I recently rewatched Steve Jobs’ famous MIT Sloan School of Management talk from 1992 where he asks the audience: “How many from consulting? Oh, that’s bad. A mind is too important to waste. You should do something.” As a consultant this criticism feels visceral coming from someone you respect deeply.
Jobs was unrelenting but he is not alone, which titles such as The Big Con: How the Consulting Industry Weakens Our Businesses, Infantilizes Our Governments, and Warps Our Economies, House of Lies: How Management Consultants Steal Your Watch and Then Tell You the Time, and Consulting Demons can attest to.
I can think of no other occupation save maybe politicians where such one sided criticism is acceptable and considered normal. But even politicians are still occasionally described in positive terms in biographies and news coverage, which I cannot recall ever having seen for consultants or consulting companies.
I am a consultant and have been for more than a decade and I love it, which creates an ambivalent feeling because I agree with Jobs and much of the criticism; there are examples of consultants being used in place of regular employees, dubious ethical recommendations and not owning the outcome. It is not something I see myself, but I am not oblivious to such things happening. Yet if this was the whole story it is difficult to explain why consulting is as widespread and pervasive as ever. Clearly such a diagnosis of consulting as indiscriminately harmful, as has become popular, must be missing something. Surely, governments, organizations and companies would not be shelling out billions worldwide if the effect of consulting was so unequivocally negative as popular treatment has it.
That got me thinking about how we could nuance this perception a bit. If we try to look at some of the aspects where consulting provides unique value that organizations cannot provide themselves.
Vertical knowledge transfer – A company can only learn how incumbents are doing by hiring people from them. They do so, but the rate of knowledge transfer is slow and not sufficient to create a coherent overview of what works and what doesn’t, especially in new areas of cutting edge technologies or processes. Consultants bring hands-on experience from other similar engagements with other clients where they have seen what works and what doesn’t. Without access to such experience organisations would more or less have to reinvent the wheel by themselves every time they wanted to do something new.
Flexible resource pool – Perhaps the most pervasive value add of consulting is the flexibility. Organizations have hiring policies and processes that can easily stretch months into the future, so if something needs to be done urgently it might not be feasible to hire. Moreover, if the nature of the work that needs to be done is transient, such as implementing regulatory requirements or delivering a project, as opposed to Jobs’ production example it might not be ethically or even legally permissible to just hire and fire people after a few months when you are done with them.
Third party validation – Everybody needs a second pair of eyes on important decisions. That is a good principle for anything important. If you grade your own homework you might not see its flaws and have a vested interest. Leaders might also have a conflict of interest in terms of making decisions. Consultants come from the outside and may have a better chance of looking at the problem in a disinterested fashion simply because they will leave again. There is a reason that auditors are external consultants. That is the flipside of Jobs’ “not owning the result”: it may not be a bug but a feature.
Specialisation – Certain things organisations will not do very frequently and it may be hard to hire or secure critical mass for it. If you are a small production company and you need to establish another production site in Nicaragua or implement an ERP system, chances are that you might not have that particular expertise on hand and indeed, that such expertise might be difficult to find as full time hires at all. Consultants, because they do the same kind of jobs in different settings acquire an expertise that very few companies would be able to develop in-house.
When (not) to use consultants
When consulting is criticised it is often because consultants are used for jobs where none of these aspects are needed. For example, when consultants are used for routine jobs essentially as glorified temps that unfortunately end up as semi permanent hires, the proverbial house consultant. That typically happens because of internal hiring policies, such as limitations to head count, challenging hiring process etc. Another example is when consultants are used for work for which there is already internal knowledge.
In conclusion I would say that much of the criticism of consulting may be correct, but that it probably can be explained as a failure to use consultants for aspects where they provide unique value, sort of like using an iPhone as a door stop: It will sort of work but be pricey and not particularly effective. If clients are not using consultants for tasks that are novel, transient and require specialisation as well as an understanding of what peers are doing they are probably better off looking at another way of providing the human resources for the tasks.
Danish 
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