Never Take An Advice From a Salesman
Sometimes, you have no choice but to simply glimmer the truth, before it vanishes like a puff of smoke in the air. And later, when the right moment beckons, you get it. That’s exactly what happened to me when a familiar, Talebian insight suddenly airdropped in full blown intensity inside my thought processor, thanks to his ranting, raging, feral Twitter self.
You can’t be serious about advising change when you have a technology to sell. You either give advice, or you sell technology. It’s unethical to think you can do both.
I admit. It took me a lot of time to get this straight, given the promiscuous nature of my trade- You know what I am talking about — the consluting business, which off late, has been keeping up the night with strange bed partners such as Sales teams, Systems Integrators, Technology Vendors and Designers.
Allow me to go on a flashback and narrate the story of strategy consulting industry to understand this strange predicament it is today beset with.
Draw a map of the world of business and the most prominent topographical feature you would notice since the 1960s, is the tall lighthouse bearing the strategy consulting industry, built on the edifice of “high-concept” ideas, which not just helped large organizations navigate through the restless, tidal pulls of the market, but also transformed the landscape of business forever.
[Book Recommendation: Do check out Lords of Strategy by Walter Kiechel III for a fascinating book-length treatment of this subject]
Back in the good old days, when the unspoken rule of the business was“Capitalize before you productize and marketize”, successful players were large ships who lacked rigorous intellectual understanding of the dynamics of competition. Armed with nothing but spreadsheets and 2 x 2 matrices, strategy professionals audaciously attempted to analyze the problems plaguing organizations using a seductive toolkit made from concepts and frameworks. What made the lighthouse pervasive and influential in the old era of business was the notion of safety it provided, hedging the risk of sailing across the rough waters of the sea. To follow the lighthouse was to reassure oneself towards the comfort of the safe harbor whose bricks were made with empirically sound methodologies and best practices.
It helped that the lighthouse was perfectly poised at the shore, not too far, not too close from the throbbing waters. Priding on their ability to stay away from the messy waters of execution, they beamed out conceptually crafted, empirically gluttonous insights, which showcased the patterns of cost and competition playing out between the large ships bobbing up and down in turbulent waters.
Today, when business cycles are struggling to keep up with the exponential changes in technology cycles, you cannot afford to have large ships, which were designed for the past and stay afloat in business. Large ships are busy mutating into lean and sentient surfboards, which can maneuver more deftly with the distributed intelligence offered by modern GPS technologies providing better situational awareness of the environment business is operating in.
When the evolutionary rules of the game dictate that large ships mutate into sentient surfboards, can the mythological lighthouse — the beacon of safety — be left behind?
Has the lighthouse begun losing its light?
By now, it must be obvious. The threatening waves of disruption has hit the safe harbor of the consulting industry. In its September 2013 issue, Harvard Business Review quoted the managing director of Kennedy Consulting Research & Advisory, Tom Rodenhauser, stating that classic strategy work has been “steadily decreasing and is now about 20%, down from 60% to 70% some 30 years ago”.
Leading the fray are the Big 4 (PwC, Deloitte, E&Y, KPMG) accountancy firms whose consulting divisions have been “doing more consulting than McKinsey, BCG, and Bain”. Gone are the days when a strategy consultant stood at a higher totem pole than an Operations consultant. The rising pressure to keep the costs under control, and the increasing complexity of digitalization of businesses have ensured that the two ends of the consulting spectrum — strategy and implementation- collapse and converge.
What was once the strength of the lighthouse keepers, their decision to stay away from the messy waters of execution, turned out to be their biggest liability.
And in response, today, the Big 4 have modularized, cradle-to-grave digital transformation services, covering not just the gamut of traditional strategy, including Risk & Financial Advisory, but also implementation services through growth platforms, which brings together digital assets, software services, and industry expertise in one singular package.
Accenture Digital Labs was launched in 2013 around the same time when Deloitte Digital Labs came to the fore. In 2014, both BCG and McKinsey launched BCG Digital Ventures, McKinsey Digital Labs respectively.
In response, traditional IT outsourcing players, of the likes of Wipro, Cognizant (Full Disclosure: My current Employer) and TCS, have also upped the ante by offering consulting services, along with system integration capabilities, thereby convincing clients of their ability to provide C-Level strategic advice along with the necessary downstream implementation optionalities.
In other words, it doesn’t matter even if you are the lighthouse, if you don’t know how to make a surfboard, which can adapt and sail through the uncertain waters of the future. No wonder, the lighthouse keepers have begun to offer surfboard building services.
The Digital Transformation Delusion
Can traditional strategy consultants address their client’s digital transformation needs?
Put this question to the strategy consultants from BCG, McKinsey and Deloitte, you will find the same word coming up in the answers from each: Strategy, and not Technology is driving the Digital Transformation.
In the past, I, and a few as well, have argued at length how traditional consulting organizations cannot help you grok Digital Transformation, because they are wired to solve problems in a linear, goal-driven approach.
Given that the large consulting firms are no longer playing the role of advisors alone, but also actively involved in end-to-end implementation cycle, can they now successfully address their clients’ digital transformation needs?
In theory, Yes. This model viz., Digital Transformation = Technology Strategy Consulting + Technology Implementation/Delivery has the right set of ingredients to be successful, in its own right. Such cradle-to-grave solution shops can enable build stronger client relationships with non-IT business audience ( who make decisions related to “Digital Agenda”), and build downstream sales opportunities for their technology implementation teams.
In reality, however, we have a problem.
When consulting teams work in close proximity with the implementation/ integration partners, would they have the necessary skin in the game to work in the best interest of the client, especially, when it conflicts with the interest of the technology implementation/delivery partners?
Problems of this kind are called as Agency problems. To define in simple terms, agency problem “arises whenever the welfare of one party, termed the ‘principal’, depends upon actions taken by another party, termed the ‘agent.’ The problem lies in motivating the agent to act in the principal’s interest rather than simply in the agent’s own interest.”
And this is not the first time the consulting industry has faced these problems. Back in 2001, the demise of Enron and Arthur Andersen taught us the perils of agency problems in relationships involving external auditors.
Today, however, the web of relations between a consulting player and its in-house technology implementation player is more complicated, with varied differences in pay-scale, and culture between the consulting and delivery teams. In my consulting experience, I have seen several instances where such conflicts have played out between the clients and consultants in different ways.
In an industrialized consulting model, where traditional consulting expertise is packaged with technology subscription services, agency problems can take a far more insidious shape with possibilities of pre-wired bias, hampering the appropriate selection of technology platforms, depending on the inherent strengths/experiences possessed by the implementation players.
The Trouble with Advice
Say what you will, it all boils down to advice. The trouble with advice is that when it is useful, it benefits both the advice giver and the client, while, when it isn’t useful, it harms only the client, leaving the advice giver unscathed.
Do what you want with the rules and procedures of law governing disclosures. The asymmetry of information will always endure. So what can be done about it?
Can we look again into the aphorism from where we started? The aphoristic advice in the title of my article is actually incomplete. Here is the complete aphorism, written by Nassim Nicholas Taleb.
Never take an advice from a salesman, or any advice that benefits the advice giver.
For now, following this aphorism should help. But again, who am I to give you the advice?
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Originally published at www.linkedin.com.