The Consulting Powerhouses and the Businesses They Save and Ruin
By James O'Shea and Charles Madigan
Times Business 355pp $27.50
Heard the one about the consultant who borrows an executive's watch to tell him the time? It's an old joke, and not a very good one. Yet James O'Shea and Charles Madigan, two veteran journalists from the Chicago Tribune, bring exactly that derisive point of view to a book that otherwise could have been the most important work on consulting in decades.
Dangerous Company, their examination of one of the world's booming businesses, is an ill-informed, anticonsultant screed filled with grievances that have been leveled at consultants for decades. The pair decry the industry's high fees, its recycling of old advice, its willingness to tell clients only what they want to hear, and its penchant for putting raw MBAs into key problem-solving roles. But this is hardly news to anyone who has been either a victim or a beneficiary of a consulting assignment. Meanwhile, they fail to describe how the business really works--and why it has been so successful.
So why should anyone read this book? Despite the missed opportunity to produce a truly penetrating inquiry, the authors do provide a lively overview of an important industry, with chapters on all the major players, including Andersen Consulting, Bain, Boston Consulting Group (BCG), and McKinsey & Co. And, coming nearly three decades after the publication of the last significant book-length examination of consulting--Hal Higdon's 1969 The Business Healers--Dangerous Company does contain some shocking revelations.
It discloses, for example, that Andersen Consulting's contract with Alabama-based O'Neal Steel Co. provided a bonus for every 100 jobs eliminated. The authors also recount the story of how conglomerate Figgie International nearly went bankrupt after racking up more than $75 million in consulting fees in the early 1990s. And they convincingly relate the disturbing tale of how a Bain & Co. consultant turned in one of his own clients, Guinness PLC, for engaging in an illegal stock-manipulation scheme.
To be fair, O'Shea and Madigan tossed in a few success stories, too. They tell how A.T. Kearney & Co. helped Sears, Roebuck & Co. save millions, assisting in its search for alternative sources for such products as auto batteries. They also provide a case study of how BCG helped pharmaceuticals maker Boehringer Mannheim Group develop a strategy to profitably market an important medical device for diabetics.
There's a useful, though brief, checklist at the end of the book to help clients get the most from their consultants. Among other things, the authors advise managers to set clear goals for hired guns, demand to be served by a consultant's more senior partners, never yield control of an operation to outsiders, and closely measure results, basing payments on performance. Another bit of good advice: Never allow a consulting firm to denigrate your employees. "You are buying intelligence, not arrogance," the authors write.
Still, this is largely a view of the industry from 10,000 feet. Seldom do the authors dive deeply into a firm, its culture, or its people. More often than not, O'Shea and Madigan seem to be scratching their way inside the business from the outside. The consultants you meet in this book are largely faceless, one-dimensional people. So consumed are the authors with a few of consulting's well-known foibles that they fail to explain why companies willingly pay $50 billion a year to advice-givers.
It's not hard to figure out why this occurred. According to the authors' notes, they failed to gain access to many of the industry's key players, from Andersen Consulting's George Shaheen to McKinsey co-founder Marvin Bower, the most influential figure in the history of consulting. In fact, they devote scarcely more attention to Bower and his brilliant legacy than to an ex-employee who has filed a sex discrimination suit against McKinsey. Neither did the authors gain any fresh insight into just what kind of advice AT&T got for the nearly half-billion dollars it spent on consultants from 1989 to 1994--even though AT&T is a company whose managers and former executives are known for leaking information to reporters.
Most of all, however, the authors approached the business not with the healthy skepticism of good journalists but with the cynical eyes of gossip columnists. Witness their view of strategy consultants, dubbed the "Darth Vaders of downsizing": "Their intellectual products would make shuttered factories a part of the American landscape, and they would create havoc in struggling communities across the land." Yes, consultants have helped companies downsize their operations, but in most cases, those cutbacks were critical to survival. And often, the authors' throwaway lines are just as gratuitous. For example, they describe Harvard business school as "the nation's Ivy League factory for snot-nosed MBAs."
For all their polish and good breeding, some consultants' sales techniques rival those of used-car dealers, and even the best of them can make mistakes. But consultants are a major reason why U.S. industry is so efficient and productive. Every day, consultants bring sophisticated knowhow and specialized expertise to clients who lack that knowledge in-house. They provide fresh outside perspective to many companies hampered by insular managements. For every botched or useless assignment, there are dozens, if not hundreds, of others that increase a company's productivity and add black to its bottom line. Few consultants, despite O'Shea and Madigan's scornful view of them, borrow or steal a watch to tell a client the time.