Consultancy, Organizational Development and Change

A Practical Guide to Delivering Value

Julie Hodges

• Editorial: Kogan Page
• Año: 2017
• ISBN:
  9780749478643
• Edición: 1
• Categoría: Negocios y empresa
• Categoría: Desarrollo organizacional

Organizations are increasingly investing in consulting capabilities to understand what changes they need to make to keep up the pace with the competition and future-proof their business. Consultancy, Organizational Development and Change is a guide for students and internal and external consultants needing to develop the necessary skills to consult in organizational settings where there is a great deal of complexity. It tackles the issues posing the greatest threat to the success of the change programme, including how to adapt to rapidly shifting needs, deal with the emotional and ethical issues that arise and ensure that the managers take full ownership for the change so that 'business as usual' is established.Complete with case studies from the 'Big Four' consultancy groups as well as boutique firms, Consultancy, Organizational Development and Change shows how to identify and execute interventions in a variety of organizational settings to deliver value. It provides guidance on how to develop a value proposition; define, write and present the business case for the proposed interventions; establish credibility and report on the results.

PART ONE

The context of consultancy

01

The nature and value of consultancy

KEY POINTS

• Consultancy contributes to, catalyses and influences organizational change and can help to create, support and embed change.
• Consultancy for change is about working with, and through, people by building and maintaining relationships in order to sustain change in organizations.
• At the heart of consultancy for change is organizational development (OD), which is a process for initiating, implementing and sustaining change.
• Defining the value of consultancy and determining whether or not it has been achieved are highly subjective, as what constitutes value for one client may be different for another, and vary in different situations.

Introduction

The aim of this chapter is to contextualize consultancy, OD and organizational change. The chapter begins by focusing on the global context in which consultancy is operating. Kamales Lardi, a Managing Partner at consultants Lardi & Partner Consulting, describes her personal experience of how the digital revolution is impacting on consulting. This is followed by a discussion of the theoretical perspectives of consultancy, which concludes by proposing a shift from the traditional process-driven approach to a people-driven approach. Perry Timms describes how he has used the latter approach, which he terms ‘people-powered’ change. The chapter then goes on to provide overviews for each of the key concepts used throughout the book. Attention is paid to what consulting is and is not, and why it is important. The chapter concludes by considering the value of consultancy and what constitutes value in the eyes of a client.

Learning outcomes

By the end of this chapter you will be able to:

• differentiate between the functionalist and critical view of consultancy;
• define key concepts such as ‘consultancy’ ‘change’ and ‘organizational development’;
• appreciate the importance of consultancy for change;
• identify how consultancy can add value; and
• recognize the different types of clients who require consultancy.

The structure and dynamics of the global consulting world

The growth of consultancy

The consulting industry is a multifaceted, global business sector that has evolved quickly. The era of strategy consultancy began in the 1960s, when the demand for engineering-based advice on the shop floor declined and there was an increase in international trade and corporate expansion, which began to shift the demand for consultancy to the senior executive level. With the growth of global consultancy firms in the 1980s and 1990s the consultancy market exploded. This was marked by the emergence of an elite group of strategy consulting firms, including McKinsey, Boston Consulting Group (BCG) and Bain & Co. These firms applied a fact-based, integrative and analytical approach to solving clients’ issues, which has been mirrored by other global firms, including the Big Four professional services firms – Deloitte, PwC, EY, KPMG – and Accenture, which also provide implementation and operational improvement services, as part of their consultancy offerings.

Commercially, consulting firms are successful; the research company Gartner has calculated that the Big Four professional services have a combined 40 per cent of the global consulting market and have significantly increased their share over the past decade through organic growth and acquisitions, with an increase in their consulting income by 11.5 per cent to £2.55 billion in 2015 (Sourceforconsulting.com, 2016). The growth of such consultancy firms is, according to the Management Consultancy Association (MCA, 2016), because of the industry’s ability to deliver high-quality services that create sustainable value to organizations.

