7/29/2010

WORK 6111 Management

Consulting
Week 1: What Is Management Consulting?

FACULTY OF
ECONOMICS & BUSINESS

Professor Christopher Wright

WORK6111 Management Consulting

Introduction
› Focus on the role, influence and activities of
management consultants
› Unit of Study aims:
- Identify major features of consulting industry and key
practice areas
- Define how to sell and conduct a successful
consulting engagement
- Outline consulting
g intervention approaches
pp
- Discuss theoretical frameworks to understand
consultancy; and
- Highlight how clients can use external and internal
consulting resources
©Arthur D. Little

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Why Study Management Consulting?

› One of the fastest growing industries of the

twenty-first century
› Role of consultancies in the management of
modern business
- in creating, disseminating and implementing
changed business practice (conduits in converting
business theory into workplace practice);
- as 'finishing schools' for future corporate managers;
and
- as 'agenda setters' at the level of macroeconomic
reform and public policy.

› Critical assessment of management

consultancies

Video Case: ‘Masters of the Universe’

› Increasing role and influence of

management consultants
› UK documentary – what’s behind the
‘consulting phenomenon’?
› ‘Behind the scenes’ interactions:
- Consultant training

- Consultant-client interaction

- Views of former consultants and clients

©Drake Solutions

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Managerial Considerations

›Why do managers hire

consultants?

›What benefits do consultants

provide?

›How should you manage

consultants to get best value?

Teaching Philosophy & Expectations

› WORK 61111 is an advanced unit of

study at Masters level
› Classes include lectures, video, group
and class exercises
› To get the most from this course you
are expected to read at least one
required reading before class
› If concepts
t or issues
i are unclear
l –
ask!
› You are encouraged to bring your
work/life experiences to class and
apply them.

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Unit of Study Organisation

› Unit of Study Outline

› Teaching Time & Location

- 1.5 hour lecture:
- Thursdays 6-7:30pm (Eastern Av LT)
- 1.5 hour seminar:
- Thursdays 4:30-6pm (Eastern Av SR310)
- Thursdays 7:30-9pm (Eastern Av SR403)
- Thursdays 7:30
7:30-9pm
9pm (Eastern Av SR406)

› Blackboard website

- http://b2.econ.usyd.edu.au/webapps/
portal/frameset.jsp

Readings

› Required Readings
- Access via Library Reserve
› Useful Books
- O'Mahoney, J., (2010).
Management Consultancy,
Oxford: Oxford University Press.
- Greiner, L. and F. Poulfelt (eds.)
(2005). The Contemporary
Consultant: Insights From World
Experts, Mason, OH,
Thomson/South Western
Thomson/South-Western.
- Armbrüster, T., (2006). The
Economics and Sociology of
Management Consulting.
Cambridge: Cambridge
University Press.

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Assessment

1 S
1. Seminar
i IIntroduction
t d ti W k 2-13
Weeks 2 13 10%

2. Seminar Paper (max Due two weeks after

30%
2000 words) presentation

3. Seminar participation Weeks 2-13 20%

(incld in
in-class
class exercises)

4. Exam Exam period 40%

Total 100%

Unit of Study Structure

Week Date Lecture Topic Seminar Topic
1 29 July What is Management Consulting? NO SEMINAR

2 5 August Management Consulting: Historical Dynamics What is Management Consulting?

3 12 August Consulting Work: Practice and Process Management Consulting: Historical Dynamics

4 19 August ‘Professionalism’ and the Critique of Management Consulting Work: Practice and Process
Consulting
5 26 August The Consultant-Client Relationship ‘Professionalism’ and the Critique of Management
Consulting
6 2 September Consultant Led Forms of Organisational Transformation The Consultant-Client Relationship

7 9 September Internal Consulting and Change Agency Consultant Led Forms of Organisational Transformation

8 16 September Consulting Expertise and ‘Knowledge Work’ Internal Consulting and Change Agency
9 23 September Consulting, Knowledge Diffusion and Management Consulting Expertise and ‘Knowledge Work’
Fashion
27 Sept - 1 Oct MID SEMESTER BREAK

10 7 October GUEST LECTURE NO SEMINAR

11 14 October Managing Management Consultancies: Business and Consulting, Knowledge Diffusion and Management
HR Strategies Fashion
12 21 October Being a Management Consultant: Identities and Managing Management Consultancies: Business and
Careers HR Strategies
13 28 October The Future of Consulting Being a Management Consultant: Identities and
Overview, Evaluation and Exam Discussion Careers

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What is Management Consulting?

