategy to be followed in order to make the assignment a success by both the client’s and the consultant’s standards.
During the assignment, many unforeseen events may occur and new facts may be uncovered so that it becomes necessary to review the original definition of expectations and roles. Both the client and the consultant should be alert to this possibility and be flexible enough to adjust their contract and work arrangements. Staff in the client organization may find at some stage that they can easily produce information or action proposals that the consultant was originally supposed to work out, or that the consultant is more useful as a trainer than as a problem-solver. Insisting on keeping to the initial definition of roles, even when conditions change, may be counterproductive.
3.2The client and the consultant systems
When, how, and between which individuals will the consultant–client relationship be established? The client, in the widest sense of the term, is the organization that employs the services of a consulting firm. There we have an institutional relationship. A professional service firm works for a manufacturing enterprise, an Internet business, or similar. But the term client can also be used in a narrower sense to mean individuals or groups in the client organization who initiate the recruitment of the consultant, discuss the job with him or her, collaborate in the course of the assignment, receive reports and recommend to higher management whether or not to accept them, and so on. Often a number of managers, supervisors, and other staff members will be directly involved in the assignment at its various stages, or will be affected by the conclusions reached.
The situation is similar on the consultant’s side. The consultant, in the wider sense of the term, is a service firm, i.e. a legal entity. But the firm employs individuals in various capacities – in management, administration, assignment marketing and planning, supervision, or assignment implementation – who are involved in various ways in negotiating, selling, preparing, managing and executing the assignment. These individuals enter into various relationships with client organizations, their internal units and individual employees.
64
The consultant–client relationship
In the delivery of professional advisory services the consultant–client relationship is always personalized. There will probably be a formal contract between the consulting firm and the organization using its services. However, the service is delivered through direct contact between people acting on behalf of the two organizations. This is fundamental. A productive relationship cannot be guaranteed by any legal contract between organizations; it will depend on the abilities and attitudes of the individuals directly involved, and on the “psychological contract” between them.
In working with client organizations, management consultants may discover highly complex relations. They may face conflicting expectations, hopes and fears, respect and disrespect, confidence and distrust. Information may be readily offered or deliberately concealed or distorted. Consultants refer to the chemistry of “client systems”, taking a systems view of the organization and trying to map out the network of relationships in which they are going to operate. This may show that, for the consultant, the client system embraces only one part or aspect of the client organization. Within the client system, the consultant then needs to determine:
–who holds the real power for making decisions related to the assignment (at all stages);
–who has the main interest in the success or failure of the assignment;
–who should be kept informed;
–whose direct collaboration is essential.
Many consultants make the mistake of automatically considering and treating the most senior person as their main client. This can upset the people who know that they will have the main responsibility for implementing the conclusions reached, and that they – not the top manager – will be directly affected and will have to live with the results. On the other hand, it may also be a great mistake to leave out the high-level manager. He or she should be informed and asked for support at an early stage.
During the assignment, the consultant continues to explore the client system and improve his or her understanding of the roles played by various people. He or she does this in order to confirm or modify the original assessment of roles, and also because assignments are dynamic processes and shifts in role can occur at any moment. For example, the appointment of a new manager can change the course of a consulting assignment dramatically.
Some situations may be particularly intricate, e.g. if the consultant does not really understand who the main client is or whom he or she should try to satisfy first of all. This may happen, for example, if top management recruits the consultant, but leaves it solely to a functional department to handle the job, if a consulting assignment is recommended and sponsored by a bank as a precondition of a loan to its client, or if a ministry sends consultants to a public enterprise. In these and similar situations, the consultant needs to clarify whether he or she is supposed to act as an inspector, an auditor, an informant, or a real management consultant. He or she should find out who “owns” the problem and is keen to resolve it – this will be the main client.
65
Management consulting
Box 3.2 Various categories of clients within a client system
In a complex client system it is useful to think in terms of categories of clients, aiming to understand their various motivations and roles, and how best to work with each category (some clients may belong to two or more categories simultaneously):
(1)Contact clients: approach the consultant initially.
(2)Intermediate clients: participate in various meetings dealing with factfinding, assignment planning, reviewing alternatives, and so on.
(3)Main or primary clients: “own” a problem for which they need and want help and for which the consultant was brought in. They are likely to be the consultant’s principal collaborators.
(4)Contract clients: play a key role in the consultant selection procedure and in negotiating and signing a consulting contract.
(5)Ultimate clients: their welfare and interests will ultimately be affected by the assignment; they must be considered when the intervention is planned, although they may not be directly involved with the consultant.
(6)Sponsoring clients: provide financial resources for the consultancy and may or may not wish to play a role in determining the procedure to follow, choosing the consultant, monitoring execution and approving the proposals to be implemented.
Developed from a typology of clients originally proposed by E. Schein, in Process consultation, Vol. II (Reading, MA, Addison-Wesley, 1987), pp. 117–118.
3.3Critical dimensions of the consultant–client relationship
Different situations and client expectations lead to different definitions of the consultant’s roles and methods of intervention. Sections 3.4 and 3.5 will review a number of role models from which to choose. Nevertheless, even if situations, assignment strategies and consultant work methods exhibit considerable differences, all consultants and clients will try to establish and nurture relationships in which they can work together to achieve a common purpose. Three dimensions of these relationships are critical: collaboration, sharing of knowledge, and trust. These dimensions are essential in consulting and could be described as objectives to be pursued in order to make the relationship fully productive and satisfying to both sides.
