antonacopoulou - challenges and opportunities - 2006

8/6/2019 Antonacopoulou - Challenges and Opportunities - 2006

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CHALLENGES AND OPPORTUNITIES

IN MANAGEMENT CONSULTING

Setting an Agenda for Future Competitiveness

REPORT 1

Research Project part of

Supported financially by


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2006, All Rights Reserved.

1

CHALLENGES AND OPPORTUNITIES

IN MANAGEMENT CONSULTING

Setting an Agenda for Future Competitiveness

Prepared by:

Professor Elena Antonacopoulou, GNOSIS Director, AIM Senior Fellow

Dr Daniel Muzio, GNOSIS Associate, AIM Scholar

Dr Daniel Geiger, GNOSIS Researcher, AIM Fellow

Mr Swetketu Patnaik, GNOSIS Researcher, AIM Research Assistant

Mr Mo Roohanifar, GNOSISResearcher


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Contents

Contributors 3

Introduction 4

Executive Summary of main themes 5

Themes

Professionalism 6

Procurement 7

Risk 8

Innovation 9

Business Model 10

Human Resources Issues 11

Summary 12

Acknowledgements 14

Contact 14


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Contributors

We acknowledge the contribution of the participants at the first GNOSIS workshop

Challenges and Opportunities in Management Consulting: Setting an Agenda for Future

Competitiveness. Their ideas have formed the core of the issues detailed in this Report.

Prof. Elena Antonacopoulou, AIM and University of Liverpool

Mr Vincent Bryant, Pi Consulting

Ms Fiona Czerniawska, Management Consultancy Association

Ms Nicola Davis, N2 Consulting and Deputy Chair of IMC

Dr Sarah Dixon, Kingston Business School

Mr Chris Gamblin, Rethinking Consultancy

Ms Heidi Gardner, LBS

Dr Daniel Geiger, AIM and University of Liverpool

Dr Karen Handley, Oxford Brookes University

Prof. Ian Kirkpatrick, University of Leeds

Mr Brian Langham, Hay Consultants Ltd

Dr Chris McKenna, Said Business School

Mr Sean McMorrow, BT

Prof Tim Morris, Said Business School

Dr Daniel Muzio, AIM and University of Lancaster

Mr Swetketu Patnaik, AIM and University of Liverpool

Ms Lynda Purser, IMCMr Mo Roohanifar, GNOSIS and University of Liverpool

Mr Laurence Smith, EDS Consulting

Mr Robert Stephens, OGC

Ms Janice Southway, Red To Green Consulting

Dr Georges Tsogas, Cass Business School

Ms Sharon Vannet, University of Dundee

Dr Sudhir Varadarajan, Tata Consultancy

Prof. Robin Wensley, University of Warwick

Mr Chris Wyatt, ESRC


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Executive Summary of Themes

The main issues for action that were generated in the discussion during the first GNOSIS

workshop were the following:

Professionalism

o Standardisationo Benefits to clients

o Brand/identity

o Accountability

Procuremento Dealing with specifics in each project

o Cost of resourcing process

Risko Professionalisation

o Brand and organisational processes

o Role of consultants as releasing risk in clients

Innovationo In consulting dependent on client relations process outcome

o Risk to innovate

o Larger firms in a better position

o Consultants are seen as a source of innovation for client

o Capacity to absorb novelty/innovation by client

o Tension with need for standardisation

o Where does innovation come from (sources)?

Within project

R&D centres

o The Next big thing in Consulting

Competitorso DIYs Internal Consultants

Business models

o Film firms

o Associate model small firms oriented :- consultant specific

o Multi-sourcing projects :- client specific

o Strategies for growth Staffing

Clients

Strategic Learningo To Collaborate

With clients

Other consultants

Other consulting firms

o Educating Clients on how to use consultants

o HR issues

Career development of young consultants

Qualifications and legitimacy

Loyalty to company/founder

Selection (hiring) of right kind


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Gender women consultants

o Knowledge

IP issues

Who should own it?

Knowledge sharing

Quality

o Value-added as perceived by clients

o What purposes are consultants used for?

o Relationships between clients and consultants

Transactional

Partnerships

o Relationships between consultants and sub-consultants

o Relationships with academics

o Image of consultants/value-added

o What consultants sell content

skills

knowledge?

These issues are grouped in six main headings and form the basis of this report and of the

subsequent workshops scheduled for 2007.


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Professionalism

Professionalisation was a heavily discussed issue. Throughout the discussion, the need for a

higher degree of professionalisation was acknowledged, either through governmental

regulations or through self regulation. The issue of professionalisation was discussed along

two lines: One was whether professionalisation would make consulting firms more liable for

the consequences of their advice. The other line of enquiry was centred on the issue of

quality. In this context, professionalisation is seen as providing and guaranteeing a general

quality framework which the consultancy market could usefully operate under. This was

thought to be particularly beneficial to both producers and consumers of consultancy services.

