Hire a consultant; ignore the advice.

At one time or another, most all businesses use consultants to fill the gaps in knowledge or to provide guidance for management.  Consultants are good in that you can sample their work with short projects, change to other consultants quickly, and stop using them when a project is completed.

I have a partner in a consulting practice that specializes in the travel industry.  Several years ago, we were hired by one of the largest companies in the industry (yet another Fortune 50) to perform a top-to-bottom audit of their processes across 27 facilities, and recommend measures to increase efficiency, increase income, better the customer experience, and of course, decrease costs while also increasing the quality of service.  We were quite confident that our services would yield great, measurable results.  The work continued for about eight weeks between the two of us as we visited the 27 locations and worked with employees in departments across all disciplines within each location and at central offices that performed services for all locations.

Finally, at the end of the project, we had identified nineteen specific issues, each of which would, if implemented, accomplish one or more of the goals outlined at the start of the project. The sum of the savings and increases in revenue were worth multi-millions annually, well worth the implementation of most or all of the recommendations.

[Email readers, continue here…]  On the final day of our assignment, I was responsible for the “reporting out” to the assembled twenty or so executives in the large conference room of this major corporation.  I started my presentation, which had been carefully documented in handouts and PowerPoint, with this story…

“I want you to all imagine that it is tomorrow morning, looking back upon today’s reporting of these past months of work by your consultants.  Imagine that today I build for you a beautiful sand castle exactly at the water line of the ocean nearby.  Tomorrow, we both will visit that beach and look at the water line, and find not a beautiful castle, but just smooth sand, just as it had been the day before building our beautiful sand castle.  In other words, I would not be surprised if you accept our report today with enthusiasm, but then in the overwhelming rush of daily business, fail to implement few if any of these recommendations that you so enthusiastically received.”

The story is true, and the results were as I predicted.  A few of the recommendations were implemented over time, one with great effect and even a national advertising campaign behind it (that you surely saw on TV).  But most were just ignored.  I imagine that our report sits today on someone’s shelf, filed with others from past and from following months and years.

Unfortunately, it is human nature to enthusiastically ignore to act upon recommendations of third party consultants. There are many, many exceptions, but far more instances of this in the business world.  Not all consultants give advice worth taking, of course. But when they do so, it is only as good as that which you implement.

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13 Responses to Hire a consultant; ignore the advice.

  1. Bob Kelley says:

    This blog is vary beneficial and perceptive way to keep earning your reputation as “Mr. Hospitality Innovator”. As a guiding advisor to thousands of entrepreneurs, many times in my presence, you always emphasize the importance of “Focus”. How do you reconcile that with the Broad Vision to see and act upon “A Whole Laundry List” of “Strategic Turnaround Issues”?

    (What follows is a somewhat lengthy context to essentially clarify the question.)

    In the decades I’ve known you, you consistently guide me with your insights into “visions of what can be” often, “visions of what should be”.

    You also are one of the best communicators of business ideas I’ve met. (You’ve definitely grown to be in the company of Tom Peters, Jack Welch and Steve Jobs.)

    In my experience, a model I picked up decades ago, is that business managers usefully fit three categories, by nature. They are: Developers, Operators, and Undertakers. You and I both have successfully been challenged in all three of these situations, many times.

    By way of clarification, these three can easily be further characterized. The Developers are the people who can take an entrepreneurial idea, as you did with “Computerization in the ’70s” and through broad focus on the emerging needs of an industry like Hospitality, and in a decade, turn it into an INC 500 company like Computerized Lodging, Inc.

    The Operators are the people who can then build the business up incrementally, as you did, with a sharp narrow focus, to where it’s the keystone for a major corporate operating division (or as the P/E people call what you did: a “Roll Up”) and be very successful at that, as you were with the nine figure MAI Corporation, as a Successful M&A Oriented Group Exec.

    The Undertakers are the Turnaround Folks who, like you, in this blog, saw the Key Success Factors to take a business out of the coffin and way up to the next level. (As you point out, in this case, if it’s just “Feeling Ill”, and not “Clearly at Death’s Door”, the proposed path is often mostly ignored.) The other side of the Undertakers is the Merchandising Side who take Junk and turn it into Jewels, and sell the Jewels with Savvy For Significant Payoffs.(Today, the FANGA (Facebook, Amazon, Netflix, Etc.) steamrollers are the visible profitable “Industry Transformation Agents”, and we call what they do “Disruption” as Opposed to “Transformation”. We both know many “Disruptors” today, based on their scope, as Developers. They can become “Undertakers” with the right strategies, and, at that point, they’re typically backed by P/E Investors.)

    With your 150 venture investments, I’m sure you’ve occasionally been an Undertaker. In fact, I was on a board where you used your “100 Strategic Questions” to identify the Key Success Factors for just such a project.

