The Rise of Management Consulting in Britain

Michael Ferguson

• Publisher: Taylor & Francis
• Year: 2019
• Print ISBN: 9781138740372
• eBook ISBN: 9781351728423
• Edition: 1
• Topic: Historia
• Subtopic: Historia del mundo

This title was first published in 2002: The history of management consulting in Britain is a subject that has received little attention in the past in terms of research or publication. This work redresses the gap in the knowledge base of business and management history, presenting the historical situation in the context of management consulting. Identifying the beginnings of consultancy services in the mid-nineteenth century, Ferguson charts its progression through a series of time frames that span the twentieth century. Utilizing a series of consistent themes, such as service delivery forms and training, which can be compared and contrasted across time, the book provides not only a history of management consultancy services, but also shows how the take-up and form of services was heavily dependent upon the prevailing attitudes within business to the role of management. The thoroughly researched and well-presented arguments in this book will greatly add to our knowledge of British management during the twentieth century.

CHAPTER 1
The Background to Management Consulting

Bringing together the various threads in order to map the history of management consulting in Britain has been a similar exercise to that of completing a jigsaw puzzle in which a number of the important pieces are missing. One major piece of this particular puzzle, and the one that has proved the most elusive, is identifying that point in time when management consulting first became established as a form of service in Britain Potentially, it could have coincided with the inception of management itself, the dating of which has proven to be equally problematic because the act of management has existed ever since human activities have involved organisation and co-operation in some form or another (Urwick and Brech 1946b).¹

The one primary reason why it has been difficult to identify when management consultants first offered their services in Britain is because records have not been discovered to make identification possible. In the early days of management consulting individuals engaged in this field tended to be either sole practitioners or they worked in small partnerships and records have simply not survived. In fact, the first management consulting company was not established in Britain until 1926 and it is really from that point onwards that information has become available.² This may also partly explain why the activities of early consultant pioneers have escaped the notice of business historians and other interested parties. To complicate identification further, in the early days the practice of advertising services was simply not carried out, that is with very few exceptions. Clients generally became aware of the existence of such men either through direct contact by the consultant himself, the more usual method, or via some form of recommendation, possibly from other satisfied clients.³ Other avenues of recognition included articles written by these men in journals and other publications, or through the papers delivered by them at professional and other forms of meeting.

This opening chapter is concerned with setting the scene for a review of the history of management consulting in Britain for the period from the 1860s to the present day; to help achieve this there are three distinct aims. Firstly, no historical review could be carried out without a clear focus. The history of management consulting is no exception and, therefore, the first section is concerned with the development of a definition of management consulting. Secondly, it is necessary to provide a summary account of Britain's business history in the period leading up to and during the period when management consulting services first commenced in this country. This helps to provide an explanation both as to why consulting services were first provided and of the form that those services took. Finally, no history of management consulting would be complete without some knowledge of the theoretical concepts and practical application that underpinned the development and trends within business and management. Such factors also helped shape the form of services provided by the consultants.

Consulting and Consultants

Britain's position as world leader in technological development, manufacturing and trade seemed secure during the early period of the Industrial Revolution. Britain was the first industrialising nation and, consequently, enjoyed a dominant position in the global marketplace at that time. By the mid-nineteenth century the picture was changing. The newly industrialising nations, exemplified by the United States and Germany, effectively challenged this position and Britain had lost its dominance in both overseas and domestic markets. From the perspective of the history of management consulting in Britain it is probably no accident that the first identified instance of a management consultant service occurred in the second half of the nineteenth century. Nonetheless it would be a mistake to conclude that Britain's waning industrial might brought with it a new phoenix to boost its industrial position. The early management consultants were not giants in the mythological sense, providing new vigour to a declining industrial base. Their numbers were too few. But from those small beginnings in the nineteenth century, management consultancy was eventually established and through the process of time, as their numbers increased and the range of services they provided widened, management consulting's position as a sought-after source of advice and assistance to business and governments became established.

At the outset one important question needs addressing; what is a management consultant? Robert Townsend (1970), in his sometimes humorous examination of business practice, suggests that management consultants are '...people who borrow your watch and tell you what time it is and then walk off with it'. This rather cynical view of the American consultancy market thirty years ago suggests that relationships between clients and consultants were and are not always positive. One reason for this might be that services provided by some consultants failed to meet the expectations of their clients. Part of the reason may be that not all those who describe themselves as management consultants actually are; many individuals and organisations advertise themselves as consultants and consultancies without providing a service of a full consultancy nature.⁴ Other explanations may centre on the competence of individuals or the provision of unrealistic expectations. Whatever the reason, there is a need to explicitly describe the role of a management consultant, if only to separate out those for whom management consulting is a business title only.

