Presentation on theme: "Management consulting"— Presentation transcript:
1 Management consulting HumancapitalSocialStructuralNetworkCapitalClientOrganizationalManagement consultingLecture 6 and 7Managing knowledge and knowledge workers
2 Human Capital – Intellectual Capital Employee Knowledge Skills ExperienceHuman CapitalIntellectual CapitalProducts and services which have market valueStaffingDevelopmentHumancapitalSocialStructuralNetworkCapitalClientOrganizationalICCommunicationPerformance ManagementRemuneration and Reward
3 Structure of Lecture 6 and 7 HumancapitalSocialStructuralNetworkCapitalClientOrganizationalLecture 6Level of analysisOrganisational perspectiveFramework for analysisManagement of knowledge (reactor model)Lecture 7Work processIdentity modelHRM issues across both lecturesRecruitment and selection of consultantsPromotion policies – ‘up-or-out’ principleThe boundaries of HRM practices
4 ObjectivesTo understand the characteristics of the management consulting industryHistoryTypes of organisationsTypes of consultancy activitiesTypology of human capitalAccording to the client interface processCareer structures within management consultancyThe role of consultants as knowledge brokersTypology of client capitalThe consulting firm – client relationshipsThe HRM practice focus:Recruiting human capitalManaging across boundariesHumancapitalNetworkSocialCapitalcapitalClientStructuralCapitalcapitalOrganizationalCapital
5 Marvin Bower's goal was to build an enduring institution, and for more than 60 years he dedicated himself to that proposition. Widely credited with being the founder of professional management consulting, Bower was a member of McKinsey and its guiding influence from 1933, when he joined, through his retirement in 1995 and until his death in 2003 at the age of 99. He served as managing director from 1950 to Rajat Gupta, former managing director, once said, "Convinced that behavior and conduct are every bit as important as skills and expertise, Marvin sought to build the firm into an enduring, values-based institution. He always saw McKinsey as 'one firm.' He built a truly global firm." Vision and values At Bower's retirement, former managing director Ron Daniel said that McKinsey's impact, reach, power, and influence are directly traceable "to Marvin – to his vision, his energy, his relentless determination, and his selfless commitment to making his firm – our firm – the preeminent institution it has become." Warren Cannon, a consultant from 1949 to 1988, said that Bower "picked these principles, not because they were God-given, but because they were principles he really believed in. In almost every case that I know of, he was absolutely right. They were in the long-term interest of the firm.” Bower didn't just preach values, according to Dick Cavanagh, a former principal, now President and CEO of the Conference Board, "He practiced them. That's the most effective way of teaching. He was a teacher as well as a leader." Blunt integrity But he could be blunt. Jack Crowley, a retired director, recalls the time that Bower, in a client meeting with a CEO, "bellowed out, 'The problem with this company, Mr. Little, is you.' And there was a deathly silence. It happened to be totally accurate. That was the end of our work with that client, but it didn't bother Marvin." Individuals in the firm who worked with Bower told stories about how he turned down opportunities to counsel prominent business leaders such as Howard Hughes, and when he refused to help the U.S. government devise a bailout plan for American Motors. If he felt it was not in a company's interest for McKinsey to serve it or that top management was not committed to change, Bower wouldn't accept the company as a client. Farewell hopes In 1993, Business Week wrote that Bower's 1968 decision, on reaching the age of 65, to "sell his stock to the other partners at book value, rather than at a vast premium that might have forced the company into debt, helped make McKinsey an enduring institution. He also required older partners to sell their stock to younger partners well before they retired. 'Young people have got to get some shares,' he said. 'They have to gain a sense of ownership.' " In a memo to the London office on the occasion of his last visit as managing director in 1967, Bower wrote: "My farewell hopes are these: first, that down the years our directors and principals will provide formal training and on-the-job coaching in the professional approach. Two, that down the years our directors and principals will shout out" – and this was underlined by Bower – "whenever they feel we're doing anything that might impair the enduring values of the professional approach or just letting those values erode through inattention. And third, that down the years our directors and principals will speak up whenever these principles that make up our philosophy are not being followed."