    So, given your skills at communicating, and your broad experience, and “the growing need to understand just what to do for success in Roll-Up Turnarounds”, “and actually broaden your vision and understanding sufficiently to actually do it”. Others may just be interested in the other side of this coin. That’s the side where an entrepreneur can couple “how to spot when to sell your company and then how to sell it.” (A situation with Unisolve, Inc, where you have a great success story!) Essentially, this situation can broadly be conceptualized as “how to get on a steamroller as opposed to being part of the pavement?” So, there is a topic here with a need for your communication skills. That topic is: “What have been the Key Success Factors, whereby a great Strategic Turnaround Analysis has actually led to a Great Turnaround, or a great sale, either independently, or as part of a “Roll Up?

  2. Hi Dave,
    Sometimes the advice should be ignored, and isn’t. I worked for a Silicon Valley company that was acquired by… a 3 letter name. For the annual business plan they hired a major consulting company to survey the market and provide the top line assumptions. The rosy assumptions were the opposite of what sales people all over the country were telling us about tough times ahead. Based on this, a zillion new sales people were hired, quotas and production capacity increased, and difficult times became downright bloody. The company was eventually sold at a loss of billions.

  3. Andrea Alms says:

    Great article, interesting…

    I wonder…my experience as consultant maybe a little different than yours.

    Perhaps, the distinction is that I was asked to help execute the advice that I was giving. It reminds me of that Benjamin Franklin quote of “Tell me and I forget, teach me and I may remember, involve me and I learn.” I told them what they needed to do, I taught them new skills and tools, and I got involved in carrying out my advice.
    We turned the asset and the team into a success.

    I think it is also human nature to “involve me and I learn.”

    If you can get beyond just the “tell me”, and help teach and get involved in the turn around of the asset/company, perhaps, that is the more optimal use of the consultant, company, and management’s time, efforts, and energy.

    Food for thought.



  4. Kevin Tomsett says:

    Very interesting, I have a couple of stories myself. Years a go, a major bank wanted to improve the way they handled payments. We came up with a great model, proved our case etc. They implemented some of it but the main reason was to get analysts’ to increase their market offering so they would get more per share, they increased their market value by 5% which turned out to be billions..
    The second case was hiring consultants to do a job, very expensive process as it took a while. The real reason for hiring the consultants was the executive didn’t want to do what the board wanted, the executive wanted to slow the process down and give himself some time to make other plans – it worked.
    I also I have great stories that prove the worth of consulting but these cases were very interesting.

  5. Les Spielman says:

    I was the managing partner on this project.

    One of the most important item that we had both missed was the internal politics of this global corporation. Even though we both presented the correct information and savings projections, several department managers empires would have been affected if all of our suggestions had been followed.

    The lesson, find out what are the personal agendas of each department manager.

  6. Gene Konstant says:

    I’vebeen a consultant 55 years and married into a family of doctors and CPA’s. The doctors patients don’t take the medicine or lose weight. The CA’s client don’t change spending or borrowing his and some of my clients rather be comfortable doing what they want than do what will produce the results they want and ultimately ‘be right’ so as I develop my ‘solutions’ I keep asking how they would do … when they would do …, what would keep them from doing. Ultimately people have a right to be wrong. Sadly that willingness often hurts others [family – friends & fools who invested among others].

  7. Bob Curtis says:

    Many years ago, I worked for a small highly entrepreneurial company that had grown to over $100 million in revenue in ten years. However, growing pains were obvious and no one knew how to fix them.

    Their solution was to hire McKinsey to prepare a strategic plan. The plan took four months to develop, causing a huge disruption of operations and also generating negative rumors about the intent and motivation for the consulting project.

    Unfortunately, project was not well communicated by the CEO and executive team to lower level supervisors and employees, many of whom lacked basic business education and skills. Most had been hired to the company’s rural location quickly as needed by senior staff who lacked sufficient management experience.

    The McKinsey team did a great job and their plan accurately assessed the company’s market position, recommended affordable and workable changes and identified new markets which had high potential. But a suspicious and uncooperative management at the company refused to make most of the changes.

    Having been warned by McKinsey that poorly equipped managers many not be able to make the necessary changes, several high powered executives were brought in to implement the plan. The result was a bloodbath, with capable supervisors fired or chased out and expensive talent brought in to take the company to the next level.

    The entrepreneurial “magic” of this small town, family culture business was lost. Customers complained about losing their company contacts, who had become friends. Customer service deteriorated and small problems became unmanageable.

    The last bit of bad luck came when the company received some bad press about potential product liability. The newly hired senior executives fled, fearing career ending publicity. With most of the old, very loyal employees gone there was no one to pick up the pieces.

    The company filed for bankruptcy a year later. I learned a great lesson about the difference between well -intended theory and practical application. I have still made some of these same mistakes in my later career. But I’ll never forget that experience with the consultants.

  8. Jim Wittry says:

    Great recap for all who consult or use consultants. Reminds me of the old saying “everyone loves change as long as it one level below themselves.

