Is Management Consulting useless? A Reply to the Baseline Scenario

The Top-Down Approach
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Someone informed me of the recent semi-apologetical post by James Kwak on Management Consultants where he comments on the same article I wrote about a few days ago. Within, he explains that while downsizing was something Management Consultancy firms do sometimes, it’s by far not the most common reason they are employed. He then proceeds to explain what the most common tasks they are called to consult on are and how it all works together due to the restraints of the situation.

Needless to say, I’m not convinced.

The basic argument Kwak is making is that Management Consultants are usually called to advise on a specific question, rather than the all encompassing “How can we improve business/make more money”. They are tasked to find out stuff like whether it’s worth going into a new market and so on. And because the people who are hired for such management consultancy are usually the sharpest sticks in the bunch, they are qualified in figuring out the answers.

But his makes no sense. No matter how smart one is, they can’t just answer such questions without having lived and experienced the job they’re advising on. We’re led to believe that these bright-but-unskilled people can somehow do this by filling in some excel charts and studying a lot of business books and whatnot. Well, excuse me but this sounds to me as effective as a court magician claiming that his recommendations are accurate because he’s thrown the bones and read the stars very very hard. I challenge the basic premise that one can make accurate business decisions based on some skills learned on MBA courses, not to mention 2-week seminars on “Management Consultancy”.

It doesn’t matter that the people doing this job are bright. It doesn’t matter if they have more time than the management they are consulting (who are surprisingly being paid to do this but “don’t have enough time”). What matters is that there is no handbook on how to make such decisions that can ever apply to every kind of market in the same way, and yet management and their consultants keep weaving this lie that one can possibly make decisions on every kind of business given enough time and spreadsheets.

It’s nonsense. A scam. A fraud on a criminal scale perpetuated by the new nobility and their lackeys who get to make the big bucks by pulling decisions out of their arse. They are the ones who think of the (proprietary) algorithms and write the management books that the rest buy anyway. It’s a close circuit with little to no relation on the real world and sustained by little else than cognitive biases and marketing.

James Kwak attempts to skirt around the unchallenged premises by pointing out that Management Consultants are “really really smart” and are hired because the paid managers are too “busy” to do what they are supposed to. This even fails to accurately refute the article it was criticizing which was pointing out that when such Management Consultancy firms are hired to do the generic “improve business” consultancy, they usually end up suggesting to downsize. This is simply the most succinct representation of the MC fraud which points that they don’t really know what they’re doing, and when they do, their own management is so incompetent in turn, that it suggests the opposite. There’s no reason to expect that when MC firms are hired to do some other kind of consultancy (i.e. analyze new markets), they are any more competent at it.

Yes, Management Consultants can be smart. Yes they can be hard-working. Yes they can be perfectionist. But none of these will help unless they have any idea what they’re doing in the first place. This is why the MC firms which can best obfuscate the fact that they do not know what they are doing are the most successful. The dynamics of the situation – the “evolutionary” competition between firms – ensures that only the ones who are conscious of their ignorance and can best cover it up with fake confidence and pure marketing are the ones who will take the best and most expensive contracts in a world where nobody at the top knows what the hell they’re doing.


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