Thursday, April 15, 2010

Inside the Consulting Profession at BCG

Keith Yost provides a unique and unappetizing insider account of what happens when consulting goes wrong, through his experience at BCG in Dubai.

His critique of the back-and-forth process of creating deliberately vague proposals as marketing tools is hilarious, yet on the mark:

"In the consulting business, it is standard practice for clients to write requests for proposals, describing the question they would like answered. The consulting firm in turn writes a case proposal: We will answer A by having Consultant B do X, Y, and Z. A well written case proposal promises much, but is deliberately vague about what concrete things the consultants will produce."

The classic problem of clients not knowing what they want, and consultants not aware or not willing to offer concrete proposals is notorious in the profession, and seems to have caused him much anguish:

"Analytical skills were overrated, for the simple reason that clients usually didn’t know why they had hired us. They sent us vague requests for proposal, we returned vague case proposals, and by the time we were hired, no one was the wiser as to why exactly we were there."

His most damning indictment has to be on the willing connivance of consultants to go along with a client's project owners, and make up numbers to put the seal of approval on the client's pet projects:

"But the client did not want analysis that contradicted their own, and my manager told me plainly that it was not our place to question what the client wanted."

What adds an ironical twist to the tale is the fact that at that very time, the client's location, Dubai, was going bust through massive projects that hadn't always been well thought of, but that involved huge payoffs for various third-parties. Few whistle-blowers come from within such client-consultant interactions where each side pats the other on the back: 

"I was not surprised the day I lost my job. The writing was on the wall. BCG’s management might have been releasing reports claiming countries like Dubai would be islands of stability in the world’s rough financial seas, but to the ground troops, it was obvious the economy was not doing well."

The larger connection to similar stories worldwide during the financial crisis, and particularly the collapse of Wall Street banks such as Lehman Brothers, should not be lost on us. The lurid stories of consulting, accounting and auditing practices following the above 'pat on the back' principle have recently surfaced, and all the big names are in there: the big four - E&Y, PwC, Deloitte and KPMG, all provided their seal of approval to banks at the center of the crisis. 

That Yost's account is of an old-time strategy consulting firm, BCG, should unsettle many in the profession. Are these simply professional necessities or could such practices change? 

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