Is Management Consulting useless? A Reply to the Baseline Scenario

A former management consultants tries to refute the “management consultancy fraud”. But he completely misses the point.

The Top-Down Approach
Image by Sanctu via Flickr

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.

Management Consultants or Court Magicians?

If Managers are the new nobility, Management Consultants are their Court Magicians.

Japanese-born American poet and critic Sadakic...
Image via Wikipedia

I just read this very interesting opinion piece from The Independent where it is shown how Management Consultancy is the largest legal scal of the 20th century. In the piece, the author is quite surprised how time after time various big firms will fall for the same scam with disastrous results and how come the bad reputation of such Consultancy firms has not yet caught up to them.

This immediately made sense to me, for the truth is that the Management are absolutely incapable of telling what is a good or bad result, since they themselves are more likely than not, as incompetent in management as the consultants they are hiring. In the past, I’ve likened the Management and the paths they use to achieve such positions, to the Nobility of old and this latest article nicely allows me to extend this analogy.

If Management is the new nobility, then the Management Consultants are the Court Magicians.

Much like a court magician, they do not have any knowledge or skill in making decisions for other people, not to mention whole organizations. In the past, those court magicians used cantrips, displays of mysticism, cold and hot reading and simply psychology, to make the Nobles believe that they had powers of foresight and Intuition. Management Consultants instead use complex excel sheets, alchemical algorithms, free market drivel and orthodoxy and raw bluff.

Court Magicians were used as advisors to Kings and Lords in important decisions. Their advise, when not simply reinforcing the opinion of the ruler as a form of sycophancy, were nothing but random. Much like current management, Court Magicians relied on the fact that a King or Lord had no more an idea on how to rule other humans and were gunning for that 50% of random chance success, while and padding it up with the cognitive biases of the nobility. Management Consultancy can’t even get a 50% success rate but they rely on the fact that current Management is so desperate in times of crisis that they would be even willing to believe in astrology or alchemy if it promised a way out.  Of course, those two disciplines have been severely discredited by actual sciences while in the field of business, marketing is king. And Management Consultancy firms can afford a lot of Marketing.

In fact, I think that if Management firms hired actual court magicians, they might actually have better success, since at least they wouldn’t be mired in the orthodoxy of  “Cut 30% of Staff no matter the circumstances”.

The more one looks at this insane system we’re living in, it truly starts to resemble some kind of neo-feudalism more and more. The incompetent are born into their positions of power, and are then advised by the more cunning incompetent on how to rule everyone else.

Now I just need to figure who the court jester is…

Words that annoy me: 'Professionalism'

Oh how I loathe it.

The key to consulting is calm confidence and p...
Image by colorblindPICASO via Flickr

By the Gawds, I really fucking hate this word. I see it used around all my work as a goddamn bludgeon against all things the speaker does not approve of.

Don’t wear the correct kind of clothes? It’s not professional.

Don’t have the correct desktop background? It’s not progessional.

Laugh out too loudly? Desk too cluttered? Not correct combination of colours? Not goddamn professional.

It’s the new ‘Decent’. It is so vague in use that everyone finds it a perfect excuse to judge and get others to change habits they do not approve of. This is marginally tolerable from co-workers who you can either ignore or explain that being efficient has much more to do with being a professional than all the rest of the “peripherals” but lo and behold when a manager mentions it. Then your only option is to shut up and take it.

How can you talk back to your manager? What can you argue? That his subjective understanding of what constitutes professionalism is wrong? Get ready to look for another job (a manager who feels the need to talk about professionalism is unlikely to be the laid-back type who tolerates his employees talking back at him). And you can’t ignore it either as that’s simply undermining his authority.

The way I see it,  when anyone (especially your boss) starts demanding ‘Professionalism’, they basically don’t like something about you and can’t reasonably argue why. They simply fall back to vague business speak and back it up with hierarchical authority to enforce it.

And this is what makes it for me such a despicable word. It doesn’t help either that Business-oriented Magazines use their imagery and marketing to present an image of the pristine, sterile business look of suits and ties and fake smiles. Then all the managers try to imitate this and we end up with demands for “professionalism”, which of course feeds directly the pockets of those being advertised in such magazines. Business attire clothing companies and other sources of company sterility.

I wonder if we’ll ever escape the clutches of herd-mentality, status-oriented culture and focus on having fun when working rather than following obsolete nonsense which originated from puritan practices of sex-starved protestants with a mission from Gawd to make everyone as miserable as they were.

Reblog this post [with Zemanta]

Let me blow your mind a bit

An excellent TED talk on how disconnected management and business practices in general are from reality.

