One conversation I had just before the last great financial crash still stands out. I was chatting with one of the canniest people in banking I knew. He was talking about one particular financial fandangle that was gaining ground as the big thing that you ought to be doing, but that it would turn into a huge disaster – which it duly did.
I asked him how was it becoming the new big thing if it was obviously going to be disastrous. His answer was a simple one: because no one is asking for it to be explained to them on one side of a sheet of A4 paper. They all wanted a fat tome, preferably signed off by a management consulting firm, which had pages of argument, pages of charts, preferably concluding with many appendices, and perhaps a bibliography or two to round it off.
At about the same time I had a drink with one of the non-executive directors I most respected. He was explaining how the role of the NED had become almost impossible. It was a job that paid well and involved not too many lengthy meetings, but also came with volumes of background papers, yards of data, a mass of stuff that was indigestible on a first reading.
The sage had seen it all before, and could fit it to your situation and requirements
You could put both of these highly respected people together and what they were talking about was the delightful journalists’ cliché of those days: The Perfect Storm. And where, you might ask, did all this stuff come from? The answer then and now is the same: consultants.
Sage advice?
Accounting firms first started providing consulting advice many decades before. It was simple. An avuncular and sage senior partner would dispense, in pithy and easily understood short sentences, the answer to your current corporate problem. The sage had seen it all before, more or less, and could fit it to your situation and requirements. The corporate chief could then go back to the board and implement it.
A business culture dominated by lawyers will always spawn verbiage
The firm would charge an enormous fee. This would be based on the value of the advice, and it would not involve vast documentation, zillions of staff hours, or specially convened internal management conferences. Frankly, it would be closer to the aspirational one sheet of paper. It was deep in City culture. And it was where consulting, or what they would have called ‘a bit of advice for you’, came from.
It was probably the US where the rot set in and the great names of the consulting world started to come from. A business culture dominated by lawyers will always spawn verbiage, and lots of it. Accountants or corporate advisers went for something closer to one-liners. And clients understood and could remember one-liners. That was what transformed corporate fortunes.
We are about to see mergers and acquisitions on a grand scale within the consulting industry
The lumbering bureaucratic nightmares that change management programmes, for example, came to represent transformed almost nothing except for the fee income of the advising consultants.
Merger nightmare
Meanwhile their world is now changing once more. But they are panicking over how effective their businesses are. So we are, as has happened before, about to see mergers and acquisitions on a grand scale within the consulting industry itself, with the consulting arms of accounting firms, still shaken by the debacle of EY failing to split itself in two, in play.
In the tradition of a snarl being better than a solution, one firm was quoted the other week as being ‘like a hungry dog outside a butcher’s shop window’. No good will come of all this. Once again, the simple principles are being ignored and the nonsense spawned by egos rises to the top. If consulting already had a poor reputation, it is only going to get worse.
