| | By Mick James
When the great US
president Franklin D
Roosevelt assured his
population that “the only
thing we have to fear is
fear itself” I’m sure he
was trying to calm people
down. But those words
have had the opposite
effect on me. I’m
irrationally afraid of
fear. I’m phobophobic.
When I look back at all
the terrible things that
have happened to me as a
result of my own foolish
actions they pale into
insignificance compared
to the consequences of
inaction prompted by
self-doubt, excessive
caution or plain old
funk.
It’s as true in the
world at large as in
one’s personal life. We
live in a world which is
literally paralysed by
fear. For what is the
so-called “credit crunch”
but an outbreak of fear
on a global scale? Fear
rules every aspect of our
lives. The “war on
terror” and its
associated propaganda has
been so effective in
scaring the living
daylights out of the
Western population that
the terrorists can put
their feet up. It doesn’t
matter what you’re afraid
of—be it global warming
or bird flu — as long as
you adopt the required
position — whimpering,
head between your knees,
humbly hoping that the
powers that be will save
you. We may not be able
to guarantee you a
pension or your children
an education anymore, but
by God we can give your
body cavities a thorough
search before we fly you
to Marbella.
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So it is with the
(allegedly imminent)
recession. Economists,
bankers and every
columnist has been
jumping out from behind
pillars and shouting
“recession” at every
opportunity for the last
couple of months. What’s
the matter with these
people? Don’t they
realise children might be
reading the business
pages? The fact that
we’re not technically in
recession yet doesn’t
seem to deter these
professional doomsayers
one bit.
There’s a terrible
tendency to talk about
recession as if it were
the Black Death and will
consume all before it,
but it’s worth keeping at
the front of your mind
that all it means is two
successive quarters of
negative growth. That’s
by no means good: jobs
will be lost, investments
will underperform. But
it’s all too easy to
forget that this negative
growth comes after a very
long period of strong
growth. And while there
are some obvious
casualties of recession —
and people whose incomes
fall under the category
of “discretionary spend”
such as consultancy,
advertising and training,
arguably have most to
fear — there are other,
longer term shifts
underway.
The MCA is just about
to publish its latest
report on the industry, a
look back on what I
suppose we must now
regard as the heady days
of 2007 (it’s available
from publishers PMP,
www.pmp.co.uk, with an
“early-bird discount” if | |
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| | ordered before the end of
the month.
The headline result is
that — true to its
reputation as a
bellwether of the economy
— consultancy growth was
already slowing in 2007.
But even so member
revenues still grew
overall by 10% and by 13%
even in financial
services, the first
sector to be hit by the
current turbulence, and
where banking revenues
actually did decline. So
we’d need a considerable
shrinkage to get the
industry back to 2006
—itself a year of bumper
growth. It’s like house
prices — people are
getting all bent out of
shape at having to shave
£20k off their asking
price, completely
forgetting the hundred
grand or so the tooth
fairy left under their
pillow last year. And
even if inflation shrinks
to zero, petrol will
still be £1.20 a litre.
Let me stress again,
this isn’t good although
it’s by no means clear
that we are even at that
stage yet. But even if we
are, is it apocalypse?
One of the things I’ve
noticed as I’ve followed
the consultancy industry
through its recent golden
years is that the
industry is very
different from the one
that hit the last down
turn in 2002-3. Even when
the opportunities seemed
limitless, firms have
talked of “cautious
growth”, the need for
“balance”, the importance
of getting the right
staff on board rather
than just making sure
they can jump on every
project. I’ve seem more | |
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| | variety and innovation
business models in
consultancy in the last
five years than in the
previous decade. But
consultants haven’t taken
the opportunity to jack
up their rates or build
empires on sand. The
industry is not largely
staffed — as it used to
be — by a high proportion
of recent and disposable
graduates. The typical
consultancy professional
nowadays is a hardened
professional with a
decade or so of
experience under his or
her belt, a wide range of
skills and a highly
entrepreneurial attitude
to their job. This is a
resilient industry made
up of resilient
individuals. It’s not
about to fall apart or
dismantle itself
overnight.
Another interesting
headline from the MCA
report shows a marked
shift towards IT
consulting and programme/
project management, which
now make up more than
half of all MCA fee
income, with PM work
growing by 44%. Reports
earlier this year from
the recruitment industry
suggest that demand for
IT staff is holding up
despite all the talk of
recession. It seems
highly likely to me that
many companies that have
been putting the phone
down on consultants will
begin to look again at
the opportunities offered
by technology and
outsourcing as growth
stalls and the costs
rise. One of the negative
aspects of a long period
of growth is that it can
also be accompanied by a
lot of corporate | |
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| | jerrybuilding, as
corporations use rising
revenues to paper over
the cracks in their own
structures.
2008 has started out
as a tough year, but it
doesn’t have to be a
desperate one if we don’t
want it to be. There’s
plenty of positive work
to be done that can allow
companies to get through
this period without the
sort of mindless
job-cutting and
retrenchment that’s gone
on in the past. And
there’s a highly
effective consultancy
industry out there just
ready to help them.
Already consultancies are
reporting that companies
are deferring
projects—this is an
industry in which
uncertainty can be as
dangerous as genuine
disaster. And what is
“uncertainty” in this
context but a euphemism
for fear?
It may take a bit of
courage to get the
chequebook out for
outsiders while
tightening the belt
internally. Consultants
need to reach out to
their clients and help
stiffen their resolve,
before the consequences
of inaction are too dire
to be remedied. Those
companies that start
exploring their options
now will fare far better
than those that remain
frozen in the headlights
of the oncoming
“recession” —
particularly if it turns
out there isn’t going to
be one after all. | |
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