Collaborative relationship
Without client–consultant collaboration, there is no effective consulting. Yet the need for active collaboration is not automatically perceived by every client and various misconceptions may have to be dispelled. Some clients imagine that by
66
The consultant–client relationship
actively collaborating with the consultant they are doing the job themselves, paying the consultant a handsome fee for nothing. The consultant who insists on the client’s collaboration may be compared to “the guy who borrows your watch to tell you the time”. Often the readiness to collaborate is tested at the fact-finding stage. The client may feel that the consultant should not be given all the data he or she requests and may even instruct staff to withhold information.
The client’s reluctance to give the consultant all the information on the state of the business cannot always be interpreted as unwillingness to establish a collaborative relationship. Accounting and financial information, for instance, may be regarded as strictly confidential by the client, and the consultant should only ask for such information if it is strictly necessary.
The modern concept of consulting methodology assumes strong client collaboration for the following main reasons:
(1)There are many things that the consultant cannot do at all, or cannot do properly, if the client is reluctant to collaborate, for example, if the consultant is refused information or cannot exchange ideas with the right people.
(2)Often higher management is unaware of the competence that exists in the organization, and important strengths may be unknown to it. Through collaboration, consultants can help clients to discover and mobilize their own resources. Also, collaboration allows the consultant to refrain from undertaking tasks that the client is able and willing to do, thus saving the consultant’s time and reducing the cost of the assignment.
(3)Collaboration is essential if the client is to be fully associated with the definition of the problem and with the results of the assignment. Consultants often emphasize that their client must “own” the problem and its solution. The reason is that people often reject changes proposed or imposed from the outside. By collaborating on a solution the client is more likely to be committed to it and will not put all the responsibility on to the consultant. This commitment will be not only rational, but also emotional. We all know that we tend to have different attitudes towards projects into which we have put long hours of hard work and a lot of energy, and where we have seen solutions emerging from our thinking and debates with other people, and to solutions that we are asked to adopt without ever having been consulted on them.
(4)Most importantly, if there is no collaboration, there can be no transfer of knowledge or learning on either the client’s or the consultant’s side. Learning does not occur by defining terms of reference, and accepting or rejecting a final report, but by joint work at all stages of an assignment, from problem definition and diagnosis, to implementation and the assessment of results. In a consulting context, learning is embedded in collaboration.
A knowledge-based relationship
The basis of the consultant–client relationship is knowledge transfer, both to client from consultant and to consultant from client. While this appears to be
67
Management consulting
widely recognized, a general statement about knowledge transfer in a consulting contract or on the consultant’s web page is not enough. The reality may be totally different if no specific effort is made to transfer and share knowledge when working together.
Both parties have to pursue joint development and transfer of knowledge as one of the key purposes of the collaboration. This requires an understanding of the processes of knowledge creation and transfer, and of their driving and impeding forces, as well as appropriate allocation of time and responsibilities.
For example, a consultant may be hired to install a sophisticated model for financial risk management and show the client how to input data to get answers. However, if the client does not understand and appreciate the underlying theories, principles, criteria, formulas, caveats and limitations of the model, i.e. the model is viewed as a “black box”, his or her understanding of risk management may not improve at all. The client may rely on the model in situations where it cannot be applied or may draw wrong conclusions from the data obtained. Conversely, if the consulting firm does not take the trouble to find out how the model is used and works in each client’s context, it misses an opportunity to learn from experience and hence to improve its services and develop new services and products.
In Developing knowledge-based client relationships,1 Ross Dawson suggests that professional firms should examine where they stand “on the spectrum between providing black-box services and knowledge transfer”. He points out that “clients’ perception of the highest value creation will gradually shift towards knowledge elicitation – helping them to develop their own knowledge – as a source of far higher value than black-box services or even communicating existing knowledge”. However, there are contexts where clients may be satisfied with acquiring a commoditized consulting product (e.g. a diagnostic instrument) and using it without learning the underlying concepts and theories. Black-box solutions cannot be discarded, but their choice should be explicitly discussed and agreed.
Relationship of trust
Collaboration and knowledge-sharing generate trust. In The trusted advisor,2 David Maister, Charles Green and Robert Galford explain why trust is the most important and critical issue in the consultant–client relationship. Unless the consultant becomes a trusted adviser, the breadth of business issues he or she will be asked to deal with and the depth of the personal relationships he or she will be able to develop with the client will remain limited. This breadth will increase as the personal relationship deepens from (1) a service-offering-based relationship, through (2) a needs-based, and (3) a relationship-based, to (4) a trust-based one. It would not be reasonable to claim and expect the client’s full trust at the very beginning of the relationship. Trust must be earned, and this means that the client must be convinced that the consultant merits trust and will not betray it. By trusting an adviser the client obviously takes a personal risk.
Earning the full trust of managers and entrepreneurs is not easy, but it is worth the effort. Indeed, such a relationship can be very rewarding for the consultant.
68