6 History Management as a unique field of study Arthur D.Little (1890s) McKinsey & CompanyFirst management and strategy consultancyFounded by James McKinsey in 1926 (Chicago)Hiring of bright young MBAsRise of management consultancy after World War IIDevelopment of tools for strategic managementBoston Consulting Group (1963), McKinsey&Co, Harvard Business SchoolBain&Co - focus on shareholder wealthConsulting within accountancy and technology firmsPwC and IBMNiche consultancy firmsCorporate social responsibiityManagement consulting grew with the rise of management as a unique field of study. The first management consulting firm was Arthur D. Little, founded in the late 1890s by the MIT professor of the same name. Though Arthur D. Little later became a general management consultancy, it originally specialized in technical research. Booz Allen Hamilton was founded by Edwin G. Booz, a graduate of the Kellogg School of Management at Northwestern University, in 1914 as a management consultancy and the first to serve both industry and government clients. The first pure management and strategy consulting company was McKinsey & Company. McKinsey was founded in Chicago during 1926 by James O. McKinsey, but the modern McKinsey was shaped by Marvin Bower, who believed that management consultancies should adhere to the same high professional standards as lawyers and doctors. McKinsey is credited with being the first to hire newly minted MBAs from top schools to staff its projects vs. hiring older industry personnel. Andrew T. Kearney, an original McKinsey partner broke off and started A.T. Kearney in 1937.After World War II, a number of new management consulting firms formed, most notably Boston Consulting Group, founded in 1963, which brought a rigorous analytical approach to the study of management and strategy. Work done at Booz Allen, McKinsey, BCG, and Harvard Business School during the 1960s and 70s developed the tools and approaches that would define the new field of strategic management, setting the groundwork for many consulting firms to follow. Another major player of more recent fame is Bain & Company, whose innovative focus on shareholder wealth (including its successful private equity business) set it apart from its older brethren. Also significant was the development of consulting arms by both accounting firms (such as the now defunct Arthur Andersen) and global IT services companies (such as IBM). Though not as focused on strategy or the executive agenda, these consulting businesses were well-funded and often arrived on client sites in force. Additionally, there has also been the development of successful niche consulting firms (such as Kaiser Associates), which are often credited with providing more focused work at greater value.
7 Types of firms in the industry Accountancy firms offering consultancyLarge non-accounting consultanciesSmall specialist boutiquesGurusIndependentsManagement consulting has grown quickly, with growth rates of the industry exceeding 20% in the 1980s and 1990s. As a business service, consulting remains highly cyclical and linked to overall economic conditions. The consulting industry shrank during the period, but had been experiencing slowly increasing growth since. In 2004, revenues were up 3% over the previous year, yielding a market size of just under $125 billion.Currently, there are three main types of consulting firms. First, there are large, diversified organizations, such as Accenture and IBM Global Services that offer a range of services, including information technology consulting, in addition to a management consulting practice. Second are the large management and strategic consulting specialists that offer purely management consulting but are not specialized in any specific industry, like McKinsey & Company. Finally, there are boutique firms, often quite small, which have focused areas of consulting expertise in specific industries or technologies.
8 Types of Consultancy services StrategyHRMarketingChangeProcess and OperationsOrg designInfotechManagement consulting
9 Major consultancies Bain & Company Boston Consulting Group Deloitte & ToucheErnst & YoungA.T. KearnyKPMGArthur D.LittleMcKinsey & CoMercerPriceWaterhouse Coopers
10 Different types of consulting services: a knowledge-based view ProductiseReuse economicsPeople-to-documentsIT focusBuy experienceReward for contribution to document databaseErnst & YoungCompetitive strategyEconomic modelKM strategyTechnologyHRMExampleBespokeExpert economicsPerson-to-personIT enables personalBuild experienceReward for knowledge creation and sharingMcKinsey & Company
11 Typology of Human Capital The consultancy processCareer structuresConsultants as brokers of human capitalBoundary spanning
12 The consultancy process: Your experience Paired assignmentIdentify a consultancy experience that you have been part of.Characterise the individual stages of the consultancy processInterview your partner and identify:Which skills were developed at each stage of the consultancy processWhich other knowledge resources did you rely upon during this processSummarise your findings and be prepared to feed back to the group
13 The career structure Analysts Consultants Senior Consultants Business development managersDirectors/Partners
14 The McKinsey Facilitator case Specific type of human capitalAcross boundariesHow would you design the recruitment process to capture this human capital?
