Chapter 1
Origins and Evolution: From Whence We Came

The Role of a Consultant

One day, somewhere in the mid-Pleistocene Epoch, after the last glacial period, a man was trying to create a stronger point on his stone spearhead so that he could better hunt and slay the peccaries that fed his clan and protect himself from dire wolves that fed on his clan. He did this in the only way he knew how, which he learned watching his father-he laboriously abraded the sides of the point on a larger rock.

On this day, however, a stranger happened by who might have been seeking more interesting surroundings, or was exiled from his clan, or, one could readily assume, simply was lost. Observing the work on the spearhead, the stranger demonstrated that the point had to be ground on a harder rock, not a softer one, and indicated how to choose them. Not just any rock would do. And, indeed, his method worked and the hunter fashioned a sharper spearhead more quickly. The stranger was offered thanks, provided with food, and bestowed with a lion's tooth. He then went on his way once again, well fed, and with a talisman.

Consulting had been born.

The Gospel

The role of a consultant is to improve the client's condition.

It may or may not have happened that way, but you can't prove it didn't. Consulting-advice, counsel, suggestions-has been around since people began living together. Claims of "the oldest profession" have been misapplied to another career, though some would claim that consulting can also be somewhat meretricious if performed with poor motives or lack of skills.

Our job is to improve the client's condition. Doctors are consultants, and one of the first things they learn in medical school is primum non nocere (first to do no harm). When we walk away from a client, the client's condition should be better than it was before we arrived, or we've failed. (That "we" may mean both the client and we have failed, but we share in the failure in any case.)

It's that simple.

However, we are engaged in management consulting as solo practitioners and small firm principals (or consultants and partners in large firms). And that pursuit did not begin when sloths as large as a tree waddled about the earth. It began and then flourished within some of our lifetimes.

The first management consulting firm was A.D. Little, founded in 1886 by a professor from MIT. It was mainly a technical research firm at the outset. Booz Allen Hamilton was founded by Edwin G. Booz of the Kellogg School at Northwestern University in 1914 and was the first to serve both industrial and governmental clients. (It wasn't until after the Great Depression's onset that these independent consultancies expanded to embrace more professionals and offices.)

Many, perhaps most, chroniclers of management consulting trace the origins to Frederick Winslow Taylor, the famed guru of time-and-motion studies in the early 1900s who purportedly spawned the industrial engineers and consultants who measured efficiency. There are two things wrong with this simplistic Genesis. First, it was governmental regulation combined with the exigencies of World War II that established consulting as we know it. And second, Taylorism was based on a great lie-Taylor fudged his numbers. In measuring efficiency (say, of a man shoveling coal), Taylor would calculate the size of the shovel, the distance to be traversed, lifts possible per minute, and so on. But he never did calculate the fatigue factor inherent in virtually all physical labor. People tend to get less efficient the more they work. When this became apparent, Taylor simply made up numbers out of thin air to accommodate this inconvenient reality. His work was discredited during his lifetime.1

From those beginnings2 management consulting grew dramatically, primarily in the United States. The egalitarian nature of U.S. democracy was conducive to the belief that even senior people could use help (as opposed to, say, the European belief that high office was to be held by family ties, school connections, nobility, or bestowal by absolute authority), and that it was a sign of strength and insight and not weakness or incompetence to ask for help.3 Only after the global transformation as a result of World War II was management consulting transported overseas from the United States.

Prior to the war, however, governmental regulation actually promoted independent consulting. As opposed to the shop mentality of Taylor, management consulting was more focused on dealing with organizational structure-bureaucracy, if you will. The outside experts (see Figure 1.1) were accountants, engineers, lawyers, and similar professionals who worked for merchant banks.

FIGURE 1.1 Relationship of Skills and Content

In the mid-1930s, New Deal legislation such as the Glass-Steagall Act prohibited banks from engaging in nonbanking activities, so they could no longer employ and bill out the experts. Yet the banks continued to urge their clients to utilize experts to protect their loans and investments and ensure effective management.

Hence, independent management consulting was boosted by Depression-era government regulation.4 James McKinsey, for example, assiduously pursued banking relationships to secure the consulting business that the banks themselves had once provided for their clients.

The war also represented seismic shifts in demographics and learning, most relevant for our purposes because of the large movement from an agrarian to an urban culture, and the introduction of mass training for people who had never been developed in such a manner before, nor so quickly, including women in manufacturing jobs. World War II actually necessitated the creation of the training "industry," for both military and domestic requirements. After the war, management consulting clearly had two components, shifting from merely specific, content-related expertise to also embrace processes that consultants mastered that were applicable in a variety of public and private enterprises.5

You can view the relationship in Figure 1.1. A consultant who is strictly a content expert (brake pads, air traffic control, medical malpractice) and has no processes to apply or transfer to the client may be thought of as an expert witness at a trial. His or her expertise is sought in a specific area for a finite duration. If there were no brake pads or air traffic control, the consultant would be irrelevant.

On the horizontal axis is the ability to apply processes and to transfer them to the client. If that is purely what's done, and there is no content expertise at all, then we have the equivalent of a facilitator, who can run group meetings and prevent mayhem, but who brings no intellectual capital or property to the table.

I submit to you that the diagonal represents the power in consulting: the consultant who can apply and transfer skills and who also has an impressive ability to tackle content areas. That person becomes a collaborator with and partner to the client, and is far more valuable (can demand higher fees) than either colleague at the maximums of the other axes. And that person more readily can become a trusted advisor, an ideal role for a consultant which we'll return to later on.

Recent phenomena have included the move of traditional audit and accounting firms into more generalized management consulting. The trust placed in them in dealing with company finances was simply transferred to other areas of the operation, albeit with mixed results-the audit mentality has resulted in time-based billing, which I'll discuss at length later as unwise, unethical, and unforgivable. There have also been abuses in such transfers of trust, as we saw with the collapse of Enron and the subsequent crumbling of Arthur Anderson's consulting business at the time (since resurrected as "Accenture").

Finally, bear in mind that IBM derives the greatest percentage of its profit not from hardware and not from software, but from its consulting operation. That should tell you a great deal about the future. No one really knows how much revenue is derived by the total management consulting profession, but at this writing I'd guess it's over $500 billion.

The Ongoing Need

We've established that our role is to improve the client's condition. That client is the person who is authorizing our payment out of his or her budget. I call that person the economic buyer. The buyer is our client, not the organization. A client is a human being, not an inanimate entity.

I know you prefer to list Bank of America or Microsoft as your client, and we all do such things. But very few buyers have the authority to hire you on behalf of the entire organization, and even those that do-CEOs, board chairs-are almost always hiring us for a limited scope of action. Your allegiance is to the economic buyer, the person whose condition is to be improved. (Only if you find that the buyer in ethical or legal conflict with the organization should you abrogate that allegiance.)

"Need" for the buyer comes in three flavors:

1. Preexisting needs.

   These are age-old, traditional, and valid needs now and tomorrow, and may include such areas as customer relations, market expansion, strategy, conflict resolution,...