In Part 1 of this series, I described two distinct streams in the history of consulting: content and process. Historically, content firms (Arthur D. Little, McKinsey, Boston Consulting Group, Bain, etc.) evolved from research to strategy. Content consultants believed in analyzing the market and the firm and providing answers. Process firms evolved from the operations systemization of Frederick Taylor and Frank and Lillian Gilbreth through Dr. Deming and the quality movement of the 1980s, as well as reengineering to Six Sigma and similar process improvement methodologies today.
It isn’t oversimplifying to say content consultants rely heavily on analytics and provide answers to be implemented by their clients, while process consultants rely heavily on training and ask questions to teach their clients how to find answers to implement. My experience shows that, with some rare exceptions, the only thing these consultants have in common is that they have little use for each other.
Part 1 explains the history of this evolution with a focus on strategy and operations firms. Part 2 discusses technology firms, largely content in orientation, and human resource firms that are largely process in orientation.
Another kind of content firm -Technology and Systems Integrators
I am the “original late adopter,” so I am probably not the best source for the history of technology consulting. Here is my limited understanding of this industry.
These days, Information Technology (IT) consultants may work for the Chief Executive Officer (CEO) or various business heads or the Chief Information Officer (CIO). IT consultants deliver such services as IT strategy, IT architecture planning, IT Security, or Enterprise Requirements Planning (ERP) services. Or they may work for various department heads for services such as data analytics, IT implementation, software management and systems integration.
Let’s just think for a minute about what has happened to computer technology in the thirty-seven years that I was a consultant.
- Hardware – Mainframes, mini-computers like DEC PDP-8 and the IBM 360 (for which my mother programmed the operating system in the early ‘60s and was still in operations in the 1980s). Personal Computers (PCs and later Macs) were first desktops and then “portables.” (Does anyone else remember the Compac “portable?” It was the size of a small suitcase and weighed over fifty pounds!) Then came laptops, tablets, and finally the cool flip-phones became the ubiquitous smart phone.
- Software – Operating systems for all of the above written in multiple languages I only know some names of (Fortran, Cobol, Basic. C, C++, Python, Java, C#).
- Systems and systems software – Financial and Management Accounting, Production Planning, Inventory management, materials requirements planning, Enterprise Requirements Planning (ERP providers like German firm SAP cast a huge shadow), HR Systems, (PeopleSoft and the long awaited SAP HR Module), Customer Relationship Management (Oracle, Salesforce.com), Internet, Social Media, media presence and the algorithms and Big Data analytics that go with them. There are so many; the evolution is mind-boggling.
- Services -There were always services firms – large like Electronic Data Systems (EDS) started by H. Ross Perot (who ran for president against Bill Clinton twice), sold to GM in the 1980s and spun off in the 90s. There were also thousands of small firms.
Accounting systems were the first to be automated so it is easy to understand how the Big Eight and now Big Four got into IT, including Accenture (which was born after Arthur Anderson spun off the consulting business, post Enron collapse).
Then every technology manufacturer (IBM, Hitachi, NTT) got into consulting followed by the Indian Data Center outsourcers Infosys, Wipro and multi-industry, multinational Tata, Now even the Big Three, Booz Allen Hamilton and newer firms like Cognizant, and Virtusa are all chasing “Digital Transformation,” the latest service offering craze.
The forgotten process firm – Organization or Human Resources consultants
Someone once told me, “You know the problem with organizational consultants? You guys can’t get organized.” Bada boom.
There is some truth to this. Much of the specialized content of human resource consulting firms comes from academic and applied research. Perhaps the most famous of these research studies are what came to be known as the Hawthorne studies, named for the Hawthorne factory of Western Electric, a part of the Bell System.
At Hawthorne, George Elton Mayo, an MIT professor, and Fritz Roethlisberger from Harvard studied workers in a number of different parts of the plant from 1924-1932. They first studied the effects of lighting and then moved on to a variety of other physical environmental factors. What they discovered was, rather than an environmental factor, the act of paying attention to workers and asking them questions about the best way to do the work, allowed participation, and produced gains in productivity far exceeding any physical changes to the environment. Later this was named the “Hawthorne effect.”
The Hawthorne studies launched a field of study called the Human Relations Movement. Researchers such as Kurt Lewin studied “group dynamics” through techniques called “action learning.” At the Tavistock Institute on Human Relations in the United Kingdom, researchers like Elliott Jacques, and Wilfred Bion demonstrated the effects of participation and supervised group dynamics on motivation and performance. Professor George Litwin and his graduate student Bob Stringer at Harvard Business School demonstrated that what Kurt Lewin called organizational climate was affected by management practice and drove motivation and performance to a high degree.
Some of the academic findings of the Human Relations Movement made it into what human resource consultants deliver. Much has been ignored by business.
Now consultants that deal with the ”people stuff” fit into many categories: training consultants, organization development firms, organization design firms, headhunters and recruiters, leadership coaches, human resource legal and regulatory advisors, employee benefits, industrial and organizational psychologists, and organizational climate and culture specialists.
So part of the problem is that organizational and human resources consultants haven’t gotten organized, or that the research that they espouse is viewed as “squishy” compared to strategy or process improvement. Part of the struggle of human resource consultants to get beyond the boutique level is that human resources consultants have subdivided into many different specialties with little overlap or synergy between them.
It’s true that executive recruiters like Heidrick and Struggles and Korn Ferry have expanded into leadership assessment and development. Some training firms like Achieve Forum have moved from management and leadership training into leadership coaching and organizational climate work. However, it is tough for employee benefit firms owned by an insurance company (Aon Hewitt, Willis Towers Watson, and Oliver Wyman/ Marsh McClelland) to be credible in all other organizationa development disciplines. Of these firms, only Oliver Wyman, which includes heritage firms Temple, Barker, and Sloane, Strategic Planning Associates as formal consulting and Mercer Delta, the firm started by David Nadler, have some greater credibility in organizational development.
Otherwise many organizational firms are boutique firms, and many are acquired by the Big Four, or other firms. The top three tier firms all say they are in organizational consulting.
120 years of consulting history – What does it mean to you?
I once observed two Organizational Development gurus arguing. “Spare me the history.” said one. “The only thing that matters is action, what are you going to do?” “No, history is important. It sets the context for action,” said the other.
Here are my take-aways from this history:
- Every firm is different. Where a firm came from, and where it sits in the fragmented oligopoly determines how hard it must work to get clients, what kind of jobs it offers, and how it treats their people.
- The disciplines and service offerings you are known for often dictates hiring and the promotion ladder. In these days when every firm seems to do everything, it’s worth looking at Wikipedia and the firm’s website to understand their history, which will have an impact upon culture and the way certain capabilities are valued.
- Content consulting and process consulting focus on different audiences, executives vs. the workforce. They sell different things e.g., answers and innovation vs. questions, methodology, and improvement. I’ve been a part of three firms that tried to combine these two approaches; none succeeded.
- New consulting firms are formed and old firms acquired regularly, so your competencies, your knowledge and skill and how you are growing them are important.
