The Basic Principles of Effective Consulting

Linda K. Stroh

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781351007825
• Edition: 2
• Topic: Negocios y empresa
• Subtopic: Consultoría

Consultants are called upon more and more to help implement needed organizational changes, fill gaps in workforce capabilities, and solve significant business problems. As the demand for consultants increases, it is critical that practitioners differentiate themselves and understand how they can be most successful, for themselves and their clients. The Basic Principles of Effective Consulting details what effective consultants do and provides a step by step process of just how they do it.

The Second Edition of The Basic Principles of Effective Consulting is fully updated with real-life cases. End-of-chapter summaries foster both mastery and engagement, as well as providing a quick reference throughout a consultant's career. In addition, each chapter includes a section "From the experts" written by successful consultants and users of consultants' services. These experts share ideas and tips about their own consulting experiences that relate to chapter material.

The book is written for entry level and seasoned consultants, project managers, staff advisors, and anyone who wants to learn (or be reminded of) the basic principles of effective consulting. The book is well suited as an excellent textbook for college courses on consulting, organizational training, and a lifetime go-to consultant's resource.

Chapter 1

Consultants and consulting

The consulting industry is thriving and is expected to grow as corporations continue to restructure, downsize, merge, outsource, and open new offices in the face of increasing business competition around the globe. According to Statista, U.S. consulting revenue grew from $107 billion to $133 billion between 2011 and 2016, with a forecast of $158 billion and more in the 2020s. Yes, the future looks bright for consultants, as projections suggest a steady growth in the demand for consultants’ services over the next decade.

In the chapters that follow, you will be provided with a step-by-step process to help both you and your clients achieve successful outcomes by reaching shared goals. You will read examples of the processes used by effective consultants, along with case studies drawn from consultants’ experiences. Also included in each chapter is expert advice by established consultants and users of consulting services.

Before we start with the details of the consulting process, however, let’s define some of the basic terms and approaches used in the consulting business.

Essentially, what consultants do is help organizations and individuals (clients) that have a need. The big question is how to help these clients most effectively. That is what this book is all about. Many consultants are very effective and make important contributions to the success of the organizations for which they consult. These consultants assist businesses in a variety of ways, from solving staffing and management problems to introducing new technology and helping organizations weather all manner of external and internal changes. Other consultants, unfortunately, are less effective—and less successful. Often, this is because they never learned the basics of the consulting process. They merely assumed that because they had expertise in some subject area that clients would be eager to follow their advice.

The ultimate goal of consulting is to solve a client’s business problems, which in many cases are related to the need for greater efficiency and effectiveness; consultants also describe what they do as interventions involving people, processes, and practices. This requires considerable skill and understanding of the organization’s talent, problems, and culture, as well as a strong grasp of the best strategies to assist organizations to change. This is a very important caveat of the consulting business. The consulting process ultimately ends with an organization and its employees embarking on some kind of change, attesting to the importance of the consultant being as effective and efficient as possible.

The purpose of this book is to provide you with the basic skills and strategies you need to be that effective consultant. If you follow the step-by-step process outlined here, you will vastly increase the probability of achieving successful outcomes for you and your clients.

In the chapters that follow, you will learn how consultants have assisted a variety of companies and agencies. For example, there is the case of a local organic food manufacturer who couldn’t decide whether to begin selling his products in a broader market; the case of the Department of Child and Family Services of a large state that turned to consultants to help them design a system that ensured that all children in their care were accounted for and monitored, so that they wouldn’t “lose” any children; the case of the manufacturing company that wanted to assess whether using social media as a marketing tool would benefit its facilities around the world; and the case of the consultant who was conducting a management retreat with the executive group of a large medical center when a hidden agenda emerged that was not part of the official agenda.

To begin, let’s consider the hypothetical case of a small business we’ll call UneekGraphix, which is starting to feel some pain caused by a decline in revenues. As you read the case, ask yourself what you would do if you were the consultant working with UneekGraphix. How would you proceed to help this company?

UneekGrafix is a small graphics company that was founded about 10 years ago by three graphic artists who met while they were working for a major advertising agency. UneekGrafix quickly established a reputation for its creative, often-offbeat designs for CDs, book covers, display advertising, exhibits, logos, and promotional items. In 10 years the company acquired several major clients and increased its staff from the three founding employees to more than 80 designers and support staff. However, in the last two years, the company has lost three major clients and has had difficulty finding new business. As a consequence, revenue has declined. Last month, the company had the first layoff in its history. Top management at UneekGrafix is both concerned and perplexed—concerned about the decline in income and perplexed about what to do about it. As the president said, “There is something going on in the market that we don’t understand, and we have to get a grasp of this quickly before we take another big hit in revenues.”

The UneekGrafix scenario is not uncommon for competitive businesses. A company is started by some talented people, experiences fast growth with a bright future, and suddenly hits a wall. Company officials can’t figure out what’s wrong. What they are currently doing was successful in the past but does not seem to be working now.

UneekGrafix could potentially benefit a great deal by hiring a consultant. The firm is having considerable difficulty determining what is causing the downturn in revenues, and a consultant could bring a fresh perspective to the problem. The consultant might suggest conducting a thorough diagnosis of both UneekGrafix’s internal operations and its customers and market. Or perhaps the consultant might help the management team take a good look at what services and products are demanded by the market and compare these with what UneekGrafix is providing. Finally, the consultant might help the team decide ways the company could reverse the revenue decline by shifting its direction.

This case is a good example of what consultants might be called on to do, as well as why their services can be so valuable to a client. We will get back to UneekGrafix soon, but let’s first clarify what is meant by the term consulting.

