ManagementConsultant_MasteringtheArtofConsultancy-PDFRoom1.pdf

RICHARD NEWTON

THE

MASTER.
THE ART
OF CONSULTANCY

FT Prentice Hall
FINANCIAL TIMES

THE
MANAGEMENT
CONSULTA T
MASTERING
THE ART
OF CONSULTANCY

Learn the answers to the critical questions you
need to ask to be a top management consultant
such as:

• How should you identify and define the services
you will offer?

• Why do clients buy consultancy and what are
they looking for?

• How can you bring maximum value to the client’s
organisation?

• How do you engage clients and win work?

• How can you deliver results that will be sustainable
for your client?

• How do you establish long-term relationships
that bring you repeat business with clients?

• When should you say ‘no’ to a consulting
engagement?

• How do you navigate your way through the potential
ethical dilemmas that face consultants?

Discover the ·client-centric approach to
successful consulting

ET Prentice Hall

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The Management
Consultant

Mastering the art of consultancy

Richard Newton

Financial Times
Prentice Hall
is an imprint of

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First published in Great Britain in 2010

© Richard Newton 2010

The right of Richard Newton to be identified as author
of this work has been asserted by him in accordance
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ISBN: 978-0-273-73087-3

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Library of Congress Cataloging-in-Publication Data
Newton, Richard, 1964-

The management consultant : mastering the art of consultancy / Richard
Newton.

p.cm.
Includes bibliographical references and index.
ISBN 978-0-273-73087-3 (pbk.)

1. Business consultants. I. Title.
HD69.C6N495 2010
001–dc22

2009050850

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Contents

Acknowledgements / vii

Preface / ix

Introduction / xi

lImB Understanding consultants and consultancy
Consultants and consultancy / 3

2 Why does anyone buy consultancy? / 23

3 Your consulting service / 41

4 The three core processes of client-centric consulting / 58

IImII Consulting engagements
5 Finding and winning work / 77

6 Delivering consulting engagements and satisfying clients / 108

7 The alternative approach – process consulting and facilitation / 132

8 Closing engagements and sustaining results / 147

High-performance consulting

9 Developing long-term client relationships / 169

10 The ethical dimension / 181

11 The language of consulting / 199

12 Knowing when to say no / 220

13 Key consulting tips / 234

14 The client’s perspective – buying consultancy / 251

Conclusion / 269

Contents
——————————————–~

.aliII Additional resources for consultants
A The tools, processes and materials of a consultancy business / 275

B References / 279

C Sample proposal letter / 281

Index / 285

Acknowledgements

I would like to thank five consulting colleagues who I started working
with years ago in Coopers & Lybrand. Although our careers have moved
on in different ways, we still work together from time to time. More
often we meet up, share stories and enjoy laughing about the occasion-
ally pretentious side of the profession. They are: Graham Jump, Peter
Meredith, Perry Childs, Richard Ellis and Andy Macey.

Dedication

This book is dedicated to my son Konrad for inspiring me to write the
book, when he admitted that he really did not have the faintest idea
what I did.

Preface

This book is a personal guide to the art of management consulting. It sets
out to help new and experienced consultants to do one thing: to become
better consultants. In simple terms, better means providing help that is of
the most long-term value to your clients. The approach is also simple: to
identify what it is that the best consultants do that their less effective col-
leagues do not – and how you can do it, too. Underlying this is my belief
in client-centric consulting.

The contents are derived from three sources. The first source is my expe-
rience as a consultant (working for Coopers & Lybrand, A.T Kearney,
Ernst & Young and my own company Enixus). Secondly, my experiences
in industry as a client – negotiating, buying and managing consultants.
Finally and most importantly, I have a network of trusted consulting col-
leagues whose ideas have flavoured the book. Like a magpie I have picked
up ideas and concepts throughout my career. I have shifted through
them, throwing away most, keeping hold of the ones I like and think are
precious. Many ideas in this book are my own, but of course I have learnt
from others. I can’t remember the sources of all of these, so I am sure
more credit is deserved than I have given.

