Consultants, whether in business or some other field of endeavor, serve a purpose if used correctly. Let us say that I have a business that produces wickets. And let us say that sales have started to decline. The key question is why have sales declined? I could look at the quarterly reports of my competitors to see if their sales are increasing over the same time period that my sales are decreasing. But I am looking for a reason why my sales are declining. So I may ask the wholesaler why sales are down. After all, he is in the business to sell to the retailers. Of course one might think my sales force might have noticed the decline in orders and have their own take on why sales are down. Many questions spring to mind. Are my competitors selling their wickets for less, thus taking some of my sales due to the price differential? Are my wickets perceived as now being less than the current quality in the marketplace? Have my wickets become technologically stale, not keeping up with the state of the art in wickets? Have people grown tired of consuming and using wickets in general, better known as reaching market saturation?
If I am a large corporation then I should have a great number of people on my staff who can answer all or at least most of those questions. But if I am a small company with very few staff positions, it may be harder to understand the questions and answers. My business may be strictly wholesale with no direct retail business. If I make parts for aircraft then my retail business may well be indirect with the bulk of my product going to manufacturing and possibly repair facilities. Hence my part sales are tied to a general demand for new aircraft and repairs on existing aircraft. For this I could use demand based planning or leading indicator planning to project my sales accurately. But if I manufacture novelty items then the process is far more hit or miss as I am trying to ride trends (the trend is your friend until it isn’t). So the reality is that my business will determine, to a large measure, how and why I measurements. But now everything can be measured successfully. If I am in marketing and clients are not asking for new campaigns I may be at a loss to understand why. Your customers won’t always tell you the truth.
It is these type of businesses that often are in need of an outside opinion or consultant. Is your staff of marketing people too old for the young markets, that is, have they lost the ability to see the rising trends in the younger crowds of retail buyers? Like the British Telecom EVP who thought the next killer app for cell phones was finding restaurants and live stage entertainment for the middle and upper middle class users, he was too old to understand, let alone listen to those in their late teens and early twenties who wanted to download distinctive ringtones for their cell phones. He was out of date and out of touch. Ringtones are frivolous expenditures for those with low to less than moderate incomes. For a man of fifty or so, why would he think about ringtones? Why would he pay a few dollars to download ringtones just so he could stand out in his group of high paid executives? A good marketing consultant who was much younger could have told him what the trend was for the young. But then he would have to be able to see the potential for profit in that group. He would have needed to see the dynamics of that younger group of cell phone users. That young consultant would need to convince him that the market opportunity was there and worth entering.
So it may be that my staff is too old to recognize what the younger consumers want. I myself may not be able to see that I have grown too old to understand my business. And it is not enough for that young consultant to come in and advise me of what opportunities are available and where. I may need to hire much younger staff and get rid of the older staff. I may need to sell my business to a much younger group of men and women who can remake that business into a successful operation. Well, that is one way of looking at consultants.
Another way has to do with the operations. It may be something rather simply such as finding the bottlenecks in production and eliminating them. Or there could be supply problems where the defect rate is too high for certain supplies and suppliers. Perhaps the problem lies in distribution of the product or the quality of my product. There is need to have outsiders come in every once in a while, perhaps on a regular basis. I may not have the size and income to support all the experts I need and there may not be enough work to justify their efforts more than a few weeks out of the year. So I would then use their services once, twice, or even four times a year. It’s like having a CPA come in to do the books every quarter when you are too small to hire a full time accounting staff.
Where consulting draws a bad reputation is in those areas of miracle working. I chose that terminology for a specific reason. Miracles, excepting religious ones, and even there I am highly skeptical, do not exist. Back in the mid eighties the fashion became mission statements for the business. The crafting of mission statements became a billion dollar industry. Even public utilities needed mission statements so that its customers and future customer could understand what their business was. Ford Motor Company was associated with the slogan, “Quality is job one.” But mission statements were often several statements long. Well, then the art was to string several dependent and independent clauses together in a cleaver way so that the customer knew what he was buying. The residential customer wasn’t buying residential telephone service, he was buying an experience. Of course the mission statement for the business customer was more involved. Gone was the simple idea that your telephone service should be available twenty four hours a day, seven days a week, and 52 weeks each year. That is what you were paying for, the continuous availability of the service whether you used it or not. Now the phone company was induced by consultants to delight the customer with great service. If the phone company was doing its job then the customer was getting the service he paid for whether he was delighted or not. If the phone company really wanted to delight the customer then it should have lowered his bill. That would have delighted the customer.
But the executives of moderate to very large corporations are so easy to fool. A company can only sell so many units of whatever and cut costs only so low. After that, what else is there to do? Well, perhaps the executives aren’t making the best decisions. Enter the consultant who will teach them a better way to make decisions. So the principles of correct decision making are presented and no noticeable improvement occurs. But everyone feels that they are making better decisions. Or perhaps the leadership isn’t all that it is supposed to be, so enter the leadership consultants to teach great leadership. More principles of leadership later and we are all now great leaders. Unfortunately the troops fail to notice, best to lay off a few for their insubordination. Now the great buzzword is creativity, thinking out of the box, thinking fast and thinking slow, and following every book on the business self help market. Our corporations must be the greatest in the world by now, so why aren’t they making more profits? I expect in this next year as the credit bubble starts to burst we will see consultants being hired to tell our executives how to reduce debt and restore profitability and market share. Another miracle will occur and the economy will be saved. I remember in Rocky II when Mr T was asked for a prediction for the fight between him and Rocky. Do you know what he said? “I predict pain!”