The rise and fall of consulting in E-times

• Consultant and influence
• Influence and power
• The eroding patterns of classicconsulting
• The difficulty of new paradigms
• Trend 1: E-business replaces old business
• Trend 2: New entrants
• Trend 3: Employability and part time work
• Trend 4: Do it your self consulting
• Is there a future for consulting?
• Literature

Consultant and influence

A consultant, by definition, has to enjoy "influence" because hehas no formal power. He can act in many different roles as anexpert, innovator, streamliner, change agent, therapist, sparringpartner, entertainer or even confessor but, in the end, he has torely on his capability to convince. Techniques may differsubstantially but always depend on the same result: the client mustultimately have the feeling that the consultant assisted ineffectively solving his problems. Herman Holtz, in his study, "TheConcise Guide to Becoming an Independent Consultant" says, "Thereis no single success in consulting. Consulting is a mix of manyskills and functions". If successful, it means that influence ispart of the game!

Repeat business is important for a consultant. This realitycauses many consultants to feel they are under pressure and notcompletely free to give their opinions, because they need clientsto sustain their businesses. Nevertheless, the good ones have noproblem in getting clients, keeping them and maintaining theirindependence. They have so much influence that it almost nearsformal power. That means that the excellent consultant has aspecial responsibility maintaining his integrity and not misusinghis power.

Influence and power

"Power is a latent resource, which must be unleashed by otherprocesses. The key unleashing process is influence, which usesinterpersonal and social skills to make others voluntarily changetheir attitudes. Influence is a much less visible process thannaked power - by its very nature, it is indirect and subtle. Otherpeople will not even be aware that you are using it. Providing theaction is done voluntarily, it will commit the target", says MaryBragg in her book, "Reinventing Influence". The six principles ofinfluence are:

1. Contrast

2. Historical commitments and consistency

3. Scarcity value

4. Social proof

5. Liking and integration

6. Emotion

The first three principles relate to how we frame or see things.The last three relate to how the actions of others influence us.Each experienced consultant will recognize that all theseprinciples make sense, but will they remain is the question. WillE-business change or even destroy consulting and consequentlyexisting principles? We will concentrate in answering that questionin connection with the two most important roles of the consultant:expert and change agent.

The eroding patterns of classic consulting

Being an expert , the consultant mostly conducts a survey.After he makes a proposal and he gets the approval from themanagement of his client, he starts an analysis or SWOT(strengths, weaknesses, opportunities and threats). The next stepis to formulate alternatives for decision-making . Finally,he formulates his preference for one alternative and the motivationfor this choice in a conclusion . Sometimes, he will alsoadd a description of the conditions for success in aneffective implementation. More and more, following the survey, theconsultant is becoming involved in the implementation processitself. Then the client can utilize the consultants know-how andsubsequently hold him accountable for the results.

Being a change agent means that the consultant iscommitted to controlling the process; the staff members of hisclient largely provide the content. "The consultant serves asbusiness partner by helping his client let go of old and adaptto a new culture . It includes identifying and framingproblems, building relations of trust, solving problems andcreating and fulfilling action plans" (quote David Ulrich). Thegreat art, traditionally, is to remain an outsider and not tobe involved personally in the process.

In the past, experts and change agents achieved tremendoussuccesses. But can they rely on that over e-time? Consultingobviously requires different approaches but, traditionally, theyfrequently share the following problems: they are time consuming,costly and the consultant never has the final responsibility forexecution of his advice. This combination is becoming, as will beexplained, less and less attractive for decision-makers.

The difficulty of new paradigms

He has to understand the new paradigms. The consultant now facesideally clients who are not only interested in new concepts butalso in engaging themselves quickly with new E-markets and manypartnerships. They are not only interested in surveys but also inprototypes online; not only in dot.corp (inside the company)approaches but also in dot.com (outside the company) solutions. Itis becoming very difficult to act just as an outsider and let"others" do the real work.

Lets identify what the main trends are of change inconsulting.