  9. Paul Moore says:

    Dave, I’ve had an interesting gig since retiring from the Boy Scouts of America. I moved from volunteering with the Executive Service Corps to serving as the part-time CEO of that organization, in its Central Oklahoma affiliate. Our role as a nonprofit is to help other nonprofits succeed. For twenty years, we did that by utilizing teams of (mostly) retired executives who functioned as consultants, bringing clients great plans that often died on the shelf. Three years ago we introduced our Organizational Focus Workshop, which is a facilitated discussion with the nonprofit’s board and key staff. It’s pretty amazing…well, maybe not…that a far higher percentage of recommendations are implemented because it’s more “their” plan than “ours.” This just might provide some food for thought over on the for-profit side of the fence.

  10. Berni Jubb says:

    Hey Dave, I once worked for a place you know very well – they were trying to figure out a transition from one segment of their industry to another. Consultants came and went, some with exactly the right idea. Much of the good work and ideas were sabotaged by those whose little empires would be most threatened by the transition. One or two senior managers could often be heard mumbling in the corridors of dysfunction that it would be best to burn the place down and start again. Effectively that is what happened though thankfully it never started again 🙂

    From the neo-tropics where highly developed stunting bureaucracy ensures the status quo remains just peachy keen and optimized “just so” to not effect the future in any way.

  11. Thank you Dave for a very interesting perspective on consulting services!

    I’ve done my share of consulting gigs, primarily with start-ups or businesses that are making a major shift in their product or service and market segments. The consulting challenge is too often how the business management will accept criticism or as you have pointed out accept change. The consulting key, as some have mentioned, is to do more than identifying the changes that are needed, but to provide the solution and set a timeline that requires measured results and scheduled reevaluation on status.

    A consultant can’t just provide a report and walk away! It’s the old story; A consultant will borrow your watch and sell it back to you. I guess the question today, is What is a watch?

  12. Michael O'Daniel says:

    In terms of response, it appears this particular Berkonomics post is No.1 with a bullet.

    Without intending it to, my consulting career has been devoted to startups, turnarounds and hopeless cases. As I grew older, I learned to recognize the latter much earlier in the game.

    I don’t think a consultant can expect any permanent results unless he/she has actual authority from C-level management to work within the organization and implement the recommended courses of action, for however long that takes. And with the visible support of the C-levels. Even then, those whose fiefdoms are threatened will do their best to sabotage the effort. On the latter subject, I speak from personal experience with an institution of higher learning that Mr Berkus knows well.

    If a consultant presents his/her plan without the visible support of top management, audience members will be looking at their watches and going “Yeah, yeah… what time did you say your flight was?”

    I think hiring consulting firms that only provide strategy is a huge waste of money. Hands-on implementation, ideally by the consulting firm working in tandem with the client’s internal resources, will have a much more lasting effect. Even then, any changes that are implemented will generally not have a shelf life much longer than 5 years. Strategic plans that are immediately put on the shelf, on the other hand, have a permanent shelf life.

  13. Another piece of essential advice Dave, delivered in your usual helpful and practical approach.

    The “execution piece” (or lack thereof) is exactly what drew me back into business from retirement. First advising early-stage companies as an Angel Investor, then progressing to larger organizations as an Advisor.

    I was seeing too many good businesses and innovative ideas struggling with growth, performing well below their potential, or finding owners ‘stuck in the weeds’. I kept seeing businesses that, frankly, deserved better success than they were achieving;

    I kept hearing a lot of talk about vision and strategy, but very little action. Businesses that actually HAD strategies were starting out with the best of intensions and high-energy, but always seemed to lose steam or get distracted within a month or two;

    I was sometimes appalled at how long it was taking business advisors or coaching systems to identify and act on the issues that were holding these businesses back – sometimes weeks, even months. I knew there was a better way, and that all most business owners needed was an easy-to-use process to help them and their team get it done in a disciplined and sustained way.

    After watching or working with many high-potential companies, I began to see at least 3 consistent attributes amongst those most successful:

    1. An ambitious & measurable goal, with a clear deadline
    2. Actions & resources prioritized on highest impact
    3. A consistent, sustained sense of urgency, discipline and accountability

    In my own experience, creation of the strategy is the easy part. The hardest part by far – and the most critical – is the execution piece (#2 & #3 above).
    Even with the best of intentions or the highest energy levels at the onset, business execution is fraught with distractions or changes from all directions and levels – which invariably ‘derails’ sustained execution. We have learned that the magic of effective execution is to shorten the cadence into weekly actions and accountability, and to maintain focus on the highest-impact priorities. As derailments and distractions inevitably happen, weekly cadence has saved us time and time again from prolonged distraction and has got our action plans back ‘on track’ within days rather than weeks or months.

    There is more than enough ‘academic’ advice available to companies today. What companies REALLY need is ‘practical’ support – a disciplined process and/or Advisor to work with them shoulder-to-shoulder to help get it done.

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