What is consulting?

For some time now, people I have known and met have been asking me questions about my work and what I do. Over the next few posts I will cover some of the most common questions posed to me and present it in the larger context.

The first set of questions  revolve around what is consulting/who is a consultant? What does s/he do?

Most of us have heard the term consulting and consultant, and have a vague impression of what it means. While most of get the broad strokes right, it is important to understand the specifics.

The dictionary defines consulting as “The providing of expert knowledge to a third party for a fee.”And the same dictionary defines consultant as “Experienced professional who provides expert knowledge (often packaged under a catchy name) for a fee.” (No kidding!)

This leads us to the question, what does a consultant do?

The most obvious answer is that a consultant gives advice (duh!). But what is the nature of this advice? As one goes further, one realizes that there are two different set-ups from which one can operate. A consulting role and an advisory role. While these terms are used synonymously given the large number of similarities, there are certain subtle difference.

Consulting is typically considered a process to help a company uncover a specific problem and arrive at a solution. The client typically uses a consulting firm to help discover the root cause of a business problem, and to help fix it. Once the problem is solved, the ‘engagement’ is over and the consultant leaves.

Whereas in advisory, the consultant helps the client uncover problems, but more often directs the clients on where to go for help. The job of the advisor is to serve as an impartial sounding board to help the client understand the pros and cons of the proposed courses of action. Advisors use a bigger picture approach to help you deal with ongoing challenges to your business.

Why do consultants exist?

A few reasons why consulting as a profession exists are:

  • There is certain domain expertise that one has which is valuable to the client
  • There is a certain skill set that one has which is valuable to the client
  • As an insulation/mechanism to deal with internal organizational turbulence
  • Business needs

Let’s look at the first type. There are people who have worked in an industry for many years and have first-hand experience about the industry. They understand the undercurrents, the unwritten norms, the unspoken rules and the unseen forces that shape an industry.

The second is when the client may require a particular skill set for a brief period of time and finds it expensive and cumbersome to hire that skillset. It is easier and cheaper for a firm to aggregate the demand for such services and charge for its services than for these individual clients to hire and manage for themselves. Let’s take the example of a company looking to get a better understanding of an industry. It is easier for them to hire a reputed firm which specializes in that particular field and pay for a report than interview many candidates, some of whom either through luck or correct signalling land the job and not deliver on their initial promises, manage the new team, verify their credentials and so on.

Companies often have an in-depth understanding of the problem and the solution. However, they may face internal pressures from the board or politics/under currents within the organization. In such scenarios, it helps C suit executive shift the responsibility or get an endorsement from a reputed consulting firm. S/he can present to the board a plan stating Deloitte or McKinsey came up with the following as a solution to our problem. If things should backfire few months down the line, the report submitted can be blamed rather than an individual. Or if shareholders or anyone asks why something was done, the report can be cited.

Business needs also create the requirement for consultants. Take for example an acquisition. While there are non-disclosures that are signed, many companies aren’t comfortable revealing sensitive information all on the basis of an agreement of intent. In such instances, it is important for a third party to come in and protect the ‘Targets’ privacy while ensuring the client has a correct understanding of the organization being acquired. (Target is the organization that is being acquired and the client is the one acquiring the organization. Sometimes the client and the target could be the same).

C suit executives and top management often have the technical competency and the skillset, however, they sometimes lack the time necessary to take a step back and look at the problem in the context of a larger picture. As Nitin Nohria, the current dean of Harvard Business School said “While every CEO talks about managing for the long term, the reality is that the crush of immediate concerns and the uncertainty of the future lead them to focus on the short term. This tension between long-term intention and short-term action is one of the great challenges of modern management.”

This post provides an overview of what consulting is, what a consultant does and why does the profession exists. In a future post, we’ll look at the evolution of the consulting industry, the current landscape and the direction in which it is headed.

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