- Management consulting news
- 28 November 2016
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The MBBs dictate business practices that companies must adopt to appear modern, rational and efficient. A power struggle, including within the consulting marketplace, where each player seeks to impose its own concept.
How to explain that at the same time, within different companies and sectors, a significant number of managers are deploying the same management practices despite having different methods of operating?
That is the question that Romain Zerbib, a strategy researcher-professor within the International Institute of Commerce and Development (ICD), sought to answer by writing La Fabrique du Prêt-à-Penser (The Ready-to-Think Factory). In this work he dissects the strategies of major consulting firms, those he calls “consulting multinationals”: “At the heart of the system are those that we can call MBBs, in other words BCG, McKinsey, Bain, Booz & Company and Roland Berger,” he explains. “These are, in some respects, architects of concepts, values and beliefs.”
These firms, says the researcher, are the founders of managerial concepts that are gaining ground with more or less success. When these concepts are adopted, they gain legitimacy that allows consultancies to efficiently monetize them. Examples abound, with Romain Zerbib citing the Strategic Game Board or the Problem Solving Test, both conceived and distributed by McKinsey.
The Strategic Game Board is supposed to help answer three simple but fundamental questions: where, when and how to start competing in a given market? This matrix could explain the American pharmaceutical giant Pfizer’s end-of-aughts strategy and its efforts to abandon certain markets and refocus its activities on others.
“Consulting firms have succeeded in creating confusion between the performance of major companies and the supposed use of their own offerings,” continues Romain Zerbib. “They create an echo, a very strong impression of prestige in comparison to their products.” If General Electric uses a McKinsey matrix and, during that timeframe, generates significant profits, the firm takes advantage of that success and spins an argument that the use of their offering is truly favorable to companies’ performance.
In conclusion, “one of the world’s most powerful companies is for all intents and purposes equated to a management practice.”
The 7-S framework
To achieve this performance, consulting firms develop tools that are not only simple and efficient, but also modern and rational. They thus carry out multiple scientific studies that allow them to support their concepts’ legitimacy through entire series of numbers and equations meant to show that any rational and devoted manager will choose the methodology in question.
The firms “have perfectly understood that managers adopted a method based on those two levers,” comments Romain Zerbib. “This is embodied even in the lexicon: depending on the vocabulary used we can immediately identify managers at the forefront of new techniques. For a manager the use, or not, of specific terminology may represent a chance to move up, or not, within his or her organization.”
The 7-S framework: the key to a business’ success – such read the headline of an article in the Cercle des Echos, thereby putting forward of McKinsey’s most successful matrices. Everything is there, nothing is missing: the concept’s creators explain that they start from the accumulated experience generated over many years by successful companies, then offer up a seven-stage formula, the famous “7-S” summarizing their methodology. “Alliterative genius,” notes one of the creators, Tom Peters, who believes that the framework’s prominently stated simplicity played an important part in its triumph.
The firm sees the “7-S” as a diagnostic tool that permits companies using it to “understand the market’s dynamics, to make important changes within the organization or to kick-start a project,” says the article’s author.
The fact that the concept was developed by Richard Pascale, Anthony Athos, Tom Peters and Robert Waterman in the 1980s illustrates some select matrices’ ability to weather the years, thereby allowing their firms to claim this as further proof of their relevancy. Thirty years after the “7-S” were born, Rajat Gupta still qualified them as being “an approach that combines the essential factors that feed powerful organizations […]. The 7-S framework remains one of the durable elements that help implement applied and focused management.” Like enduring fashions, successful frameworks are exploited and refined over the years.
“Firms impose their own governance models”
“Consulting firms impose their norms and standards through training, by influencing the education that future managers receive within the major business schools, through the prizes they award and the various books they publish,” states Romain Zerbib. “They are present all across the managerial environment and they manage to organize this universe according to their own standards.”
One of the most telling examples, according to the researcher, is that of the BCG matrix, created in the late 1970s. At that time, the latest fashion was to concentrate one’s assets and to try to find portfolio management modalities. This led many managers to carry out the exact same arbitrages, leading some researchers to state that the BCG matrix could be blamed for some of the United States’ relative decline – because it had led management to not take any risks.
At one point in time, all managers had the same way of approaching the market, through the prism of this single tool. “This was an extreme case,” notes Romain Zerbib. “Today there is no one way of doing things. But firms do have a responsibility: they direct management’s decisions, they impose their own governance models. That isn’t trivial.”
Consulting firms are waging a veritable war to develop and impose the next trendy concept. When one of them succeeds in establishing a new standard, the others follow the lead and develop similar practices. The big firms are often the ones taking the lead, but not always, according to Romain Zerbib, who cites the “5 steps”, a framework developed within Valéo with the input of MNM Consulting’s founder.
Lise Melia for Consultor.fr (January 2014)