Jim's Blog

Why Management Consultants Ought to Scare You

April 2017

Most executives admit that it takes too long and costs too much to solve complex business issues. In many cases, they try to accelerate the process by hiring management consultants who offer various business improvement recommendations.

The fact is organizational improvement programs have a rotten success rate; in general, about 30% and oftentimes lower. Examples include:

Training 15%
Culture Change 19%
TQM/Process Design/Six Sigma 30%
M&A 33%
New Strategy 58% (an outlier!)

And there are many similar data points where these came from.
 

These results stem from three main factors: (1) issue misdiagnosis, (2) solution selection bias, and (3) poor follow through.

According to many executives, a common reason for hiring management consultants is, “because they recommend what I want to do?” (See 1 and 2 above)

What’s more, it’s difficult to learn from past initiatives. While considerable resources are committed to improvement programs ($200K to $900K annually in the Fortune 200) there are virtually no usable data from thousands of pilots, projects, and programs.

4 Steps for Increasing Management Consulting Results

To get the speed, accuracy, and results they’re aiming for, consumers of management consulting should use these strategies:

  1. Take a whole system view. Stimuli applied to one part of the organizational system will have an impact somewhere else. Those consequences can either be intended (planned) or unintended (typically, unfortunate surprises).
  2. Develop a complete solution set. Leaders often get fixated on one “thing” and disregard the need for other solution elements, delivery methods, and strategies.
  3. Use a supporting technology with enterprise-wide reach to analyze the issues, guide solution selection, and track the implementation. Find ONE system, not pieces and parts that you have to integrate.
  4. Create an Organizational Health Record. This will capture program information in a reusable form and help people at every organizational level – now and in the future.

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