Defining consulting

In this book, a consultant is defined as someone who either advises a client on the desirability of taking some action, or who assists the client in making a decision and then helps the client in planning or implementing action as determined by the client. Several points are stated or implied by this definition:

First, a consultant works for clients. These clients, or beneficiaries of the consultant’s services, can be individuals, groups, or organizations.

Second, a consultant helps these clients achieve goals that the clients, not the consultant, identify. The point here is that the client usually decides what problems need attention or what initiatives need to be implemented, and the consultant is hired to address these problems or help institute these initiatives. Identifying the problem may not be easy, and the consultant will often have to work hard to be sure that the problem the client has identified is in fact the problem that needs solving. We will discuss this further in later chapters.

Third, a consultant provides a specialized skill or expertise that the client, or client organization, is unable to provide on its own. For example, a company might hire a consultant to identify software to increase efficiency in some aspect of the business and, perhaps, conduct training in how to use it. Alternatively, the consultant might conduct a study on a topic in which the consultant but no one in the hiring organization has expertise, such as some specialized aspect of marketing or social media.

Fourth, although consultants may influence decision making by virtue of their knowledge or expertise, consultants usually have little power or authority to make changes. A consultant may recommend changes, and even how to make them, but the client retains ultimate authority over whether and which changes to implement.

To apply this definition of consulting to the UneekGrafix scenario, the client, in this case the company, has identified the loss of revenues as its problem. What you as a consultant would bring to UneekGrafix is probably some specialized expertise in strategic planning, market analysis, or some related area that the company does not have, or at least does not have with the level of sophistication needed. Based on your research and expertise, you will surely be able to influence what decisions the top management team makes regarding its overall strategy. However, final decisions on what to do and when to do it rest in the hands of UneekGrafix’s management. Managers get paid to make and execute decisions; consultants get paid to advise them.

Two approaches to consulting

Now that we have defined, in general terms, what consultants do, let’s get a bit more specific. Not all consultants use the same approach to serve a client’s need. Regardless of the goal of the project, consultants typically will take one of two basic approaches when they work with clients. They will function as experts or as facilitators. Although most consultants position their services toward one approach or the other, effective consultants know how to modify their approach depending on the nature of the problem or project the client wants them to tackle. In other words, they function as a combination of expert and facilitator, refining their approach in response to the needs of their clients. That said, let’s take a brief look at the differences in these two basic approaches.

Consultants as experts

If you ask someone what a consultant does, most people would say that a consultant offers expert advice. Medical doctors are frequently used as examples. You explain your symptoms to a doctor, who in turn asks you a few important questions and then tells you what you need to do to get better. The process is typically fairly quick and simple, although not always painless.

The situation is not too different in the business context. Usually, a client brings a problem to a consultant, who then asks the client many questions. The consultant may gather diagnostic data related to the problem—by reviewing company records or market figures, for example. The consultant may also interview a broad sample of people throughout the organization. The consultant then analyzes the data, arrives at a diagnosis of the problem, and tells the client what the company needs to do to improve or eliminate the problem. On occasion, a consultant will also assist in implementing the recommendations, thereby taking more of a facilitator role.

Let’s go back to the case of UneekGrafix and look at how a consultant using the expert approach might consider the company’s dilemma of its decreasing revenues.

Once the top executives at UneekGrafix decided to seek the assistance of a consultant, they interviewed three consulting firms that specialized in market strategy or strategic planning. Each firm made a presentation to the executives at UneekGrafix and, on the basis of the presentations and interviews, the company chose a firm that had considerable expertise in the graphics industry.

After the consultants had a good understanding of what the company executives expected from them, the consultants conducted interviews with company personnel. The purpose of the interviews was to identify the products and services offered by the company as well as to understand what the company’s executives saw as their primary customers and markets. The consultants then conducted a series of customer and market analyses. They interviewed current as well as former customers of UneekGrafix. They also talked with individuals at companies that had never used UneekGraphix to better understand how the company was perceived in the marketplace.

Another focus was on the company’s competitors: what were they doing that was bringing them business? To answer this question, the consultants conducted a very thorough market analysis. They were particularly interested in which products and services in the graphics business were increasing in use and which were declining. Also of interest was understanding what the market would look like in five years, particularly the impact of emerging technologies.

Having completed the market analysis, the consulting firm presented its findings to the senior management team of UneekGrafix, both in an oral presentation and a written report. In addition to the findings, the report included several recommendations of changes the company could consider making to reverse the decline in revenues and get back on a growth path.

As the UneekGrafix example demonstrates, the obvious advantage of employing experts as consultants is that they have knowledge that is not available in the client organization. As the business world becomes faster paced and more technologically sophisticated, experts can be an invaluable resource. The consultants hired by UneekGrafix had several special skills. One, they had a good understanding of what information to collect and how to collect it. Two, they were experts in the graphics field. They also had a good understanding of strategy—how to help a company gain a competitive advantage over its competitors.

As experts not only in strategic management but also in the graphics business, the consultants to UneekGrafix gave its managers new insights about their business and offered several valuable recommendations on ways to jump-start its revenues. These are among the ways consultants can be so valuable.

This approach could best be described as a “research” kind of consulting project, one in which the client lacks the data, tools (a survey, for example), and/or the resources to do what needs to be done. For example, a client might ask a consultant to prepare, distribute, and analyze RFPs (requests for proposals) for employee benefit plans. The consultant collects input from the client, then does a lot of the research on his or her own with potential vendors, explains the results, and then helps the client decide which proposal to accept. End of story.

As with any approach to consulting, the expert approach, described here, has potential problems. One possible con...