Consultants could use standard professional credentials to validate their expertise and

differentiate themselves from competition in what remains an open, contested and uncertain

marketplace. Professional standards would also act as a powerful protective mechanism,

guaranteeing minimum industry-wide competence and ethical standards helping clients to

evaluate quality and to navigate the uncertainties connected with purchasing expert advice.

Thus, in this context it is clear that professionalism helps to address a wide ranging number of

important issues, including procurement, risk management and quality control.

Despite these arguments, it was recognised that professionalisation generated very different

levels of support across the management consultancy industry. In particular, this idea was

much more popular with the smaller consultancy firms, who clearly saw the benefits

connected with the external accreditation and validation of their skills. Larger practices tended

to guarantee quality through the reputation of their own brand and to validate competences

through their own internal standards and accreditation processes. There was a consensus that

large firms do not have a big interest in professionalisation, since they hold their internal

standards as sufficient to ensure the quality of their services. The clients would therefore


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benefit from professionalisation since it could be seen as making the dispersed and

unconsolidated consulting market more coherent. Indeed, there is an interesting and lively

debate on whether professionalism, regulation and quality control could be better served at the

occupational level, through a dedicated professional institute (such as the IMC) or at the

organisational level, within the boundaries of the individual consultancy practices. Equally

challenging would be the way these two distinct but related levels of activity could be

connected.

One of the related issues discussed around professionalisation was the importance of brand

name and identity with particular reference to small firms. Small firms were seen as lacking

an established brand equity as compared to the bigger practices. Thus, the smaller firms tend

to develop their brand name around the founding team (or the founder himself) and exploit

existing contacts in order to generate new revenues. Relationship building becomes essential

when a brand name is not powerful enough. Therefore, building relationships with individuals

within client firms is of key importance for smaller practices. Whereas, because of their

existing brand equity, the bigger consulting firms find it relatively easier to get access to

potential clients and new accounts.

Procurement

The logic of professionalisation is strongly related to procurement. How can clients make sure

that they purchase the right skills sets, negotiate appropriate contractual terms and manage the

consultancy project effectively? This is the main challenge procurement presents.

Professionalism, with its quality and competence guarantees, secured through formal

credentials and official certification processes, may prove a useful mechanism in guiding and


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supporting client decisions. Yet, the reliance on professional standards and credentials should

not disengage clients from the procurement process and from the co-production of

consultancy knowledge. In this context procurement was discussed as being an entry barrier

for small consultancy firms, especially in the public sector where e-procurement seems to be a

widely used strategy. Here, the costs for drafting proposals were considered as being

substantial, so that small firms are implicitly discouraged from bidding.

Successful consultancy projects are often individually tailored to a specific set of client

requirements and emerge from the delicate negotiation and continuous interaction between

practitioners and purchasers. Standardisation may indeed guarantee a minimum common

denominator, which could help the marketplace to operate more expediently; however, this

route could also threaten to displace deeper forms of engagement, devaluing the consultancy

experience for both producers and consumers whilst divorcing the end-user from the

consultancy process and its outcomes. These deeper forms of engagement, which could go

beyond the resources and expertise of many procurers, are thought to be particularly difficult

to achieve and maintain but can be encouraged through training programmes designed to help

clients to buy consulting services and manage consultants.

Risk

All consultancy projects involve putting clients at risk for a certain period of time. Thus, risk

is an inherent element of consultancy as an activity. However, certain steps can be taken to

minimise this. Professional standards as well as industry-wide best practices and

organisational processes within individual firms (such as training, quality control and

accreditation) can help to reduce risk. In particular, brand reputation is often perceived by

clients as a good indicator of quality and consequently relied on as a risk-management


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strategy. Again training as well as more systematic engagement through the procurement

process may play an important role in equipping clients to assess, negotiate and manage risk

for themselves.

Another aspect of risk was discussed around the issue of the consultants role in seeking to

deliver value along the lines of help managing risks (or risk management), and or help

release clients potential. The smaller consulting firms generally pick up clients that either

bigger consulting firms will not consider or those clients who have hired bigger consulting

firms in the past but are exploring the possibility of approaching specialists. Sometimes the

larger consulting firms help to facilitate the latter. It was discussed that sometimes bigger

consulting firms tend to evaluate the potential of a client on the basis of their ability to pay

and not simply because of the project. As a result this approach means that the bigger

consulting firms will tend to look to sectors which are booming in order to match their annual

revenue targets.

Innovation

Clients have ambivalent attitudes towards innovation (and therefore its associated risks). In

particular, whilst they sought and welcomed innovative outcomes and solutions, clients

tended to be much more conservative with regards to innovative processes. It seems that

clients fear the risks associated with untested approaches and methods and, throughout the

bidding process and the initial stages of a consultancy project, clients tend to favour the safety

associated with established models. The establishment of trust, often achieved in the later

stages of a client/consultant relationship, is seen as essential in nurturing and supporting

innovation. Thus, trust plays an important role in removing risk, uncertainty and minimising

transaction costs within consultancy projects.


