A Pivot al Moment in Management Consulting
October 4, 2023
The practice of selling “management consulting” has undergone a handful of tectonic shifts since Edwin Booz convinced Sears, the “department” store outfit to hire him. (Yes, I am aware I am cherry picking, but this is a blog post, not a for fee report.)
The first was the ability of a consultant to move around quickly. Trains and Chicago became synonymous with management razzle dazzle. The center of gravity shifted to New York City because consulting thrives where there are big companies. The second was the institutionalization of the MBA as a certification of a 23 year old’s expertise. The third was the “invention” of former consultants for hire. The innovator in this business was Gerson Lehrman Group, but there are many imitators who hire former blue-chip types and resell them without the fee baggage of the McKinsey & Co. type outfits. And now the fourth earthquake is rattling carpetland and the windows in corner offices (even if these offices are in an expensive home in Wyoming.)
A centaur and a cyborg working on a client report. Thanks, MidJourney. Nice hair style on the cyborg.
Now we have the era of smart software or what I prefer to call the era of hyperbole about semi-smart semi-automated systems which output “information.” I noted this write up from the estimable Harvard University. Yes, this is the outfit who appointed an expert in ethics to head up the outfit’s ethics department. The same ethics expert allegedly made up data for peer reviewed publications. Yep, that Harvard University.
“Navigating the Jagged Technological Frontier” is an essay crafted by the D^3 faculty. None of this single author stuff in an institution where fabrication of research is a stand up comic joke. “What’s the most terrifying word for a Harvard ethicist?” Give up? “Ethics.” Ho ho ho.
What are the highlights of this esteemed group of researches, thinkers, and analysts. I quote:
- For tasks within the AI frontier, ChatGPT-4 significantly increased performance, boosting speed by over 25%, human-rated performance by over 40%, and task completion by over 12%.
- The study introduces the concept of a “jagged technological frontier,” where AI excels in some tasks but falls short in others.
- Two distinct patterns of AI use emerged: “Centaurs,” who divided and delegated tasks between themselves and the AI, and “Cyborgs,” who integrated their workflow with the AI.
Translation: We need fewer MBAs and old timers who are not able to maximize billability with smart or semi smart software. Keep in mind that some consultants view clients with disdain. If these folks were smart, they would not be relying on 20-somethings to bail them out and provide “wisdom.”
This dinobaby is glad he is old.
Stephen E Arnold, October 4, 2023
Gartner Hype Cycle: Some Pointed Criticism from Analytics India
September 5, 2023
Note: This essay is the work of a real and still-alive dinobaby. No smart software involved, just a dumb humanoid.
I read the Analytics India article “Gartner’s Hype Cycle is a Waste of Time.” The “hype cycle” is a graph designed to sell consulting services. My personal perception is that Gideon or a close compatriot talked about the Boston Consulting Group’s version of General Eisenhower’s two by two matrix. Here’s an example of
I want to credit Chris Adams article about the Eisenhower Matrix. You can find Mr. Adams’ write up at this link. I don’t know what General Eisenhower’s inspiration was, but the BCG adaptation was consulting marketing genius. Here’s an example of the BCG variant:
This illustration comes from Business to You at this link.
Before looking at a Gartner graph goodie, I want to point out that the BCG innovation was to make the icons relate to numbers. BCG pointed to the “dogs” icon and then showed the numbers like market share, product costs, etc. that converted an executive in love with the status quo to consider rehoming the dogs or just put a beloved pet down. In the lingo of one blue chip outfit, the dog could find its future elsewhere.
I did a Bing image search for Gartner hype cycle and found a cornucopia of outputs. Here’s one I selected because it looked better than some of the others:
If you want to view a readable version, navigate to this Medium post by Compassionate Technologies of which I have zero knowledge. (But do the words “technology” and “compassion” go together?)
The key point about the Gartner graph is that they all look alike; that is, the curves don’t change, which is the point I guess. A technology begins at point 0,0 and moves up a hockey stick curve (maybe the increasing hype) and then appear to flatten out. I am confident that the Gartner experts are not gathering technology market and investment data and thinking in terms of linear regression, standard deviation, or a calculator on a mobile phone.
