Consulting is not a ‘profession’ and never will be. Its success is the
ultimate symbol of the flexible, free agent labour market, writes Stephen
Overell
It wasn’t a bribe, it was a consultancy fee. So said Colin Skellet, the
chairman and chief executive of Wessex Water as he began helping police with
their inquiries into allegations of corruption surrounding a £919,000 payment.
Skellet argued that it was an upfront fee for five years’ worth of
consultancy, after a Malaysian conglomerate bought his company for £1.2bn.
Was this normal, it was asked? No, came the answer from assorted
well-groomed people waving time sheets, eager to reassure observers that ‘the
profession’ of management consul- tancy had medical standards of (self-)
governance.
But what is normal, exactly? Consultancy has always been a gloriously
fragmented business – a label that provides a home to sole traders, occasional
dabblers and out-and-out witchdoctors, just as much as it does to the big
behemoths and strategy boutiques. But should the case ever reach court, it will
presumably turn on a venerable philosophical conundrum that no-one has ever
come close to resolving: what is a consultant?
The business of definition is, as a consultant might say, like trying to
nail jelly to the ceiling.
The rules of the Management Consultancies Association (MCA) require member
companies to have been in business for at least three years before they can be
admitted. Yet many people flit in and out of consultancy. That is why you never
see estimates of how many there are, only how much is spent on them (£7bn in
the UK1; $62bn worldwide2).
What’s in a name?
Attempts to create a stable profession such as law or medicine through
‘apprenticeship’ systems seem hopelessly fanciful.
"The term has become very confused," concedes Bruce Petter,
executive director of the MCA. "Everyone is a consultant these days."
In the US, one closely watched ranking of consultancies, run by Consultants
News, defines consultants as "independent advisers". That may work
for the big multi-million dollar consultancies, but there is little independent
research about consulting work done by individuals.
Fruitful descriptions of what consultants actually do usually involve
analogy. "In the best cases, consultants fill the role of the medieval
jester," says Professor David Norburn, professor of management at Imperial
College, London. "They try to get leaders to reconsider the position they
are in, but in a non-threatening way. Companies could probably do an awful lot
of this for themselves if they chose to and save themselves the ludicrous
bills. But the problem is they don’t grow independent-minded people –
risk-takers, mavericks or sideways thinkers."
If that sounds too saucy a portrait of the average consultant, David
Francis, deputy head of the Centre for Research in Innovation Management at the
University of Brighton, believes: "Consultants are like bees – they go
from one organisation to another, sowing ideas. Provided they behave ethically,
they can be a major force for innovation."
Call in the middleman
The inherent mystery of the craft and the useful meaninglessness of the term
is the reason for consultancy’s dazzling success.
Old-fashioned jobs involved descriptive labels, such as baker or stevedore.
Modern ones, ‘chief talent officer’, ‘consultant’, are deliberately nebulous.
All kinds of things organisations once did for themselves now require
middlemen, downsized victims of the cult of corporate leanness. And through
organisations being lean, ‘consultancy’ has become baggy: a word that is as
flexible as its troops. Which may be why it does not seem to follow the same
rules as other businesses.
The members of the MCA posted 17 per cent growth in a ‘difficult’ year for
the profession. Around the world, the Kennedy Information Research Group says
consultancy continues to grow by between 10 and 30 per cent a year, depending
on the country.
Identity crisis
At the heart of the identity crisis lies the fact that consultancy has never
really been an independent trade in its own right. Traditionally, it was a
spin-off from the large accounting firms. In 1953, Arthur Andersen helped
General Electric install the world’s first business computer, handling payroll
for a factory in Louisville, Kentucky. As a result, more large companies sought
advice on new systems – technology was and is the consultant’s handmaiden – and
they turned to their accountants.
Today, IBM is thought by some way to be the biggest name in consulting,
following its acquisition of PwC Consulting in late July for $3.5bn (£2.25bn).
For many years the growing presence of IBM in the business services and
consulting market was obscured, because it didn’t figure in the rankings. Its
hardware and software divisions were not deemed sufficiently independent of its
consultancy offerings, an objection that has now faded. But still the basic
problem: the biggest consultancy in the world – generator of 41 per cent of IBM
Global Service’s $85.9bn (£55bn) revenues – effectively piggybacks on the name
of a firm known primarily for something else.
Scandal is a marvellous motivator, however, and the Enron affair may finally
entrench that elusive independence.
Central to Enron was that Andersen consultants earned more from the relationship
than Andersen auditors, who failed to spot unconventional accounting – a
fulfilment of the anxieties of regulators, who, ever since the 1980s, had
fretted over such conflicts of interest. Now, consultants cannot divorce
quickly enough from their former bedfellows. KPMG is the most recent,
re-branded as BearingPoint.
So, what is a consultant? The only way out is something bland like ‘a person
who transfers information’. But that doesn’t capture the whole clever, shadowy,
complicated, schmoozing, money-spinning alchemy of consultancy.
2 Kennedy Information Research Group
Top five global consultancies
1. IBM Business Innovation Services
2. Accenture
3. Cap Gemini Ernst & Young
4. PricewaterhouseCoopers
5. Deloitte Consulting/Deloitte Touche Tohmatsu
Source: Consultants News
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