- Management consulting news
- 01 December 2016
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In an exclusive interview with Consultor, Matthias Kipping, co-author, ‘Defining Management’ reveals how consultancies grew into the powerhouses they are today. But he also argues they can’t keep doing the same things that got them here today to guarantee their future:
How did it happen that the accepted experts in management theory grew to be the management consultants – those actually advising managers how to do their jobs, rather than actual managers themselves?
For Matthias Kipping, professor of policy, Schulich School of Business, this was a question he felt needed to be answered, and his just-published book – ‘Defining Management’ is his very thought-provoking attempt at answering it.
“We’ve almost taken for granted how powerful consultancies have become in defining what ‘good management’ is,” he says speaking exclusively to Consultor. “The regard with which consultancies are held in today is almost at its height – something that’s been achieved in only a relatively short space of time – since the 1930s. In short, their rise has been nothing short of fascinating.”
But here’s the interesting part. The journey to consultants being the preeminent authority they are today was by no means assured, he says. Instead, Kipping argues they owe much of their success to the parallel growth (and symbiotic relationship) they formed with two other emerging players: business publishers and business schools. “All three co-evolved at the same time,” he said.
“The rise of consultancies very much depended on these three agents rising up together, each reinforcing and feeding into the other. The business schools grew because they could now send people to consultancies; the business press made business something people wanted to study further at the business schools – and so it was a virtuous circle for them all.”
However, according to Kipping, there were key changes the consultancies made specifically that meant their ascendancy continued: “First, they adopted scientific theory,” he agues, “but crucially, at a time when they weren’t a ‘profession’, they adopted the elements other professions like law did – like presenting themselves as acting in clients’ best interests rather than the interests of themselves.”
He adds: “The final part of the jigsaw was after the Second World War. This is where their breakthrough really came – working with government in the rebuilding of America [the history of consultancies is very much the history of US consultancies] – something that not only gave them visibility, but also legitimacy.”
But if that’s the history of the rise of consultancy, what’s the current situation, and what does the future hold for consultancies too? For while his praises their role in defining best practice, in his book Kipping also notes the less salutary 1990s, when consultancy was just as synonymous with chasing the latest ‘fads’, and celebrating businesses that ultimately failed (Enron et al).
“You need to look at things in the whole,” he says diplomatically. “The thing about consultancies making bad calls is that this isn’t just something that happened in the 1990s – it’s actually happened throughout the history of consultancies. The only thing that’s different is that this seems to be particularly infamous.”
He says: “At the end of the day, consultancies are just trying to predict the future. This is a difficult thing for anyone, so sometimes there just isn’t an awful lot they can do. That said, what the best consultancies are doing now is saying ‘yes, there might be all these new challenges, that are supposedly the next great ‘thing’ – like Big Data – but let’s take a step back, and properly analyse things’.”
The real challenge consultancies face today, he argues, is to understand these global changes, and to find new ways of staying up to date. For instance, he argues that if there’s been one constant in the last 70 years, it’s that consultancies’ fortune have risen and fallen on their ability to stay current.
He argues Booz Allen Hamilton is a classic example of a consulting firm that was dominant from the 1930s-60s, but then went “too scientific” and research-based, more recently, at a time when clients needed more prescriptive (telling them what to do) advice, rather than analytics. This, he claims, paved the way for the likes of McKinsey to come out of its shadow. “Managers still want to be told what to do,” Kipping says. “At the end of the day, consultancy is really about managing human behaviour, and this involves slow, slow change, rather than giant leaps.”
But in terms of where consultancy is now, Kipping argues it’s never been healthier. “Consultancy is even spreading its way into the Vatican!” he says. “Management is changing all the time, so this is also creating new opportunities. There may well be less hierarchy and less ‘management’ in organisations today, but there are still middle managers, and there is still at CEO at the top, and so change hasn’t dented the reputations of consultancies, it’s only made the need for new solutions even greater.”
The $1million question, of course, is what the next big challenge facing consultancies will really be? “Oh, without doubt, it’ll be about how the Millennial generation decides it wants to work, and share information,” he says quickly. He says: “Consultancy is ultimately about ideas – more specifically sharing an idea, for a fee. But Millennials share ideas freely; they reach out in amazing ways.” He adds: “This is the new way of working. Whether or not a McKinsey or the like will have solutions for this remains to be seen.” This, arguably, is the next, but as yet unwritten chapter in the history of consultancies.
Peter Crush for Consultor.news.
Defining Management is out now, published by Routledge (Shop at Amazon)