The long storied history of the consulting industry in the U.S. is at a turning point. From humble beginnings with the advent of scientific management to the modern day McKinsey & Co., KPMG and Gemini, the industry has grown to an estimated $39.3 billion in the U.S. alone.
At the heart of change is the growing track record of mixed results, poor financial returns, and lack of appreciable gains in corporate capabilities and cultural advancement.
In their bestselling book, "Dangerous Company: Management Consultants and Businesses They Save and Ruin" James O'Shea and Charles Madigan state, "Behind nearly every corporate merger and every downsizing or "reengineering" effort of the last decade lurked a highly paid consultant". They go on to outline case studies of fortune 500 companies that spent $millions on consulting contracts only to see their situations worsen.
Manufacturing and operating organizations are particularly prone to the following consulting failures:
Four Ways Consultants Fail Organizations
1. Programs Fails to Connect to the Larger Organization- manufacturing and operations are complex ecosystems involving a web of synergistic connections of vision, values, technology, policy, systems, process, people and culture. Any change, no matter how slight can upset the delicate balance of an organization often resulting in even more chaos. Consultants too often view operational improvements as one off event discounting how the new system, process or team will fit and interact in the larger system. John P. Kotter's piece for the Harvard Business Review describes this as "not anchoring changes into the corporate culture". On the other end of the issue is creating and installing a great new program that has to operate in a bad system. If the organization is fundamentally underperforming, then addressing anything other than the whole will result in an eventual choking off of the brilliant new system.
2. Fail to Involve Front Line Teams- A CNNMoney piece entitled, "Surrounded by Management Consultants? Speak Up", captures the frustration of a line supervisor living through his company's third restructuring in five years. The supervisor goes on to define how management consultants have been brought in to come up with solutions, and each offering solutions that he defines as "unworkable, and blindly obvious to anyone who knows the business". The piece does a fantastic job of capturing the sentiment of front lines teams who had to work within or even implement solutions that they had no part in developing. Teams that are just complying are often just going through the motion and quick to abandon the new program at the slightest signs of problems. Full ownership as a result of deep involvement often results in teams making extra effort in making the new program work.
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3. Poor Execution- companies with operational challenges are where most consultants are hired. Operations are a complex web of technology, policy, systems, process and people. Unfortunately, many consultants in this arena rely on topical methods that just scratch the surface and are designed to make a big splash and temporary boost to the financials. Regretfully, these efforts often disappear months later leaving the company in worst condition than when they started. A 2011 article entitled, "The Failure of Strategy (and Strategists)", cites that many consultants or strategists "have become captivated with big picture strategy and eschew anything that smacks of implementation". In the vast majority of my own turnaround assignments the walls of what are now distressed companies are often adorned with brilliant illustrations of past operational excellence programs that failed. These past failures in nearly every case caused serious distractions away from core activity, often worsening the situation the new program was designed to correct. The lack of poor execution left the front line teams limping along using half of the old process and half of the poorly implemented new process.
4. Failure to Teach to Fish- front line operating teams in many cases have often been the recipients of years of cost cutting measures creating impossibly lean work environments. Training and development programs are often the first to the chopping block during cost cutting periods. Regretfully, it is during these kinds of business cycles that well intended business leaders and advisors set an operation on a path of decay that often begins the death spiral downward. It is this short sided strategy that completely misses a fact that world class operations know all too well- that a commitment to routinely advance the technical and continuous improvement skills of front line teams can result in sustained improvement regardless of business cycles. Consultants looking for extended fees often exacerbate the situation by selling in programs or improvements based upon their firm's expertise without addressing the training needs to transfer ownership to the floor teams so they can routinely improve upon the process that is implemented.
In summary, future professional engagements designed to optimize manufacturing assets and teams will require a more comprehensive approach beyond mere advisement. Third party experts will have to demonstrate success in capturing financial returns but guarantee new institutionalized capabilities that improve the future competitiveness of the business. Business leaders weary of past organizational wounds will be seeking real sustainable change and demand that investment in services will not be in vein.
For more about the benefits of skilled execution, and building sustainability into operating teams go to www.interimamerica.com
The Author: Chris LaCorata is an operating executive with an expertise in creating world class operating organizations. With more than 20 years of turnaround and revitalizing experience Chris has become keenly aware of factors that can either stunt the positive growth of operating businesses and begin a long cycle of decay, or advance a manufacturing business to new heights on the global stage.