Management Consulting News

Last week, as my wife and I headed to a local café we frequent when we're not up to making dinner, I was bemoaning some statistics from a recent study about client perceptions of consultants. As always, the café owner greeted us warmly and showed us to our table.

After the usual chit-chat, I surprised him by asking, "What would happen if 60% of your customers were not satisfied or only somewhat satisfied after eating here?" "Well," he answered, "we'd have to rethink everything we do--the menu, our cooks, food preparation, service, even parking. We would have to make serious changes right away."

"What if 50% of your customers claimed to be indifferent when asked if they were loyal to your restaurant? What would you do?" He was indignant at the thought and said he'd likely close his doors and go back to selling shoes. He was getting quite agitated, so I quickly explained that those statistics came from a study, not about restaurants, but on how clients perceive consultants.

Consultants should be just as agitated. Maybe the changes we need to make are not as simple as firing the cook, but we should try to get to the root of this growing client dissatisfaction and find ways to turn their perceptions around.

What are your opinions about the level of client satisfaction? Besides the obvious--asking for client feedback--what can consultants do? Send me an email with your thoughts.

"If your tendency is to make sense out of chaos, start chaos."
- Carlos Castaneda

It's no surprise that Thinkers 50 rates Tom Peters as one of today's top management thinkers. As Fortune put it, "We live in a Tom Peters world."

Peters is the author or co-author of ten international bestsellers, including In Search of Excellence, which he wrote with Bob Waterman in 1982. A self-described "prince of disorder, champion of bold failures, maestro of zest, and corporate cheerleader," Peters is also the Chairman of the Tom Peters Company, a global training and consulting organization.

His new book, Re-imagine!: Business Excellence in a Disruptive Age, was released in October 2003 with British publisher Dorling Kindersley. Peters says he and this design-driven publisher aimed at nothing less than to "reinvent the business book."

MCNews: What keeps going through my head is that, in this book, art meets argument in a way that really breathes life into the ideas.

Peters: We really enjoyed the project exactly on that dimension. It was more work and more sheer fun then anything I've done in twenty years. I'm not an artist, but my wife is a designer and it was her idea to go to the publisher Dorling Kindersley.

After I figured out what she was talking about, I started laughing--as did my agent. But then I met them and it seemed like the right thing to do. I don't know whether I did a decent job, but the publisher's people sure did.

Dorling Kindersley does elaborate designs all the time for gardening books and so on, but they recruited additional help for this book. They hired an absolutely fabulous designer from London's ad world who brought his eye for 'with it' images to the book.

We really worked our buns off so the images in the book would reflect the message of diversity, especially showing women as the new economy's natural leaders. We also wanted to stress the role of design as the ultimate competitive advantage.

MCNews: Your argument flows in a natural progression, but it's as disruptive to go through the book as the message itself.

Peters: I do think we have a solid linear argument in there. When I look at the chapter headings, they could belong to a McKinsey presentation that I might have written twenty years ago.

Peters: The editorial person at McKinsey, aka the head honcho for linear thinking, used to get on my case about being a circular thinker. I always took that as a compliment, even though it meant my livelihood was at risk at the time. But I wouldn't say that I'm good at it. I think it's more instinct then anything else. There is a fine balance or, more accurately, an interesting tension between holism and linearity that is, alas, missing from nine out of ten consulting presentations.

We had a whole book at McKinsey on the pyramid style of writing. I assume the other big consulting firms have something similar--very black and white, very fact-based. But, giant companies are so unclear in their thinking and so screwed up that, as awful as that writing style is, it often makes a compelling case about a set of data.

MCNews: You say in the book, "It is the foremost task--and responsibility--of our generation to re-imagine our enterprises and institutions, public and private." What does re-imagine mean to you?

Peters: I both love and hate that quote. I think it's quite pompous and I'm almost embarrassed by it. But it hit me as pretty accurate, and I think the term re-imagine speaks for itself. The theme of the book is that everything from the education of our youth to the way we fight wars against elusive enemies requires the reinvention of every type of organization.

What is going on in our world is a qualitative shift in what organizing means. It's all so strange and different that I don't even know what a superlative for it would be. And I think that shift will accelerate as technological change accelerates, which in my opinion it will.

You can call me a slave to Silicon Valley thinking, but this information technology revolution is as real as it gets, and it's going to dramatically change everything we know.

In his book, Smart Mobs, Howard Rheingold talks about how wireless technology will lead to the next social revolution. The phenomenon applies to education, the military, politics and business enterprise.