There were several reasons for writing this book, but two of them stand
out. Firstly, there are comparatively few books on consulting, unlike
many other management disciplines. Look at the business book selection
in a good bookshop or online, and you will find many on strategy, lead-
ership, marketing, delivering change and project management, to name a
few areas. But consulting books are relatively scarce, scarcer than an
industry of its size justifies. There are a few good books on consulting,
but they do not approach the audience in the way I want to.

Preface –..’–

The second reason comes down to my frequent frustration when I work
with or engage other consultants. The simple truth is that the profession
often does not live up to its own hype. This is not to deny that there are
many brilliant consultants out there, and I have been lucky enough to
work with and learn from a few of them. But there are many consultants
who know they should be better to justify their fees. Worse, there are
some very mediocre consultants who mistake being paid a lot with being
good. As supposed experts in business, it is amazing how often consult-
ants provide inadequate value to their clients.

Management consulting is a large and very varied industry. The range of
skills and services that fall under this title are huge. The difference in the
type of work of the most expensive strategy houses compared to a project
management consultant is so great that they may not even recognise
each other as being in the same profession. There are some books that set
out to address components of this industry. They tend to describe various
tools and techniques of consulting. The best tools and techniques are
only applicable in some situations and even if you know them it does
not make you necessarily an effective consultant. I wanted to write a
book for all management consultants.

The book contains tools and techniques, but it is also intended to make
you think like a consultant: how do effective consultants think about their
work and their clients? Consulting experiences are varied, and each is
unique. By thinking like a consultant, irrespective of the situation you are
in, you will be able to deal with any situation in the most effective way.

Introduction

Ask someone in business to define the title ‘management consultant’,
and you will get a wide variety of responses, not all of them complimen-
tary! The title covers an extensive range of roles providing a variety of
services. There are no universally recognised standards for being a man-
agement consultant and as a result there are very varying levels of
quality. In addition, many people want to be management consultants
but do not know what it entails.

There are many consulting success stories, and numerous people have
become comfortably well off as consultants. Given this success, it might
be thought that the world was full of praise for management consultants.
Yet, if you ask many customers in the private and public sector about
their feelings and experiences of consultants, you will often be met with
sceptical and even highly negative comments. There are numerous causes
for these responses, but they can be summarised into three major cate-
gories. Firstly, too many consultants simply do not provide sufficient
value to their customers and rely on churning out the same old work
time and time again. Secondly, even good consultants with valuable
knowledge often fail to understand true client needs. Thirdly, it is unfor-
tunate to say, but there seems to be a number of very poor management
consultants. This problem is compounded by the already mentioned
lack of widely recognised standards for consultancy which can be used to
judge or benchmark consultants against.

A key reason for the negative perception of consulting is the fact that too
many consultants are focused on what they have to offer and how they
make money, rather than what clients need. Too many consultants pro-
vide context-free and generiC advice, whereas what clients need is advice
that is tailored to their specific culture and context. Overall, too many
consultants spend too much time trying to be clever, rather than asking
themselves what actually makes a good consultant?

__ …. I;,;.;ntroduction

This book will describe those factors that make good consultants and
how consultants can go about providing client-centric consulting. It
describes consulting from the viewpoint of the client, and so will help
consultants understand what will make them successful. The book will

, ‘ the book focuses
on the skills of success-
ful consultants , ,

help in deciding on how to provide the most
appropriate services and advice to clients. Rather
than considering the tools and processes of con-
sulting, as most other consulting books do, it
focuses on the skills of successful consultants –

what they do that makes them successful, success in this context being
defined as client results, not only in terms of financial returns for the
consultant. Finally, the book contains many tips from the author’s and
his colleagues’ years of experience in consulting.

There is a huge number of management consultants and business advi-
sors of one form or another. Management consultancies have been one of
the great business success stories of the past 40 years, with some now
employing tens of thousands of people in worldwide bUSinesses, deliver-
ing significant profits to shareholders and partners. At the other end of
the scale there are thousands of small consultancies and independent
consultants. As employment patterns change, more and more people are
choosing to work as consultants.

