The simple answer is that they uncover reliable intelligence and insights needed to drive smart decision making. To do that, though, client-focused consultants must mix solid scientific research techniques with innovative—and sometimes experimental—applications. Let’s take a closer look.
Research Methods Used by Consultants
Management consultants typically take two approaches to research:
1. Qualitative (phenomenological). To gather necessary data, this approach uses:
- ethnography (participant observation)
- interviews (structured, semi-structured, and unstructured)
- ground work (reviewing existing documentation and reports).
2. Quantitative (empirical). To gather necessary data, this approach uses:
- surveys and questionnaires
- experiments (for example, quasi-experimental design)
- business process modeling and simulations to model data, enterprises, and their operations.
In reality, as more firms pay scrupulous attention to delivering concrete results through improved systems and processes, management consultants must deploy both epistemological approaches and use a mix of research methods.
A Conventional Trio: Strategic, Tactical, and Operational Models
To use an intel-based approach to organizational research, a consultant’s operation needs to be rigorous, method-driven, and evidence-based. On the other hand, the consultant also needs to be vigilant in not allowing research models to become overly mechanical or robotic. Consequently, for every new consulting project, consultants should approach the problem with a fresh, unbiased mindset that suits each client’s unique situation. To use Tom Watson’s words from his article on coaching on the Huffington Post, consulting, although different than coaching, is also “as much about mindsets as skill sets.”
Because it’s not really possible to detail every technique used by consultants, let’s focus on three types of frameworks: strategic, tactical, and operational. (There is a multitude of frameworks accessible to industry experts. For a coherent model of strategic learning that’s grounded in theory and research from strategy, cognitive science, and adult learning, see research from Casey and Goldman.)
Strategic models (enterprise positioning/winning aspirations) use research to frame the strategic position of an enterprise and give answers to strategic questions. For example, to gather data and insight, consultants may use strategic dialogue (based on Pietersma et al., 2002; Pietersma et al., 2006). This is a systematic methodology used to analyze and implement strategy that is composed of three phases (strategic questions) and seven steps. It’s important to note that to go from strategy formulation to execution, various in-depth analyses need to be carried out for each step. Here’s a look at each step (representative analyses are put forward in brackets for consideration):
Phase 1: What does the playing field look like?
1. Strategic visioning (Greiner’s Growth Curve)
Phase 2: Which game(s) do you want to play?
2. Outside-in analysis (Porter’s Five Industry Forces Analysis)
3. Inside-out analysis (Porter’s Value Chain Analysis, and the DuPont Analysis)
4. Strategic options (Strengths, Opportunities, Aspirations, Results Analysis)
5. Strategic choice (Risk/Reward Calculation, and Market Attractiveness/Business Attractiveness Analysis)
Phase 3: How do you play a winning game?
6. Elaboration and planning (Henderson and Venkatraman’s Strategic Alignment Model)
7. Execution and monitoring (Balanced Score Card)
Tactical models (design/enterprise) are used to direct enterprise processes, resources, capabilities, and talent. They also address critical “how to” questions when researching and reengineering enterprises. By way of illustration, let’s examine Business Process Reengineering (BPR). Specifically, having determined strategy, you may want to critically re-evaluate and radically re-design organizational processes (based on Hammer and Champy, 2006). A BPR project can be led in four phases:
- Phase 1: Define scope and establish goal(s)
Clear signals include hostility and redundant communication (too many meetings and emails)
- Phase 2: Redesign process(es)
Priorities include efficiency measures, critical success metrics, and output levels
- Phase 3: Determine management
Priorities include choosing management methods, managing performance, continuing learning and development, determining reward systems
- Phase 4: Execute and consolidate
Priorities include leading a change initiative in a disciplined way, and consolidating gains by continuing to remove organizational processes and policies that inhibit change, and by establishing new, related change projects.
Upon successful implementation of BPR, the enterprise may enjoy several tangible benefits, such as significant improvement in quality, substantial reduction in costs and indirect labor, and marked increase in revenues.
Operational models (execution) are deployed to make the most effective use of the operational processes and actions, to help improve and transform organizations, and to execute next practices in enterprises. Case in point: the Plan-Do-Study-Act (PDSA) Cycle (based on Evans and Lindsay, 2017).
The PDSA cycle, promoted by W. Edwards Deming, is composed of four stages: plan, do, study, and act. It’s a simple and powerful methodology for developing, testing, and implementing changes to any process that will lead to continuous improvement and long-term organizational learning.
- Plan: Establish a challenging target for improvement and develop action plans to achieve the target. Consultants will need to analyze the current situation, describe process(es), and select the most promising solution(s).
- Do: Implement the plan on a trial basis by running disciplined experiments. By doing so, consultants will not use up all the resources but learn a lot.
- Study: Check the results of your experiment for improvement, and identify further experimentation that may be required.
- Act: During this stage, the improvements are standardized, and the final plan is executed as a current best practice and communicated throughout the enterprise. Because PDSA means never being satisfied with the status quo, the whole cycle starts again in an iterative process to identify other improvement opportunities or next practices.
The central proposition about PDSA is that improvement is the result of the application of knowledge—knowledge developed through a process of learning.
Stock Market Reaction to Hiring Consultants
If the consultant’s role is as impactful as many claim, we should be able to observe its merit in market values and economic reactions. In fact, most clients who publicize that they’ve hired management consultants do experience a rise in their market value. Specifically, research from Donald Bergh and Patrick Gibbons (2011), which analyzed 118 client firms, found that the client firms that have the highest financial profitability show the biggest growth, by way of drawing from signaling theory (Spence, 1974; Spence, 2002).
Be that as it may, the research from Bergh and Gibbons demonstrate that stock market reactions to an organization’s announcement that it has hired an external consultant do not seem to positively correlate with the consultancy’s brand reputation. That is to say, clients hiring the most well-known global consultancies, such as Bain, BCG, Booz Allen Hamilton, McKinsey & Company, do not realize any different market response than those clients that engaged other advisory firms. (For a critical assessment of management consultancy’s impact on management, see Andrew Sturdy’s article in British Journal of Management.)
On balance, in professional consulting, it takes two to tango—the practical rigor. And there is little doubt that models offer practical value. They provide a shared language, make the complexity of a problem manageable by reducing it to a number of workable steps, and spotlight the interconnectedness of organizational variables, such as strategy, people practices, processes, and systems. However, no model will promise that a consultant will advise objectively—even if the consultant may over-promise
Ultimately, the fundamental role of the consultant is to co-create value and improve the client’s condition and performance. But consulting is effective only if the client is demonstrably better off after the engagement.
- Block, P (2011). Flawless Consulting. San Francisco, CA: Pfeiffer.
- Tkaczyk, B (2017). “A Balanced Approach to Professional HRD Consulting: Lessons from the Field,” Global Business and Organizational Excellence (GBOE), Vol. 36, Iss. 4, pp. 6–16.