Business 2.0 had a great story about Dawn Meyerreicks, who is the chief technology officer of the Defense Information Systems Agency. After 9/11, her office quickly leased all the available transponders over Central Asia. That move led to the "Napsterization" of the battlefield by cutting out the military middlemen and allowing the real players on the ground to communicate directly and instantly with one another.

MCNews: Let's talk about how such qualitative shifts are affecting the consulting industry. For large firms, client satisfaction is down and client "loyalty" is way off. But the smaller firms are on a tear.

Peters: With rare exceptions like Wal-Mart, bigness brings with it a host of problems. For the large consultancies, part of it is bubble problems. I once saw data in Forbes about the number of people that Deloitte Consulting, Ernst & Young, PwC and Accenture added in a five-year period, and it was just insane. Just to hold the firms together is a challenge.

To try to manage virtual armies of consultants and weather the brutal assault on the integrity of everybody on both the consulting and the accounting sides since Enron, that's a double body blow. It's therefore not surprising that the most interesting stuff would be coming out of relatively small firms.

MCNews: You talk about how technology will cause the outsourcing, or even extinction, of much of the traditional white-collar work force. Is there a way to staunch the flow?

Peters: There is a mixed message in the book. One message says we are doomed, and then there is the chapter about everybody heading to the value added services.

To survive as a member of any department or organization, you have to turn yourself into a micro version of that organization. You have to become somebody who does value added work, sends out invoices and gets paid. Those who want to avoid being micro-processed or out-sourced have to learn how to do work that is worth paying for.

MCNews: How does this trend impact those in professional services, like consultants?

Peters: When it comes to re-imaging or reinventing, many consultants might say ho hum, because we in consulting have always been doing this stuff to a significant degree.

Now, you are welcome to accuse me of intellectual shoddiness, but I am arguing, without spinning the implications out far enough, that we are going to become a nation of consultants. Perhaps we already have. If IBM is now IBM Global Services and UPS is UPS Logistics instead of a bunch of guys with trucks, all of the value added is going to come from this consulting-like intellectual capital. I hate the term--it's been used so much you want to puke--but it is accurate.

And for the consultants, maybe we are going to find ourselves competing with former departments. The proof of the pudding is IBM buying PwC Consulting. IBM turns itself into a consultancy and what does it do? It buys the consultants. Why wouldn't UPS do the same thing? UPS wants to mange the entire supply chain for its customers and probably has enough money to sink a ship. Why not buy the consulting practice of Deloitte or Accenture? So I think we are all homing in on the same pie.

Peters: Potentially. I have said that it's as stupid to use the word consulting as it is to use the word retailing. There are one person's consultancies--maybe a fabulous guy who does inventory management for grocers and is worth a jillion dollars a day to do the inventory thing for a twenty-million dollar company. And then, at the other end of the spectrum, you have the monster firms. So a consultant is not a consultant any more than a retailer is a retailer.

MCNews: You make an important point in the book: people think losing manufacturing jobs to China is a problem but the jobs we are losing in the service sector are a much bigger issue.

Peters: Absolutely. I was talking to a senior guy at GE Capital today about how GE is out-sourcing everything to India. They are out-sourcing thousands of jobs to India, and GE Capital is a consulting company!

And the difference is that it doesn't cost a thing for a service company to move other than making sure there are good satellites overhead. You don't need to move any capital equipment, and the roads and sewers don't have to work. You just need a low hanging network of satellites with perfect communication.

I gave a speech in Manila and I was utterly fascinated by how Manila is now advertising itself as an alternative to India. In the Philippines, of course, English is spoken as a first language. They are positioning themselves as the third largest English speaking nation after India and the United States. They want to become the hub for call centers for the English speaking world. It's a national strategy and it makes all kinds of sense.

Peters: These strange times demand a lot of reinventing or re-imaging, and we are in desperate need of ideas. The fact that 98% of those ideas turn out to be bull is totally irrelevant. If I read a book that cost me $20 and I get one good idea, I have gotten one of the great bargains of all time.

Also, I don't believe in holy writ. Buy fifty books or twenty-five books, take three weeks off, read them and make up your own theory. The fact that you end up literally burning twenty-two out of twenty-five books is beside the point.

One book which you may come across is by Sydney Finkelstein called Why Smart Executives Fail. I was listening to an interview with the author on New Hampshire Public Radio, which made me hysterical with laughter.