The client says, “Your team’s report strikes me as filled with unsupported assertions. My company cannot accept the analysis. We won’t pay the fee for this type of work.” Oh, oh. Thanks, MidJourney, close to my prompt but close only counts in horse shoes.
The difference between the BCG graph is that numbers are used to explain the “dogs,” “stars,” etc. The Gartner graph is a marketing vehicle. Those have read my essays over the years know that I view the world with some baked in biases; for example, the BCG graph is great marketing which leads to substantive consulting. This is one characteristic of a blue chip consulting firm. The Gartner graph is subjective or impressionistic, a bit like a Van Gogh night sky. Sure, there are stars, but those puppies don’t look like swirlies to me. Thus, Gartner is to me a mid tier consulting firm. Some consumers of these types of marketing graphs use them to justify certain actions; for instance, selecting a particular type of software. When the software goes off the rails, the data-starved impressionistic chart leaves some hungry for more data. When another project comes along, the firm may seek a blue-chip outfit even if its work is more expensive.
Now back to the Analytics India article cited above.
The author makes a statement with which I agree:
The Gartner Hype Cycle is not science, but Gartner presents it as an established law.
Exactly. This is marketing, not the BCG analytics centric Eisenhower 2×2 matrix.
Here’s another passage from the write up (originally from Michael Mullany):
Many technologies simply fade away with time or die. According to Michael Mullany, an additional 20% of all technologies that were tracked for multiple years on the Hype Cycle became obsolete before reaching any kind of mainstream success. The Gartner Hype Cycle is not science, but Gartner presents it as an established natural law. Expressing similar sentiments, a user on Hacker News wrote, “Why do people think the Gartner Hype Cycle is a law of Physics?” when in fact, the Hype Cycle lacks empirical backing and fails to consider technologies that deviate from its prescribed path.
Yep, marketing.
Do I care? Not any more. When I was doing consulting to buy cheap fuel for my Pinto (the kind that would explode if struck from behind), I did care. The blue chip outfit at which I worked was numbers oriented. That was a good thing.
Stephen E Arnold, September 5, 2023
Blue Chip Consulting Firms: A Malfunctioning System?
August 14, 2023
Note: This essay is the work of a real and still-alive dinobaby. No smart software involved, just a dumb humanoid.
Blue chip consulting companies require engagements from organizations willing to pay for “expertise.” Generative software can provide an answer quickly. Instead of having many MBAs and people with “knowledge” of a technology provide senior partners with filtered information, software can do this work quickly and at lower cost.
A senior consultant looks at a malfunctioning machine. The information he used to recommend the system resulted in the problem which has turned into an unanticipated problem. Instead of a team of young MBAs with engineering degrees, he has access to smart software. Obviously someone will notice this problem. “Now what?” he asks himself.
“Consulting Firms Like Accenture Are Giving Recent Grads $25,000 Stipends to Push Back Their Start Dates” suggests that blue chip consulting firms are changing the approach to bringing new human resources on board. The write up reports:
Work has been slow at many top consulting firms over the past year. New hires straight out of business school are running errands and watching Netflix — to the tune of $175,000 a year — because there’s not enough work to go around. Others are being offered tens of thousands dollars to push their start dates back to next year.
Let’s assume that this report about “not enough work to go around” is accurate. What does this suggest to, a person who has worked at a blue chip consulting firm and provided services to blue chip consulting firms in my work career?
- The pipeline of work to be done is not filled or overflowing. Without engagements, billing is difficult. Without engagements, scope changes are impossible. Perhaps the costs of blue chip consultants is too high?
- Are clients turning to lower-cost options for traditional management consulting services? Outfits like Gerson Lehrman Group sells access to experts at a lower cost per contact than a blue chip firm? Has the gig economy crimped the sales pipeline?
- Is technology like ChatGPT-type services provide “good enough” information so companies can eliminate the cost and risk of hiring a blue chip consulting firm? (I think the outfits probably should be conservative in their use ChatGPT-type outputs, but today the “good enough” approach is the norm.)
