Management Consulting Week 2016 is coming up in the fall (Oct 17-21) – and the central theme of our fall event is Consulting 4.0. With the novel and disruptive changes that are taking place throughout the world, our presenters will provide you with the insights and practical takeaways you need to excel in this challenging environment.
One of the benefits of longevity in a profession is getting an insider’s view of its evolution. Having spent most of my career in and/or around consulting and consultants, I have given some thought to how management consulting has progressed over a relatively short history. So let’s start at the beginning – and see how we’ve gotten all the way to Consulting 4.0.
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Consulting 0.0 - Origins
The origins of the management consulting profession are often traced to practitioners focused on very practical issues of productivity on the shop floor --time-motion studies, assembly line design, and the introduction of the experience curve. Much of this work was inspired by the disciplines of engineering and sociology. As the nascent profession evolved, practitioners migrated to the boardroom and to the office.
Rapid expansion of the post-war American economy in the 1950’s and 1960’s gave rise to two distinct branches of management consulting, differentiated here simplistically by their organizational orientation:
- Strategy - Firms such as McKinsey, AT Kearney, and Bain focused on anticipating and designing broader directions to assure growth -- by pioneering strategy, planning and programming methods drawing upon economics and psychology, and disseminating their practices through leading business schools and their publications. This model helped create a unique class of consultants serving Boards and senior leadership.
- Operations - Concurrently, accounting firms began to shape and develop their management consulting practices by offering methods to reduce the costs and increase the productivity of the operations of large (and growing) organizations. Management reviews, productivity studies, and organization structuring methodologies offered disciplined approaches to increase the productivity of labour intensive processes. This simple model established a broader base of well-trained consultants who used relatively complex methodologies and tightly prescribed processes. The rise of this model grew the profession and its disciplines significantly.
Various shocks to the economy, and the prevalent social order of the day, have shaped the methods and approaches to management consulting since those early days. The constant is that consultants share methods, processes, and knowhow within a disciplined project framework. They apply these tools using trust-based relationships with senior leaders.
Consulting 1.0 - Seeking Stability and Control
The impetus for change to this relatively stable business order can be traced to the oil shock of the early 1970s, when prevailing assumptions about the economy, world order, and the foundations of business were put into question. As cost structures escalated under rising oil prices, management consulting responded with more robust strategic planning processes (forecasting, scenario planning) and business process re-engineering, and organization design. It is fair to assume that much of this work was undertaken with the assumption that a shift had taken place and a re-defined equilibrium was required.
Throughout the 1980s and 1990s, changes in the rules and political structures governing trade, complemented by improvements in telecommunications made globalization more feasible. This added new strains to domestic firms, and made possible the growth of multinational firms with greater internal cohesion.
Management consulting responded with:
- micro and macro competitive strategy methods;
- elaborate information technology based enterprise resource planning (ERP) systems (for product planning, cost and development, manufacturing or service delivery, marketing and sales, inventory management, shipping, and payment); and
- integrated financial and human resource management systems augmented by change management methods to assure longer term acceptance of these expensive systems throughout the workplace.
The intent was to assuage the fears of those with a stake in the profits of firms by instilling a greater degree of certainty and control in a world that was becoming increasingly uncertain and harder to control.
This era came to a close in the aftermath of the Y2K (Year 2000) ‘crisis,’ which fell short of the predicted chaos stemming from fears that automated systems of the day would crash due to a programming oversight. While this fear provided impetus for lucrative large system installations, it also generated a growing level of cynicism about the objectivity of management consultants who did not realistically frame or better explain the risks when the foreseen cataclysm failed to materialize.
I continue my ‘unofficial’ exploration of our evolution as a profession in this 2nd post.