15 Components of a high performing culture General business knowledgeUnderstanding of client contextLogical problem solvingIQCreates environment of trustManages group dynamicsHigh awareness of emotionsEQHigh self knowledgeExperience of own transformational journeySense of vocationSQ
16 Using external facilitators poses a challenge to many forms of intellectual capital flows ClientsFacilitators
17 Facilitator network: HC viewpoint External pool of facilitatorsFocal Practice GroupRegionsOther Practice GroupsClientsFacilitators within clientsExternal skill expertsHC boundary
18 Mindsets are often misunderstood and ignored Needs –met and unmetThoughts and feelingsValuesand beliefsWhat we see and usually try to changeBe- haviourWhat we cannot see, make assumptions about and often do not addressA desire to change ends up like most New Year’s resolutions if root causes are not identified and addressed
19 The first step in mindset change is a new level of personal understanding Requires insightRequires a choiceRequires practice
20 The first step in mindset change is a new level of personal understanding “You cannot solvea problem from the same level of consciousness that created the problem in the first place”Albert EinsteinRequires insightRequires a choiceRequires practice
21 The McKinsey Facilitator case How would you design the recruitment process to capture this human capital?
22 Facilitator network: OC viewpoint External pool of facilitatorsFocal Practice GroupRegionsOther Practice GroupsClientsFacilitators within clientsExternal skill expertsRecruitment & development processesClient delivery processes
23 Positioning in the lecture Nature of the industryTypology of human capitalConsulting processCareer structureKnowledge brokersNow we turn to the human-client capital interfaceWe take a closer look at how clients perceive consultants?
24 IDEA SUBMISSION PROCESS Stick hexagon on hexagon wall with similar ideas and rejoin groupWorkshop room1. Group discussion on topic/ideaReceive hexagon at idea table and write on idea no. and titleIndividual or group write up idea cover sheet and attach backup materials (others at table may start on another idea at this time if appropriateSubmit written materials at idea tableIn trayDoor to patioFilingCassette record sheetPatioWall#1Individual(s) go outside to record 2–3 minute video to explain ideaVideo station helper puts idea no. stick on to idea coversheet and onto video cassette record sheet. Records idea title onto cassette record sheetIndividual(s) write idea no. and idea title on directors board—hold up at start of recordingRecord 2–3 mins videoVideo station helper with stickers of idea number
25 The perception of Human Capital The ability to learn in practiceWhy smart people don’t learnThe impact on organisational learningThe impact on social capitalThe impact upon the client relationshipsocial construction of learning
26 The client-consultant relationship Human capital and its link to client capitalDimensions for analysisStrength of tiesfrequencyRelationaltrustCognitiveShared mental modelsGiving answers or shaping futures
27 The nature of relationships Structural densityStructural holesDyadicArchitectureThe nature of relationshipsSocial capital(between facilitators)MorphologyStructural densityXStructural holesTrust:NatureDeepResilientPositionalGeneralized(between sponsors)DyadicClient-and-network capital(between internal and external facilitators)Organisational capital:HRM processFlexibilityMechanisticAdaptiveClient relationship process
28 Facilitator network: SC & CNC viewpoint External pool of facilitatorsFocal Practice GroupRegionsOther Practice GroupsClientsFacilitators within clientsExternal skill expertsDense: Deep anddyadic trustStructural holes: resilient andgeneralised trustStructural holes:Deep and dyadic trustDense:Resilient and dyadic trust
29 Books about management consulting Flawless Consulting, Peter Block, ISBNGuerrilla Marketing for Consulting, Jay Conrad Levinson and Michael W. McLaughlin, ISBN XManaging at the Speed of Change, Daryl Conner, ISBNManaging the Professional Services Firm, David Maister, ISBNThe Professional Services Firm Bible, John Baschab, ISBNManaging Transitions, William Bridges, ISBNManagement Consulting: A Guide to the Profession, Milan Kubr (ed.), ISBNThe World's Newest Profession: Management Consulting in the Twentieth Century, Christopher D. McKenna, ISBN