Trend 1: E- business replaces old business

Case: food retail company

A consultant had been acting for many years as a strategicconsultant for a global retail company. In 1998, he became awarethat the digital revolution would substantially change the businessof his client. Not only would the emerging new businesses like"home shopping" pick-up at least 10% of their business in 2005(this was the common understanding), but even more threatening, theinfluence of this seemingly limited long-term development would beultimately disastrous. It would make, without radical change of thestrategy, all the existing supermarkets obsolete because retailrealizes only about 2 or 3% bottom line net profits.

The consultant was not absolutely sure of the expecteddevelopments, but he had a strong feeling that the company had toexpand their business far beyond food retail with non-food productsand services. Partnerships and a co-branded concept were aprecondition. Furthermore, the company should adopt only one strongumbrella Internet brand instead of keeping their portfolio of localbrands.

For problem solving, the company was able to mobilize greatexpertise in many areas such as merchandising, logistics,purchasing and IT management. Nevertheless, the Board and stafffailed to think "out of the box". The consultant was not convincingenough and had insufficient international experience. He lost hisclient. It is now 2000 and the transition needed to energize thefood retail company again is still not in sight .

Many consulting offices have been confronted with developmentslike the case just mentioned. Sometimes clients are ahead andsometimes consultants, but there is always a need for fast change.Processes to match elementary strategic re-thinking with the needsof new competencies and change management are difficult to manage.People often have totally different expectations of the future.Some rely on operational thinking more than strategic decisions,others simply do not have the required vision to bridge HRproblems, and there are also managers and consultants that haveinsufficient knowledge to translate anything into practicalaction.

Historically, "body shops" like Anderson, KPMG and EDS/AT Kearny benefit from hugere-engineering surveys. At the same time McKinsey , Boston Consulting Group ,and Booz, Allan &Hamilton realized numerous large scale strategic andstreamlining studies for global companies, which kept them strongconnected with the old economy. And all these giant consultingfirms, who have earned huge amounts of money, now have to questionhow they can meet the new economy related E-trends. Beyond that,they have become aware that new talents are more interested instart-ups or incubators then in old proven reputations fromconsulting firms as well as global companies. So recruitment is nowa problem and, simultaneously, the future of traditional consultingfirms.

Trend 2: New entrants

Newcomers like Razorfish, Sapient ,USWeb, Nexgenix , iXL and Atomic Tangerinesuccessfully integrated strategic-, advertising- and IT- consultingin a one-stop shopping consulting concept and they have had greatsuccess, at least in the US. All these companies like to share inthe entrepreneurial risk with a variation, depending on the stageof the life adoption cycle.

Case "Phoenix": Atomic Tangerine (AT)

AT is a spin off of the old reputed consulting firm, SRI.They concentrate on young technology such as E-security, webbuilding, speech technology, multi channel approaches andinteractive TV. They are not only interested in working on anhourly fee but prefer to share in the entrepreneurial risk of theirclients. So they take equity as part of their reward and attractpeople from companies like Anderson Consulting to join them. Theygrew enormously within a few months and expanded their businessinto almost all continents. The old SRI firm might not survive thisprocess because almost all the good elements of their practice areused for the "Phoenix" or revival operation. Because the oldcompany keeps only the old-fashioned stuff, it might die.

These consulting firms often fuse together -as stated before-strategy, marketing, branding and technology to help clients buildprofitable and more permanent E-relationships with their customers.They use innovative relationships, advanced marketing- andtechnology skills to help clients build meaningful bonds with theirconstituents so they don't have to focus all of their energy andresources on driving short-term site traffic.

Case: quote website iXL

Blink. A "dot com" company is after your market. Click. Yourcustomers are buying online right now. Bang! The starting gun fortransforming your business has been fired. At iXL, we work with ourclients to create e-transformation. From designing a new breed ofbusiness strategy to the rapid deployment of forward-thinkingInternet solutions, iXL offers a comprehensive set of strategicInternet services designed to generate success for ourclients.

