Management Consulting Firms

I have chatted with a number of people lately, both in and out of the alcohol industry, about the continued widespread use of the so-called experts who come in at eight figure fees to “advise” corporations on how to improve business performance.

I’ve had more than my share of exposure to these firms over the years and one of the reasons I enjoy the non-corporate life is not having to deal with consultants who ask for your watch so they can tell you what time it is.

My first experience while at Seagram was with a “household name” company that received tens of millions to suggest a straightforward and logical reorganization. I couldn’t help but feel that those who brought these folks in were either 1) not smart enough to figure it out for themselves or 2) needed the air cover of outside consultants, as in whom to blame to counter complaints or in the case of failure.

On another occasion, I recall the retention of a buzz-name consulting firm hired to help figure out what to do about the tequila category. They basically regurgitated strategic and other documents that the internal team had prepared. What, you don’t accept the opinions of your own people but feel comfortable taking the same advise from outsiders because you spent millions on it?

I understand the role and use of consultants for staff augmentation, discovering and applying best practice, even increased analytic capabilities. But I don’t get the use based on “external change force for political cover” or “fresh perspective.” If your own people can’t do this then get new people.

There are a few deep dark secrets of these consulting firms that should be spotlighted. The first is that the tens of millions dollar fee and resulting recommendations are often generated by straight-from-business-school neophytes with limited to no real world experience.

Second, the single most important goal of a consultant is to get the next project.