Critics are more sceptical and instead portray the consulting industry as one in which consultants benefit from crisis or underperformance on the part of clients. Their view is that consultants are healers of corporations in need of salvation, and that they are ready to provide all sorts of solutions to clients who would otherwise not know what to do (Sorge and van Witteloostuijn, 2004). This would suggest that the consultancy sector benefits from economic decline and moves counter-cyclically to the economy. Thomas Armbruster says that this is, however, an erroneous assumption. Instead he points out that consultancy not only ‘breathes with economic cycles, but it does so in a strongly reinforced, procyclical way: the highs of consulting growth are much higher than general economic highs and the lows are even lower than general economic lows’ (2006: 92). So a weak economy or recession pulls consulting revenues down while a growing economy boosts consulting revenues. Armbruster concludes that consultancy ‘depends on and responds to blossoming or recovering client firms, rather than feeding on corporations in crisis’ (2006: 93). This is supported by Andrew Hill (2015), who points out that demand for consultancy comes from improving economic conditions and a sense of being in a position to act on new visions of the future. Hill concludes that investment in consultancy is based on discretionary spend and that the consultancy market represents a buyer’s, rather than a seller’s, market.

The drive to succeed and to increase buyer demand shapes the structure and organization of consultancy firms and influences recruitment (Matthias, 2013) with many firms operating an ‘up or out’ culture (O’Mahoney and Markham, 2013) which underpins the sink or swim aspect of having a successful career. Consultants at global firms may each earn significant salaries in return for long working hours, high sales targets and utilization rates, high levels of stress and weeks spent away from home. Despite these pressures, because of the high pay and the prestige, students at business schools frequently aspire to jobs in consulting. In an article in the Financial Times entitled ‘MBA graduates’ love affair with consultancy endures’, Ian Wylie (2016) writes that ‘Google, Facebook and Amazon might grab more of the headlines, but consulting firms are still snapping up the most students at top business schools as they remain the largest recruiters’.

Despite this continuing increase in popularity amongst potential recruits, the consultancy industry is facing disruption. In an article published in the Harvard Business Review entitled ‘Consulting is on the cusp of disruption’, Clayton Christensen and colleagues (2013) describe major change in the consulting industry with firms moving away from judgement-based and bespoke diagnoses towards knowledge asset solutions. Although in general the size and influence of big-name consultancies such as McKinsey and BCG are still strong, early signs of a pattern of disruption by increasingly sophisticated competitors with non-traditional business models are evident. In the article, Christensen and colleagues point out that the share of work that is classic strategy has been steadily decreasing and is now about 20 per cent, down from 60–70 per cent some 30 years ago (Christensen et al, 2013).

The industry is facing significant changes. A report by Sourceforconsulting.com (2011) identifies six trends impacting on the sector which are causing disruption:

1. Context. The globalization of clients is a crucial source of growth, but at the same time it is reshaping the consultancy industry.
2. Purchase. The increasing use of multinational purchasing models is impacting on the historic influence of relationships.
3. Resources. Clients are choosing to staff more projects internally.
4. Delivery. Competition is now between firms and freelancers rather than between firms.
5. Outcome. The majority of consultancy firms now sit in the middle between advice and implementation.
6. Margin. Clients are expecting lower fee rates and higher value for their return on investment.

A factor to add to this list is the digital transformation, which is driving change in organizations and consequently impacting on the consultancy industry.

The impact of the digital transformation on the consultancy profession

The digital revolution is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres and resulting in transformational change in the behaviour of people across the world. There is unlimited potential from billions of people connected by mobile devices, with unprecedented processing power, storage capacity, and access to knowledge (Schwab, 2016). Digital consumers are now expecting the same level of responsiveness and intuitive user experience from their interactions with companies. The demand for digitization of products and services has impacted traditional business models, with the emergence of digital businesses across various industries. These purely digital companies have developed their business models to accommodate the growing population of digital consumers, and are proving disastrous for traditional business models...