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BE CAREFUL WHERE YOU TREAD

Updated: Jan 10

Could Wells Fargo’s recent decision to slash consultancy costs presage an industry-wise trend? Only time will tell. The eye-watering sums involved ($1bn/p.a.) were certainly not a surprise.

Many a company blithely has stepped onto the slippery slope of consultancy and lived to regret it. The initial foray is almost always modest and innocuous: a little expert advice here, some technical help there. What harm can it do? None whatsoever, if that’s the extent of it.

Even though the engagement may start off low-key, the undertow is inexorable, incremental and addictive. And it doesn’t take long for a form of obsessive psychosis to infiltrate management thinking. Once it's deep-seated, common sense and objectivity are cast aside.

It's doesn't take much to diagnose the onset of a consultancy addiction – logic starts to contort and the language changes from explanation to justification as the costs mount up. The resulting presentations are a sight to behold.

Nor is it too difficult to identify the circumstances that foster this phenomenon in the first place: a rigid and centralised power structure, an intolerance of mistakes and an all-pervasive fear of opprobrium. The presence of all three factors may only be in extreme cases, but any variation is fertile ground for consultancy.

There is also a common misconception that any internally generated solution is bound to be weak, ineffectual and lack expertise. But if you take the same solution, wrap it in a prominent consultants' brand, add a dash of the latest business memes and, voila!, you will be feted as a genius. Then, sit back and observe how managers lap it up with starry-eyed delirium.

Perhaps the attraction is in the brand, or perhaps it’s the human need to deflect blame when things go wrong, as they often do. The latter is not so uncommon: Why carry the can, and risk your own livelihood, when you can pay others to do so?

Either way, one can’t really blame the consultants. Like any other business, they need to sell as much of their products and services as possible. Besides, what business doesn’t crave addictive customers?

Nor is everything they propose just recycled garbage. Consultancy is only ever effective when it is short, sharp, specific or surgical. Anymore, or anything else, is a sign of indulgence and the onset of operational malaise. An analogy may help to hold this concept in mind: is it normal to hanker after the doctor once your ailment is successfully treated? Only if you are a hypochondriac.

In extreme cases the addiction can be so entrenched that very few critical decisions are made without recourse to consultants. Indeed, some managers even exhibit the classic withdrawal symptoms whenever the ‘consultancy fix’ is under threat: tantrums, panic, rage and depression.

The only time consultancy services are scrutinised with a sober eye is during an economic downturn. When profit margins start to recede, and these costs emerge suddenly like incongruous rocky outcrops, there is no choice but to address the addiction. Apparently Wells Fargo is undergoing this very experience at the moment.



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