Successful management consultants were and are involved in improvements to the process of management within client firms. In the pioneering days of management consulting (covered in Chapters 2 and 3) consultants were engaged in activities in support of management across a range of operational areas in manufacturing and related industries. In other words, they were concerned with the day-to-day operations of the business rather than the strategic decision-making processes. Initially, assignments were concerned with the management of production processes, both at the shop-floor level and within the administrative set-up of the businesses. In the early days of consultancy outside interference in those areas associated with strategic decision-making was considered taboo, the role being the sole preserve of those born to the task. Attitudes reflected the situation that '...managers are born, not made' (Wilson 1995). This attitudinal stance only slowly changed, with changing attitudes becoming more noticeable in the post Second World War period, and this was reflected in the form of services provided by management consultants. Today involvement in areas associated with production management is but one aspect of management consultancy and delving into the strategic areas of business is as common as improving operational performance.

The range of services provided by consultants did not stand still; they evolved and widened over time to take account of the changing circumstances found within the various industrial and commercial settings. Later, in the period after the Second World War and onwards, consultants were found operating within Government Departments. From a definitional perspective, this meant that the role of the consultant also evolved over time; it still continues to evolve even today as the boundaries of management consulting are pushed even wider. Nevertheless, it is possible to provide an outline definition of a management consultant, identifying the core elements of the role through an acceptance of the evolving service base and the levels within the firm to which it is applied.

The consultant is a specialist provider of services in support of management in exchange for a fee. Initially, definitions of consultants identified their independent nature in not being direct employees of the firm. Such definitions have changed over time to bring them in line with the view that internal consultants can also exercise a level of independence in carrying out their tasks.⁵ Nevertheless, any definition of a consultant must identify their impartiality, to the extent that he or she is free from the internal political wranglings of the firm. Their advice should have no preconceptions; it should be objective and honest. Such advice is concerned with all the elements of management and would fit within the broad areas of strategy, policy, markets, organisation, and procedures and methods at the various levels within the firm (Boakes 1999).

From a historical perspective, the areas identified above are those that apply now and these have not always been present within the portfolio of services provided by management consultants throughout their history. Similarly, the categorisation of services has also changed, with the current categories differing from those that applied in the early period of the consultants' history.⁶ For example, information technology lies at the heart of consulting today, both as a distinctive service area and as an aid to consulting. In the early years some individuals and companies did not follow the general trend of providing services in production management as a core focus. Some of the early consultants were concerned with the marketing and sales aspects of a client's business, although instances of work in these areas were relatively rare. This was because management consultants, by and large, either came from an engineering or accountancy background, at least during the first half of the twentieth century. Regardless of background, however, all consultants require knowledge of the particular operational environment in which they are involved, as well as an interest and experience in management.

As a consequence of their involvement in an organisation consultants develop a plan determined through some form of analysis, and having made recommendations are at the point in the series of events for which those engaged in a purely advisory capacity would have completed their task. This is the point, in definitional terms, which separates management consultants from those providing services of an advisory nature whose responsibility ends with the presentation of their recommendations. From here on, to be a consultant, part of the role is to provide assistance in the execution of the recommended plans where such assistance is required. The management consultant is, therefore, more than a provider of advice on payment of a fee. The consultant is responsible for ensuring that solutions are fully effective, only handing over the remaining portion of responsibility to the client at the conclusion of the assignment. In this way, solutions that have to be modified as a consequence of their practical application, or those that require further translation in the operational setting, are carried out under the supervision of the consultant. In succinct terms, the consultant is employed to identify and correct deficiencies and weaknesses in the firm, as well as to search, identify and define opportunities for improvement where that is appropriate.

The definition is complicated because traditionally management consultants have also played their part in the continuing development of managers. Chapter 7 specifically deals with this aspect of consultancy work, although instances of consultant involvement in the broad fields of management education and training can be found throughout this book. In parallel with this and throughout the history of management consulting, less formalised methods have also resulted from the involvement in consultants in client firms. For example, Kubr (1977) points toward the consequential development of client personnel through observation and involvement with the consultant when problem solving is taking place during an assignment. Therefore consultants also have a role to play in the continuing development of managers and client personnel as part of the consulting function.

