| | By Mick James
As the (intended)
double entendre of this
book’s title suggests,
it is one of a number of
recent books that
suggest there is
something vaguely
unrespectable and
unwelcome – if not
outrightly fraudulent –
about the consulting
industry. From this
perspective consultancy
is viewed as a vaguely
mysterious, if not
necessarily malignant
growth on the body
economic, whose very
existence demands
explanation. “Why
management consultants?”
is the author’s repeated
question to himself, and
the answers he gets are
certainly not those he
would get from a roomful
of consultants.
The central thesis of
this book is that
management consultancies
were only able to
prosper in and dominate
their professional niche
because of specific
changes in the US
regulatory environment,
specifically anti-trust
initiatives which kept
accountants and bankers
out of the advice
business in the 1930s,
and the Consent Decree
of 1956 which kept IBM
out of IT consultancy
and smoothed the way for
the rise of Andersen.
It’s a novel thesis
and certainly one which
separates this book from
most histories of
management consultancy –
indeed the author
rejects the Taylorean
scientific management
movement’s role in
consultancy history as
akin to that of the
Neanderthals in human
evolution. However, it
does require a rather
sweeping dismissal of
what most people would
consider the bulk of the | |
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| | consultancy industry. A
quick glance through the
index confirms this: 88
references to McKinsey,
40 to Booz.Allen,
compared to just seven
for Accenture/Andersen
Consulting, and one each
for KPMG and Deloitte
Consulting. Checking up
this last reveals that
the author cannot
exactly be accused of
having a deep or broad
understanding of the
consultancy industry:
“Deloitte Consulting
completed a management
buyout and reverted to
its legacy name
Braxton,” to which the
only response is a
pantomime roar of “oh no
it didn’t!”
Howler though it is,
this assertion is less
worrying in my view than
sweeping generalisations
such as “Management
consulting firms fall
into two camps: those
who provide advice on
corporate strategy...and
those who provided
advice on information
systems”. Central to
this book’s thesis is
that the history of
consultancy is really
only the history of the
strategy firms, and
McKinsey in particular,
but this in turn is
based on a view of
consultancy that so is
narrow that even the
strategists might not
recognise it.
Basically, it is that
consulting offers
“economies of
knowledge”, cheap access
to expertise but
particularly information
that it would be too
expensive to acquire or
keep in-house. Most
people would accept this
as an accurate if
partial account of one
of the ways in which
consultants deliver
value. Even McKenna
accepts that this in | |
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| | itself would not explain
what he calls the
“institutionalisation of
management consulting in
the United States”. But
he must stick to this
narrow definition to
support his thesis that
“widespread employment
of consultants was an
unintended consequence
of anti-monopoly
legislation...consulting
might represent only one
of many potential
solutions for the
institutional transfer
of best practices, but
in the United States,
most of the other modes
were illegal.”
I think this reveals
a very profound cause of
the unease which many
business theorists (and
journalists) have with
the consultancy
industry, particularly
in the States (it also
reveals a very shallow
one, which is that they
see consultants as
knowledge brokers, like
themselves, only
grotesquely
better-remunerated): for
people who go the full
three cheers for
free-market economics,
American capitalism
shouldn’t need
consultants—it should be
self-sufficient and
self-regulating.
Therefore if something
as intrinsically wrong
as the consulting
profession appears
within the American
economy, it must have
been imposed from
outside. And given that
American, and by
extension, global
capitalism should be
self-supporting, then,
equally, corporate
collapse must be the
result of outside
forces—possibly those
same outside forces that
created the consultancy
industry, vectored
through its malign | |
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| | embedding in the
business world.
And so it proves to
be: “The worldwide
scandals in corporate
governance, culminating
in the failures of
Enron, WorldCom and
Parmalat were a
consequence of two
decades of surging
demand for accounting
and consulting services
by directors and
officers attempting to
offset corporate
liability for potential
managerial malfeasance”.
This is where the
book’s thesis gets
decidedly murky. True,
Arthur Andersen’s
involvement with Enron
became the touchstone
for the alleged
conflicts of interest
that led to consultancy
divestment and Sarbanes
Oxley. But it’s always
worth reiterating that
Andersen at the time was
anything but a typical
“Big Four”
accountancy-cum-consultan
cy firm, and any
conflicts of interest
certainly didn’t come
from the award of
monster SAP contracts
(it’s also worth
pointing out that, as a
major accountancy firm
rapidly building up a
consulting unit after
the divestment of a
technology consulting
arm, Andersen would be
precisely a typical Big
Four firm). McKenna
doesn’t really take
account of this, despite
the fact that the only
thing Andersen was
convicted of was
obstructing justice
through shredding
documents, and that this
act was carried out by
accountants (plus of
course, the conviction
has been overturned, but
too recently to be noted
in the book).
This makes the book’s | |
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| | concluding chapter – a
heartfelt plea for the
consultancy industry to
fully professionalise
itself so that “ethical
standards... become the
norm in consulting” –
rather baffling. I can’t
see that a group of
accountants feeding
documents into a
shredder makes a case
for or against the
professionalisation of
consultancy: if you’re
going to blame Andersen
for the Enron affair it
doesn’t make much of a
case for
professionalisation per
se. Nor does the book
begin to examine the
horrendous difficulties
involved in
professionalising
consultancy.
Consultancy is a moving
target, exemplified by
the struggle to write a
book such as this
without being constantly
overtaken by events.
This book made me wonder
if it really was
possible to write a
history of consultancy,
or whether the
industry’s constant
remaking and reinvention
of itself leaves it
without a past in any
meaningful sense. In
which case, the
challenge for the
industry is not, as
McKenna would have it,
to stop evading “adult”
responsibilities by
claiming to be the
world’s newest
profession but to ensure
that it remains
precisely that.
The World’s Newest
Profession, Christopher
McKenna, Cambridge
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