Net net: Blue chip consulting firms are in the influence game. The delayed “start work” information indicates that changes are taking place in the market which supports these firms. The firms themselves are making changes. The signal summarized by the cited article may be a glitch. On the other hand, perhaps there is a malfunction in the machinery of what has been a smoothly-running machine for more than a century?
Stephen E Arnold, August 14, 2023
MBAs Want to Win By Delivering Value. It Is Like an Abstraction, Right?
August 11, 2023
Note: This essay is the work of a real and still-alive dinobaby. No smart software involved, just a dumb humanoid.
Is it completely necessary to bring technology into every aspect of one’s business? Maybe, maybe not. But apparently some believe such company-wide “digital transformation” is essential for every organization these days. And, of course, there are consulting firms eager to help. One such outfit, Third Stage Consulting Group, has posted some advice in, “How to Measure Digital Transformation Results and Value Creation.” Value for whom? Third Stage, perhaps? Certainly, if one takes writer Eric Kimberling on his invitation to contact him for a customized strategy session.
Kimberling asserts that, when embarking on a digital transformation, many companies fail to consider how they will keep the project on time, on budget, and in scope while minimizing operational disruption. Even he admits some jump onto the digital-transformation bandwagon without defining what they hope to gain:
“The most significant and crucial measure of success often goes overlooked by many organizations: the long-term business value derived from their digital transformation. Instead of focusing solely on basic reasons and justifications for undergoing the transformation, organizations should delve deeper into understanding and optimizing the long-term business value it can bring. For example, in the current phase of digital transformation, ERP [Enterprise Resource Planning] software vendors are pushing migrations to new Cloud Solutions. While this may be a viable long-term strategy, it should not be the sole justification for the transformation. Organizations need to define and quantify the expected business value and create a benefits realization plan to achieve it. … Considering the significant investments of time, money, and effort involved, organizations should strive to emerge from the transformation with substantial improvements and benefits.”
So companies should consider carefully what, if anything, they stand to gain by going through this process. Maybe some will find the answer is “nothing” or “not much,” saving themselves a lot of hassle and expense. But if one decides it is worth the trouble, rest assured many consultants are eager to guide you through. For a modest fee, of course.
Cynthia Murrell, August 11, 2023
The Future from the Masters of the Obvious
June 26, 2023
The last few years have seen many societal changes that, among other things, affect business operations. Gartner corals these seismic shifts into six obvious considerations for its article, “6 Macro Factors Reshaping Business this Decade.” Contributor Jordan Turner writes:
“Executives will continue to grapple with a host of challenges during the 2020s, but from the maelstrom that was their first few years, new business opportunities will arise. ‘As we entered the 2020s, economies were already on the edge,’ says Mark Raskino, Distinguished VP Analyst at Gartner. ‘A decade-long boom, generated substantially from inexpensive finance and lower-cost energy, led to structural stresses such as highly leveraged debt, crumbling international alliances and bubble-like asset prices. We were overdue for a reckoning.’ Six macro factors that will reshape business this decade. The pandemic coincided with and catalyzed societal shifts, spurring a strategy reset for many industries. Executive leaders must acknowledge these six changes to reconsider how business will get done.”
Their list includes: the threat of recession, systemic mistrust, poor economic productivity, sustainability, a talent shortage, and emerging technologies. See the write-up for details on each. Not surprisingly, the emerging technologies list includes adaptive AI alongside the metaverse, platform engineering, sustainable technology and superapps. Unfortunately, the Gartner wizards omitted replacing consultants and analysts with smart software. That may be the most cost-effective transition for businesses yet the most detrimental to workers. We wonder why they left it out.
And grapple? Yes, grapple. I wonder if Gartner will have a special presentation and a conference about these. Attendees can grapple. Like Musk and Zuck?
Cynthia Murrell, June 26, 2023
Blue Chip Consultants Embrace Smart Software: Some Possible But Fanciful Reasons Offered
June 7, 2023
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Note: This essay is the work of a real and still-alive dinobaby. No smart software involved, just a dumb humanoid.
