Veni, Vidi, Invoici
Why traditional consulting firms cost their clients much more than just their fat fees…
“Veni, Vidi, Vici” — Julius Caesar 1
One of the questions I’ve been asked many times by CEOs over the past 35 years is “Why would I hire you when I could hire McKinsey..?” 2
The question usually crops up when a senior executive has invited me in to explore helping create a future-fit culture, and they take me along to get the CEO’s blessing.
My answer to the question is very simple: “If what your organisation now needs is what traditional consulting firms do well, it would make sense to hire one. But it isn’t — so it doesn’t.”
What traditional finders, minders, grinders consulting firms do well is provide research-based answers in support of senior executive decision making.
It’s what they were set up to do decades ago, and its what they’ve honed their skills, practices, and methods for doing ever since.3
By providing this service, traditional consulting firms anchor senior executives in the anachronistic legacy perception that their role is making decisions.
Why anachronistic?
Because in an increasingly uncertain and unpredictable world, last week’s good decision can easily be next week’s bad one.
That’s why, in future-fit organisations, senior executives don’t see their role as making decisions but as creating conditions — conditions in which good decisions get made and implemented, iteratively, on a dynamic, ongoing, continuous basis throughout the organisation.
I’ve addressed this shift in senior executive role from making decisions to creating conditions previously.4
So here I'll explore why hiring traditional consulting firms to help create future-fit cultures of innovation, agility, and adaptiveness is at best a waste of money, and at worst a recipe for disaster.
Their historical focus on making decisions meant senior executives were often faced with having to make highly complex and strategically significant decisions.
They might, for example, need to decide whether to invest or divest in certain markets, technologies, and/or geographies; or decide where and with whom to form strategic alliances; or decide how to streamline operations; and all manner of similarly strategic questions.
Traditional consulting firms evolved to help senior executives answer just such questions, providing research-based advice to help them make better informed decisions.
The way the mainstream consulting firms are organised to do this is described by David Maister, the world’s leading advisor to professional service firms for more than 30 years, as follows:
“Seniors (partners or Vice Presidents) are responsible for marketing and client relations; managers for the day-to-day supervision and coordination of projects; and juniors for the many technical tasks necessary to complete the study. The three levels are traditionally referred to as “the finders,” “the minders” and “the grinders”. 5
The above is from Maister’s seminal book Managing the Professional Services Firm — which has long been required reading for partners in traditional finders, minders, grinders consulting firms.
In the book, Maister shows how consulting firm profitability fundamentally depends on leverage.
Leverage in consulting firms means getting the maximum number of grinders mobilised on fee-generating work by the minimum number of finders.6
Now, there’s obviously significant risk involved if hordes of inexperienced junior grinders are allowed to maraud around willy-nilly inside client organisations.
So, to minimise this risk, the grinders are constrained and corralled to operate within tightly prescribed lines by standardised one-size-fits-all approaches repeatedly rolled out to client after client.
This is known within the consulting world as the “cookie cutter” or “paint by numbers” approach.
Of course, consulting firms don’t call them that in front of their clients, preferring to label them “best practice methodologies”.
Mostly, this labelling is marketing spin — the consultants want clients to perceive their practices as the best on the market.
But there is a way in which the term “best practices” does contain a grain of truth — they’re the best practices for maximising consulting firm revenues by leveraging lots of low-level grinders with minimal supervision by more expensive colleagues.
The primary performance metric inside traditional consulting firms is billability.
Billability is simply the ratio of how much of junior consultants’ time is actually billed to clients, expressed as a percentage of their time that could be billed to clients.
Junior consultants are typically expected to achieve upwards of 75% billability — i.e. at least three quarters of their working week, every week, should be “on fees”.
This fundamental focus on billability is fully understandable from the consulting firm’s perspective.
Just a few percentage points swing in average billability across a consulting firm makes the difference between gargantuan profits (and huge bonuses for the finders) and disastrous losses (and finders needing to find new jobs).
The finders, minders, grinders business model’s power in profitably mobilising hordes of junior consultants is, however, its fundamental, fatal weakness when a client organisation wants to create the kind of future-fit culture of innovation, agility, and adaptiveness they need to thrive in an increasingly uncertain and unpredictable world.
Creating a future-fit culture requires the client organisation to develop new innovation, agility, and adaptiveness muscles — muscles that will only be developed when people in the client organisation do the heavy lifting themselves.