Lately it seems a day doesn’t pass where I don’t see something which confirms the Anarchist perspective of reality. Watch the following video from TED. It’s only 20 minutes long but if you haven’t heard about his before, I guarantee it will disrupt many of the things you think you know about business.


It’s funny really. Just the other day someone decided to challenge me on my article about the Uselessness of Management and now I even have the handy proof to show their absolute disconnection from reality. I especially like this video since it points ample light in how much contemporary economics is based on ideology and assumed “axioms of human existence” rather than science.

This is an especially nice video to show to all those proponents of Copyrights and Patents who think these are somehow required to promote creativity and the arts. In fact, it should now be obvious that were copyrights to become absolute and unavoidable, creativity would be severely sniffled.

Hopefully this video should also make those who claim that “if this method was superior to rewards, it would have been selected by the market” reconsider their position on the effectiveness of the markets. Because one has to wonder; If non-reward based motivation is productively inferior, why is it still the dominant form? Unfortunately I know that most probably won’t listen, for when reality and markets clash, ideology will win hands down. But you never know, perhaps it will serve as a push in the right direction, a seed of doubt about the Capitalist system.

Some Related articles

Reblog this post [with Zemanta]

Managers are the new nobility

Why do MBAs get so well paid even though all evidence points that they do not deserve it? My half-cooked theory is that they are the natural result of the crypto-feudalism of our system.

Harvard University
Image via Wikipedia

I just read this interesting piece on how the MBA degree is not only useless but practically fostered the mindframe that drove the Wall Street meltdown. There are some interesting points within and some of the quotes are just hilarious but I feel that the author does not go far enough.

While the problems of the mindframe that your can “train a leader” are obvious not only after a short explanation but also through viewing the dismal failure most managers are, a failure which in turn has not relation to their subsequent payment and bonuses, the reasons of why this paradigm came to be is not explored.

And what would you know, I have a theory on that.

You see, we have a society which rewards those who can accumulate wealth better with more wealth. We also have the concept that this wealth can and should be passed to one’s progeny so as not to be squandered.  We also know that wealth = power and power can be used to prevent others from challenging one’s own wealth/power.

As wealth accumulated to fewer and fewer hands, those at the top, through inheritage ended up creating dynasties, and the mentality of those who are born within a dynasty is that they deserve to be there. That they deserve these privileges that their ancestors have granted them (AKA Spoiled rich brats). When you add to that the common feeling of people who have “made it”, who do not want to see their progeny having to walk the same path but rather continue where they left them, you get the mentality of nobility: By right of heritage, one deserves their social position.

Sure one could train his children as experts on something but that would mean that they may start low and actually have to take orders from someone else. There also the alternative that the progeny simply lives of the considerable wealth the parents have created but this would lead to a progressive reduction of wealth, especially since a jbless hedonistic child is bound to spend increasingly more and more. No, the wealth a position had to be transferred somehow.

In the past, the founder of a very succesful company could easily tranfer his wealth to his children (or at least some of them) which wasn’t much different from a lord tranferring his feud to his sons. However as privately owned companies were outcompeted from public ones, this path became progressively harder to take as the shareholders don’t necessarily have to be the same as the managers.

So another way had to be found to ensure that the progeny of the movers and shakers of any society would in turn become the movers and shakers of the future.  And just in time, the managerial courses came about. I have noted that the rise to prominense of such courses correlates very nicely with the increased incorporation of American business. The less the posibility one has to transfer the accumulated wealth, the more necessary to have a way to jump start one’s career.

And slowly but surely, the managerial class was created. A class which incidentally has a very high entrance cost (as you need to have both the money and the status to be accepted in institutions such as Harvard) which practically means that only those already in the upper levels of society can enter. And as progressively the higher paying positions of companies necessitated one being part of the managerial class, the cumulative dificulty in getting in, became even larger.

So now you’ve basically got a system where if you’re rich and powerful you get to become even more rich and powerful by right of heritage, while the chances of one of the unwashed masses “making it” are as high as the chance a mercenary or a merchant had to become a “sir” or a lord in an Aristocracy.

Like the nobility, the managerial class is not taught how to be productive or ethical like the rest of us, they are tought how to be decisive and arrogant. Like the nobility, the managerial class does not need to suffer the bad results of their actions (golden parachutes and the like) unless they happen to step on the toes of another of the ruling class while they’re at it.

It is funny because this is the culmination of all the bourgeoisie has been striving to achieve ever since the liberal revolutions of the past few centuries. To take the place the aristocracy had in their zenith. They have obviously achieved it, but like the aristocracy before them, they have nowhere to progress, but down.

Reblog this post [with Zemanta]