VentureBeat published an interesting essay about the blue-chip consulting firm, McKinsey & Co. Some may associate the firm with its work for the pharmaceutical industry. Others may pull up a memory of a corporate restructuring guided by McKinsey consultants which caused employees to have an opportunity to find their futures elsewhere. A select few can pull up a memory of a McKinsey recruiting pitch at one of the business schools known to produce cheerful Type As who desperately sought the approval of their employer. I recall do a miniscule project related to a mathematical technique productized by a company almost no one remembers. I think the name of the firm was CrossZ. Ah, memories.
“McKinsey Says About Half of Its Employees Are Using Generative AI” reports via a quote from Ben Ellencweig (a McKinsey blue chip consultant):
About half of [our employees] are using those services with McKinsey’s permission.
Is this half “regular” McKinsey wizards? That’s ambiguous. McKinsey has set up QuantumBlack, a unit focused on consulting about artificial intelligence.
The article included a statement which reminded me of what I call the “vernacular of the entitled”; to wit:
Ellencweig emphasized that McKinsey had guardrails for employees using generative AI, including “guidelines and principles” about what information the workers could input into these services. “We do not upload confidential information,” Ellencweig said.
A senior consultant from an unknown consulting firm explains how a hypothetical smart fire hydrant disguised as a beverage dispenser can distribute variants of Hydrocodone Bitartrate or an analog to “users.” The illustration was created by the smart bytes at MidJourney.
Yep, guardrails. Guidelines. Principles. I wonder if McKinsey and Google are using the same communications consulting firm. The lingo is designed to reassure, to suggest an ethical compass in good working order.
Another McKinsey expert said, according to the write up:
McKinsey was testing most of the leading generative AI services: “For all the major players, our tech folks have them all in a sandbox, [and are] playing with them every day,” he said.
But what about the “half”? If half means those in Black Quantum, McKinsey is in the Wright Bros. stage of technological application. However, if the half applies to the entire McKinsey work force, that raises a number of interesting questions about what information is where and how those factoids are being used.
If I were not a dinobaby with a few spins in the blue chip consulting machine, I would track down what Bain, BCG, Booz, et al were saying about their AI practice areas. I am a dinobaby.
What catches my attention is the use of smart software in these firms; for example, here are a couple of questions I have:
- Will McKinsey and similar firms use the technology to reduce the number of expensive consultants and analysts while maintaining or increasing the costs of projects?
- Will McKinsey and similar firms maintain their present staffing levels and boost the requirements for a bonus or promotion as measured by billability and profit?
- Will McKinsey and similar firms use the technology, increase the number of staff who can integrate smart software into their work, and force out the Luddites who do not get with the AI program?
- Will McKinsey cherry pick ways to use the technology to maximize partner profits and scramble to deal with glitches in the new fabric of being smarter than the average client?
My instinct is that more money will be spent on marketing the use of smart software. Luddites will be allowed to find their future at an azure chip firm (lower tier consulting company) or return to their parents’ home. New hires with AI smarts will ride the leather seats in McKinsey’s carpetland. Decisions will be directed at [a] maximizing revenue, [b] beating out other blue chip outfits for juicy jobs, and [c] chasing terminated high tech professionals who own a suit and don’t eat enhanced gummies during an interview.
And for the clients? Hey, check out the way McKinsey produces payoff for its clients in “When McKinsey Comes to Town: The Hidden Influence of the World’s Most Powerful Consulting Firm.”
Stephen E Arnold, June 7, 2023
MBAs and Advisors, Is Your Nuclear Winter Looming?
May 31, 2023
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Note: This essay is the work of a real and still-alive dinobaby. No smart software involved, just a dumb humanoid.
Big time, blue chip consulting firms are quite competent in three areas: [1] Sparking divorces because those who want money marry the firm, [2] Ingesting legions of MBAs to advise clients who are well compensated but insecure, and [3] Finding ways to cuts costs and pay the highly productive partners more money. I assume some will disagree, but that’s what kills horses at the Kentucky Derby.
I read but did not think twice about believing every single word in “Amid Mass Layoff, Accenture Identifies 300+ Generative AI Use Cases.” My first mental reaction was this question, “Just 300?”
