Comment by holdenc
16 years ago
This story is written with a wonderful naivete. Consultants like BCG exist only to lend credentials and competent temporary labor. The companies who hire these consultants are looking for affirmation and peace of mind -- most of them too mired in bureaucracy or incompetence to draw even the most basic conclusions by themselves.
Still, it's hard to believe that peace of mind is worth paying 5 kids graduated 6 weeks ago in Political Science from Stanford to come give Powerpoints on meaningless, vapid crapola billed to you each at $300/hr, even where such figures don't make much of a blip on the bottom line.
It does seem strange, but here are some reasons why this happens:
- When you hire BCG or McKenzie to (for example) value a business segment or recommend an acquisition, their feedback can be touted as expert and unbiased.
- BCG will do whatever it takes to deliver what's asked, even if it's a banal Power Point. So the person who decided to hire them is taking a minimal risk by doing so.
- In many cases it's a chance for the client company to get insights on how competitors have solved similar problems. Albeit in the story everyone's right out of school, I've seen cases where a pharma company will hire a group from a place like BCG because they've also worked for a competitor.
- Lastly, it's a chance to work with some talented folks who might make good permanent hires at the client company.
Bottom line, is that this type of consulting is usually a huge waste of money. But it's also one of the only ways huge companies can get a group of talented degree-toting individuals to work on important temporary projects with the assurance that company will get exactly what it wants.
Consultancy is an easy business model.
In companies there are people who are paid to decide things. They also have budgets. Often they are called managers. There are consequences with decisions.
Managers learned a trick: Give the money of your budgets to consultants to make the decision your company pays you for.
If the decision was a good one: The manager was the one who hired the consultants!
If the decision was a bad one: Who could blame the manager, even the top consultants of BCG/Berger/McKinsey couldn't make the right decision, he hired the best!
Either way: The manager outsourced the work he was supposed to do but still gets paid and freed himself from the consequences. Heaven!
Or simply "Cover my ass" jobs.
Before middle management makes a big decision, they need to prepare the ground work of excuses they will use if the project fails.
Expert report is an excellent tool to show your boss and shift the blame. (And hey, the company is paying for it).
They don't want anyone that has a clue and might therefore threaten them! (sadly seen this in my work)
Edit: many of the other cynical explanations further down in the thread are quite valid too (scapegoat theory et al)
I've worked at so many of the largest companies as an employee, contractor and even overpaid consultant and this is completely true. These companies are completely mired in their own structure that there is nothing they can do to get out.
Everyone is protecting their turf and their headcount that you almost have to have "Bob and Bob" come into, even though they don't know anything themselves.
When I was working for a professional organization as a consultant, sometimes I would go into gigs where I literally knew nothing about the product that I was supposedly an expert on. I remember specifically one case where I spent a frantic weekend learning about a tech that I was supposed to help this company plan a rollout for because I was the expert. The worst part was these employees had been preparing for this rollout for weeks, so they already had a good grasp of the core and I was still trying to learn all of the acronyms.
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That's just how the managing partner described it when BCG came to do a recruiting talk. He called theirs one of the most improbable businesses in the world- companies pay a lot of money to have just-graduated kids work on their problems.
The thing is, on an individual level, consultants really do work like sled dogs. If you have something in mind that needs a dozen fairly smart people to go to North Dakota and work 90 hrs a week for 3 months, consultants can do that and your regular employees probably can't (or won't).
However it's up to you to actually have something like that in mind in the first place... I can't think of anything offhand myself!
"This story is written with a wonderful naivete."
Exactly. Another case of idealism colliding with reality. It's refreshing and makes me sigh at the same time.