There are many attractions to a career in consulting. For some, consulting
may seem the only choice following redundancy from a senior pOSition.
There are many examples of initially despondent redundant managers
finding not only a better income, but more enjoyable work in consultancy.
For others, it is a lifetime career choice that starts from university, even
though few students have any real concept of what being a consultant
entails. Many people enter the consulting profession for a more flexible
lifestyle, although this is harder to achieve in practice than it might seem.
Whatever the reasons for considering it, consultancy is a great opportu-
nity. Companies appear to have an increasing and insatiable demand for
advisors and interim managers. Providing services can be very profitable
and give consultants a high standard of living. But consulting also has
risks. It’s an increasingly competitive environment as more people are
drawn to the profession. Select the wrong services or sales approach, and
consulting will be a stressful profession. There is also the constant uncer-
tainty about what happens when the current engagement is complete.

Many people assume that simply because they have some speCialist
expertise, they can be a good consultant . Certainly, expertise is an

essential foundation. This book assumes you have an area of specialist
knowledge and can competently apply the techniques and tools of your
specialisation. But specialist knowledge is not enough. It is not intended
as a tautology when I say that the core competency of a successful con-
sultant is the skill of being a consultant. It is not a profession for everyone
_ there is a specific art to being a consultant.

Although the consulting industry is successful, that success is in jeop-
ardy. Fee rates for many organisations, including some of the largest
firms, are lower in real terms than they were previously. Clients are
becoming more adept at controlling consultants and extracting the best
value from them . More and more people are entering the consulting
industry, meaning that to excel the standards are rising all the time.
Consultants need to raise their game.

This book sets out to provide you with guidance to what makes a great
consultant, irrespective of where you fit amongst the incredible variety of
management consultants. It avoids the constraints of focusing on specific
elements of consulting or approaches to consultancy, and instead takes a
client-centric view of what is needed to provide expert consulting.
Although this book contains approaches, the fundamental questions it
seeks to answer are what makes a great consultant and building on that,
how do you achieve this?

Contents and structure

There are 14 chapters and two short additional reference lists in the
book. The book is broken into three main parts. In the first part
(Chapters 1-4), I explore what it means to be a management consultant
and how to go about setting yourself up as one. In the second part
(Chapters 5-8), I discuss how to go about winning work and delivering
value to clients. In the third part (Chapters 9-14), I discuss a range of
broader issues which set the context for consulting and will give you
some additional tips and techniques to being a successful consultant.

The book has been designed to be read from cover to cover, but you can
dip into it as you require. If you want to reference parts individually, the
detailed contents of each chapter are described in the following table:

Introduction

Chapter title

Consultants and consultancy

2 Why does anyone buy
consultancy?

3 Your consulting service

4 The three core processes of
client-centric consulting

5 Finding and winning work

6

7

8

9

Delivering consulting
engagements and satisfying
clients

The alternative approach –
process consulting and facilitation

Closing engagements and
sustaining results

Developing long-term client
relationships

10 The ethical dimension

Chapter summary

Introduces the key terminology and concepts used
in the book and provides an overview of what being a
consultant means.

Explores how successful consulting starts by
understanding the reasons clients have for buying
consultancy. This is essential knowledge for anyone
wanting to provide client-centric consulting.

Looks at the range of services you can offer as a
consultant and how to position your skills and
experience as a saleable client service.

Discusses the core engagement process and then puts
it in context with the client’s change process, and the
client’s operational process. Understanding this
relationship is at the heart of client-centric consulting.

As a commercial business, consultants must find
opportunities and sell their services to clients. This
chapter discusses the processes and approach to
winning work.

Investigates the central work of a consultant-
delivering consulting engagements which add value
to the clients.

Describes an alternative approach to expert
consulting – process consulting – which can be
used to deliver entire consulting engagements or as a
tool on an engagement.

All consulting should result in some change in a client,
otherwise it delivers no value. Often the change takes
place and must continue after the consultant has
finished their work. This chapter considers how to
achieve change, and how to sustain it after a
consulting engagement is complete.

Describes the advantages of having long-term client
relationships and how to develop them.

Considers the ethics of consulting, and the potential
ethical dilemmas that regularly face consultants and
ways to deal with them .