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Against widely-held assumptions, it is suggested that bigger consulting practices may be more

inclined to take risks and pursue innovation in management consultancy. These firms

(especially when they also operate in markets other than consultancy) can leverage the

resources and expertise of the larger group and use these to shelter and support the

development of more innovative (and often more risky) solutions. This makes for an

interesting contrast with the popular tendency in the literature to associate innovation with

smaller firms, who are thought of as being more dynamic and responsive.

Innovation also raises a series of proprietary issues. Who should own, control new

knowledge, techniques and technologies, which may emerge from a consultancy assignment?

How can we negotiate between competing ownership claims? Is such knowledge generic or

client (or even project) specific? What rules should govern the transferability of this

knowledge? Would the client benefit from licensing agreements, which allow the consultants

to re-deploy such knowledge in exchange for royalties?

Business Model

Our discussion indicated how, especially, in the smaller management consulting practices

there is a shift towards an associate model of consultancy, whereby practices contract-in

teams of freelance or external consultants to meet the ad-hoc requirements of specific time-

bound projects. This core/periphery business model is particularly attractive to the smaller

firm who can use it as a convenient method to acquire the necessary breadth and depth of

expertise required by many contemporary assignments, without internalising these in their

cost-structure.


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HR issues

The changing business model in management consulting, coupled with the range of external

forces in the business environment are creating a range of Human Resources issues. Among

the most significant issues discussed was the need for clearer career paths for young

consultants. This greater focus on supporting the development of young consultants was seen

as both a source of attracting the right calibre of staff as well as, retaining talent. In relation to

this issue greater attention to the qualifications that management consultants may need to

obtain in the future as part of more clearly defining their professional identity is seen to be

important.

Moreover, qualifications were considered to be a means of enhancing the legitimacy of

management consultants for the role and contribution they make to addressing client issues. It

was not clear what these qualifications might be, however, parallels were drawn with other

professional groups (e.g. Lawyers, HR specialists) and their corresponding professional

association bodies as a means of supporting their ongoing development.

Furthermore, it was noted that more women are now entering the management consulting

field and the demographics and gender dimensions of the workforce are changing. This point

calls for greater consideration of these issues particularly in building a clearer proposition

about the personal development opportunities the management consulting profession

provides to those seeking a career in management consulting.

Finally, considering the more fluid relationships that govern the growing business models in

the sector the issue of loyalty to the firm and/or the founder was also considered critical. The

HR issues reflect several key challenges in the management consulting sector particularly in


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the way consultants get socialised into their role. This observation also reflects a key

opportunity to review hitherto neglected HR practices, such as Staff Induction and

socialisation as a source of attracting and retaining the right staff.

Summary

All these issues taken together reflect both challenges and opportunities that deserve more

analysis before an agenda for action can be drawn. The issues listed in this report that call for

action whether they are currently seen as challenges they also reveal a number of

opportunities that lie ahead. The course for action that will determine the future

competitiveness of the sector unquestionably will be shaped by the various stakeholder groups

and the way the interrelated.

To better understand how a course of action can be defined and to adequately prepare for the

intended and unintended consequences there is clearly a need to examine further how

management consulting can continue to add value through the services and products it

provides. Two further workshops will be designed to allow for the systematic analysis of

these issues following the GNOSIS approach of integrating the perspectives and knowledge

of Business Practitioners, Policy-makers and Academics.

It is proposed that the second workshop in the series be focused on the themes ofRegulation,

Professionalisation and Procurement. The second workshop will explore the opportunities

and challenges presented to Management Consulting by each of these issues and the

implications for Quality and the value adding role of management consulting, as well as, the

management of risk.


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The third workshop will focus on the themes of Innovation, Strategic Learning and

Competitiveness and the opportunities and challenges these present to management consulting

considering in particular their implications for knowledge sharing, modes of working and

organising.

Collectively the issues that will emerge for the workshops and will continue to be recorded in

subsequent reports will form the Agenda for Action for the Future Competitiveness of

Management Consulting in the Knowledge Economy, which will be produced after the

International Conference in September 2007.


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Acknowledgements

This document is based on data gathered at the event Opportunities and Challenges in

Management Consulting: Setting an Agenda for Future Competitivenessheld at the

London Business School on 24th

November 2006. We are grateful to everyone who

participated in the event and provided support in making this event happen, particularly our

guest speakers Robin Wensley, Fiona Czerniawska and Chris McKenna. The authors would

like to acknowledge the support of the ESRC/EPSRC Advanced Institute of Management

Research under grant number RES-331-25-0024 for this research.

Contact

If you would like to know more about the themes raised in this document, or have any

questions about GNOSIS research and subsequent workshops, please contact:

Professor Elena Antonacopoulou

AIM Senior Fellow

Director GNOSIS

University of Liverpool Management School

Chatham Building

Chatham Street

LIVERPOOL

L69 7ZH

Tel.: +44 (151) 795 37 27

Fax: +44 (151) 795 37 24

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