Why Consultants Make Bad Politicians (and this is a good thing)
During the quarterly meeting of HorseHead Holdings (The Parent Company of MSG Consulting), we were lamenting the state of politics in both Brazil and the USA. I need not go into detail except to say that the level of discourse is worse than my daughter’s kindergarten class.
While I support one’s civic duty to vote, here is why the Consultant decision process is far superior to that of the politician. I will take what I hope is a relatively non controversial, yet ‘’international example,’’ that emphasizes the use of objectivity and data, and the importance of sample size in decision making.
Welfare / Bolsa Familia
This program to assist the poor is often used by political parties to divide the populace.
- Viewpoint A) The more conservative party usually considers the program a waste of money and will cite an example of some family that receives the funds, yet does not work or seek employment, potentially defrauds the system, and uses the proceeds to purchase alcohol and cigarettes.
- Viewpoint B) The more liberal party will demonstrate that the program works exceedingly well, and will show the single mother that uses the funds to pay for an after school program, allowing her to work a second job, and provide a stable environment for her kids.
Both of the above examples can be true. But they are probably not representative. Yet the masses will vote accordingly based on what they want to believe.
Relating this scenario to a corporate program, this could result in either killing a program that is accretive (positive) to earnings, or continuing one that is detrimental (negative) to earnings.
Politicians want to get (re)elected. Employees don't want to get fired.
Consultants want you to succeed.
The Bad Debt Expense Equivalency
For anyone who has worked in retail, you know that you always include a bad debt expense. Effectively accounting for non payment, fraud, etc. There are other costs too — shrinkage (e.g. employees breaking or even stealing inventory). Cumulatively, the “cost of doing business.” This is built into your cost model. So when you sell that Pink Elephant sculpture made in Thailand that will bring the purchaser good luck, the $14.99 price covers the 4% cost of doing business.
A program like Welfare/Bolsa Familia is no different. If Viewpoint A is the case 90% of the time, the program needs to be ended or greatly modified. If Viewpoint B is the case 90% of the time, then perhaps the program is working and just needs to be slightly modified.
The Consulting Approach
In consulting, we try to avoid the extremes that politicians, and just about anyone else involved in political debate takes, and follow a more obejective methodology.
- Define Goals: As we are evaluating an existing program, we can presume that the goals are agreed upon; however, always good to revisit/reset them to ensure that there is no disagreement after the fact.
- Avoid the Anecdote (Note: not antidote): You cannot use a singular example like Viewpoint A or B. You need a significant sample size to evaluate the program.
- Source the Data: Almost every government entity will provide myriad sources to support or debunk (not support) the program in question, whether welfare, or healthcare, or <fill in blank>. So sources must be decided upon beforehand, and Wikipedia is normally not acceptable (yet, ironically, often less biased than others.)
- Define the Threshold for Success: I wrote above that 90% was OK as a success metric for Welfare, but is it? Is 80% or 65%? Ensure these are defined as well at the outset.
- Accept the Results: You want the program to work? Of course you do. But that is the whole point of analyzing it, to determine its success. It is like getting on a scale. If you are gaining weight when you want to lose weight, well, better to know so that you change your program. Politicians will change the narrative and ‘’spin’’ the story: "Gaining weight" magically becomes losing weight. Um, no.
Consultants will, or should, a) tell the truth (you’re getting fat), b) move the approach, c) alter the strategy and d) prevent you from throwing your money away.
Politicians, to use our educational system as a metaphor, regularly get an ‘F’ in ‘a, b, c, & d’ above.
Client should expect an ‘A’ from their Consultants!