Today, management consulting is an accepted and commonplace form of service, but this has not always been the case. Management consulting has been labelled in many different ways at different times and some labels have engendered fear amongst the working population, for example in the early years the title 'efficiency engineer' was linked to the activities of those providing consultancy services. Many of the early consultants were engineers by profession and improvements to manufacturing efficiency were the hallmark of their service. Consultants were known as 'industrial engineers', 'consulting engineers' or 'field engineers', amongst other titles. 'Management consultant', as a job title or as a descriptive label, is the more recent form of terminology dating from the post 1930s setting within Britain. The first instance of the usage of the term 'consulting' in a business title occurred in 1919 with the formation of the partnership of Brindley and Elbourne (see Chapter 2). For the purpose of this history management consulting and management consultants, as generic norms, are applied in all instances, unless some other form of terminology has specific relevance to the particular setting being described.

An Outline History of Britain's Business Environment

There appears to be little doubt, and this history supports this contention, that the growth of management consulting in Britain has in part been influenced by wider trends in Britain's economic and business environments, A pocket history in but a few pages cannot possibly hope to provide a comprehensive account of the changing nature of Britain's businesses. In any event there are a number of volumes in existence that perform this role very well.⁷ The purpose of this part of the chapter is to provide an outline sketch of some of the main events that occurred within Britain in the period leading up to and during the commencement of management consultancy services.

During the Industrial Revolution, particularly during the period of the latter part of the eighteenth and the beginning of the nineteenth centuries, production in industries such as textiles, engineering, timber and mining within Britain tended to be widespread; generally the size of enterprises was relatively small, although there were exceptions. These enterprises, workshops and domestic arrangements, were predominantly family owned and controlled, and after the 1770s many of them were located near to cheaper sources of labour and water (More 1989). During the nineteenth century, industry began to concentrate in urban areas where economies of scale and the use of steam power helped facilitate change. By the mid-1880s there was an increasing number of consulting engineers who acted as salesmen abroad; this was made possible because of seminal events such as the birth of railways. These consulting engineers working in countries outside of Britain, as well as within it, sold railway installations, factories, harbours, and a whole host of major structures and other forms of installation. Orders for specifications to fulfil their clients' requirements were passed on to a multiplicity of workshops and factories specialising in individual areas of manufacturing. This was a complex process of ordering, manufacture and eventual passage of goods for assembly and installation under the control of the consulting engineers themselves.

In the textile industry from the late eighteenth century onwards, a plethora of textile manufacturers, specialising in their own particular areas of production, produced only what was asked of them. In support of this structure, and intimate to the overall process, were merchants, particularly for colonial markets servicing a growing export trade. These merchants initially operated in Liverpool and Manchester, and later in London, acting as the sales managers for the myriad numbers of small firms that tended to concentrate on only one process within the whole scope of textile production. The situation in textiles was similar to that of engineering, concerning a complex series of orders being fed into a range of manufacturers for eventual transmission to fulfil client requirements. Other industries were similarly affected, for example within furnishings and in household goods. During this overall period of expansion, the general population of Britain was also growing, for example between 1855 and 1900 the population increased by more than 50 per cent (Feinstein 1976). Civic services (such as they were) and other services were expanding to cope with the needs of a growing population, also being serviced by this myriad number of predominantly small-scale manufacturing units.⁸ This is emphasised through the situation in which output in industrial production and manufacturing had almost tripled during the same period, even though Britain's share of world production fell (Pollard 1965).

Expansion was brought about, in some measure, through the realisation of some within industry that they were in a position to start up on their own account. Many became journeymen in the first instance working for other employers, eventually moving on to setting up their own workshops. Some of these businesses, albeit largely small-scale, grew from workshops into company formations, especially during the latter part of the nineteenth century. This provided those companies with the opportunity to bring in outside money to stimulate further expansion, although family ownership and self-investment meant that little outside money was ever raised, at least until the early-twentieth century (Wilson 1995).

More generally in Britain there was a growing realisation of inefficiencies in the production process. This failing situation came to a head in the late 1860s and was a subject of discussion about the Paris Exposition of 1867 which demonstrated that Britain had lost its primacy in some of the major manufacturing industries and it was significantly losing trade to competitors abroad. Je...

Table of contents

• Cover
• Half Title
• Series Page
• Title
• Copyright
• Contents
• List of Tables
• Preface
• Acknowledgements
• General Editors Preface
• Dedication
• 1 The Background to Management Consulting
• 2 The Pioneers, 1869-1925
• 3 The Beginning of Organised Consultancy, 1926-1933
• 4 New Directions, 1929-1939
• 5 Wartime Practices, 1939-1945
• 6 Improving Productive Performance
• 7 Management Education and Training: The Consultancy Approach
• 8 From Efficiency Engineering to Strategy
• 9 Information Technology and Management Consulting
• 10 The International and Global Aspects of Management Consultancy
• 11 A Summary and Review of Management Consultancy
• Bibliography
• Index