Finkelstein's book is about learning from failures. What goes around comes around. The reason Waterman and I wrote In Search for Excellence in 1982 was that all the writing at the time was about things that had failed. We thought it would be nice to have a counter-balance about a few things that worked, and suddenly we were in the mainstream. And now we're saying enough of that, let's learn from the failures.

Peters: Absolutely. That's what makes it all fun, except for those poor souls who take themselves too seriously.

Peters: In my experience, and I bet it's true for all of us in professional services, there are two types: those who know the answers before they start, and typically what they come up with is useless, and those who have the audacity to charge the client a ton of money and then muck around tenaciously until they find the answers.

MCNews: Thanks for your time today.

The World's Top 50 Management Thinkers

Which of today's thought-leaders do you think have had the most influence on management theory and practice? Compare your opinions to Thinkers 50, the original global ranking of the top fifty business thinkers.

To answer the question, "Who is the most important living management thinker?" the panel of experts at Thinkers 50 considers criteria such as the originality, practicality and impact of ideas, rigor of research, loyalty of followers and presentation style. The Thinkers 50 web site includes bios for each of the fifty gurus who made the cut.

The Top Five:

1 Peter Drucker
2 Michael Porter
3 Tom Peters
4 Gary Hamel
5 Charles Handy

You can find the rest at http://www.thinkers50.co.uk/.

* * * *

Social Network Applications: An End to the Cold Call?

Ever wish you could get access to the inside information or person you need, just when you need it? Help may be on the way. Dubbed the Technology of the Year for 2003 by Business 2.0, Social Network Applications are computer programs that analyze networks of people and their contacts to do everything from matching people with others in their own organizations to helping salespeople generate leads.

Companies that offer these programs like Spoke, Ryze, Visible Path and ZeroDegrees have put social network theory to work helping people get business introductions that might otherwise not happen. Spoke's executives, for example, claim that the software provides "access, insight and influence to key decision makers" that will mean the "death of the cold call." They also say that customers in their pilot program are seeing a 20% increase in leads salespeople can pursue.

Not be outdone, Visible Path's executives say their product "delivers unprecedented reach into companies" that provides a "vital competitive sales advantage." They further assert that the tool shortens the sales cycle by 27% and "fattens" deals by 10%.

Social network applications aim to harness the power of the internet to extend your personal and professional network faster and further. To be truly effective, though, these companies must attract legions of users to fill out their social networks. In the meantime, some consultants have had success with these tools, so you may want to take a peek at some of the social networking sites.

If you want to learn about the theory behind social network applications, have a look at the work of Stanley Milgram and at Six Degrees: The Science of a Connected Age by Duncan Watts.

http://www.ryze.com/
http://www.spoke.com/
http://www.visiblepath.com/
http://www.hoovers.com/zerodegrees/--ID__118118--/free-co-factsheet.xhtml
https://www.linkedin.com/

* * * *

Despite reform efforts brought about by corporate governance concerns and the Enron scandal, corporate executives remain deeply dissatisfied with the work product their accounting, legal, IT and other consultants are providing. As a result, according to a new survey, one in nine professional services or consulting relationships could be terminated in the next twelve months.

In 2003, the Albany-based business analysis firm, Ross McManus, surveyed more than 1,200 senior executives representing over 20% of Fortune 1000 firms. The survey indicated that consultants and other professional service providers rate only a "C+" grade from their clients for overall satisfaction. According to the survey, many long-standing consulting relationships could soon be put up for review.

The number one reason for client dissatisfaction: the consultant's lack of understanding of the client's business.

Steve Banis, a principal with Ross McManus, will join us next month to reveal how consultants can overcome these client satisfaction issues.

As winter closes in on the Northern hemisphere, some of you may be dreaming of getting away. If so, check out the 2003 eighth annual World's Best Awards, which Travel and Leisure magazine based on nearly 200,000 responses from its readers. You may want to go for the best, or you want to avoid the crowds and go elsewhere!