The write up points out:
Accenture has identified five broad areas where generative AI can be implemented – advising, creating, automation, software creation and protection. The company is also working with a multinational bank to use generative AI to route large numbers of post-trade processing emails and draft responses with recommended actions to reduce manual effort and risk.
With fast food joints replacing humans with robots, what’s an MBA to do? The article does not identify employment opportunities for those who will be replaced with zeros and ones. As a former blue chip worker bee, I would suggest to anyone laboring in the intellectual vineyards to consider a career as an influencer.
Who will get hired and make big bucks at the Bains, the BCGs, the Boozers, and the McKinseys, et al? Here’s my short list:
- MBAs or people admitted to a fancy university with super connections. If one’s mom or dad was an ambassador or frequents parties drooled upon by Town & Country Magazine, you may be in the game.
- Individuals even if they worked at low rent used car lots who can sell big buck projects. The future at the blue chips is bright indeed.
- Individuals who are pals with highly regarded partners.
What about the quality of the work produced by the smart software? That is a good question. The idea is to make the client happy and sell follow on work. The initial work product may be reviewed by a partner or maybe not. The proof of the pudding are the revenue, costs, and profit figures.
That influencer opportunity looks pretty good, doesn’t it? I think snow is falling. Grab a Ralph Lauren Purple Label before you fire up that video camera.
Stephen E Arnold, May 31, 2023
Will McKinsey Be Replaced by AI: Missing the Point of Money and Power
May 12, 2023
Note: This essay is the work of a real and still-alive dinobaby. No smart software involved, just a dumb humanoid.
I read a very unusual anti-big company and anti-big tech essay called “Will AI Become the New McKinsey?” The thesis of the essay in my opinion is expressed in this statement:
AI is a threat because of the way it assists capital.
The argument upon which this assertion is perched boils down to capitalism, in its present form, in today’s US of A is roached. The choices available to make life into a hard rock candy mountain world are start: Boast capitalism so that it like cancer kills everything including itself. The other alternative is to wait for the “government” to implement policies to convert the endless scroll into a post-1984 theme park.
Let’s consider McKinsey. Whether the firm likes it or not, it has become the poster child and revenue model for other services firms. Paying to turn on one’s steering wheel heating element is an example of McKinsey-type thinking. The fentanyl problem is an unintended consequence of offering some baller ideas to a few big pharma outfits in the Us. There are other examples. I prefer to focus on some intellectual characteristics which make the firm into the symbol of that which is wrong with the good old US of A; to wit:
- MBA think. Numbers drive decisions, not feel good ideas like togetherness, helping others, and emulating Twitch’s AI powered ask_Jesus program. If you have not seen this, check it out at this link. It has 64 viewers as I write this on May 7, 2023 at 2 pm US Eastern.
- Hitting goals. These are either expressed as targets to consultants or passed along by executives to the junior MBAs pushing the mill stone round and round with dot points, charts, graphs, and zippy jargon speak. The incentive plan and its goals feed the MBAs. I think of these entities as cattle with some brains.
- Being viewed as super smart. I know that most successful consultants know they are smart. But many smart people who work at consulting firms like McKinsey are more insecure than an 11 year old watching an Olympic gymnast flip and spin in a effortless manner. To overcome that insecurity, the MBA consultant seeks approval from his/her/its peers and from clients who eagerly pick the option the report was crafted to make a no-brainer. Yes, slaps on the back, lunch with a senior partner, and identified as a person who would undertake grinding another rail car filled with wheat.
The essay, however, overlooks a simple fact about AI and similar “it will change everything” technology.
The technology does not do anything. It is a tool. The action comes from the individuals smart enough, bold enough, and quick enough to implement or apply it first. Once the momentum is visible, then the technology is shaped, weaponized, and guided to targets. The technology does not have much of a vote. In fact, technology is the mill stone. The owner of the cattle is running the show. The write up ignores this simple fact.
One solution is to let the “government” develop policies. Another is for the technology to kill itself. Another is for those with money, courage, and brains to develop an ethical mindset. Yeah, good luck with these.
The government works for the big outfits in the good old US of A. No firm action against monopolies, right? Why? Lawyers, lobbyists, and leverage.