› Problems of definition
- narrow versus broad definitions
- rhetoric vs.
vs reality

› Traditional definition as an advisory service:

'Management consulting is an advisory service contracted for and
provided to organizations by specially trained and qualified persons
who assist , in an objective and independent manner, the client
organization to identify problems, recommend solutions to these
problems and help, when requested, in the implementation of
solutions.'
(Greiner & Metzger (1983) Consulting to Management).

› But more than advice giving. Also

implementing change as well as providing
outsourced business activities?
©Arthur D. Little

Key Consulting Disciplines?

› Four key disciplinary influences:
- Operational Efficiency: investigation and implementation of techniques
to improve manufacturing and service efficiency
efficiency, reduction of costs and
improved productivity (eg. operations management, cost reduction,
business process reengineering and supply chain integration).

- Corporate Structure and Strategy: review and analysis of corporate

structures and business strategy. Pioneered and developed by
consultancies such as McKinsey & Co. and Boston Consulting Group;

- Information Technology: management information systems, systems

g
integration and more recently
y the implementation
p of enterprise
p resource
planning (ERP) systems. The pioneer here Andersen Consulting
(Accenture);

- Human Resources: consulting on HR issues such as remuneration,

training, communications, change management, industrial relations
(global pioneers Hay, Mercer, Towers Perrin).

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Reasons for Growth

› Consulting industry has grown in excess of 25% p.a. -why?
- Economic changes have forced corporate restructuring and the
demand for external advice;
- Cost reduction and demand for improved operational efficiency
- Globalisation of business operations, expansion of MNCs to NICs
- Technological change - information technology the fastest growing
sector of the consulting industry during the 1990s;
- Outsourcing of business functions to external providers;
- Management uncertainty – rate of change increases management
uncertainty and anxiety, search for external expertise;
- Management fashion - Consultancies create the demand for their
services through talking up the need for change and the latest 'fad or
fashion'.

Largest Consulting Firms 1998

Rank Firm Name 1998 Global Annual 1998 Global
Consulting p.a. Consultants
Revenues Growth
$M
1 Andersen Consulting $7,129 25% 53,416

2 PricewaterhouseCoopers $6,000 40% 40,800

3 Ernst & Young $3,870 35% 16,450

4 Deloitte Consulting $3,240 40% 19,560

5 CSC $3,000 17% 20,000

6 KPMG $3,000 30% 14,094

7 McKinsey & Company $2,500 14% 5,184

8 Cap Gemini Group $2,261 37% NA

9 Mercer Consulting Group $1,543 15% 11,304

10 Arthur Andersen $1,368 44% 9,196

11 A.T. Kearney $1,234 17% 2,880

12 Towers Perrin $1,230 12% 8,155

13 Booz-Allen & Hamilton $1,204 12% 6,540

14 IBM Consulting $990 13% 5,060

15 American Management Systems $913 24% 7,398

SOURCE: Consultants News, June 1999, 6-7.

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End of Consulting Growth?