1 Bali (Indonesia)
2 Great Barrier Reef Islands (Australia)
3 Santorini (Greece)
4 Sicily (Italy)
5 Kauai (USA)
6 Maui (USA)
7 Hawaii (USA)
8 Tasmania (Australia)
9 Prince Edward Island (Canada)
10 Galápagos Islands (Ecuador)

1 Sydney (Australia)
2 Florence (Italy)
3 Bangkok (Thailand)
4 Rome (Italy)
5 Cape Town (South Africa)
6 New York (USA)
7 San Francisco (USA)
8 Venice (Italy)
9 Istanbul (Turkey)
10 Santa Fe (USA)

According to researchers at the META Group, the global outsourcing trend keeps gathering steam, with over 40% of new system development being handled either by offshore outsourcing firms or external contractors. Business process outsourcing is also on the rise as companies farm out activities like customer service call centers to outsourcing firms in India, Russia, China and the Philippines.

Last month, however, Dell Computer, the Texas-based computer giant, yanked back some of its customer service activities from India after a slew of complaints from corporate customers. No matter how low the cost for outsourcing, look for most companies to have little patience for poorly performing call centers.

Consultants who can conduct independent assessments of how well a client's outsourcing firm is performing will likely find a receptive audience. There's also a potential opportunity for consultants who understand the ins and out of customer service to help clients avoid the bumps that Dell Computer encountered.

Publishing experts predict that e-books will eventually outnumber printed books. For all anyone knows about the booming e-book industry, that may have happened already.

My computer's hard drive is home to many terrific e-books. I downloaded some for free and forked over my hard earned money for others. I've gotten great value from both types, and will continue to build my collection.

But, there's something I just don't get: how come some e-books are so expensive?

For example, I just read an ad that boldly announced a forty-three page e-book that would revolutionize my marketing, and who couldn't use that? But, I had to buy it right now to qualify for the special price of $49.95, or I'd have to pay the regular price of $179.95.

A potential buyer couldn't see any of the book's contents, except for a cryptic table of contents; even the central idea of the e-book was a complete mystery. I scratched my head wondering why on earth anyone would buy this book, sight unseen, for either price.

By contrast, stroll through any traditional bookstore, and you'll find thousands of professionally edited, hardcover books written by leading authors for under $30. You can pick up any book and read as much of it as you'd like before you decide to buy it--or not.

Clearly, e-book content can be fresher than that of a traditional book. But e-book publishers have many cost advantages--no need for expensive distribution, minimal publishing cost and minor promotional costs. So, shouldn't e-books be less expensive? I must be missing something about how the value of these publications is derived.

Maybe you can enlighten me. Are you willing to pay more for e-books, and if so, how come? Send me an email with your thoughts.

On December 7, 1968, a man named Richard Dodd returned an overdue library book to the University of Cincinnati. His great-grandfather had checked out the volume in 1823. The library didn't make him pay the fines, which totaled $22,646.

On December 12, 1899, Dr. George F. Grant received a patent for the golf tee. Tired of the inconvenience of teeing up a ball by pinching damp sand into a launching pad, Grant invented the tee to improve his game. But Dr. Grant never marketed his invention. He gave some of the tees to friends and playing partners, but the majority of them were squirreled away at his residence. http://www.ourgolf.com/history/georgegrant.html

December 17, 1919, was the date Albert Porta, an internationally respected seismologist and meteorologist, predicted would be the end of the world. He said the alignment of planets would cause a magnetic current that would pierce the sun and engulf the earth in flames. As the date approached, suicides and hysteria were reported throughout the world. As you can imagine, Porta's career took a serious nosedive on December 18.

Michael Treacy, former professor at MIT's Sloan School of Management and co-author of the bestseller The Discipline of Market Leaders, contends that growth is a choice that lies entirely within a company's power--despite many business leaders' excuses to the contrary.

In his new book, Double-Digit Growth, Treacy declares that blaming the economy, competitors or unforeseen circumstances for stagnant growth or decline is "a little like listening to an addict in denial." Next month, Treacy expands on these concepts and has some pointed advice for consultants trying to grow their practices, so don't miss it.

We'll also feature a conversation with Steve Banis, Principal with Ross McManus and author of a recent study on clients' satisfaction--or lack thereof--with consultants. We'll ask Banis how consultants have managed to get themselves into so much hot water with their clients.

"Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning." - Winston Churchill

MCNews is published on the first Tuesday of each month. If you received this issue from someone else and wish to subscribe, please visit www.ManagementConsultingNews.com.

We welcome your comments on the Newsletter, the site or about what you'd like to see on either one in the future. So, please don't be shy. Send your comments along to us.

You may forward this Newsletter in its entirety to anyone you wish. If you wish to use any individual part(s) of the Newsletter or the web site, you need to request permission in advance from the editor. It's really unlikely that we'll turn down your request. For details, please see our Terms of Use.