Chapter title

11 The language of consulting

12 Knowing when to say no

13 Key consulting tips

14 The client’s perspective-
buying consultancy

Conclusion

A The tools and processes of a
consultancy business

B References

C Sample proposal letter

Introduction

Chapter summary

The central tool ofthe consultant is language. This
chapter describes some approaches to communications
and explores the topic of consulting jargon.

Not all consulting opportunities are worth pursuing.
This chapter describes the characteristics of
engagements which consultants should avoid if
possible.

A summary of useful key tips from experience.

A short review from a client’s perspective of issues to
consider when purchasing consultancy.

A brief summary of the role of the management
consultant and topics covered in this book.

A summary of the key processes and tools any
consulting business requires.

A short list of references that have influenced the
author’s thinking, and may be useful to readers.

A sample proposal letter for readers to adapt.

Un de rsta n din 9
consultants and
consultancy

chapter

Consultants and consultancy

This chapter answers the questions: what is a management consult-ant and what is management consultancy?
You may be an experienced consultant who wants to pick up a few new
tricks. On the other hand, maybe you are new to consulting and want to
gain a better understanding of what it is all about. This chapter is aimed
primarily at the novice consultant, whether you are considering joining a
major consultancy, are starting out as an independent consultant, or
have been recruited as an internal consultant. It provides an overview of
some of the fundamental concepts in consulting. Most of the book is
about how to be a consultant. As an opening to the subject this chapter
answers what being a consultant means.

To gain the most from this book it is important to understand what a
management consultant is, to be familiar with some common consulting
terminology, and to appreciate the difference between being a consultant
and other roles. If you want to be a management consultant, it is helpful
to recognise why you want to be a consultant and to think through
whether or not it is a profession that can meet your desires. To achieve
this it is useful to have at least a basic grasp of the economics of a con-
sulting business. This chapter sets out to do all of this. There is nothing
complex here, but it is impor~ant as it provides the foundations for the
rest of the book. This chapter covers a disparate range of topicS that com-
bined give a basic, but essential, picture of consulting.

__ :..U;;.;.nderstanding consultants and consultancy

One small, but noteworthy point: rather than write the phrases ‘manage-
ment consultant’ and ‘management consultancy’ repeatedly, I shorten
these to ‘consultant’ and ‘consultancy’. There are other types of consult-
ants and consultancy, and many of them could find something useful in
this book, but the focus is on the management variety.

What is a management consultant?

There is a large and growing band of people who call themselves manage-
ment consultants. Some people are management consultants but do not
use this title, preferring labels such as business advisor, strategy consultant,
operational consultant or even leadership consultant. These and related job
titles encompass a divergent and eclectic group of individuals.

The work such people do varies enormously. The fee rates range from low
to very high, and the length a consulting project may vary from hours to
years. Clients who use consultants can be the owners of firms, managers
of one level of seniority or another, or the main board directors of major
corporations. Clients can also be staff in the public sector and not-for-
profit organisations. Some consultants are employees of the firms the

, , it is not easy to
come up with a concise
definition , ,

consulting takes place in, others are external but
regular faces within an organisation, while many
are individuals who appear in a client organisa-
tion for a short time and never reappear again.
Their areas of specialist expertise go from obscure

pieces of business to generalist management advice. Given this huge vari-
ety, what is it that is similar that enables them to be bundled together as
management consultants? It is not easy to come up with a concise defini-
tion that covers this assortment of roles.

The problem with describing the role of a management consultant is
compounded by the fact that some existing definitions have been writ-
ten by people who are not consultants, and who do not understand fully
what consultants do. But listening to professional consultants can
equally be misleading. Those who are consultants have a vested interest
in making the role sound majestiC and magical, and to bias any descrip-
tion towards the type of work they specifically do. I have read definitions
of management consultancy in sales brochures, books, dictionaries and
various online encyclopaedias. A few definitions are the hopeless sum-
marisations of people without any real understanding, some are correct
but focus on irrelevant aspects of the role, many are good, but do not
quite manage to encapsulate the role and its variations.

Consultants and consultancy

Given the wide variety of consultants, rather than starting with a defini-
tion, I will list characteristics to provide an appreciation of the role of a
consultant. As little in this world is absolutely black and white there are
caveats with each one of these characteristics.