› The e-commerce boom and

consulting
› Dot-com to 'dot-bomb', US economic
malaise and consulting contraction
› Declining consulting growth and job
cuts
› But also new models of consulting
g
› Redesign of established consulting
businesses (shift away from
partnerships and 'rebranding')
©Fairfax

Consulting Industry Growth

30%
27%
25%
5% 22%
20%
20%
15%
15%
12%
10% 8.5% 9% 8%

5%
1.4%
0%
-2%
-5%
-6%
-10%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

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Largest Consulting Firms 2003

Rank Firm Name 2003 Global Annual
Consulting p.a.
Revenues Growth
$M
1 IBM (incld PWC) $12,955 -2%

2 Accenture $8 272
$8,272 -7.1%
7 1%

3 Deloitte $5,920 2.5%

4 Capgemini $5,074 -21.7%

5 CSC $3,350 -8%

6 Bearingpoint (ex KPMG) $3,141 3%

7 Hewlett-Packard $3,095 -0.2%

8 McKinsey & Company $3,000 0%

9 Mercer $2,719 1.4%

10 SAP $2 461
$2,461 -11%
11%

11 T-Systems $2,142 -2.5%

12 Booz-Allen Hamilton $2,017 18.6%

13 LogicaCMG $1,949 -9.3%

14 Atos Origin $1,829 2.5%

15 Oracle $1,730 -12.7%

SOURCE: Consultants News, June 2004, 4-5.

Most Prestigious Consulting Firms?

Rank Firm Headquarters/Largest Office

1 McKinsey & Company New York, NY

2 The Boston Consulting Group Boston, MA

3 Bain & Company Boston, MA

4 Booz Allen Hamilton McLean, VA

5 Monitor Group Cambridge, MA

6 Mercer Management Consulting New York, NY

7 Mercer Oliver Wyman New York, NY

8 Deloitte Consulting LLP New York, NY

9 Mercer Human Resource Consulting New York, NY

10 The Parthenon Group Boston MA

Boston,

11 IBM Global Services Armonk, NY

12 Gartner Inc Stamford, CT

13 L.E.K. Consulting Boston MA/London

14 Accenture New York, NY

15 A.T. Kearney Chicago, IL

Source: Vault 2007 Management & Strategy Consulting Survey

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Australian Management Consulting

› Highly concentrated industry structure:

'The image of a ‘comet-like’ structure emerges from the data - a small
‘h d’ off large
‘head’ l firms
fi and
d a llong ‘t‘tail’
il’ off smallll partnerships
t hi or llone self-
lf
employed operators.' (Howard, 1997, 86).

› Distinction between 'strategy firms', the 'Big Four',

'human resource specialists', and 'operational
efficiency' firms. Significant convergence in services
offered by large consultancies.

› Extensive periphery of small firms and solo practices -

88% of business management services consist of <5
employees.

Australian Consulting Market

Business
Strategy
Consultancies
McKinsey & Company
Boston Consulting
Group
HR Consultancies Booz Allen Hamilton 'Big Four'
Bain International Accounting Firms
A.T. Kearney Accenture
Hay Group
Towers Perrin IBM (PwC)
Hewitt Associates Deloitte Consulting
TMP Worldwide Bearingpoint (ex
(ex--KPMG)
Ernst & Young
Operational
Efficiency
Specialists

PA Consulting
Proudfoot Consulting
GPR Dehler

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Growth in Management Consulting

3000

Management Consultancy Listings, Sydney and Melbourne

2500

2000

1500 Melbourne
Sydney

1000

500

0
1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Source: Sydney and Melbourne Yellow Pages

Consulting : Towards a Critical

Understanding

› What does an understanding of consulting tell us about

the role of management and business more generally?

› Recent growth of a critical literature on consulting and

consultants. Key themes:
- The problematic nature of consulting as a ‘profession’;
- Techniques consultants have used to create legitimacy as business
advisers (discursive strategies, 'impression management');
- Questionable
Q ti bl nature
t off consulting
lti expertise;
ti
- The role of consultants in the creation and propagation of management
‘fads and fashions’;
- The management of the consultant-client relationship

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Conclusion
› Aim not to teach you how to be a consultant (although
this Unit provides lots of helpful insights!)
› Provide a critical insight into consulting as a central
feature of organisational life
› Better understanding of the process of organisational
change (where this involves external or internal
consultants and change agents)
› Provide ppractical insights
g into the best use of
consultants and what makes a good client
› Provide insights into the changing nature of the
management function and contemporary business
practice

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