THE BIG CON

Two respected researchers draw back the curtain to probe the consulting industry, and what they find is worrying.

Mazzucato and Collington, academics connected to the Institute for Innovation and Public Purpose at the University College London, ask an interesting, important question: What is it that consultant firms are really selling? The answer seems to be confidence—the image that they know what they are doing, with a level of expertise and knowledge higher than that of the client. Or maybe it’s more of a “confidence trick,” a sleight of hand that provides huge profits for little actual assistance. The authors deeply examine the activities of the giant consulting companies, particularly McKinsey, Boston Consulting Group, Bain & Company, and the “Big Four” accounting firms. These corporations expanded massively in the 1980s and 1990s on the back of a neoliberal wave of privatization, outsourcing, and reorganization. While they present themselves as objective advisers, their proposals usually involve cuts to staff numbers and a focus on short-term gains. Mazzucato and Collington look at several cases where their advice turned out to be spectacularly, painfully wrong—although the consultants still walked away with fattened pockets. The authors point out that the expertise of consultants is often exaggerated and tends to be generalist rather than specialized. The use of consultants undercuts the development of intellectual capital within the client organization, resulting in problems that require more consultants to fix. In the concluding section, the authors give advice to anyone considering engaging consultants, such as first examining your own organization to see if the needed expertise is already available. Clear metrics to gauge success or failure should be incorporated into a contract, and research into the record of the consulting firm is invaluable. As the authors demonstrate, these are simple steps that could save a great deal of money, time and difficulty.

A detailed and disturbing look at the consulting industry and its negative impacts on companies and governments.