But hire a traditional consulting firm and, by definition, it’s their junior grinders who must do the heavy lifting or the consulting firm will bleed red ink.
And when it’s the consultants doing the heavy lifting, any muscles that get developed are in the consulting firm, not the client organisation.
That's why traditional consulting firms come in, see things, and send invoices — and not much else...7
However, that’s not the worst of it.
The people in the body of the client organisation see only too clearly that the inexperienced junior consultants they encounter are not adding any value.
And this generates disaffection, demoralisation, and disengagement within the client organisation — which is completely antithetical to cultivation of organisational innovation, agility, and adaptiveness. 8
The bottom line is that traditional consulting firms cost organisations a great deal more than the fat fees they invoice…
Creating a future-fit culture
A future-fit culture of innovation, agility, and adaptiveness requires sense making, decision making & action taking to become ever more tightly coupled, rapidly and repeatedly iterated, deeply embedded and widely distributed throughout an organisation. 9
Back in the mid 1980s, when I worked with a world-leading open innovation lab and the first client asked me to help them create a culture like ours, I knew that this meant creating conditions where people combined their individual, inevitably incomplete perspectives to produce a greater whole.10
After a few years specialising in helping clients throughout Europe, Asia, and the US create future-fit cultures of innovation, agility, and adaptiveness, this crystallised into the recognition of 2D3D mindsets as the basic building block of such cultures.11
In December 1998, the Financial Times published a feature article on my 2D3D thinking tool.
There’s a six minute video available online describing the problems that occur when people are trapped in 2D perspectives, and the benefits of cultivating 2D3D mindsets instead. 12
A 2D3D mindset is simple enough to understand: none of us ever sees the whole of any situation.
All we each ever have is a biased, limited, one-sided, ‘2D’ perspective on a ‘3D’ reality that none of us can ever see in its entirety.
Future-fit organisational cultures are all about widespread adoption of 2D3D mindsets — so that people combine their different partial 2D perspectives in their everyday actions and interactions, thereby progressively unblocking, unlocking, and unleashing their collective capacity to co-create new value through innovation, agility and adaptiveness.
The starting point for anyone seeking to help organisations create future-fit cultures is to first cultivate a 2D3D mindset themselves.
When, instead of a 2D3D mindset, someone gets trapped in their narrow, biased, one-sided, and inevitably incomplete 2D perspective, they impede innovation, agility, and adaptiveness.
So how can you tell if you’re trapped in your 2D perspective?
If you’re convinced your perspective is right and others are wrong — you’re trapped.
Questions for reflection
How many people in your organisation are disaffected, demoralised, and disengaged as a result of interacting with junior consulting firm grinders who add zero value?
Where are traditional consulting firms currently engaged in your organisation — and what damage are they causing?
How often do you get trapped in your own 2D perspective, seeing others as wrong?
The Latin phrase Veni, vidi, vici (“I came, I saw, I conquered”) is popularly attributed to Julius Caesar who, according to Appian, used it in a letter to the Roman Senate around 47 BC after a rapid victory against Pharnaces II at the Battle of Zela.
It could be any of the finders, minders, grinders consulting firms, but CEOs usually mention McKinsey, because they’re the brand leader amongst such firms.
Brand leaders McKinsey has been doing this for almost a century — since 1926.
See my previous article on why senior executives must give up their decision rights.
Managing the Professional Service Firm (David Maister 1993 p7).
A typical big consulting firm partner will be expected to sell several million dollars of work per year, with their bonus and future career crucially dependant on how much they sell.
There is of course another more sinister form of value that senior executives gain by hiring a brand name consulting firm. When things go wrong, they can say “Don’t blame me, I hired McKinsey (or BCG, or KPMG, or Deloitte, or Accenture, or…)”.
Engagement surveys may pick this effect up, but won’t do anything to improve it. As the old farming adage says: “Weighing a pig doesn't make it grow any faster”.
This previous article contains links to — and transcripts of — three videos (totalling 19 minutes) on what works, and what doesn't, when creating future-fit culture of innovation, agility, and adaptiveness.
I’d learned this within the first year of joining, in 1983, Cambridge Consultants. It was here that a client asked me: “Could you come and help our people behave more like your people..?” — launching the career path I’ve been on ever since.
For more on 2D3D mindsets, see this previous post.