Here’s Robin Hanson on consulting (I blogged a bit of it here).
The upshot is that strategy consultants exist to help break up resistance to changes in strategy. Here’s an amusing caricature:
Fellow consultants and associates … [said] fifty percent of the job is nodding your head at whatever’s being said, thirty percent of it is just sort of looking good, and the other twenty percent is raising an objection but then if you meet resistance, then dropping it.
It’s easy for people to read things like this and think “oh, well if THAT’s all they’re doing, it’s clearly valueless work”
We are clearly programmed to politic in the shadows. The idea that a boss would be willing to direct large swaths of company resources to a consulting firm to bolster his political case for a certain course of action is ridiculous.
Yet I’m increasingly convinced that that’s what is going on. It happens in my business, too.
In fact, I think that the presence of consultants might actually be an incredibly macro-beneficial thing. Think about this quote from Daniel Kahneman’s latest book, which I’m still working through:
Because adherence to standard operating procedures is difficult to second-guess, decision makers who expect to have their decisions scrutinized with hindsight are driven to bureaucratic solutions -and to an extreme reluctance to take risks. As malpractice litigation became more common, physicians changed their procedures in multiple ways: ordered more tests, referred more cases to specialists, applied conventional treatments even when they were unlikely to help. These actions protected the physicians more than they benefited the patients, creating the potential for conflicts of interest. Increased accountability is a mixed blessing. (page 204 in hardcover version)
Now remember that real strategy is incredibly hard and so dependent on execution to make strategic planning nearly irrelevant. Giving executives excuses to take risks should improve overall performance.
The irony for the poor consultants is that they need to walk a very careful line. Being able to grant legitimacy to a view is an incredibly valuable ‘product’ but one that requires a reputation for not being a mercenary.
People need to believe the consultant is above such crass political maneuvering. The sponsoring executive him/herself probably self-deludes, thinking that his/her ideas are winning simply on the power of their own merits.
Such confidence is another hallmark of risk-taking. Which is good for the economy.
Not Unreasonable 