Consultants do the following seven things:

They provide advice and recommendations to managers, and may
provide assistance with the implementation of the recommendations.
Caveat: Consulting companies may provide a whole range of services,
from pure consulting to training and outsourcing. Not all of this is
consulting. Consulting is about providing useful advice, and helping
managers to implement the advice.

2 They base their advice and recommendation on a set of skills and
expertise, or intellectual property they have available to them.
Caveat: This is what should happen. However, ask any experienced
manager and they can probably tell you of the time they spoke to or
even engaged someone who purported to be a consultant but who
had very limited skills, experience or intellectual property.

3 They consult. This may sound obvious given the name, but it is often
forgotten. What I mean by this is that consultants engage in dialogue
with an organisation and its staff, and apply their expertise to develop
recommendations, taking account of the specific needs and context
of that organisation.
Caveat: Some firms called consultancies do not consult. Such firms
may be very successful in selling research, benchmarking data or other
types of information. Consultants do not sell products or give the same
advice to everyone. There is nothing wrong with selling a product, but
irrespective of how it is branded, it is not management consulting.

4 They are involved with a given client on a temporary basis.
Caveat: The length of a consulting project may be anything from
hours to months. Occasionally, it may be years, although it is difficult
to argue that someone who has worked continuously in one
organisation for years is still working as a consultant. (Internal
consultants work for one organisation, but they will be working on
different projects across a range of departments or divisions.) It is not
unusual for a consultant to work regularly for the same client, but
each piece of work is of a limited duration.

S They are independent. A consultant should be providing advice or
recommendations irrespective of the internal politics and vested
interests of an organisation or the managers who are their client.

Understanding consultants and consultancy

Caveat: Consultants are human, have their own business interest to
consider, and naturally have their own biases. But a consultant’s
biases should be independent of a client’s biases.

6 They are not paid for from an organisation’s normal staff budgets.
Caveat: A manager who wants to employ a consultant needs a budget
for it. This is often true even for internal consultants who charge back
their time, and if they do not, they remain an overhead to the rest of
the business.

7 They add value to a manager and the client organisation by helping
them to change. Value can take many forms, such as improved
decision making, faster change implementation, reduced business risk
and so on.
Caveat: At least they should do! Reality is not always so clear cut.

If we take these seven characteristics of a consultant and take the most
pertinent points it is possible to develop a definition of a consultant that
is true in most situations:

A consultant is an independent advisor who adds value by helping managers to

identify and achieve beneficial change appropriate to their situation.

Essential consulting jargon

To get the most from this book it is important that we start with a
common understanding of the basic terminology surrounding manage-
ment consultancy. Some words, or pieces of consulting jargon, will be
used repeatedly through the book, and if you are new to the industry
then it’s important you become familiar with these concepts. I am not
generally a big advocate of jargon (see Chapter 11), but there are words
and phrases that are continuously used by consultants. Most of these
may be obvious and intuitively understandable, some are not specific to
the consulting industry, but they are essential to know.

Consultants tend to talk about clients, rather than customers. The con-
cept of a client is explored in the next chapter. In general terms, the word
is used both to refer to a specific manager who gives the consultant direc-
tion on a consulting project, and the organisation in which that manager
works . Hence a consultant may think of the client as Mr Peter Smith
of the XYZ Company, or may consider it to be the XYZ Company. To

Consultants and consultancy

differentiate, when I refer to a client I am talking about a person (or
group of people), when I am talking about the organisation the client
works for I use the term client organisation.

Once employed by a client, the specific consulting project being under-
taken is usually referred to as an engagement or sometimes a live
engagement. A client is one of a larger group of stakeholders a consultant
must deal with. Stakeholders form a set of individuals who consultants
must take into consideration when delivering an engagement.

To win some work consultants engage in business development. Business
development relates to time that is not (usually) chargeable to a client,
and includes activities that are associated with marketing a business and

, , consultants must
normally write a
description of the
service they will
provide ”

pursing specific sales. The aim of business devel-
opment is to identify opportunities, and then
convert these opportunities into live engagements
and hence have some chargeable time. An oppor-
tunity is the situation in which a client has a need
for some consulting support. To convert an oppor-
tunity into an engagement and hence be able to

charge …