What’s the essay achieve? [a] Calling attention to McKinsey helps McKinsey sell. [b] Trying to gently push a lefty idea is tough when those who can’t afford an apartment in Manhattan are swiping their iPhones and posting on BlueSky. [c] Accepting the reality that technology serves those who understand and have the cash to use that technology to gain more power and money.
Ugly? Only for those excluded from the top of the social pyramid and juicy jobs at blue chip consulting firms, expertise in manipulating advanced systems and methods, and the mindset to succeed in what is the only game in town.
PS. MBAs make errors like the Bud Light promotion. That type of mistake, not opioid tactics, may be an instrument of change. But taming AI to make a better, more ethical world. That’s a comedy hook worthy of the next Sundar & Prabhakar show.
Stephen E Arnold, May 12, 2023
MBAs Rejoice: Traditional Forecasting Methods Have to Be Reinvented
February 27, 2023
The excitement among the blue chip consultants will be building in the next few months. The Financial Times (the orange newspaper) has announced “CEOs Forced to Ditch Decades of Forecasting Habits.” But what to use? The answer will be crafted by McKinsey, Bain, Booz, Allen, et al. Even the azure chip outfits will get in on the money train too. Imagine all those people who have to do budgets have to find a new way. Plugging numbers into Excel and dragging the little square will no longer be enough.
The article reports:
auditing firms worry that the forecasts their corporate clients submit to them for sign-off are impossible to assess.
Uncertainty and risk: These are two concepts known to give some of those in responsible positions indigestion. The article states:
It is not just the traditional variables of financial modeling such as inflation and consumer spending that have become harder to predict. The past few years have also provided some unexpected lessons on how business and society cope with shocks and uncertainty.
Several observations:
- Crafting “different” or “novel” forecasting methods will accelerate the use of smart software in blue chip consulting firms. By definition, MBAs are out of ideas which work in the new reality.
- Senior managers will be making decisions in an environment in which the payoff from their decisions will create faster turnover among the managerial ranks as uncertainty morphs into bad decisions for which “someone” must be held accountable.
- Predictive models may replace informed decisions based on experience.
Net net: Heisenberg uncertainty principle accounting marks a new era in budget forecasting and job security.
Stephen E Arnold, February 27, 2023
Going after the Original Entitled Wizards of Wonder: Blue Chip Consultants
February 14, 2023
I read “The McKinseys and the Deloittes Have No Expertise in the Areas That They’re Advising In.” I think the wildly “that they’re advising in” would make some old-school editors uncomfortable. But grammar and usage aside, the Financial Times, the odd orange newspaper, has identified what might be called “The Once Emperor-Like Are Naked So Let’s Put Them on TikTok.” Well, not TikTok, but the blue chip consultants are in the spot light for a short time.
I noted this passage in an “interview” with the author of the book The Big Con, by Mariana Mazzucato and Rosie Collington:
The Big Con of the book’s title is not a crime; it’s a confidence trick. Consultancies and outsourcers, Mazzucato argues, know less than they claim, cost more than they seem to, and — over the long term — prevent the public sector developing in-house capabilities.
The article presents as “real” financial news something that most former employees of blue chip firms know: Get smart about nanotechnology. We have a client meeting at 9 am.” The sentence is emitted from a sleek partner at 6:15 pm on a Wednesday evening. Yep, that’s why professionals at blue chip consulting firms get paid reasonable money: Get smart fast, spout sentences which seem to be spontaneously helpful, and nod at the right places. The goal: Close a job and start billing and scope change and bill some more.
I liked this statement in the article:
“These are private companies, the McKinseys and the Deloittes, that have no expertise in the areas that they’re advising in.”
Accurate? Yep. Will blue chip consulting firms change? Nope. Will those who hire blue chip consulting firms change their ways? No.
But why?
We can answer the question next week by getting our consulting firm to lead a discussion with the government staff involved in determining next steps. Those next steps require defining a project, a statement of work, a procurement or an add on to an existing contract, and billing.
In short, a validation of the superior intellect of the blue chip firms and their wizards of wonder.
Stephen E Arnold, February 14, 2023
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