It is clear that new entrants are often more entrepreneurialthen the old, because they are pioneers. Subsequently, they forcecompanies like McKinsey and Andersen Consulting to adopt newpractices. The result is that these older companies are nowinvolved with venture capital, incubators or accelerators to launchnew businesses.

Trend 3: Employability and part time work

Rosabeth Moss Kanter urges in, "World Class", that security ismore a responsibility of the employee than of the employer.Increasing human capital will, according to her, stimulateemployability. Lifetime employment is an illusion stronglyconnected with the industrial society and related social control.Japan might be the best example of that development. Manytraditional companies there are strongly connected in mutuallyinterdependent networks or Keiretsus. Management can hardly makequick decisions, as they are part of group consensus. And theyshare the risk of huge investments. But in the digital ageeverything changes so fast that immobile structures are a handicapand cause serious problems.

"The organization becomes de-jobbed", says William Bridges inhis article "Leading the de-jobbed organization". He continueswith, "A traditional organization is hung upon a skeletal system ofposition-based leaders. The de-jobbed organizations are patternedlike an energy field and leaders function as energy nodes aroundwhich activity clusters. These ad hoc [RvT: or E-] leaders tend tobe self-selected far more often than they would be in thetraditional organization. Perhaps the simplest way to talk aboutleaders needed by the de-jobbed organization is to say thatleadership itself is being de-jobbed." Everything is part timework! Consulting is in the eyes of the client by nature part timework connected with leadership and will benefit both employabilityand de-jobbing.

Trend 4: Do it your self consulting

The web enables much "do it your self" consulting. Alreadyfamous is, "Ask Ernie" the tax and legal site of Ernst&Young . Guru.com is the Web's premier exchangefor connecting independent professionals with contract projects.They have over 200,000 connected "gurus" and over 22,000 hiringcompanies. With successful e-business consulting, clients will beable to close the gap between online lookers and actual buyers. Doit your self is great by helping steer customers to products andservices that appeal specifically to their interests, and thenproviding the necessary services to ensure those customers createrepeat business.

Is there a future for consulting?

The lesson is that there is hardly any future for a consultantas long he is not able to fundamentally rethink his role. The mostdominating factor is that he has to act with speed. There is notime for unlimited thinking and he has to take risk. Otherwise,nobody will feel that he understands the business or that he iswilling to take the responsibility for his advice. He can be anexpert or a change agent but the client expects that he will alsobe entrepreneurial involved. Being an outsider is only interestingfor strictly personal questions; within a company thedecision-makers like to have a partner in action.

The requested competencies of a consultant are preliminaryE-business knowledge, strategic intuition, change managementinsights, and a clear picture about the expected results. Offurther importance is: persistence in combination withintelligence, good hearing capabilities, entrepreneurial thinking,knowledge of human behavior and the will to act. But having allthese capabilities, we doubt that the involved person will still beinterested in being a consultant, he has more exciting options.Consulting isolated from participation in implementing is more adying activity then a rising one.

We can also put it the other way around: all the work becomespart time work and therefor almost everybody will be sometimes aconsultant. It is an employability role model. Great news for aglobal company in the field of temporary work and a reputedconsulting firm who like to merge.

Debijdragen in m@n@gement van onze correspondent in SiliconValley oogsten veel waardering. Burt Rost van Tonningen heeftzijn bijdragen verwerkt en gebundeld in een integrale visie opE-commerce, E-organization en E-strategy met als titel:

"PREPARING FOR THE E-TORNADO:
Observations from a European in Silicon Valley"

In november 2000 heeft Holland Business Publications dit boekgepubliceerd. U kunthet on-line bestellen.

Literature

Bragg, Mary, Reinventing Influence , Financial Times,London 1997

Bridges, William, Leading the de-jobbed organization" in"Leader of the Future", Jossey Bass, San Francisco 1996

Holtz, Herman, An Independent Consultant , Wiley&Sons, New York 1999.

Moss Kanter, Rosabeth, World Class , Touchstone, New York1995

Ulrich, David, Results-Based Leadership, Harvard Business School Press, Boston1999